WBD424 Audio Transcription

El Salvador’s Bitcoin Report Card with Aaron Van Wirdum

Interview date: Tuesday 16th November

Note: the following is a transcription of my interview with Aaron van Wirdum. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I talk to journalist and Print Editor-In-Chief at Bitcoin Magazine, Aaron Van Wirdum. We discuss the implementation of the Bitcoin law, what has changed in El Salvador and which nation-states might follow in their footsteps.

“The only reason gold has the monetary value that it does have is because there’s this small chance that one day it will be the reserve currency again...and Bitcoin is making the exact same bet. ”

— Aaron Van Wirdum

Interview Transcription

Peter McCormack: What do you think of the studio today?

Aaron van Wirdum: This is an awesome studio, thanks for having me here.

Peter McCormack: We've got bacon and Disneyland!  It's so funny when we travel round to do these interviews, trying to find places, and this one came a little bit last minute, and we were going to record it in there and the guy said we've got an arts studio.  When we came in, I was like, "No, we've got to record in here".

Aaron van Wirdum: Yeah, I wonder if the sound is going to come out right?  Maybe it's a bit echoey, right?

Peter McCormack: I mean, usually we fix that shit, but I don't know, it's weird, man.  I don't know if it's too busy.  I don't know, I like it.  It's kind of interesting.

Aaron van Wirdum: It's definitely cool.

Peter McCormack: Anyway, man, good to see you.  This is the fifth country we've hung out in, I think.

Aaron van Wirdum: Yeah, maybe more than that by now.

Peter McCormack: Well, the US, El Salvador, here, Latvia?

Aaron van Wirdum: I don't remember, maybe the Netherlands at one point?

Peter McCormack: We haven't.

Aaron van Wirdum: You haven't?  Oh.

Peter McCormack: Germany?

Aaron van Wirdum: Yeah, Berlin, maybe. 

Peter McCormack: Maybe, yeah.

Aaron van Wirdum: Got to be a bunch.

Peter McCormack: That's what I love about this.  Anywhere you go in the world, you get to see all your friends again and talk about Bitcoin.  And today, big day, let's check the price, dude. 

Aaron van Wirdum: All-time highs, right?

Peter McCormack: Yeah, we hit $68,495 this morning.  The last two nights, it's shot up during the night.  Usually, it's the US leading it.  So, interesting times, brother.  Anyway, listen, I want to talk to you about a bunch of stuff.  Mainly, I want to talk to you about El Salvador, because you and I have both spent a lot of time there; ongoing project for Bukele and his team.

Aaron van Wirdum: You were the trailblazer, you were the first to go, the first bitcoiner.

Peter McCormack: Well, apart from Michael.

Aaron van Wirdum: Yeah.

Peter McCormack: Well, he set it up.  That was at LABitConf.  Were you at LABitConf?

Aaron van Wirdum: Well, I'll be at LABitConf next week, but no, I have not been to any of these so far.

Peter McCormack: Yeah, that was LABitConf in 2019 and Michael said, "Do you want to come and see my project?" and I went out there and it was cool.  But everyone's pretty much been there, has made their pilgrimage.  But how long were you there for?

Aaron van Wirdum: I was about three months in El Salvador.

Peter McCormack: Yeah, you were there during the whole build-up during the session in parliament where they passed the Bitcoin Law through to it coming in.

Aaron van Wirdum: No, I came in after it passed parliament.

Peter McCormack: Oh, you did?

Aaron van Wirdum: Yeah, it was a bit unfair.  When it was announced in Miami, I was in Miami of course.  Then I basically started to make travel plans, and I think I went there three weeks later.

Peter McCormack: Oh, I thought you were there.

Aaron van Wirdum: The law passed one week later, or even less than that, and I went about three weeks.  So, I was there two months before the law went into effect and about a month after.

Peter McCormack: And then you stayed until, so was it 7 or 9 September; I always forget?

Aaron van Wirdum: The law went into effect from the 7th, I think; yeah, it was the 7th, I'm pretty sure.

Peter McCormack: Yeah, I went to the US on the 9th, that was it.  So, I was there and you went to McDonald's, I went to McDonald's.

Aaron van Wirdum: Oh, did you?

Peter McCormack: Yeah, I went to McDonald's.

Aaron van Wirdum: Could you pay with Bitcoin as well, because I heard there were some different locations -- oh, no, I remember, I think you tweeted about it.

Peter McCormack: No, I texted you.

Aaron van Wirdum: Oh, did you?  Oh, yeah, you were having issues, yeah, that's it; you were having issues with the QR code.  It was a bit of a puzzle.

Peter McCormack: Yeah, so I don't know if this is just me being a typical dumbass like I normally am, or it was just confusing.  But what happened was, I went to Starbucks, we took the camera crew, went to Starbucks, bought a cup of coffee and it was seamless, so smooth; just made the order, they held up their phone, I had my Lightning wallet and I paid. 

What happened was, then I went to McDonald's and they had it built into the interfaces, which by the way, I was surprised they did that.  I thought it would be something at the till.

Aaron van Wirdum: Well, they had both.

Peter McCormack: They had both, but the fact that they'd built it into the screens --

Aaron van Wirdum: Yeah, that's great.

Peter McCormack: Well, the thing in my mind was, you can just launch this globally.  But what happened was, I ordered and it said, "Pay" and it came up with a QR code.  And I don't know if it was because it was in Spanish on the screen and I couldn't read something, so I try to paid with my Lightning wallet and it said it did not recognise this QR code.  And that's when I texted you.

Aaron van Wirdum: It was just not very clear.  It said in English, "Just scan this QR code", but you'd expect to be scanning an invoice, or something like that, but you're scanning actually a URL that takes you to a website and you can make a payment there.  I guess the reason they're doing it, or the benefits to that sort of shit, is that you can choose between Lightning or on-chain; while at Starbucks, for example, you only have the Lightning option.

I think that's the way to go at this point, but I think that was sort of a trade-off that they made.  It's a bit more complicated, but then you can make an on-chain payment as well.

Peter McCormack: Well, that's the point.  I think they should have done it just Lightning only.  Because, if you're doing an on-chain, are they doing zero confs, or are they doing one conf; who knows? 

Aaron van Wirdum: I don't know actually, I don't think I've tried that.

Peter McCormack: They should have just spun up a Lightning invoice and let you pay.  Well, whatever, but you helped me through it, so I eventually did it.  You were there, I've been there, there's a lot to talk about with it, a lot to unpack, lots of different opinions on whether we should care, whether it's a good thing, whether it's a bad thing, what people think of the Bukele administration, what this means for other countries.  But I think now's a good time just to talk about our experiences there, what maybe we think about it, and what we think this means.

As a starting point for me, I just wanted to say that when they announced it and they said, "Three months", I was like, "There's fucking no chance"!

Aaron van Wirdum: Yeah, that's crazy.

Peter McCormack: Yeah, "There's no chance".  And, even though they had some rollout issues, I was blown away with what was actually available on the 7th.

Aaron van Wirdum: I wonder why they went for -- you spoke with the President; I wonder why they went for such an aggressive timeline?  Was it really what he said, that they were just ambitious and they like to work under pressure; or, was there maybe some sort of political manoeuvring going on where they figured, "Let's get this through before the IMF really gives us a hard time, or before anyone can really stop it.  Let's rush it through for that reason", because three months is crazy, yeah, it's insane to roll out, especially because there was nothing when they announced it essentially.

I mean, there were some apps, some people were using Strike and there was the Bitcoin Beach project, but there was no legal infrastructure, the Chivo wallets had to be designed from scratch, there was just nothing.  And then, to roll that out within three months; even well-funded companies take longer to develop a wallet than three months, and these have top experts in their team.  So, yeah, we agreed that was great.  Do you have any idea?

Peter McCormack: Yeah, I mean I asked him the question in the last interview.  But before I tell you what he told me, I had a web design business, right, so I understand what goes into building something technical.  We built some huge websites and some simple websites.  I don't think we would ever, even the most basic corporate website, three months would be still pushing it, because you have to go through business planning specs, design, UX, testing, rollout, deployment, post-deployment bug fixing; there's a lot into it.

So, when they said three months I was like, "No chance".  But what he actually said; I put the question to him and what he actually said to me was, "Whether we said it was three months or six months or a year, we would have never been ready on time.  Whatever you set the deadline, you're not ready, so set it ambitious and accept you're going to have some difficulty with the rollout", and that kind of made sense.  It gave everyone a deadline they had to work to and, yeah, they had some difficulty with the rollout.  And Starbucks only had three months' notice, and McDonald's only had three months' notice; they all had three months' notice.

I was still able to go to both those places on the morning and I was able to buy coffee and I was able to buy a burger and it worked; and it still blows my mind.  But it also says to me, I'm not going to claim ownership of this, somebody tweeted out, "How have Starbucks and McDonald's rolled out Lightning in three months and lots of the major exchanges haven't?"

Aaron van Wirdum: Yeah.  Well, I would assume the reason, if you want an answer, is because the major exchanges want to build it inhouse, they don't want to outsource it to some other external party, and that's what McDonald's and Starbucks are obviously doing; they're not building their own Lightning implementations, they're just hiring someone from IBAX to do it for them, for example.

Peter McCormack: Yeah, or maybe there's just not the incentive as well.  I mean, is there a massive demand for Lightning really on exchanges?

Aaron van Wirdum: Right now, probably not, because fees are low.  Today, I think they're a little bit higher, because we just breached all-time highs, and people are rushing into exchanges.  But no, there's not a lot of fee pressure in general, so not a lot of reason to do that probably.

Peter McCormack: But yeah, I'm still impressed they rolled out.  I never actually got to play with the Chivo app.  I got to see it, but I never got to play with it, because I wasn't there long enough, I couldn't download it.  Did you get to play with it?

Aaron van Wirdum: Yeah, I did.  First, I was playing with other people's apps, but at some point someone gave me the access.  So, I have it on my phone now.  The Chivo app is not great.  With the Chivo app, you clearly see that three months was too aggressive, or just not finished.  It doesn't work half the time, sometimes it doesn't work at all, sometimes payments won't work, sometimes they do.  Sometimes you get weird bugs when you scan a QR code and it just doesn't work sometimes, funds get lost in the ether.  There are all sorts of problems with the app.

I think the app is the most obvious example of why three months is a bit crazy.  And it kind of pisses me off, to be honest in a way, because I think it was completely unnecessary.  Even if you want to roll out the law on such an aggressive timeline, you can do that without also rolling out the app on such an aggressive timeline.  You can make Bitcoin legal tender without necessarily introducing your own app as a government.  You can just say, "From now on, we're accepting Bitcoin payments for taxes".  That's the main thing you would have to do to make it legal tender.

Peter McCormack: My assumption is they had to do the app, though, to support the provisions in the law that said, "You have to accept Bitcoin, but you don't have to hold Bitcoin"?

Aaron van Wirdum: Yes, you're exactly right.  The obvious out of that would be, "All right, we'll do that later.  We're not going to force Article 7 yet".  Solved; they could have done that.  And then you also don't need the provision of Article 8, or 12, I don't know which article.

Peter McCormack: Yeah, 7, 8 and 12 are the big ones.

Aaron van Wirdum: Right, I think so.  I think 12 was the one that guaranteed conversion, from the top of my head.

Peter McCormack: 7 is, "You have to accept".  I think 8 was that --

Aaron van Wirdum: "If you obviously cannot accept, you don't have to".  It doesn't matter, Peter.

Peter McCormack: But what I think they tried to do was to design the law in the fairest way possible.

Aaron van Wirdum: Well look, I'm not onboard with Article 7 in the first place.  I would have preferred there to be no Article 7, because in most countries, almost every country, legal tender does not mean you're mandated to accept it.  It usually just means that it's the currency that you can use by law to settle debts.  That's really all it means in most countries.  If you have a legal debt, for whatever reason, then you can settle it in legal tender.

But if you're operating a shop or a restaurant, or whatever it is, you're not mandated to accept legal tender in the first place.  There are very few exceptions in countries where it is the case, and now El Salvador has the exception for Bitcoin, where it's actually mandated.  I think that sort of contradicts the Bitcoin philosophy in itself.  I think Bitcoin, for me, stands for freedom of currency, use the currency of your own choice, and Article 7 sort of goes against that philosophy.  So, I don't really like that; I would have preferred it if they'd…

My first favourite option would have been to just abolish legal tender laws, I think.  Legal tender laws in general should just go out of the window, we don't need them.  Second best option is to make Bitcoin a legal tender, but not mandatory.  I would have preferred that over the mandatory thing.  If they do go the mandatory route, then yes, the provisions are making it more acceptable and more fair.

Peter McCormack: Yeah, so I asked him about that as well.  The reason he said he implemented Article 7, the reason it was so important, he said, is that if he didn't, there is no incentive for McDonald's, Starbucks, Pizza Hut, Walmart to accept Bitcoin.  He said, "They won't do it".

Aaron van Wirdum: Well, that's sort of the chicken-and-egg argument, the bootstrapping argument.  How do you introduce new currency into the world, into a country, because people will only want to accept it if they know they can spend it somewhere else?  Mandating it sort of solves that problem.  But in my opinion, Bitcoin already solves that problem with Number Go Up technology.  That's the incentive; that's why Bitcoin has been catching up so far, and that's why it will continue to catch up, which is limited supply and there's actually a very strong financial incentive to want to have Bitcoin.

That solves the chicken-and-egg problem in my view.  Article 7 is not really necessary.  It might speed it up a bit; it is another way of solving the chicken-and-egg problem.  Then again, how much would it really help?  That's something we'll have to see now because, yeah, you're right that McDonald's --

Peter McCormack: But there was something else he added to that that really stood out to me.

Aaron van Wirdum: Oh, yeah?  Go on.

Peter McCormack: He said, "But more importantly, I've got five banks in this country.  They're all multi-billion-dollar banks".  He said, "They now have to accept Bitcoin for financial services".  It forces the banks to modernise.  And I thought that was quite interesting.  I think I'm neutral on the subject --

Aaron van Wirdum: It's not a very libertarian thing to say, right, you agree with that at least?

Peter McCormack: No, but I'm not really a libertarian anyway.  So, I've said it before, I'm kind of politically lost anyway.  I fundamentally agree with libertarians on lots of things, but I'm not a libertarian.

Aaron van Wirdum: I'm probably with you on many aspects, but when it comes to money, I guess I would consider myself very libertarian.

Peter McCormack: Yeah, look, you would probably explain it to me and I would be, "Yeah, I agree with you actually".  If you went into your thesis on why they should abolish legal tender laws, that you should have -- my assumption is, you should have competition around money and the freedom to use whatever money you will, and therefore the best money will rise to the top.

Aaron van Wirdum: Yeah, exactly.

Peter McCormack: That makes sense to me and I agree with you on that.  I'm just explaining to you what he said to me, and I just thought that was the most interesting part, that you can go now and buy bank services and they have to accept Bitcoin.  The turkeys are now having to vote for Christmas!

Aaron van Wirdum: Well, I can tell you the banks are not very happy with that!

Peter McCormack: Yeah, of course.  Give me some insight, what do you know?

Aaron van Wirdum: Yeah, so there was this week where as you know, a lot of bitcoiners go to El Salvador, went to El Salvador over the past couple of months; and there was one week where there was a small group of bitcoiners just making appointments at banks, basically, and asking if we could stop by and hearing them out, and asking them if they had any questions for us, because there was nothing coming from the government, there was no information.

A lot of people in El Salvador, especially also the financial institutions, they were really lost, they had no idea what was going on.  That's one of the things we learned; that was our impression anyway.  So, yeah, we visited a couple of the national banks, which was interesting that we show up in our Bitcoin T-shirts and our scruffy hair, and we were let into the boardrooms and we were sitting with either the CEO or the CTO, or whatever C-level executives were available.

Peter McCormack: What was that like?

Aaron van Wirdum: That was interesting.  That was a funny week in a way.

Peter McCormack: What did you find out then?

Aaron van Wirdum: Well, one of the things that we found out is that they have no idea what was going on, really no idea.  They didn't know if they were supposed to be mining, or they were asking us about Ripple, or they didn't know the difference between Bitcoin and Lightning, or if there was a difference; you know, really beginner questions.  They were mostly concerned about AML KYC kind of stuff.  That's the type of thing banks will really get in trouble for if they don't do that well, so they had no idea how to deal with that in the context of Bitcoin.  I'm losing my train of thought; there was somewhere else I was going.

Peter McCormack: Yeah, but were they accepting Bitcoin?

Aaron van Wirdum: I was just going to say, they were definitely not happy, because they knew that on 7 September, someone can walk into this bank branch, demand to repay their mortgage with Bitcoin and then legally, they would have to actually accept that payment, and they had no idea how to do that or where to even start, or anything like that.

Peter McCormack: Oh, okay, that's interesting, because in my head when I was thinking about the banks having to accept Bitcoin for financial services, sometimes you have products that you buy from a bank.  I don't know, what's an example?  I've got a bank card and I pay £15 a month for the fucking metal version where I get a metal card and some stuff I never use, like insurance and bullshit; I don't know why I do it.  But I pay £15; I actually pay for that.  So, my assumption is similar things like that, where you're buying a service, maybe you're getting a mortgage and there's an initiation fee, that you would be able to pay for that in Bitcoin.

But actually, the ability to make mortgage payments in Bitcoin is entirely different; that hadn't crossed my mind.  So, they have to do that?  Any transaction?

Aaron van Wirdum: It would be any legal tender.  That's one of the things legal tender should do, if you have a debt in any country, you should be able to repay it in the legal tender, so that includes the mortgage debt.  So, in that case, they would definitely have to accept Bitcoin for mortgage repayments, yeah.

Peter McCormack: They've probably put in the whole infrastructure and there's a very low number of people who would actually want to.

Aaron van Wirdum: Oh, judging by my experience in El Salvador, it's probably no one, or very few people indeed.  I mean, you've been there.  It's not like there was a very high Bitcoin penetration in El Salvador, or anything like that; less people there than probably in London or in Amsterdam, or in Western countries.  There wasn't even a Bitcoin meetup when we showed up there.  We started one, but there was no Bitcoin meetup before Bitcoin Law was announced.  I think there were not a lot of bitcoiners there in general.

Peter McCormack: Well, the bootstrapping thing worked for El Zonte, it just happened.  You go there and everywhere -- I think the only place, that El Vikingo, was the only place that didn't accept it at the time.  But everywhere else is pretty much accepting it.

Aaron van Wirdum: Oh, no, there were a couple of the more, what do I call it?  I want to say upper class, but that's exaggerating it.  So, some of the restaurants that were more geared towards American tourists, they actually wouldn't accept it.

Peter McCormack: Well, El Vikingo's one of them.

Aaron van Wirdum: Oh, yeah, the Belgium-owned restaurant.  That's one of them, yeah.

Peter McCormack: But what I'm saying is, they managed to bootstrap that entire little village, and it spread up to El Tunco.  There were two or three places in El Tunco, and you could see how El Tunco could then become like El Zonte, and you could see how it could spread up the coast and maybe into San Salvador, and over time that would have happened.

Aaron van Wirdum: Yeah, it spread to Puerto de la Libertad a little bit; I was there.

Peter McCormack: Yeah, of course.

Aaron van Wirdum: That was pretty small, but still.  But still, it's spreading a bit, and you can see it in the Bitcoin Beach wallet, right, where all the locations are.

Peter McCormack: But my only thing, I thought it was cool in some ways that you could go to Starbucks and McDonald's now.  Now, I wonder how many actual transactions, once the initial excitement…  Do you have any data?

Aaron van Wirdum: No, unfortunately not.  I did ask about it.  I'm trying to remember; I don't think they told me, but I think it's probably safe to assume that it's not very high.

Peter McCormack: Yeah, and what I don't really have a feel for is, the only data I'm really seeing is the stuff coming from Bukele.   He's obviously going to paint a very promising picture of what's happening, but I don't really know.  I don't know how many wallets have really been downloaded.  I think the last count was 2.5 million.  Is that true; isn't it true?  I don't know, I don't know all these things.

Aaron van Wirdum: I think that's plausible, just because they were giving away the $30, so there's definitely going to be a lot of people that downloaded it.  The question is, how many of these people downloaded it just to get $30?  Yeah, basically for that reason alone, and my guess would be most; the vast majority would be my guess.  It's hard to get reliable statistics.

Bukele tweeted out the active user statistic, but active user is usually defined as, "Anyone who used the app in the past month".  Then, he tweeted it out within a month after the release of the app, where everyone would get their $30.  So, that doesn't actually provide any extra information.  We didn't learn anything new, other than the downloads, assuming that the download statistics are accurate at least.    A lot of people are using it as sort of a gambling app essentially.  They got $30 for free, and now they're trading back and forth to see if they can make more off that.

Peter McCormack: With shitcoins!

Aaron van Wirdum: No, just from dollars to Bitcoin, because that's free within the app.  So, you can try to make more of it.  I think there is a bunch of Salvadorans doing that.  There's also some real adoption, by the way.  There's definitely a very popular game that the youth plays online, and they're really using Bitcoin, because that's the only option there, especially the youth in El Salvador; they're not going to have credit cards or PayPal or anything like that or banks, so they're actually using Bitcoin to be able to play that game through Bitrefill, I guess; they're buying the gift cards.  So, there is real adoption; I don't want to downplay it at all.

But I think the Chivo app, to your point, I think most people would have just gotten the $30.  You also saw the very long lines in front of the ATMs.  That was the thing.  At first, you could not do that actually.  You could not just take the $30 from the app, walk to an ATM --

Peter McCormack: You had to do one transaction, right?

Aaron van Wirdum: Yeah, there had to be one hop to another Chivo app, so it was locked within the Chivo system for one transaction.  Then after that transaction, it was free to be spent wherever you want, including getting your $30 out of the ATM.  So, after a few days, people figured it out and there was a very active market where people would just --

Peter McCormack: Send it to their mates.

Aaron van Wirdum: -- either just send it back and forth; or, you had these people that were buying up everyone's $30 of Bitcoin for $25 in cash, and then they would collect all the $30 in Bitcoin and then get them all out of the machine at once and make a big profit.

Peter McCormack: Fuckers are always trying to figure out a way to game this stuff!  But the people queuing up, what was your experience, because there are anecdotal reports of people going to the Chivo ATMs who are also buying Bitcoin?

Aaron van Wirdum: I have, from a pretty reliable source, that it's 99% were selling it, at least in the first week or two weeks.  But I do think a lot of people probably sold their $30, but then kept the Chivo app for remittance, for example.  Like, if their family wanted to send some funds later, then they would have that app on their phone, and so it did incentivise them to download the app and use the Bitcoin for the first time.  So, there's still a win there, if the goal was to get people to use Bitcoin; it's just this free $30 was the main incentive, and most people probably just sold it.

Peter McCormack: But there will be a group of people who didn't sell, and their $30 is maybe $40, $45 now.

Aaron van Wirdum: If not more, yeah.

Peter McCormack: Yeah, "This is magic internet money".

Aaron van Wirdum: Yeah, and the way the app is designed, you can see it very clearly, that you have your dollar balance and your Bitcoin balance, and they're both denominated in dollars, if I'm saying it right, so you really see that the Bitcoin is going in the right direction and dollars not.  I mean, for many of us, that's how you get into Bitcoin in the first place, right; you notice because something's happening with the price, and that's kind of interesting and that peaks your interest, and that's how you start thinking about the whole thing.

Peter McCormack: Come for the gains.

Aaron van Wirdum: Yeah, I think that's how a lot of people get in first, and so it might be an entry point for a lot of Salvadorans.  I think we'll have to see how it develops.  The first month was interesting.  It's interesting to see how it launched, and it was interesting to see how it started, and it was interesting to be there.  But the real interesting story is going to be over the next couple of years, to see if people are really going to use it for remittance, for savings, for PayPal replacements, because they can't get PayPal, digital transactions.  Will it actually be adopted?  That's going to be very interesting to see, and that's more of a story for the next couple of years.

Peter McCormack: Yeah, my assumption is there will be a handful of people within that, whatever percentage it is, 5%, 10%, 15% of the people who've been exposed now, get orange pilled and they go and learn about Bitcoin.  I don't know what class they will be; it could be across the board.  It could be some of the poorest, it could be some of the wealthy, who knows?  But there will be a percentage who will now be orange pilled by this and they will become bitcoiners.

Aaron van Wirdum: Yeah, for sure.

Peter McCormack: Yeah, and they will teach other people.  But I think there's also going to be a group of people who are going to miss out and feel negative towards it.

Aaron van Wirdum: I mean, we forgot there nocoiners, right.  Nocoiners are everywhere, so there will be nocoiners there.  Yeah, it's going to be tough for some of the protesters and some of the really anti-Bitcoin people, who were anti-Bitcoin for all the wrong reasons really.  They were anti-Bitcoin because they were anti-Bukele.

Peter McCormack: They're not anti-Bitcoin.

Aaron van Wirdum: Right.  Still, my point is, if you were marching the streets with a big anti-Bitcoin sign, it's going to cause some cognitive dissonance to change your mind after that probably.

Peter McCormack: Well, we were at one of those protests together.  My view on that is if Bukele had banned Bitcoin in El Salvador, they would have all been holding up pro-Bitcoin signs and fundraising in Bitcoin.  I don't think there's a single anti-Bitcoin protest.  I think every anti-Bitcoin protest is an anti-Bukele protest.  So, whatever policy he has, they're against.

Aaron van Wirdum: I would probably go a little bit less far than that.  I tend to agree with the general sentiment of what you just said, but there are some informed protesters as well, there are some people in that crowd, or in general, that will have legitimate concerns, or at least concerns that I agree are legitimate.

Peter McCormack: How fast it was rushed through parliament without consultation, that kind of thing?

Aaron van Wirdum: The lack of transparency is not a big one.  Still, it's unclear who even developed the wallets, we don't know where the funds are held.  I mean, that should be a concern that bitcoiners would agree with.  It's custodial and no one knows where the funds are.  That's pretty anti-Bitcoin.

Peter McCormack: I thought it was pretty well-known who developed the wallet?

Aaron van Wirdum: Well, tell me.  I've been hearing a whole range of names and I think it's a combination of them.

Peter McCormack: I thought it was Athena; I thought that was pretty public knowledge?

Aaron van Wirdum: Oh, no, I think they're part of it on some level, but I also don't think they developed the whole wallet from beginning to end.  I think it's different developers, different development companies doing different parts of it.  I think BitGo is part of it, I think some Brazilian company is part of it, some Venezuelan lady was in charge of the whole thing.  But again, this was my point, we're not getting any transparency about any of this.

Peter McCormack: So, look, you're a bitcoiner, pretty popular bitcoiner, you know your shit with this.  What do you think they should be doing?  My assumption of obviously proof of reserves and transparency around the app, but to create trust and transparency within the Bitcoin community, what would your message be that they should be doing?

Aaron van Wirdum: My message would be that they should be doing less.  My message would be, "Leave it to the free markets.  Let the free-market developers offer their wallets and their payment processers".  That's what I would prefer.  You don't need a government-sponsored wallet that barely works.  It's not necessary really for what you want to achieve.  So, just do less in general, that would actually be my message.

Even if you looked at just the practical reality, the Starbucks experience and McDonald's experience, these were way better than all the Chivo experiences.  These were companies that actually knew what they were doing and it works and these companies will be eager to conquer markets like El Salvador, because obviously there's money to be made and there's products to be offered, so they will do it. 

There's not really a good reason, I think, for the government to go all out with their own wallet.  Even if you want to guarantee the conversion, approach it as minimal as possible.  I'm not sure what the minimal approach would be, but I'm sure there's a way more minimalist approach than what they actually did with the full-blown wallet with all the different options; you have the merchant option and you have the user option and you have the point-of-sale option, and I think just the whole thing wasn't actually necessary.  Just leave it to the free market; that would be my general feedback to the next country that wants to introduce Bitcoin as legal tender.

Peter McCormack: And, have you felt like that from the start, or did you get wrapped up in the excitement, because I certainly got wrapped up in the excitement of it?  I knew what was happening, because I was down in El Salvador with Jack, and I think just in my head, it was like, "Wow, this thing!"  I mean, I'm only really a five-year-old bitcoiner, right; but even in that five years, it's gone from still a nerd toy with some institutional exposure back in 2017 to, "Holy fuck, this is on Tesla's balance sheet!"  Look at what Michael Saylor's doing and now we have a country making it legal tender.

This is incredible, and I got wrapped up in that certainly.  But the more I speak to people like yourself, I'm like, is this one of those things where perhaps we got caught up in something that might not be great for Bitcoin; or, does it not matter, because everything's good for Bitcoin?

Aaron van Wirdum: I'm not sure it's bad for Bitcoin.  Well, I guess the bad thing, if I would have to point to something that's bad for Bitcoin, and that's sort of the thing that bothers me, is that by releasing an app that barely works, essentially the Silicon Valley, move-fast-and-break-things approach, I think that's not a good fit for Bitcoin.

I want people, when they use Bitcoin, to have a good experience, especially if it's the first time they're using Bitcoin; I want it to work and I don't want them to be unsure if the transaction came through, or the app is crashing.  A strategy was not necessary, just leave it to the free market, and then people will have a good experience, and I think that's actually better for Bitcoin.

I do think the fact that Bukele put Bitcoin on an equal playing field as the dollar, which I already mentioned you can also do by just abolishing legal tender laws, but this is not a way of doing it, I do like that.  I think that's great.  So, I sometimes sound negative when I'm talking about this, because I'm focusing on the things I don't like, or the things that I hope the next country will do better.  But no, in general, I think the potential for Bitcoin in El Salvador is great.  So, it's great for El Salvador and to your question, also good for Bitcoin probably.

So, there are four benefits for Bitcoin in El Salvador, essentially, four things that have been mentioned.  So, one of them is remittance; the second one is banking the unbanked; and then you have the image for El Salvador, that it's producing a much more positive image for the country, which was previously known mostly for gang violence and negative stuff and now all of a sudden, it's on the map as a tech entrepreneurial nation, which is kind of cool and it's attracting bitcoiners and we're all going there next week for the conference; and then, the fourth one is decreasing dependency on the US dollar, which I would say is actually the biggest benefit long term, if it catches on. 

So, I think Bitcoin definitely has a lot of potential in El Salvador and as such, it's also good for Bitcoin.  It's just I'd like it if -- some of the mistakes were so easy to avoid.  You could have so easily not have had Article 7, which I think would have been fine, or so easily just have said, "All right, we're going to delay the wallets a little bit until it actually works".  There was no real reason to rush it out, I think.  So, there were a number of problems that were so easy to avoid that it's hard for me to ignore them.

Peter McCormack: Yeah.

Aaron van Wirdum: But in general, I'm positive.  It's a super interesting experiment with a lot of potential.

Peter McCormack: Super interesting, and other countries must obviously be looking.  And right now, I think overall, it's certainly a net positive for El Salvador.  You've got a certain amount of increase in tourism; I don't know how much, probably negligible in the grand scheme of things, but you've certainly got an increase in tourism.

Aaron van Wirdum: Well, they probably had very little tourism to begin with, so any increase is a big increase relatively speaking.

Peter McCormack: Yeah.  But you've got that, you've got certainly an increase in investment in the country, whether that's people wanting to buy property, or people wanting to invest in companies or have offices there.  You've got El Salvador on the global map.  Bukele is suddenly globally known.  Essentially, it was a hack for him to become globally known, or an interesting one.

Aaron van Wirdum: I think that's the main reason for him to have done it actually, by the way.

Peter McCormack: Do you think?

Aaron van Wirdum: I suspect, yeah.  I think he likes the attention.

Peter McCormack: We'll come back to him, because I've got some nuances on him.

Aaron van Wirdum: Sure, yeah.  Well, you know him better than I do, but yeah.

Peter McCormack: Well, but maybe I don't know him, that's the point.  But it's put El Salvador on the global map, put Bukele on the global map.  I think it's the remittance; certainly any money that's coming in that's avoiding Western Union, putting more money in the hands of people from El Salvador, is great.  People do have access to banking services.  I think overall, it's definitely a net positive for the country.  I'm not 100% sure if it's a net positive for Bitcoin; I think it probably is.

Aaron van Wirdum: Why wouldn't it be?

Peter McCormack: Because, I'm thinking where this might go.  There are certain ways this story plays out that can be really shit, and I'm a bit nervous about that.

Aaron van Wirdum: Can you give an example?

Peter McCormack: I think it depends how the government plays out.  I think we have to talk openly and honestly about the government, but I'll come back to that because again, I've got views on that as well.  But what I was really getting at is, other countries must be looking now.  Are the leaders of the countries simply looking at the fact that they're probably, what, 20%, 25% up on their Bitcoin investment?

Aaron van Wirdum: Yeah, they're building all the animal hospitals now and whatever else.

Peter McCormack: Yeah, schools.  Let's see if he does build 20 schools.

Aaron van Wirdum: I mean, obviously that's not necessarily a benefit that's repeatable for other countries, although the incentives do sort of work out in that direction.

Peter McCormack: Yeah, but I mean other countries must be looking going, "Hm".  Well, it's a bit like you don't want to be the last person to buy Bitcoin, right, and you don't want to be the last country to adopt it.  So, I think overall it's a net positive story.  I'm like, "Who's next, and how will they do it?" because it would be very easy to completely copy what they did and focus on Bitcoin.  It could be very easy to be a crypto nation and support shitcoins and stuff.

Aaron van Wirdum: Yeah, that's the other thing.  I didn't mention that, but that's actually something I obviously really do expect, that they're focusing on Bitcoin and not all the other bullshit.

Peter McCormack: Do you think they will get sucked into that?

Aaron van Wirdum: I do think --

Peter McCormack: Charles Hoskinson writes a cheque?

Aaron van Wirdum: I mean, I've heard from people pretty close to the government that they are opening the door to all of that other bullshit essentially, not to make it legal tender, but at least by making Bitcoin legal tender, I think they do hope that all the other bullshit will come as well in one form or another.

Peter McCormack: Because they've got big cheques they can write.  Charles Hoskinson does it; he writes big cheques, and builds libraries and bullshit to convince people that Ethiopia needs Cardano.

Aaron van Wirdum: He builds libraries?  I didn't know that.

Peter McCormack: Didn't he build a library in Wyoming?  Fuck knows, fuck that guy anyway.

Aaron van Wirdum: I don't keep track with any of that.

Peter McCormack: No, he's a penis.  So, let's talk a little bit about Bukele.  I think it's a really complicated and tricky subject.  The first time I interviewed him, I said I felt like --

Aaron van Wirdum: How did that come about?

Peter McCormack: So, what happened was, he did the Spaces, his brother came on, I DMd his brother, I said, "I want to interview the President, can it happen?"  He DMd me back, gave me his number and said, "Let's do a call".  We did a call, I pitched him, I said, "Look, this is why I think you should give me the interview".  He said, "Okay, you can have the interview.  Come to El Salvador.  I can't tell you what day it will be, but just come here and it will happen in the next week".

So, it got booked in and then it got delayed and then delayed again.  But I got it, but I also said, "I can't do a cold interview.  I want to meet him beforehand, so can we have a meeting?"  So, they invite me up to the Presidential house.

Aaron van Wirdum: Were the questions screened?

Peter McCormack: No.  Infamous Metallica shirt!  Met him and asked him a bunch of questions, but I told him the topics I wanted to cover, and in fairness to him, he said, "You can ask me any question you want", which was great.  The second interview, I definitely asked tougher questions, much tougher questions, you know.

Aaron van Wirdum: Oh, there was a second interview?

Peter McCormack: Yeah, I've done a second interview.

Aaron van Wirdum: Oh, is that published?

Peter McCormack: No, because what happened was, we were making a film when the law came in, and I asked if I could ask him questions for that and to film it, which we did, and I'm not going to release that interview until after the film comes out, because the interview was for the film.  So, once the film's done, I will release the full interview, and I definitely asked tougher questions.  I asked him the questions I think you would want asked.

But when I did the first interview, I did say that I think one-term presidencies are tricky, because I don't think five years is enough to do this project.  Essentially, he's made Bitcoin legal tender, he's got two years to go until the next election.

Aaron van Wirdum: Yeah, three, I think.

Peter McCormack: I think it's under three now.

Aaron van Wirdum: Yeah, probably.  It was three a while ago, so it's under three now probably, yeah.

Peter McCormack: But I don't think that's long enough.  I think most people can see a benefit from Bitcoin in four years, but I think if you have eight years, that's when you really fully understand Bitcoin, you've gone down the rabbit hole, you've learnt about saving, you've learnt about all the things you need to learn.  And I think this is the same for individuals, a company and a country.  So, for me, it felt like one-term presidency, it felt like wasn't long enough, so I asked him that question. 

Now, I feel like there's a lot of people who are critics of him, heavy critics, such as Hanke, etc, and I'm in this place where I believe him right now that he wants the best for El Salvador, the country, the people, himself.  Definitely, legacy is important.  But I believe him on that.  But how does this all play out, because any very popular President can eventually, certainly in that region, slip into more authoritarian ways?

Aaron van Wirdum: I mean, I would say that's how most of them start.  I think most dictators in history probably start out well-intentioned and popular, and then they start to consolidate power and slowly and surely, it gets worse and worse and worse.

Peter McCormack: And, he has consolidated power.

Aaron van Wirdum: Well, that's very clear that he's doing that, yeah.  So, to your point maybe, I do agree that so far, he seems to be doing things that are really in the best interests of the country and he seems well-intentioned, but we have checks and balances for a reason, to prevent a slide down to total authoritarianism, and he's removing all of these checks and balances.  So, that's not a good sign if you ask me.

Peter McCormack: Well, his argument is that corruption was or is historically all throughout El Salvador and politics at every single level, and he said, "We need a clean house, start again".  And again, I asked him this question and he put it to me, he said, "If I want to prosecute a judge for corruption, it's going to take years.  Why don't I just get rid of them and clean house".  Now, that could be post-rationalising a consolidation of power, or it could be, "Yeah, do you know what, we do need to clean house, we need to start again.  El Salvador needs this".

I think the real test will be not the next election, because I think it's pretty obvious he's going to run, and it's pretty obvious he will stay as President.  And, you can rationalise it, even though it's against the constitution.  You can rationalise it and say he appears to be doing a good job, he appears to be popular.  The last four Presidents have all been thieves and left the country with millions of dollars or ended up in jail. 

It's what happens after that; how does he re-establish trust in the political system and does he go for a third term?  That's where I think it gets tricky.  Is it a third term, a fourth term?  That's where I think it gets tricky.

Aaron van Wirdum: I mean, he was not supposed to go for a second term, so why not a third and a fourth?  Once you go down that route, why turn around?

Peter McCormack: Because, I think you can rationalise a second term.  The US has two terms.  I'm not agreeing with it, I'm just saying you can rationalise it.

Aaron van Wirdum: Yeah, it's more a combination of all of the things, like getting rid of the Supreme Court and then the judges and the Attorney General and then extending the term length.

Peter McCormack: Yeah, six years, yeah.

Aaron van Wirdum: It's the combination of all.  Because, if it was just term length, in The Netherlands, we don't even have that, so you can be Prime Minister your whole life, if you like.

Peter McCormack: Same in the UK.

Aaron van Wirdum: Yeah.  So, if it's just one thing, then sure, but doing all of these things in a very short period of time, I think it definitely looks like he's going for power grab.

Peter McCormack: Of course, yeah.  The optics aren't great. 

Aaron van Wirdum: Right.  And then, I don't know, did you ask him, I'm curious; there was the protester that was arrested, right?

Peter McCormack: I did.

Aaron van Wirdum: Can you tell me what he said?

Peter McCormack: He said this guy --

Aaron van Wirdum: Maybe some context for people that don't know.

Peter McCormack: Oh, yeah.  So, there was a protester who was an anti-Bitcoin protester.  He was handing out the "No Bitcoin" stickers.

Aaron van Wirdum: He was a well-informed guy, by the way.

Peter McCormack: Yeah, well-informed guy.  He leaked a bunch of private emails with regards to the Chivo app; am I right?

Aaron van Wirdum: Possibly, I'm not sure.

Peter McCormack: But I can't remember his name, but he was arrested and a lot of people --

Aaron van Wirdum: Mario Gómez.

Peter McCormack: Mario Gómez, that's the guy.  Was he arrested at the protest we were at?

Aaron van Wirdum: Right before.  We went to the protest and right before that protest, he was arrested without any reason given essentially and was held for a day, something like that.

Peter McCormack: Yeah, so again, I asked the President about this and he said to me, "There is no benefit to me arresting --" he said, "I'd never heard of this guy".  He said, "If I arrest him, I make him famous, I give him a platform.  There's no benefit to me".  He said, "As soon as we found out, we immediately released him.  There's not benefit to me on this".  So again, he's a politician, who knows?  Every answer may be perfectly crafted to hoodwink me and the audience, but you just never know.

Aaron van Wirdum: Well, he's certainly a star in PR.  He's obviously very good at that.

Peter McCormack: I thought he was also leaking photos of the Chivo app, or the schematics, but anyway.

Aaron van Wirdum: Well, someone did; I'm not sure if that was him.

Peter McCormack: Yeah, but he was accused of, what he did was a crime as well.  But I mean, I don't know the details.  But yeah, we need to get this interview out, because we've covered nearly all of it now!  But look, he has an answer for everything.  You have to navigate this and say what's right and what's wrong. 

Me and Danny had a long talk about this, because my first interview was very much like a friendly interview.  Then the second one, I asked some tougher questions, and I'm not going to lie, I was fucking nervous with the questions I had written down. 

Aaron van Wirdum: But you were allowed to ask them, and it was not pre-screened or anything like that?

Peter McCormack: No, not pre-screened.  They allowed me and he answered everything.  Like a trooper, he answered every question, then afterwards we shook hands and we talked about it, and we did discuss a third interview.  I don't know if it will happen, but we did discuss it.

Aaron van Wirdum: It's interesting, this is actually the thing.  I don't know if you know this, but in El Salvador, people are a little bit pissed off about this.

Peter McCormack: What, that I've had two?

Aaron van Wirdum: He doesn't speak to Salvadoran journalists, but he talks to international journalists now, well you in particular, I guess.

Peter McCormack: Yeah, I mean I know it's mine twice; he did Tucker Carlson.  Fuck you, Tucker, I got two!

Aaron van Wirdum: I didn't know he did that, by the way, that's interesting.  But when the Bitcoin Law was announced, so first of all, he announced it at Bitcoin Magazine, the Bitcoin 2021 Conference in Miami in English; and that, for a lot of Salvadorans, felt like a betrayal.  He was and still is very popular in El Salvador, but he had his image, or name, or people saw him as someone who stood up for the poor in the country essentially. 

Then all of a sudden, on a sunny day in June, there he is at a conference in Miami, speaking in a foreign language, announcing a new legal tender for their country, which was never discussed in El Salvador itself.  And after that, he was hanging out on Twitter Spaces, and he changed his bio to English and he was doing an interview with you.  And a lot of people in El Salvador did see that as they felt a bit betrayed.  Now, all of a sudden, he's turning his back and he's becoming friends with all these rich, international Bitcoin investors, rather than the poor Salvadorans who he was supposed to stand up for.

Peter McCormack: Well, I can spin that a different way.

Aaron van Wirdum: I'm not saying they're right, I'm just saying this is a sentiment that I heard a couple of times when I was there.  It's obviously not your fault, just to declare, I'm not putting it like that.

Peter McCormack: No, but he's bringing an international spotlight on El Salvador and leading to investment and tourism.  And he knows the opportunities.  The money to grow El Salvador is going to come from outside of El Salvador into it, so I don't think that's a bad thing.

Aaron van Wirdum: Yeah, but people don't see Bitcoin that way.  I mean, I tend to agree with you, yeah, but people in El Salvador, at least, a lot of people see Bitcoin as this rich people plaything.

Peter McCormack: The weirdest experience for me on the last trip is where I became part of the -- I was considered the enemy and I was part of Bukele's inner circle, I was accused of doing Bitcoin business with him.

Aaron van Wirdum: Oh, you noticed it yourself as well then?

Peter McCormack: You know about this?

Aaron van Wirdum: Well, I was just telling you about this; are you telling me something else?

Peter McCormack: No, what I'm saying is, I actually got direct accusations of being involved in corruption with Bukele, I'm there to do business, I'm there to steal money off the native Salvadorans, that I'm involved in corruption.  I got threatened with violence.

Aaron van Wirdum: Yeah, I didn't know it was this bad.

Peter McCormack: I got threatened to be attacked, I got told to get the fuck out the country.  My Instagram got astroturfed, absolute shit show.  And I even tried to have rational conservations and say, "Look, let's just be honest.  I'm not involved in any other Bitcoin business apart from doing a podcast, right.  That's what I'm here to do", and people didn't give a shit.  I could show you my Instagram from a post; it's fucking crazy.  But it was clear astroturfing, because there was a massive pile-in.  But these accusations are wild, like wild, wild accusations.  But that's why I felt like the second interview --

Aaron van Wirdum: So, who's accusing you of this?

Peter McCormack: Political opposition.

Aaron van Wirdum: Oh, political opposition?

Peter McCormack: You know, like the protesters; it's their groups.  And, it's the equivalent of -- there's a spectrum.  There are people who've got valid concerns on the opposition, and then El Salvador has its own woke.

Aaron van Wirdum: What do you mean?

Peter McCormack: Just the people who are from -- I went to one of the protests, one that was at that roundabout with the Scales of Justice thing.  Fuck, I'm so shit at remembering stuff like this.  But anyway, it was very much a progressive crowd, which was cool, no issue with that.  But the arguments, they were literally screaming in my face, "Get out the country, we're going to fuck you up!" and I was like, "Can we talk; can we interview?  You think I'm supporting the President, let's hear your side".

They didn't want to talk.  Eventually one guy spoke off camera, but they were screaming in my face.  It felt very similar to any woke crowd that you've seen over the last two years, screaming in people's faces, that won't listen to a rational conversation.

Aaron van Wirdum: Interesting.  Do you know what they were screaming?

Peter McCormack: Because I'm part of supporting the Bukele Presidency, I'm involved in corruption, I'm here to make money out of the people of El Salvador. 

Aaron van Wirdum: Yeah, well now you mention it, I've experienced a little bit of that; not as bad as you, but I've experienced a couple of times when I mention that I've anything to do with Bitcoin, then I'm automatically Bukele's best friend and therefore not a real journalist and an enemy of whatever, El Salvador, not a good guy for sure, and not a real journalist.  Obviously, that's literally been told to me.

Peter McCormack: You're literally our best fucking journalist in Bitcoin, hands down, I'll say that.

Aaron van Wirdum: Oh, thank you.  I'm not sure if that's true, but thank you anyway.

Peter McCormack: It is true.  So, back to Bukele.  So, you think he's actually done the Bitcoin Law to make himself famous, because I don't buy that one?

Aaron van Wirdum: I mean, look, I'm fairly new to El Salvador, obviously; I'm not an expert in El Salvador.  But yeah, some of the people that I've gotten to know over the past couple of months while I was there, I've heard it from different people that didn't know each other and it seemed that they were interested in politics, that it was a common thread that he has a big ego that needs to be fed and he likes the attention and he likes his name being out there, and that's the type of guy he is, that's what he's looking for. 

I know that very specifically, one of the arguments that had been presented to him in favour of the Bitcoin Law was, "Look, you can make history as the first President in the world to introduce Bitcoin as legal tender".  This has been explicitly presented to him as an argument, from what I know, and I mean I don't know his inner workings obviously.  But from what I hear, this is definitely one of the things that drives him, just ego and prestige and being the first President to introduce something like that would definitely, like you mentioned, would put his name in history, essentially.  That would have been a big reason for him to do it.  I think that's very possible.  I don't know him personally, I don't know his inner workings, but from what I've heard superficially, I guess, it sounds plausible.

Peter McCormack: Do you think you can do that job without an ego?

Aaron van Wirdum: Probably not, yeah.  There are probably different levels of it, though, and he might be on the high end of it.

Peter McCormack: Yeah.  So, how do you think it plays out and what are the things you're keeping an eye on with El Salvador now, as a journalist?

Aaron van Wirdum: The most interesting thing to see will be if people adopt it in a real way, if they will actually start to accept Bitcoin without converting it to dollars, because that's really necessary in the end for it to be successful.  So, we could go point by point. 

You have to have the remittance argument.  That's one of the arguments in favour of Bitcoin, and if you really want to get into that, that's pretty nuanced, because right now with Bitcoin, remittance with the Chivo wallet is essentially free.  But in the real world, it costs money to move money around, friction, that's just the economic reality.  So really the reason that it's free to do remittance of Bitcoin is because it's being subsidised by the government. 

By remittance in this context, to be clear, I mean you have dollars in the United States, you convert it to Bitcoin, you send the Bitcoin to El Salvador, you convert it to dollars again.  That's what I mean when I say remittance.  But if people actually start to use Bitcoin and circulate Bitcoin, then there's a real economic benefit, because now remittance is a thing of the past.

Peter McCormack: Or save it?

Aaron van Wirdum: Sure, circulate, save, use it as money, rather than just for remittance itself, is what I mean.  So, it will be interesting to see if people actually start to do that.  Because, if they only use it for remittance, if they just convert in and out of dollars, then the government is subsidising it, but it won't do that forever.  At some point, they have no more money to subsidise with, I would assume, or a new President comes into power, or they'll have to stop.  So, it's sort of essential that people start to use it for that benefit to play out long term.

Peter McCormack: My assumption is there's a tiny spread in there somewhere.

Aaron van Wirdum: There's a tiny spread?

Peter McCormack: Yeah.  My assumption is they can't be just giving away the spread each time.

Aaron van Wirdum: I mean, I tried it.  I had someone send me $20 and I went to the Chivo ATM and what I actually did was I took a photo of the QR code and sent that to someone on Twitter.  There's a Twitter thread where you can still see this, and I posted a video, and within four minutes, I had $20 in my hand from the Chivo ATM.

Peter McCormack: Damn!

Aaron van Wirdum: Maybe there was a 10-cent spread, maybe, but that's obviously very low compared to the actual friction or what Western Union would -- I think that's probably just price fluctuation, so that was probably the reason for that 10 cents.  And it was 20 cents, but it was, I think, the mining fee.  So, no, I think that's actually fully subsidised.

Peter McCormack: Well, listen, I think it's going to be three-and-a-half years until we know.

Aaron van Wirdum: Well, a big factor will be what will the price actually do.  So far, so good.  Like you already mentioned, if the price goes up, that will obviously start to interest some people also in El Salvador, and if they see the $30 go up.  The interesting thing will be if people start to adopt it, and that can be for financial reasons or for remittance reasons or, like we mentioned, the kids that are using it because they can't have PayPal, if they want to play an online game.  It will be interesting to see how it plays out.

Bringing it back to one of the first things we mentioned, about abolishing legal tender laws, the reason I think you might as well abolish it is because money is really something that is emergent, it's something people use because it benefits them, because they want to use it, like language, it's similar.  We're speaking English because you don't speak Dutch, so we're settling on English.

Peter McCormack: And everyone in Holland speaks brilliant English!

Aaron van Wirdum: Yeah, but ugly accents, though!

Peter McCormack: Yeah.

Aaron van Wirdum: I think money is a very emergent property and we will have to see if it plays out for Bitcoin.

Peter McCormack: Yeah, well I can't remember the interview recently with somebody, we were talking about you basically have to do four years in Bitcoin.  That's your first tour of duty, four years.  Once you've done four years, you've done a cycle, you've fucked up, you've learnt your mistakes, you kind of get it, and then it gets easy after that, right.  But it feels like, as a country, it has to go through that, and it feels like it's going to go through its bearish time.  There are going to be people that, say Bitcoin goes to $150,000, there are going to be some people buying Bitcoin at that price, and then it might go down to $60,000.

Aaron van Wirdum: And that's when the critics are going to have a field day in El Salvador.

Peter McCormack: Yeah, it's going to be fucking painful, which is probably when it will come back to, "You know what?  Maybe it wasn't the smartest idea to it this way", who knows?

Aaron van Wirdum: Oh, I mean that narrative will certainly take hold in a bear market, yeah.

Peter McCormack: Especially with Hanke, that motherfucker.  People love to post-rationalise, but then, there'll be another bull market and who knows?  Well, if we keep having these cycles.  But I think it's going to take a few years to realise.  Ultimately, I think it will be good for El Salvador, because I think in four years' time, there'll be a lot more Bitcoin in the country than there was before, and that Bitcoin will have appreciated in value; so ultimately the net wealth of the country will have risen up, been raised up because of that.  So, we will see, man.

Aaron van Wirdum: Yeah, I mean it does depend in the end on whether people will adopt it, because people can use Bitcoin anyway, obviously.  It's not like you need it to be legal tender and it doesn't necessarily mean that people will use it if it's legal tender, but you could be right and we'll have to see.

Peter McCormack: What do you make of this last year anyway, because it's been the most interesting year I've had in Bitcoin?  2017 was interesting because of the fork wars, but this has just been -- it feels like every week, there's incredible new news: ETFs, Tesla, MicroStrategy, El Salvador, banks adopting it.  And you'll see, "A bank in Thailand's adopting it", "Estonia's considering it".  There's just a constant feed of positive news.  It feels like we're just approaching the "suddenly" phase.  I think it's been incredible, but what do you make of it, because you've been around a long time; you report on it; you're close to the news itself?

Aaron van Wirdum: Adoption-wise, it's amazing.  Things that would have made headlines, that would have been breaking news a couple of years ago, are barely noticed now; you've just mentioned some.  For me personally, this is not the most interesting year though.  I'm more interested in the fork wars type of stuff that you mentioned, and the whole Blocksize War. 

For me personally, that was a very interesting time, because that was a time when in a way, the whole idea of Bitcoin was being shaped in people's minds and, "What is it actually?  What are we debating about?  What defines Bitcoin?  Why are we here?"  Essentially, that was what the debate was really about.  For me, that was very interesting.  All the adoption, that will just keep happening, presumably.

Peter McCormack: So, what is Bitcoin then; why are we here?  Get philosophical with me!

Aaron van Wirdum: You want to go there?

Peter McCormack: Yeah, let's go there!  Do you know what?  It's funny; I actually think it's one of the hardest questions to answer when it's just the simplest, "What is Bitcoin?"  What's your go-to?

Aaron van Wirdum: I think my go-to would still be digital cash, cash for the internet, a type of money that you don't need a third party for.  If I pay you, then it's really a transaction from me to you without us needing anyone else.  "Digital cash" is still my go-to answer, but then digital gold, the limited supply, follows shortly after that.  From there on, I guess it depends on who I'm talking to, just feel what someone is interested in.  Is someone more an activist type, or more an investor type, or more an entrepreneur type, or just someone who likes to travel, or whatever; take it from there.

Peter McCormack: Yeah.  I've always changed.  I did the digital gold thing for a while, and then I stole one from Vijay Boyapati, which he said to Tom Woods.  He said, "Bitcoin is like gold but with this magical property that you can teleport it around the world".  I was like, "That's pretty cool".  Then John Pfeffer said to me that, "Weinstein said that money is a ledger and Bitcoin is the best ledger there is".

Now, recently I've just started saying, when people say, "What is Bitcoin?" I just say, "It's the best form of money that's ever existed", and then I allow them to ask me questions.  If they don't want to ask me a question, fine, I'm off; but then they're usually, "Why?"  I'm like, "Well, there's three forms of money: there's Bitcoin, there's gold and there's fiat, which is pounds and dollars.  This one's infinite, this one's difficult to transfer, this one has the best properties of all".  21 million gets people.  We've just got a guy; the guy we rented this off, he didn't even know that.  He's like, "What?"  "Yeah, it's fixed limit".

Aaron van Wirdum: Oh, really, some people don't know?

Peter McCormack: Yeah, he didn't know that.  And there's already close to 19 million.  What is it, December?

Aaron van Wirdum: What, is he Bitcoin or no?

Peter McCormack: No, he's an artist.

Aaron van Wirdum: Oh, that explains it then.  Sure, not everyone knows that.  I'm assuming that everyone who calls himself a bitcoiner would know that.  That would be a safe assumption, hopefully.

Peter McCormack: No, he's not a bitcoiner, he's an artist.  So, why are we here?  We'll go there! 

Aaron van Wirdum: Why are we here?

Peter McCormack: Yeah, why are we here?  Why are we doing this?

Aaron van Wirdum: Well, I think that the fiat currency system is clearly not working very well, I think it's increasing inequality and I think we need a better, fairer form of money.  And I think limited supply money actually makes a lot of sense.  It's the best way to track value, not just across space, but also across time, because the 21 million will always be the 21 million, and I think that's the best way to organise an economy, to have a very objective measure, ruler, and that's Bitcoin, I think.  Like you said, Bitcoin's the best money and that's why I'm interested.

But also, the censorship resistant part is very important as well.  I mean, Wikileaks is the original example for me, where the financial infrastructure was just completely abused in an extra legal way to shut down a critical journalist by blocking all the bank transfers and credit cards.  And Bitcoin actually offered a solution, and I think that's another very big benefit of Bitcoin itself.

Peter McCormack: Did you hear what Saylor was saying yesterday; I think it was on Pomp's show?

Aaron van Wirdum: No.

Peter McCormack: It was an interesting one, because I think Ty tweeted out wondering what supporters or fans of Saylor would think of this, but Saylor was saying, and I think it's definitely worth diving into; he was saying, what he wanted from the bitcoiners is to focus on Bitcoin versus gold.  Gold really is just a rock, it serves little purpose, you can't loan it out, you can't send it; it's a difficult thing to use, you can't programme it, etc.  It doesn't have an army, it isn't sovereign to a specific country, it is just this rock that is very hard to use as money.

Whereas, if you take on currencies, you're taking on armies and governments and central banks.  Gold is being demonetised right now.  That's where bitcoiners should focus their time, on gold.  I think some people would argue that somebody who's holding billions in Bitcoin, I think the suggestion is that there's a reason for him to say that, because he doesn't want to be the enemy of the state with that much Bitcoin.  But I can also argue his side and say, "Actually, that's a fair point".

Aaron van Wirdum: Hang on.  When you say Bitcoin should compete with gold, what he means is, it shouldn't compete with fiat; it should just be this store of value thing that's just a store of value thing.  That's what he's saying.

Peter McCormack: I think he's saying focus on the story of -- Bitcoin will do what Bitcoin does, right.  If it destroys fiat, it destroys it; we can't decide that.  But I think he's saying, focus your energy on fighting gold and winning and beating gold, because the dollar does have an army.  I think the point he was making, because he said it on a Spaces recently, he said, "As long as there are nation states and as long as there are governments, there are going to be sovereign currencies.  In the short term, they're not going to be going away".  So, I can see the point he's trying to make.

Aaron van Wirdum: Well, that's not obvious to me at all, by the way.

Peter McCormack: I think in the short term, it is to me.

Aaron van Wirdum: Well, what do you define as short term?

Peter McCormack: Do I see the fall of the nation state in my lifetime?

Aaron van Wirdum: No, it's not necessarily the fall of the nation state, but you can still have nation states without fiat currencies.

Peter McCormack: No, because they can adopt Bitcoin.

Aaron van Wirdum: Yes, clearly.

Peter McCormack: But at the same time, I think the point he's trying to make is, let's focus the energy on what we can win right now.  Perhaps sarcastically, people say, "Trojan horse", but perhaps in doing that, Bitcoin gets even bigger during that period, and then afterwards it can go for fiat currencies.

Aaron van Wirdum: I think that doesn't make sense to me, because I think gold itself is competing with fiat currencies essentially.  I think the only reason gold has the monetary value that it does have is because there's this small chance that one day, it will be the world reserve currency again.  You're sort of betting on that happening, and that's where the monetary value is coming from, and Bitcoin is making the exact same bet, in a way.  I think the value from Bitcoin is essentially a bet on it becoming the world reserve currency in the end. 

So, Bitcoin and gold are doing the same thing.  It doesn't really make sense to me to then focus on gold, because gold in itself is focused on fiat currency.  Do you understand what I mean; are you following me?

Peter McCormack: Yes and no.

Aaron van Wirdum: It's kind of Hal Finney's original argument.  When he was first trying to value Bitcoin, he made this back-of-a-napkin calculation where he said, "What are the odds of Bitcoin becoming the world reserve currency?" and then dividing the price of what it would be by the odds of it actually coming there, and that's how you would value Bitcoin today.  It's a bit more complicated if you want to get into it, because there's time preference, but that's how I think about it. 

Then, the way I see it, gold and Bitcoin are doing the same thing.  How much would an ounce of gold be worth if it becomes the world reserve currency again?  What are the odds of that happening?  And I think that's sort of the value of gold, and the question's the same thing.  So, it doesn't make sense to me to focus on gold; they're both focusing on fiat.

Peter McCormack: Interesting.  I'll have to put that to him.

Aaron van Wirdum: I haven't spoken with him, I haven't met him or anything.

Peter McCormack: Again, another interesting character who's now firmly part of the history of Bitcoin.  I mean, I've got so many questions I want to ask him now.  I've interviewed him twice; I've got newer questions I want to ask of him.

Aaron van Wirdum: I think it makes total sense, and this is the first thing you should suggest, I think it makes total sense for him to say that, because of the position he's in and because he doesn't want to get into any sort of unnecessary trouble.  It's a very easy way to just say, "Let's focus on gold", because gold is allowed and it makes sense from his position to maybe say that, even if he doesn't mean it.

Peter McCormack: But I think he does mean it; I think he does.  I don't think he's an anarchist, I think he's somebody who believes in freedom coming from democracy.  Whereas, other people believe democracy holds freedom back, democracy's anti-freedom.  But I think he believes freedom comes from democracy.  That's my assumption, but I would love to ask him the question.  Next time I interview him, I will.  I think he's a very interesting character.  Again, he polarises people.  He's not popular with everyone.

Aaron van Wirdum: I mean, hasn't he in the past suggested that Bitcoin should be fully KYC-proof, AML, sort of pushing for that sort of stuff?

Peter McCormack: I don't remember him saying that.

Aaron van Wirdum: I recall that vaguely, I could be wrong, but I do recall that and I obviously don't like that.

Peter McCormack: Yeah, but also sometimes, you have to explore ideas.  I've explored ideas and been yelled at for them.  There was a time where I suggested, I think it was to Giacomo, "Why don't we offer a truce with Roger Ver.  Bitcoin's already won", etc.  I fucking got yelled at.

Aaron van Wirdum: There's two kinds of people.  Some people explore their ideas in public and get yelled at, and then there's the type of people that explore their ideas in private and will only ever say something once they figure it out.  You're clearly category one!

Peter McCormack: Yeah, absolutely, but happy to hold that, because I'm always happy to admit that I was wrong, or I've got a changing view of things.  I'm trying to reflect my thoughts, but also the thoughts of people I think who listen to the podcast and are in a similar position.  I don't think there's any harm in doing that.  Perhaps he's doing something similar.  When you're that public, essentially your ideas are being A/B tested in the public space.

Aaron van Wirdum: It's interesting how big of a story he became in a year.

Peter McCormack: Well, dude, he bought like $3 billion of Bitcoin!

Aaron van Wirdum: Sure, yeah.  Still, though, 18 months ago, no one had heard of him, I think it was 18 months ago, and now he's the superstar of Bitcoin.  That went really fast.

Peter McCormack: It's the Bitcoin hack, man.  All right, two other things I want to talk to you about.  Bitcoin Magazine is going analogue?

Aaron van Wirdum: Yeah, we're going to make print magazine again.

Peter McCormack: That's fucking cool, man.

Aaron van Wirdum: One that you can fold and hold in your hand.

Peter McCormack: Well, I get the Citadel21, and it's lovely.  It's just lovely getting that in there.  Shoutout to Hodlonaut and, what's her name?  Fuck, I've forgotten her name; who does he deal with?

Aaron van Wirdum: Who, Hodlonaut?

Peter McCormack: Yeah, he makes it with…?

Aaron van Wirdum: Katia?

Peter McCormack: Yeah, the two of them.  Big shoutout to them.  But that's lovely getting that.  It's just beautiful and to think that Bitcoin Magazine's going back to print I think's really fucking cool.

Aaron van Wirdum: Yeah, I don't know when this is going to be published, but it should be in stores probably when it's published, I think, or at least very soon.

Peter McCormack: Do we know when that is; like, next week?

Aaron van Wirdum: Yeah, within a few days, I think.  Or maybe at first, you can only subscribe.  I'm not actually sure about the logistics.  I should maybe know, but yeah, the first magazines are rolling out off the press right now.

Peter McCormack: What was the decision to do that?

Aaron van Wirdum: First of all, the people that are doing it, which is me and Mike Germano, Annabelle, Joe, we really like print magazines in general.  For me, it was always, even back when I started journalism, back in journalism school, that was always the thing I wanted to do; for some reason, I like it.  It just has a special something to it, and I think we also want to treat it like that.  It's the best of Bitcoin Magazine in a way, the most in-depth stories, the most original interviews, like the crown jewel of the company in a way.  That's what we really hope it to be.

So, yeah, the first magazine will have the El Salvador issue.  That will be my cover story then.  That's the main reason I was in El Salvador, so my cover story about the whole rollout will be there, the main story in the first edition of the magazine.

Peter McCormack: So, it's a massive piece?

Aaron van Wirdum: Yeah.  How long is it?  Pretty long, yeah.

Peter McCormack: Thousands of words, yeah.

Aaron van Wirdum: We have Max Keiser who's contributing, we have a story about the China exodus, what else do we have?  We have a travel guide for El Salvador, so anyone who wants to go can check that out.

Peter McCormack: Nice!  It's funny, everyone who writes to me, "You've been to El Salvador, I'm thinking of going.  How safe is it?"  I've never had a problem.

Aaron van Wirdum: No, me neither, and I've not heard of any problems either.  So, it does have a very bad rap, but it seems to be fine.  There obviously is a lot of gang violence, although it has been dropping over the past couple of years.  But I think they mostly focus on basically exploring people in parts of El Salvador.  I mean, it's ugly, but my impression is that tourists are more or less left alone. 

I've mostly been in the capital and even in the capital, it was mostly the richer areas of the capital, and then some of the tourist towns, and I felt fine and safe everywhere.  And, there's Ubers, as you know; it's easy to get around.  Yeah, I felt fine, I think it's fine.

Peter McCormack: Okay, let's finish on Taproot and I'll frame this in a way that's going to really piss people off: I still fucking don't understand Taproot!

Aaron van Wirdum: Yeah, it's gone live this weekend.

Peter McCormack: Yeah, 720-odd blocks to go.  For me, it's one of those things that's great for devs, great for techies, it's great for Bitcoin.  I don't know why I care about Taproot, as a casual user of Bitcoin, not as somebody who's a Bitcoin hardcore person.

Aaron van Wirdum: Well, you care about Bitcoin doing well presumably?

Peter McCormack: Of course, yeah.

Aaron van Wirdum: I think, for Bitcoin to do well, it's important that the properties of Bitcoin are as well developed as they can be, and one of the important properties of Bitcoin, I would say, is fungibility, of any money.  Any money has to be fungible, which means that one currency unit should be worth the same and interchangeable for another currency unit.  One dollar bill should be worth the same as another dollar bill and it doesn't really matter which one you have.  That's what fungibility is.  The same with gold.  One ounce of gold or another ounce of gold, it doesn't matter which one you have, it's fungible.

That's actually one of the Achilles heels of Bitcoin, I would say, is that it doesn't really have that, or at least it's not great, because every Bitcoin UTXO has its own unique history.  You can see where it was spent before and every Bitcoin leaves a trail on the blockchain.  You can, for example, see which Bitcoins were used in which wallet or in which ways, and that harms fungibility, because it helps the analytics.  The blockchain analytics companies of this world sort of spy on everyone and figure out who owns what, or which coins are moving where and all that kind of stuff.

Peter McCormack: Big fuck you to Chainalysis.

Aaron van Wirdum: Yeah, exactly, thank you.  So, it would be good if we could make their jobs harder at least, it would be good if we can make the Chainalysis guys, their jobs harder.  So, one way of doing that is making Bitcoin more fungible, and one way of doing that is making transactions less distinguishable from each other.  So, if we can make every transaction look more or less the same, then you can't tell anymore in what wallet it was used, or how it was used, or that kind of stuff.

So, one example would be a Lightning transaction.  Lightning opening and closing transactions are very easy to pinpoint, as such, on the blockchain, so you can see that guy was using Lightning and that guy was not, so it makes it easier to trace funds over the blockchain.  Taproot makes that sort of stuff harder.  It makes Lightning transactions, to stick with that example, look like regular transactions.  It's possible to make Lightning opening and closing transactions look like the guy that's buying coffee on-chain.  It all looks the same, so it's benefitting fungibility.  That's the essence of it.  Do you want to go into technical details?

Peter McCormack: I mean, yes and no.

Aaron van Wirdum: It also benefits scalability a bit, by the way, so that's another big issue for Bitcoin obviously, that Bitcoin has this limited block size and therefore limited amount of transactions that can be processed over the network.  There's a good reason for that, namely you want everyone to be able to run their own node, which keeps the network decentralised and secure, but it does mean that fees go up and there's less rooms for transactions.

Taproot helps with that as well, because it makes certain types of transactions, like Lightning transactions, which I just mentioned, more compact; you can fit more of them in blocks and therefore more of them on the network.

Peter McCormack: It's been talked about like this is the biggest upgrade for Bitcoin since SegWit, right, this is super important, but I'm so far removed from it, because I'm not technical, "Pete's not technical", and I feel like I should know more about it and understand it.  I've done two sessions with Andrew Poelstra and he explains it all to me, and I'm like, "I have no fucking idea what you're talking about".  But I know it's good for Bitcoin, but it's a bit like, I'm sure there's some amazing upgrades happening to my mobile phone every time they do a new version.  I don't know what the fuck they are; I can still make calls and texts.

Aaron van Wirdum: It's a lot harder to make upgrades to Bitcoin than to your mobile phone, so that makes it at least more interesting to me.  I think that has also always been a topic that I have found super interesting, is how do you upgrade a decentralised system like Bitcoin, where there's no one to dictate the upgrade, there's no one in charge, there's no one who says what's supposed to happen or when.  So, if you want to upgrade a system like Bitcoin, it's actually a very interesting type of science of how to figure it out and what role the miners have and what role the users have and what the economic incentives are and what the best timing is. 

That's very fascinating, but on that point, while we are recording this, it seems that only half of all Bitcoin nodes have upgraded to Taproot.  Meanwhile, we had the big mining migration, so all of the miners that were signalling for Taproot eight months ago, or whenever it was, it's not clear how many of these miners are still actually mining or how many miners are new.

Peter McCormack: Is this a problem?

Aaron van Wirdum: Well, I don't know!

Peter McCormack: Oh, God!

Aaron van Wirdum: It doesn't look great to me.  It would be nice if we'd seen bigger, more adoption, more nodes upgraded.  The problem is, if half of the network is upgraded to new rules and half of the network is not, and then a transaction shows up that breaks the new rules, then the old nodes, they don't care, because they don't care about new rules; and then, you can get into situations when the network splits and all of a sudden, we have a very ugly mess where it's not clear which network is the real Bitcoin.

Peter McCormack: But I thought nodes were backwards compatible?

Aaron van Wirdum: Well, they are backwards compatible if a majority of miners is enforcing the new rules.  So in that case, we're fine.  If the majority of miners, by hash power, is enforcing new rules, we're fine.  But like I was saying, back when we were signalling, it was maybe a very different group of miners now. 

Peter McCormack: Okay!

Aaron van Wirdum: I'm not really concerned, but it's also not ideal if I'm looking at the stats right now.  We'll probably be fine.

Peter McCormack: So, we think this upgrade to the most important monetary network in the world, which is going to be the backbone of the future financial system will "probably" be okay!  Oh, fuck, Aaron.  Oh, man!

Aaron van Wirdum: It depends to a large extent on the miners.  As long as they're at least a little bit informed about what's going on, we should be fine.  So, let's hope they are.

Peter McCormack: Fingers crossed, man.  Listen, good to see you.

Aaron van Wirdum: Yeah, you too.

Peter McCormack: Love talking to you always.  Tell people where to follow you, where to read your writings.

Aaron van Wirdum: Yeah, so I'm on Twitter @AaronvanW.  I'm running the print magazine now mostly, so if you go to bitcoinmagazine.com, you'll certainly find how to order the print magazine section anywhere there, somewhere there, or in Barnes & Noble, or you can subscribe.  I'm also doing a podcast, a technical podcast with Sjors, which is Bitcoin Explained.

Peter McCormack: Well, I'm happy to come on any time and explain anything you need!

Aaron van Wirdum: Thank you, yeah, that will be good!

Peter McCormack: Mate, listen, great to talk to you.  I stand by what I said, I think you are the best journalist in Bitcoin.

Aaron van Wirdum: Thank you very much.

Peter McCormack: I think it's not even close.  We're always talking about your work.  I think what you do is brilliant and I appreciate you, and just keep crushing and it's always good to catch up with you, whichever country we're in, man.  So, take care and keep doing it.

Aaron van Wirdum: Thanks for having me.