WBD537 Audio Transcription
All Bitcoin, No Fiat with Sahil Chaturvedi
Release date: Saturday 6th August
Note: the following is a transcription of my interview with Sahil Chaturvedi. 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.
Sahil Chaturvedi is a Product Designer at Unchained Capital. In this interview, we discuss getting on zero for fiat and being all in on Bitcoin at an individual level. What are the technical requirements, the required mindset, and the current practical limitations?
“What if there was a way to hold Bitcoin only as your money and completely sidestep financial debasement and have better financial privacy, but at the same time, you can be interoperable with the legacy Fiat financial networks. That’s an interesting concept to me.”
— Sahil Chaturvedi
Interview Transcription
Peter McCormack: What a guest, man, he brings us a bottle of whiskey.
Danny Knowles: It looks like a nice bottle too!
Peter McCormack: So, this was Odell's recommendation?
Sahil Chaturvedi: Absolutely. So, you can thank him or blame him.
Peter McCormack: Dude, literally in about half an hour, Danny's off to get the food, because we're going to feed you after this --
Danny Knowles: Steaks all round.
Peter McCormack: -- and Jeremy's like, "Do you want some wine?" and I'm like, "Not really, man, I'm not really drinking much at the moment". You turn up with a bottle of Rye.
Sahil Chaturvedi: All down the drain!
Peter McCormack: Salut, brother.
Sahil Chaturvedi: Cheers.
Peter McCormack: Thank you for coming in.
Danny Knowles: Neither of those are Junseth pours.
Peter McCormack: No. I think next time, Junseth will just go straight for the bottle. Oh, that's so fucking good. I like Rye.
Sahil Chaturvedi: Thank you, Odell.
Peter McCormack: Thank you, Matt Odell, thank you so much. How are you doing, man?
Sahil Chaturvedi: Good, I'm excited to be here.
Peter McCormack: Well, it's good to have you on the show.
Sahil Chaturvedi: Yeah, absolutely.
Peter McCormack: I've known you for quite some time.
Sahil Chaturvedi: It's weird, yeah. I've seen you around at a bunch of these events and social things and, yeah, it's been great.
Peter McCormack: Coming in and out of Austin, popping into the Unchained offices. How's my boy, Parker; is he good?
Sahil Chaturvedi: Parker's the best. He's probably the hardest worker I've ever seen, ever known, always working on Bitcoin, always in the office.
Peter McCormack: Yeah, so Pomp kind of popularised the idea of the "get off zero". He was the guy saying it and we were like, "Yeah, so we've got Sahil coming in tomorrow from Unchained Capital, and we're going to be discussing get on zero", and he was like, "Huh?" I was even thinking, if we titled this show, Get On Zero, it's going to be like, "What? That's a bit of an anti-Bitcoin message".
Sahil Chaturvedi: No, I think that's where that meme was born out of, was the "get off zero" movement of like get off zero, meaning getting 1% of your net worth in Bitcoin; just get off zero. This is coming from the other extreme, taking it to logical extreme of holding fiat for the smallest amount of time. I just think it's a fascinating meme.
Peter McCormack: Well, we think you're fucking crazy!
Sahil Chaturvedi: Yes, absolutely, I agree!
Peter McCormack: You clearly don't have any children.
Sahil Chaturvedi: No, yeah.
Peter McCormack: And we're going to work through this, I think it's a fascinating show to go through. But you haven't done many podcasts?
Sahil Chaturvedi: Just a couple, yeah.
Peter McCormack: So, not a lot of people listening might know who you are. I know you are, I know you're the shit, but a lot of people won't. So, can you just explain to people who you are, where you're from?
Sahil Chaturvedi: Absolutely. So, I'm a product designer at Unchained Capital. Specifically I'm working on the vault products, so multisig stuff, basically how to secure your Bitcoin, get it off of exchanges. So, I'm a product designer, so I think about, "What's the experience of designing products?" So, you get into the app, what does it feel like; what screens come up? And I moved to Austin recently to join Unchained, and it was kind of a no-brainer. A lot of us get into Bitcoin and it's like the 80/20 principle; it's the smallest amount of effort for the most impact. It just made sense; you have to work in Bitcoin. I was interested in self-custody as well. It was a perfect fit; Unchained, perfect fit.
Before that, I was doing design stuff at start-ups in the Bay Area, San Francisco Bay Area, had my own company that got acquired, esports marketing stuff.
Peter McCormack: I knew you before you joined Unchained.
Sahil Chaturvedi: Yeah, exactly.
Peter McCormack: We met before, didn't we?
Sahil Chaturvedi: Bingo, yeah. I was still kind of friends with bitcoiners on Twitter and stuff. Yeah.
Peter McCormack: You'd been saying you wanted to get a job in the space.
Sahil Chaturvedi: I think I pestered Will. He's going to hate me saying this, but I think I pestered him for a year or something!
Peter McCormack: Well listen, Unchained, great company, great group of people who work at that company, great location, proper bitcoiners and to have a product designer come in is a testament to where they're going, but also a testament to where Bitcoin is going. We need good product design, and to have someone like you in the space working is very cool. Has it been hard?
Sahil Chaturvedi: Just being a designer? Yeah. I think there's a lot of interesting challenges, especially when it comes to multisig and Bitcoin technical stuff. There's a lot of Bitcoin products they try to resemble traditional finance models, where everything is abstracted. But at Unchained, we're trying to keep the ethos of Bitcoin really strong, and that's challenging sometimes. What does it mean to use a hard wallet, or signing device? You just plug a thing in and then weird QR stuff comes up; it's challenging to make that translation, but it's super-fun, so I wouldn't trade it for anything else.
Peter McCormack: Do you miss the Bay Area?
Sahil Chaturvedi: That's a good question. The weather is incredible, man. That's the one big trade-off is that the weather's perfect.
Peter McCormack: Perfect; what about this week? It wasn't too hot.
Sahil Chaturvedi: In the Bay Area?
Peter McCormack: Oh, I meant in Texas! Oh, because you mean you've got that kind of microclimate up there.
Sahil Chaturvedi: Exactly. It's like 70° year round, it's perfect. And then you come to Austin, it's been 110°. But you get used to it, right, pros and cons. And the pros of Austin, there's just an infinite list, and there's just this one con. I'm like, "It's fine!"
Peter McCormack: How hot was it this week?
Sahil Chaturvedi: I think we touched 109° probably. It sounds insane.
Danny Knowles: What's that in real numbers?
Peter McCormack: Yeah, what's that in British numbers?
Sahil Chaturvedi: It's got to be like 30° or --
Danny Knowles: 43° nearly.
Sahil Chaturvedi: Holy, what?
Danny Knowles: That's very hot!
Peter McCormack: Okay, so in the UK, if it gets to 30°, it's unbelievable. What's the record?
Danny Knowles: In the UK?
Peter McCormack: I can't imagine it being above 32°.
Danny Knowles: 38°!
Peter McCormack: Well, that would have been a one-off, one day.
Sahil Chaturvedi: It's also a little dry, so it's really not the worst thing in the world. I think you get used to it, and Austin has a bunch of boating activities, so you can be in the water, or in the AC, so it's totally fine.
Peter McCormack: And the grid survived because of the Bitcoin miners, otherwise the whole thing would have collapsed and died.
Sahil Chaturvedi: Yeah, it's been great, and hopefully, fingers crossed, it continues to work well, because I think we're going to have this for the next month or two probably.
Peter McCormack: What, a month or two-month heatwave?
Sahil Chaturvedi: I think so, yeah.
Peter McCormack: Damn! What did people do before they had air con?
Sahil Chaturvedi: That's a really good question. I guess you suck it up and you wear cowboy boots and jeans; I don't know!
Peter McCormack: Well, listen, I'm really glad to see you down there, working with a great team, enjoying yourself.
Sahil Chaturvedi: Yeah, couldn't be happier.
Peter McCormack: Good move for you, and it's nice to see you here in Miami, coming to talk to you about Bitcoin. Give me your Bitcoin story, tell me, what's the background, how did you get orange pilled?
Sahil Chaturvedi: I think it was 2017, when a lot of people probably heard about it for the first time. I literally remember where I heard about it the first time. I was talking to one of my friends around that time when I was working on my own start-up, and he was like, "I'm buying all these [basically] shitcoins", and I was like, "Yeah, this is stupid, this is just crazy, this is a waste of time, these are all scams". But I was like, "The technology is kind of interesting", you know, that typical talking point; the technology's interesting. I didn't really look at it much.
I think about 2018, I just came across some YouTube videos, Andreas of course, and just went down the rabbit hole watching Andreas videos and was like, "Wow, this is awesome!" I think I shitcoined for probably two or three months, then I saw the light!
Peter McCormack: We all did it.
Sahil Chaturvedi: Yeah, exactly. But it wasn't too long, it was okay.
Peter McCormack: And have you become hardened in Texas?
Sahil Chaturvedi: Well, I was hardened before Texas, and then Texas just made my conviction impossible to break.
Peter McCormack: Well, you're surrounded by bitcoiners.
Sahil Chaturvedi: Yeah, hardcore Bitcoin maximalists. It's highly recommended.
Peter McCormack: Yeah, I don't really have that in Bedford. I think I'm the only bitcoiner in Bedford. There might be one other person.
Sahil Chaturvedi: Well, that's why you've got to make a move to Austin, or part of the time.
Peter McCormack: No, I've got to orange pill my town, man. I've started with a football team, now I've just got to get everyone behind it.
Sahil Chaturvedi: That's a great move too. We need to be distributed. We can't all be in Austin, I guess.
Peter McCormack: Bedford is the Austin of England!
Sahil Chaturvedi: Yeah?
Danny Knowles: Just without the food, the weather, the culture!
Peter McCormack: Yeah, so our steaks aren't as good, that's true. We have zero culture.
Sahil Chaturvedi: You have soccer, football.
Peter McCormack: We have real football; we don't chase an egg around!
Sahil Chaturvedi: I have no skin in that game, I'm not a sports person at all.
Peter McCormack: You are now, you're a Real Bedford guy!
Sahil Chaturvedi: That's true, yes, all right, cool!
Peter McCormack: Come on, man, for fuck's sake!
Sahil Chaturvedi: Absolutely, yeah!
Peter McCormack: All right, listen, you crazy fucker, I totally didn't see that coming. Look, I know there are people who are Bitcoin only, right, and sometimes I wonder how Bitcoin only they are. But you've come out and you've said, "Get on zero, I'm doing this, I'm going to go all Bitcoin". God, I've got so many questions, where shall I start? I'll tell you where I'll start, just why are you doing this, man? Like, fair play, but what?! And when did you start?
Sahil Chaturvedi: Pretty recently. I would say I think November 2021.
Peter McCormack: What was the price?
Danny Knowles: That was the top, right?
Sahil Chaturvedi: Exactly, it was the top. So, it's a great example of, "Hey, this kind of still works. I mean, it's totally fine". It actually is totally fine, I'm totally great!
Peter McCormack: I'm fine! I mean, I'm rekt!
Sahil Chaturvedi: Exactly. No, but it's like, if you think about the user journey of people coming into Bitcoin, for the first time, they'll come in and they'll be, "This is an investment. I'm going to hedge and put 1%". And then you read some stuff and your conviction increases and you're 5% and then 10% and then 50%. And then you read an article from Pierre Rochard and you're like, "Oh, this is not an investment, this is cash, this is savings". So you're like, "Okay, cool, I'll put all my savings into Bitcoin". But there's still that last bit of your chequing account, your moving-around money.
I think in an inflationary environment, I think you can tell the time you hold fiat currency decreases and decreases. So, if you're in Venezuela, you want to hold bolivars for the shortest amount of time possible.
Peter McCormack: So, when I went out there -- I don't know if you know, I went out there a couple of years ago and made a film, and I was with Crypto Bastardo. And, he's in this situation that's slightly different, in that he needs bolivars from day-to-day, also needs dollars at times, but he holds all his money in Bitcoin and he will just transfer out for the bolivars he needed on a weekly basis. He said, "Even when the price is crashing, I'm still going up in bolivars".
Sahil Chaturvedi: Exactly. And that's such a great insight. And to your point, he's holding, what did you say, bolivars for a week or something like that?
Peter McCormack: Yeah, he gets what he needs for the week.
Sahil Chaturvedi: Exactly. So I think, at least in my opinion, the get on zero thought process is, what if you take that to the logical extreme and say, "What if there's a way to hold Bitcoin only as your money and completely sidestep financial debasement and have better financial privacy, but at the same time you can be interoperable with the legacy fiat financial networks?" That's an interesting concept to me.
Peter McCormack: So, what are the rules of the game here? You only hold Bitcoin?
Sahil Chaturvedi: I only hold Bitcoin, but I think one interesting nuance there, at least in my opinion, I don't think "get on zero fiat" means you can't have a car or a house or stocks or anything like that.
Danny Knowles: A chair!
Sahil Chaturvedi: Exactly, a chair or a cow, half a cow in your freezer. I don't think they're mutually exclusive. I think it's just a mental model of rethinking the role of fiat currency, so specifically fiat currency.
Peter McCormack: Well there's certain things you can't do without fiat currency. Holding a house is absolutely fine, because you want to live in a house, but I just want to get to the specifics of the rules. So, you only have Bitcoin. Do you get paid in Bitcoin?
Sahil Chaturvedi: Exactly. So, I think before we get into the specifics, it's useful to understand or try and get the mental model of what we're talking about with payment rails. So sats, obviously we know can move on Bitcoin native payment rails, so Lightning, on-chain, all that kind of stuff; and dollars can move on fiat legacy payment rails, so PayPal, ACH, Fedwire, all that kind of stuff. So, the idea is, here's the mental model.
What if dollars can be a payment rail, just one of the many payment rails, to move Bitcoin, which is your cash, through space? And I think the reason for talking about that mental model, even if it's not very specific, is because when you understand the "why", it becomes very easy to deal with the "how", and we'll talk about how at will. But when you get the why, it's like now your conviction is airtight. Even risks like fiat currency exchange fluctuation, they don't shake your conviction, because you understand the why.
Peter McCormack: Okay, give me the why again, give me the hard why.
Sahil Chaturvedi: So, the why is, you want every sat that you're holding to be -- you want to be able to sidestep financial debasement, monetary debasement, completely, and have better financial privacy and all that kind of stuff. But still to your point, a lot of expenses are in dollars, so you need to be interoperable. Your chat with Jack Mallers at Strike, fascinating stuff, and everyone's talking about how the Bitcoin Network can be this awesome payment rail to move dollars. So, dollar to dollar with Bitcoin is a payment rail, and that's awesome, it's so cool.
What if we flipped that around? What if we said, "In addition to that, there's another alternative where you have Bitcoin to dollar or Bitcoin"? Imagine a cart and it just picks up the Bitcoin and moves it to the person who wants their dollars, so a payment rail to move your Bitcoin through space, and it's an interesting conversation we can chat about, but at what point -- what even is a medium of exchange anymore? If you want dollars and I'm giving you Bitcoin, what is the medium of exchange? Or with Strike, if I send you dollars and you get Bitcoin, what is the medium of exchange? I don't know anymore. It's all payment rails. So, what are you holding and what is the payment rail and what are you receiving?
Peter McCormack: Is it a little bit like, you know with Google Translate, they've taken it to that point whereby I can speak into it English, and say you're a German, you can have German come out to you, but you can choose whatever language it comes out to you; is it like that? I can put in any -- if we think of currencies as languages, I can put any currency language in and you can have any currency language you want at the other end?
Sahil Chaturvedi: Bingo. I think that's exactly how I think about it. I only hold Bitcoin, and if you… The way I think about it is, whether you're buying a cup of coffee or you're paying for rent, you and your counterparty, you have a mutual choice to use legacy, slow, less private fiat networks, or you have a choice to use superior, fast, private Bitcoin networks. And in the meantime, it might take them some time to convince them, but in the meantime you want to be interoperable. You don't want to be a Roger Ver and beg them to upgrade.
You're interoperable. In the meantime, slowly over time your conviction increases. We don't need to wait for legal tender in the US; we don't need to do that, you can do this today, you can be on Bitcoin 100%.
Peter McCormack: Wow. We don't actually want Bitcoin to be legal tender in the US. We had --
Danny Knowles: Aaron Daniel.
Peter McCormack: -- Aaron Daniel here yesterday. If you don't know him, he's a lawyer based here, and he's quite the expert on the Constitution and Bill of Rights. And he's been looking at legal tender rights, and also where Bitcoin plays within the Constitution and Bill of Rights. He brought out, was it the Tenth Amendment?
Danny Knowles: Yeah, 10.1, I think it was.
Peter McCormack: I'm going to get some things wrong here; I'm British, get a lot wrong, but it's something in there where it says, "States shall not create their own legal tender, apart from being able to coin gold or silver". And he was explaining both the argument for, that if the Founding Fathers were writing that today, they may include Bitcoin within that, because Bitcoin shares the properties of gold; there's no central party, it's transparent, it's scarce.
Whereas, what that part of the Constitution was trying to avoid was states creating their own fiat currencies, and then essentially printing money and attacking other states. So, you had to have a federal currency and no state currency, but if you have gold and silver coined, you can't really do that. He was saying Bitcoin would fit within that, but he also argued the other side.
Danny Knowles: The wording was like, "It can't be anything but gold and silver", so it's whether you take the literal definition or not.
Sahil Chaturvedi: Yeah, it's very specific.
Peter McCormack: So, he argued both sides. And we got to the end of it and he said, "By the way, I don't think Bitcoin should be made legal tender".
Sahil Chaturvedi: What was his argument for that?
Peter McCormack: He said it would reduce freedom.
Sahil Chaturvedi: Yeah, there's definitely some arguments there where people just don't want the state involved at all.
Danny Knowles: Yeah, he said basically exactly that. He said, "If this is the money that separates money and state, why do you want to include the state?"
Sahil Chaturvedi: Yeah, and honestly, that's fair. And when we talk about how I'm doing this and how many other people are doing this, we can get into why it's not a super-big deal. It would be nice, but it's not really changing my behaviour at all.
Peter McCormack: Yeah, he thinks there's other things that can give regulatory clarity and make life better. The tax laws, for example, one of the most important ones; shit, that's another thing, we're definitely going to have to talk about that.
Sahil Chaturvedi: Absolutely, yeah.
Peter McCormack: Yeah, but I can't remember exactly how he explained it, but he said that by making Bitcoin legal tender, you're essentially reducing freedom, because the state becomes involved in it. Just leave it, separate it out. So, I understand why you're doing it, but I want to go back to the rules a little bit. So, the point you made the decision, did you then go into your bank account and just literally empty it into Bitcoin?
Sahil Chaturvedi: Yeah. Actually, so I'm not sure if they're still a sponsor, but one of your sponsors at the time, LVL, Chris, great guy, I started using their product.
Peter McCormack: Is that because you heard about it on the show?
Sahil Chaturvedi: That was part of it, yeah.
Peter McCormack: There you go.
Sahil Chaturvedi: I was like, "Oh, man, it's on Pete's podcast"!
Peter McCormack: Marketing works, definitely. Well, their product is designed to allow people to do that.
Sahil Chaturvedi: Exactly, and that's the direction they're going in, and their whole team is focused on that. And it's fascinating, because what their vision is, is exactly what I'm saying. So, Bitcoin is your money, and you're interoperable with ACH and Wire and all that. So to your point, when I found that product, I was like, "All right, let me just take my chequing account dollars, it's not a ton, a good amount of dollars, whatever dollars I had".
Peter McCormack: A couple of hundred thousand?
Sahil Chaturvedi: Yeah, couple of hundred K, you know!
Danny Knowles: Couple of million!
Sahil Chaturvedi: Yeah, exactly, and I was just, "Market buy, let's do it".
Peter McCormack: Done.
Sahil Chaturvedi: Yeah, done. And now, obviously when I say I'm 100%, there's maybe $10 in my wallet or something.
Peter McCormack: Well, I was going to come back to that, so I've got a logical way to work through this. So, you did that. Did you get rid of your bank account?
Sahil Chaturvedi: No, exactly, because LVL in some ways is a bank account; it's a Bitcoin bank.
Peter McCormack: No, don't say the bank because of privacy, but Chase, whoever, were you with a bank like that and did you get rid of it?
Sahil Chaturvedi: Exactly, so I was using Allied Bank. And the only reason I haven't got rid of it is because -- well, the balance is zero. The only reason I haven't gotten rid of it is logistical reasons. LVL doesn't have cheque deposit yet. So I was like, "If someone gives me a cheque, I need a way to be interoperable with cheques, so I need deposit".
Peter McCormack: And is there another thing with that, like credit scores? In the UK, we have something called credit scores, and your credit score is based on a number of different factors, like have you got a mortgage and have you always made payments? Have you had a bank account; how long have you had it for? If you separate yourself from the financial system, you're going to separate yourself from credit scores.
Now, I'm immediately figuring out the answer to that is Bitcoin doesn't need credit scores, because you over-collateralise with certain things, but that is something on my mind. If I was you, why would I want to keep my bank account? Cheques, yes. Well, you say that. My bank actually, Revolut, don't accept cheques, because they don't have branches.
Sahil Chaturvedi: Yeah, and LVL doesn't either as of today.
Peter McCormack: So it's not for cheques. I'm trying to think.
Danny Knowles: I've never received a cheque in my life.
Peter McCormack: What?
Danny Knowles: Never ever received a cheque or written a cheque.
Sahil Chaturvedi: In the Bay Area, I had to pay rent with cheques. This was like two years ago. It's madness.
Peter McCormack: You've never used a cheque?
Danny Knowles: I've never had a chequebook, I've never received a cheque.
Peter McCormack: That's really strange to me.
Sahil Chaturvedi: I'm jealous.
Peter McCormack: I'm a good three or four years younger than you! Hold old are you?
Sahil Chaturvedi: I'm very young, I'm under 30.
Peter McCormack: His age starts with a "2"! Yeah, so the chequebook was a thing when I first got a bank account, you had to have them. But I also had them, because I've had companies where you write cheques. I mean, I haven't written a cheque in a long time, but I receive them. There's a couple of things; if you're with an energy company, they overcharge you every month to make sure you're always in credit, then when you close out, they send you a cheque at the end.
I got a dividend from a company that was paid in a cheque as well. But I said to them, "I can't use this", and they did a bank transfer anyway. I can't believe you've never used a cheque, Jesus! Yeah, so what else would I need a bank account for?
Sahil Chaturvedi: I mean, I can tell you what I use it for. So, I'm pretty sure I pay my car payment through ACH, you pay off the credit card bill through ACH. So, I do use a credit card. That was one of the things you talked about.
Peter McCormack: Okay, there's so much to get into here. So, I'm trying to get… So, there's only holding Bitcoin, then there's a separate thing which is detaching yourself from the financial rails, and they feel like two separate things.
Sahil Chaturvedi: Bingo.
Peter McCormack: Is the goal to do both?
Sahil Chaturvedi: The goal is to do whatever you feel like doing. So, the whole point is to not hold dollars. In my case, I'm okay with a little bit of KYC, I'm okay with using a credit card; it's not a problem for me. Obviously, "get on zero", it's a new term, but you have people like Max Hillebrand and Samourai Wallet, and all those guys, they've been on zero before the hashtag was ever created. So, they're like the OGs. I'm pretty sure Samourai Wallet doesn't have a bank account, as far as I know, I think I saw him say that on Twitter.
Peter McCormack: So, they just operate purely in -- you see, we definitely couldn't operate our -- so, I'll tell you what we'll do at the end, we'll work through it. I'm going to go through personal and business and where I think for me, it would be difficult. Because like I say, I think there's two things: there's get on zero; and then there's be your own bank, separate yourself from it. So, you have a credit card, but interestingly with the credit card, you're not only getting on zero, you're getting on negative there.
Sahil Chaturvedi: Bingo. So, getting on negative I think is even cooler. If you're okay with being in the financial system and KYC and all that stuff, if you're okay with that, it's optimal to be getting on negative. I don't like the word "selling" Bitcoin, because I consider it using Bitcoin, I consider it spending Bitcoin.
Peter McCormack: Yeah, that's fine.
Sahil Chaturvedi: But I rarely spend Bitcoin, because as long as your expenses, and we'll get into this later, but as long as your expenses are less than your income, I rarely sell Bitcoin.
Peter McCormack: So, one of the things is, I don't trade Bitcoin. I never look at the price and think, "It's low, I have to buy [or] it's high, I need to sell". Now, there are times I buy and sell and the price is a bit shit, whatever, or the price is good, whatever. Well, let's put it a different way; I'm not an active trader. So, if I was living my life and I buy Bitcoin, I've got some money on the sidelines, okay I want to buy, but usually I just buy spot, whatever the price is. I don't think, "It's going to drop in a week [or] go up in a week", and I'm stacking sats.
If your income is higher than your outgoings, then you're always stacking, yes, and you're not thinking about trading. So, do you run your expenses on your credit card and then at the end of the month, you settle? Okay, so how do you settle? So, you work very hard, you create some badass designs, you get to the end of the month, you get paid; how do you pay off your credit card?
Sahil Chaturvedi: So, because in this example I'm using LVL, but it could be any Bitcoin bank, if someone's listening to this two years from now, income comes in, because again, LVL is both a dollar chequing account and a Bitcoin chequing account; dollars come in, and then theoretically, I instantly sell the dollars for Bitcoin. And then -- well, in my example, income comes in and then I instantly pay off my credit card. And then whatever's left is just swept into Bitcoin.
So, if you take an abstracted view, it looks like what I'm doing is, I'm swapping into Bitcoin and then selling again and doing all this, but it's like the meme version of that to get the point across. Technically under the hood, what's happening is you're still holding zero fiat, but dollars come in, pay off all your expenses on the same day, so your volatility risk is --
Peter McCormack: So, you don't get paid in Bitcoin, you get paid in dollars.
Sahil Chaturvedi: In dollars, exactly, because I'm not going to go and beg Unchained to change all their accounting systems. I'm like, "You guys want to use that because it makes sense, I agree, that's totally fine". I'm interoperable, and I can do that.
Peter McCormack: Because you've got LVL, they make the whole thing easy.
Sahil Chaturvedi: Exactly, LVL makes the whole thing easy. And they're working on making it better, so I'm glossing over some of the details. Automation is still not there yet, so technically I have to go in and put the amount in; it's a little jinky, it's a new start-up, right, that's how it goes. But Chris has a good, I think, head on his shoulders and he's going in that right direction. He's going to work on automation and fix all those problems.
Peter McCormack: So, that's the credit card, that's cool. What about, say if you have a car payment, you don't usually put a credit card in, it's usually a direct debit from a bank account; or can you?
Sahil Chaturvedi: Oh, you mean for a car payment?
Peter McCormack: Yeah.
Sahil Chaturvedi: Yeah, so for a car payment, I put in a direct bank account and a routing number, and that account and routing number is LVL, exactly.
Peter McCormack: Okay, so LVL gives you all of this?
Sahil Chaturvedi: Exactly. LVL's basically -- I mean, I don't know anything about their back end, but from my understanding, it's basically a wrapper on a legacy fiat bank and then a Bitcoin bank, a Bitcoin account, and you have access to both of them in one app basically.
Peter McCormack: You see, that's the thing. Most of us operate our lives with day-to-day payments, and then at the end of the month, all those regular payments, whether it's your utility bill, your car payment, your mortgage. If you can put them all in LVL, your dollars come in, they pay them out, the remainder goes into Bitcoin, then the next month starts.
Sahil Chaturvedi: 100%, exactly. And while you're doing that, you're slowly building up this long-term savings balance of Bitcoin.
Peter McCormack: "Bitcoin is saving", as Pierre Rochard says.
Sahil Chaturvedi: Bingo. Exactly like Pierre says, "The point of cash is to hedge against future uncertainty". So, over a long enough period of time, assuming you have enough savings, it's okay if you "sell" your Bitcoin. Again, I don't consider it selling, you're spending your Bitcoin.
Peter McCormack: Using.
Sahil Chaturvedi: Exactly. The whole point of holding Bitcoin is to spend it on a future date when there's uncertainty. So, that's the way I view it. Income comes in, everything is held in Bitcoin and then when you need it, you spend your Bitcoin, that's totally fine.
Peter McCormack: Yeah, now you've explained it like that, that as long as my outgoings are less than my income I'm always stacking, I always end up every month with more Bitcoin, my trajectory is fine. One of the things though is like, sometimes we're in very clear bull markets and sometimes we're in very clear bear markets. I think bull markets are even clearer, because we don't want to accept bear markets. I think the psychology is, a bull market starts, "We're in a fucking bull market; let's go crazy!" And even now, when we've dipped to $19,000, you go to $22,000, "The bull market's started again, I'm fucking in!"
Whereas, the bear market's like, we've dropped from $65,000 to $40,000, "No, it's coming back". So, there's a psychology around all of this whereby it's going to be harder for you to maximise sats predicting price, so am I guessing you don't care about price?
Sahil Chaturvedi: Exactly, I don't care about price. Bitcoin's my money and over a long enough period of time, the value goes up. If you've been stacking for a few years, like four years or five years, I mean when Trump got elected, the price was $600, not $60,000; $600. If you think about that, that's mind-blowing stuff.
Peter McCormack: Was it? Was it 2016 he came in?
Sahil Chaturvedi: I'm pretty sure. Don't quote me up. Look it up! I'm pretty sure it was something insanely low.
Danny Knowles: I mean, it was even lower than that in 2016 for a bit, it was like $400.
Peter McCormack: Hold on, because the thing that weirds me out about that is, Trump got in before I started the podcast, but actually Trump got in before I got back into Bitcoin, and it doesn't feel like he did. In my head, if somebody said, "What happened first?" because I got back in at the right end of 2016, start of 2017. In my head I'm like, "Surely that was after Trump came in?"
Danny Knowles: I mean, it was 2016.
Peter McCormack: Fuck it was, that's so weird.
Danny Knowles: His presidency started at the start of 2017, but he was elected.
Peter McCormack: That's so weird, because it just doesn't seem like it. Bitcoin years are like dog years, right, and if you'd asked me that, I would have said, "No way". I don't know why, my immediate reaction is just, "No, that's not true". But shit, it was $600. That Bitcoin I bought to get -- I don't know if you know the whole thing about my mum?
Sahil Chaturvedi: Yes.
Peter McCormack: Yeah, so she died 12 January 2017, and I got the Bitcoin at the end of 2016 to get her the cannabis oil treatment. But I feel like the whole Trump thing happened after that.
Sahil Chaturvedi: It's weird, yeah. Bitcoin timelines are crazy.
Peter McCormack: And that Bitcoin was $600.
Sahil Chaturvedi: I definitely was not around in that timeline, I wish I was. And then obviously March 2020, $3,000. We're talking about $17,000 being a dip.
Peter McCormack: Hold on, Rizzo tweeted out today the date where Bitcoin hit 1 cent, and it's up 2,000,000% since then. I was like, "I could have spent $1,000 on Bitcoin and been a gazillionaire!"
Sahil Chaturvedi: It's crazy stuff and I try not to think about it at all. Sometimes it happens, but you can't think about it.
Peter McCormack: Oh, dude, when we're finished and the cameras are off, I'll tell you about how much Bitcoin I lost in 2017. It sucks, dude.
Sahil Chaturvedi: I would love to know just for the --
Peter McCormack: It sucks, dude!
Sahil Chaturvedi: But that's why a lot of people think, "Oh, if I went all in five years ago, it would have been great". "You're going to keep saying that. Just do it".
Peter McCormack: Yeah, but what if we're all wrong, and we've had the final top?
Sahil Chaturvedi: Yeah, that's very much true. And honestly, if that happens, I'm happy to go down with the ship at this point.
Peter McCormack: You're fucked, I'm fucked, Danny's fucked, our show's fucked, everyone's fucked.
Sahil Chaturvedi: But you know, maybe the real all-time high was the friends you made along the way!
Peter McCormack: Oh, you're so nice, come on! Sahil, come on! You made me need to be a nicer person. Okay, right, so you have the LVL account. Do you get a card with LVL?
Sahil Chaturvedi: Yeah, you get a debit card, yeah.
Peter McCormack: Okay, so you can use that to pay for a lot of stuff along the way. You get an Uber, you can use your LVL card; you book a flight, you can use your LVL card; you go to a bar, you can use your LVL card. The problem is, everything's gone digital. I'm trying to think of scenarios where actually -- you're going to answer this easier than me trying to figure it out: where do you need physical cash?
Sahil Chaturvedi: Physical cash? There's probably a lot of restaurants, bars, that are cash only, physical cash only. And even then, I think that's fine. You can go to an ATM and withdraw $40, $50, $100.
Peter McCormack: With your LVL card?
Sahil Chaturvedi: Yeah, with your LVL card, because it's just a normal bank.
Peter McCormack: And when you do that, is it taking it off your Bitcoin balance in LVL?
Sahil Chaturvedi: That's another question where casually, I abstract a lot of that out. Today, no it's not. Today, you have to manually go sell and then you get the dollars. It's still instant, so it's not a problem.
Peter McCormack: But there are cards you can get where you deposit Bitcoin in the balance and it deducts from it?
Sahil Chaturvedi: Exactly, and a lot more of those things are coming out and there's so much innovation happening here, it's mind-blowing stuff.
Peter McCormack: So, you get to the bar, you're like, "Pete, do you want a beer?" I'm like, "Yeah, man". You're like, "Oh, shit". So, you go in, you sell $40, $50 worth, that makes it available for your card?
Sahil Chaturvedi: In the dollars, then I can go withdraw it.
Peter McCormack: So at that point, you're always holding a little bit of dollar there.
Sahil Chaturvedi: Yeah. So, the idea is just to minimise the time you hold it.
Peter McCormack: So, you're not on zero?
Sahil Chaturvedi: I'm a larp, yeah, basically. I'm larping.
Peter McCormack: For fuck's sake!
Sahil Chaturvedi: I know, why did you get me on here? I'm just a larp! You're trying to minimise as much as possible.
Peter McCormack: Yeah, I get it.
Sahil Chaturvedi: In some scenarios, you're like, "Oh, fine".
Peter McCormack: I'm going to gear this one that's going to annoy people, they're going to call me a shitcoiner, right; but I plan to hold a very small amount of Monero.
Sahil Chaturvedi: I've been following your journey, yeah.
Peter McCormack: Yeah, and the only reason I wouldn't want to do that is because there are certain people who will say, "You're a shitcoiner, you hold Monero, Monero's a shitcoin. You're not a true bitcoiner", and all that stuff. I plan to hold a small amount of Monero, like a couple of hundred bucks, and I want to play with it in terms of testing some transactions out. And if there's certain things I want to do, I'm going to keep doing it.
It's a similar scenario. Maybe you're always going to have that small amount because you need it, until you get to the point where you can be truly zero. But do you also have a small bit of physical cash; do you always make sure you have some?
Sahil Chaturvedi: I don't. There might be some lying around just because I forgot. But I never intentionally have dollars laying around. And even in the example we talked about, where I might have $40, that's more of a technical limitation than a philosophical limitation. So today, LVL doesn't have the auto-convert, but tomorrow, say they add that, then I'm literally not holding dollars for more than a millisecond.
Peter McCormack: So, do you keep a certain amount of Bitcoin in your LVL, and then the rest in multisig?
Sahil Chaturvedi: Bingo. So, my chequing account, whatever I feel comfortable -- because, to be clear, it's a KYC custodial account. So, you don't want --
Peter McCormack: All your Bitcoin in there.
Sahil Chaturvedi: Yeah, or anything even close. So, I have a very small amount, and the rest is in my personal multisig savings.
Peter McCormack: Right, chequing account, savings account.
Sahil Chaturvedi: And to be honest, you might even have something in the middle. You might have 1 Bitcoin in a Muun wallet, or something like that, so it's still self-custodial, it's still private, CoinJoined to Muun wallet or something. So, there's a gradient to this, but I would consider LVL just to be your chequing account, or something like LVL.
Peter McCormack: Have you found yourself a little community; actually, have you converted anyone to get on zero?
Sahil Chaturvedi: I don't know if I've personally converted anyone, as far as I know. I talk about this to my Unchained friends; some of them think I'm crazy as well, but there definitely is a small, little community of, you could call them "get on zero early adopters". Again, I don't consider us the --
Peter McCormack: The zeros!
Sahil Chaturvedi: Yeah! We need a cool name.
Peter McCormack: Zero gang!
Sahil Chaturvedi: Zero gang!
Peter McCormack: Yeah, a little Telegram group.
Sahil Chaturvedi: We do have a little fun group chat.
Peter McCormack: You do; so, there's a group of you?
Sahil Chaturvedi: Yeah. It's a fun group and we talk about a lot of this stuff, a lot of these strategies about, "How are you handling this?" Some people use a line of credit. We were talking about credit cards; some people have a line of credit so when they have a big expense, they can put it on the line of credit, pay it off later. Some people are like the more Samourai extreme, where they're no KYC, "I'm going to get my paycheque in dollars, I'm going to go trade it all for cash, withdraw it as cash, go to an ATM", and do all of that stuff. Totally fine.
I think the basic principle that unites us all is, we don't hold fiat. Then, no KYC, you can do what you want. I'm a sucker for seamless experiences, and unfortunately the seamless experiences require KYC as of today, so I kind of lean in that camp.
Peter McCormack: But directionally, you're heading?
Sahil Chaturvedi: Absolutely.
Peter McCormack: So, has there been anything where you've become stuck, any situation you've been like, "Oh, fuck, I'm fucked here"?
Sahil Chaturvedi: That's a good question. I don't really think so, aside from just weird technical stuff, again just with some of these companies being new and some of these products being so new. But philosophically, I don't think so, and obviously we can get into some reasons why you might not want to do this. And also, one thing I should be clear about is, this isn't a dogmatic thing, it's not like virtue signalling, "Oh, you're not a bitcoiner". We're all going to be fine.
Peter McCormack: We're all going to make it!
Sahil Chaturvedi: We're all going to make it. If you're 10%, 50%, 99%, we're all going to be fine. So, the last 0.1% isn't going to change your life.
Peter McCormack: Well again, talking back to Pomp yesterday, we had a conversation and the philosophical part of that was, you start and you're 1%, whatever, and you end up and you go the full hit, which I've done. But then, there gets to a bit where you need to pull back a bit, because I've got responsibilities towards children, and when I choose to be entirely Bitcoin, I'm risking part of their inheritance. So, I've pulled back just a touch. I'm not going to give the numbers, I'm still irresponsibly long, but I'm not 110% anymore because of that.
Sahil Chaturvedi: And you're a bear!
Peter McCormack: Yeah, I'm a bear, a fucking shitcoiner, statist cokehead! But there are things there, scenarios you think about that. You give me the reason why you wouldn't do it, and then I'll run through the logical things, if I wanted to, where I think my challenges would be.
Sahil Chaturvedi: Yeah, so I think one reason I thought of pretty recently actually, I was talking to a start-up founder friend, and a lot of these start-ups and a lot of these companies are VC-funded. Their expenses are more than their income, they don't have a good income statement. So, in those cases, yeah, if you've got $2 million from a VC and you don't have good income, I can see that being a problem for a business.
If you're a person where your expenses are more than your income, you have other problems to deal with. So, as an individual, I see very few scenarios where this wouldn't work, except here's another one I thought of; I'm curious what you think. You're buying a house in six months and you put a down payment. Fine, that's cool, do it, hold some fiat, no one's going to yell at you for that.
Peter McCormack: This is funny; I've bought a fucking house and I had to put a down payment, and part of it was, I was going to sell a bit of Bitcoin to put towards this. It's a nice house, me and the kids, next step in our lives. And at the point, I think it was about $40,000 --
Danny Knowles: It was $40,000-something, yeah.
Peter McCormack: Yeah, then it dropped and I was like, "Fuck, I should have done it then" and then it dropped again, "I should have done it then". I mean, it wasn't a lot of Bitcoin to sell, but it was at $28,000 was the point I sold a bit of Bitcoin, because I've stacked now since 2017. This last year, I've stacked harder than I've ever stacked. But now it's like, "Okay, now I want a house, I'm older, I'm nearer death, people die at 43, 44 all the time". The heart is a delicate thing, it could just go, "Pop!"
Sahil Chaturvedi: My niceness is influencing you, Pete!
Peter McCormack: Yeah, I was like, "I don't want to die next year and have all my Bitcoin unused; I want to have enjoyed this last year". So, I planned to sell a small percentage of my Bitcoin. And eventually, $28,000 I got out. But getting out at that point, essentially $40,000 down to $28,000, what is that? It's about 25%?
Danny Knowles: Something like that.
Peter McCormack: Yeah, about 25% more it cost me. But the thing I'm thinking about more is my football club. If I wanted the same strategy, it's highly irresponsible for a couple of reasons. We get paid at the start of the year by the sponsors, and through that year we then have to pay our players, our referees, our caterers, all the shit that we run for our club.
We bill an amount in pounds. Most people pay us in pounds, some pay us in Bitcoin. The people who paid us in Bitcoin, the sponsors we've held, we're down 60%. Luckily it's a small amount. If we'd held it all in Bitcoin, the whole thing would be down 60%. Our trajectory for the next year would be super-difficult, because we're down, and I can't take that risk yet. I take the small risk, we've been keeping some Bitcoin, and hopefully when that bounces back, it bounces back higher. But our expenses, while they're month to month, we're paid at the start; we're not paid every month.
Sahil Chaturvedi: Yeah, so that's actually another one for businesses. It's not just if your expenses are more than your income for a start-up, I think it's also, even an individual, if you're paid at an irregular basis and you can't really predict. Maybe you're a contractor and you're paid, I don't know, once every seven months or something, something crazy like that. That's a great point.
Peter McCormack: Yeah, I mean our team, our costs are front-loaded at the start of the season. So, every month during the season, we know what the players cost, we know what the catering costs, we know what the refs cost, we know what our streaming costs. But at the start of this season, before the season had even started, we did a load of work on the ground, we bought a tractor, we put in an irrigation system, we actually paid upfront for our streaming, we ordered new kits and merchandise. 50% of our cost was at the very start of the season.
So, we have to run our business on pounds, but we are able to operate a Bitcoin wallet and store a certain amount of Bitcoin. Do you know what it is? For you, it's the amount you're not going to spend every month becomes your Bitcoin, right?
Sahil Chaturvedi: Yes.
Peter McCormack: The amount we know we're not going to spend over the next year, we've kept in Bitcoin, and then we can do that.
Sahil Chaturvedi: So, that's kind of actually the same thing.
Peter McCormack: Kind of.
Sahil Chaturvedi: It's very similar. If you're putting it aside, you're kind of spending it in some ways. You're like, "I'm going to spend this anyway". It's like the house example. It's like, "I know in six months, I'm putting the down payment, so I'm kind of spending it anyway". I see that as pretty similar. It's almost a known expenses versus what a lot of people do is they'll hold a year's worth of dollars as an emergency fund. It's like, "Okay, you're losing 30% a year by holding the dollars".
Peter McCormack: Not if Bitcoin falls 60%.
Sahil Chaturvedi: Yeah, okay, yeah sure. It's a bad time to be saying that, yeah.
Peter McCormack: But that's the game. Your one makes total sense. As soon as you said it to me that, "As long as my outgoings are under my income, I'm always stacking", and that's the thing. I've always had this goal, ever since I got rekt in 2018, like fucking rekt; I'll tell you the whole story afterwards, but I got rekt, and I had to start rebuilding. And I always had this goal: every month, I want to have more Bitcoin than I had the previous month; that's a simple goal. Some months I did well and some months I didn't do so well, but I always grew my stack, that was it. But get that wrong, time that wrong, you can get in a difficult scenario.
Sahil Chaturvedi: It is tough, yeah, I agree. So, I think you can find a lot of scenarios where it might not make sense to do this, and I think that's where it ties into this not being dogmatic. It's not like something -- it's not that some bitcoiners are lesser bitcoiners because they're holding fiat. Anyone who's claiming that is probably a bad actor. I don't think that's a good move. I think it's more of showing a way that, "Hey, this is possible for a lot of people in certain scenarios", and those scenarios we talked about. So, your expenses are less than your income, maybe you have more regular income, maybe you have a good amount of savings in Bitcoin, so that even with market volatility, you're like, "I have savings, I can spend my Bitcoin, it's not a big deal".
Peter McCormack: There is a different responsibility that comes with having kids as well, just there's certain things I have to think about with my kids: expenses that come at different points of the year. For example, my son has finished school now, he's probably about the same age as you, he's going to go to university. I've got a new cost centre that's starting for me in September when he starts university. I can't risk that, and I'm never going to risk that, so I have to partition that and I have to keep that in there. But that whole idea of outgoing and income, and being under it, it's a really fascinating concept.
Danny Knowles: The thing that I can't quite get my head around is, so I'm 90%-plus Bitcoin, but I see that totally differently, in the sense that this is stuff that I'm putting away for a long time. But you say you want to hold fiat for as little time as possible to avoid the debasement, which I understand. But the problem with the debasement is that you're losing purchasing power. But since you started, you've lost 70% purchasing power, and that's a mindset that's kind of hard to get my head around.
Sahil Chaturvedi: Yeah, that's really tough, and that's why getting the why is so freaking important.
Peter McCormack: But then you're asking him to be a trader; do you see what I mean?
Danny Knowles: I do.
Sahil Chaturvedi: Such a good point.
Peter McCormack: I've decided not to play price.
Sahil Chaturvedi: Bingo. Whenever I see -- and again, I'm not virtue signalling or anything, but when I see hardcore Bitcoin maximalists being like, "I bought the dip", I'm like, "How did you have fiat to buy the dip? I don't get it"!
Peter McCormack: Because Arthur told us. Arthur said, "Have some dry powder --"
Sahil Chaturvedi: Hayes?
Peter McCormack: Arthur Hayes, "-- because at the end of the year, you're going to need it"!
Sahil Chaturvedi: Yeah, I guess that's fair, that's the one… yeah.
Peter McCormack: No, but you're right, it goes all the way back to what I said earlier. I've stopped trading. "Buy the dip" is a great meme, yeah, we should buy the dip when we've got it, but I don't really usually have dry powder to buy the dip; or I do, but I'm still not buying the dip, because that's the amount of dry powder I've always kept on the sidelines. I'm consistent. Whenever I buy Bitcoin, I buy it at a time when my dry powder is at an extent where I'm like, "That's money I don't need for the next year", and I just go out and I buy spot, and I've always done it like that. So, I think I'm operating in a very similar mentality, but with a completely different model.
Sahil Chaturvedi: The model being…?
Peter McCormack: Whenever I buy, I just buy spot at that current price. I have a DCA that's set up, but that's a small amount. But say the podcast is doing well, our expenses are low, we're at a decent point, I'm like, "I've got some spare, I'll go and buy", but I'm never sat there with a pile waiting for the dip. I've never sat there waiting with dry powder just in case. That's just who I am. Other people can time -- I know, Danny knows, that I'm terrible at timing the market, so I just buy when I've got the dry powder. If Bitcoin's at $15,000, $28,000, $40,000, I just buy. You're doing exactly the same.
Sahil Chaturvedi: I think it's the same thing, and it's just, like you said, in specific scenarios, specific situations, you determine that your risk/reward situation is, "I probably want to hold some fiat", because maybe you have some fixed expenses, like a loan repayment that's a fixed amount. Okay, you could make an argument for that. Again, not dogmatic, totally cool, no problems with that. I just think, and this is not my quote, this is LaserHODL on Twitter, he said this once, he was like --
Peter McCormack: Is he back?
Sahil Chaturvedi: I think he's back, yeah. He's under a new name, yeah, but he's back. What was the quote? Yeah, you've heard, "Spend fiat, stack sats"?
Peter McCormack: Yeah.
Sahil Chaturvedi: He's like, "That's a low inflation meme. When inflation's low, yeah, you spend fiat and you stack sats". High inflation meme is, get on zero, hold no fiat, save Bitcoin, spend Bitcoin.
Peter McCormack: Yeah, I hadn't considered inflation in this as well.
Sahil Chaturvedi: You're guaranteed losing purchasing power.
Peter McCormack: So, okay, the best way to explain that is when we go sideways, you're looking and going -- say Bitcoin ranges between $18,000 and $23,000 for a year, and you're just sat there with your dry powder for the whole time, you should have stacked sats.
Sahil Chaturvedi: Yeah.
Danny Knowles: Yeah, but I guess when I said debasement, there's debasement and then what happens because of the debasement; it's the whole thing. But that's not what's happened the last seven, eight months, whatever, is it?
Peter McCormack: No, it's just gone to shit!
Sahil Chaturvedi: Well, the dollar has debased. Now, of course, Bitcoin has also lost purchasing power, that's true. But I think people forget about the massive rips that can happen, and you've no way to time that. So, I guess part of the claim is that, if you're worried about the dips and you're not worried about missing out on the massive run-up, you're kind of acting like a trader.
Peter McCormack: Exactly. And if I go back to the point where, I hate the question when it comes around where people are like, and it's happened a lot recently, "Is now a good time to buy?" I hate that question, because I know it can always go further down. I always just say to people, "Look, I don't know, I don't know anymore, fuck knows what will happen. All I'll tell you is that when I buy Bitcoin, my intention, it doesn't always play out, but my intention is to hold that for at least ten years".
I say that, because I cannot see a scenario where any Bitcoin I buy now isn't worth more in ten years. So, when they ask me, I'm like, "I lost some money, yeah, you asked me six months ago; I said ten fucking years, dude".
Sahil Chaturvedi: I know.
Danny Knowles: Just to play Devil's advocate, because this sounds like I'm very pro-fiat, but are you not being a trader anyway?
Sahil Chaturvedi: In what sense?
Danny Knowles: I understand the conviction of Bitcoin, we all have big conviction of Bitcoin, but you're trading your, say, guaranteed -- well, I probably think more than 9%, but whatever; you're trading that guaranteed inflation rate for the price volatility of Bitcoin right now.
Sahil Chaturvedi: Interesting. So, you're basically saying, yeah, I'm guaranteed down 9%, whatever, 10%, 15%, but I'm risking the downside of Bitcoin?
Danny Knowles: Yeah, and this is where I say it makes me sound really pro-fiat, but I mean in a short timeframe, that's the risk.
Sahil Chaturvedi: I think that's really the key. In the example we're talking about, when you're dealing month to month and your expenses are less than your income, like I said, I'm rarely spending my Bitcoin directly. So in that case, I don't see that as much of a concern.
Danny Knowles: Yeah, that's fair.
Sahil Chaturvedi: Unless your time horizon is less than two years, in which case I do agree.
Peter McCormack: I mean, Danny's a real central-bank-loving statist cuck!
Sahil Chaturvedi: The moment I walked in, the moment I got the message, I was like, "Oh gosh, Danny!"
Peter McCormack: Danny sells Bitcoin.
Danny Knowles: I don't think I've ever sold Bitcoin.
Peter McCormack: He sells Bitcoin to buy watches.
Danny Knowles: No, that's opportunity cost. I don't buy Bitcoin, I buy watches!
Sahil Chaturvedi: He's spending his Bitcoin, he's spending his savings to buy watches. That's a better way of phrasing it.
Danny Knowles: Watches don't inflate the same.
Peter McCormack: I don't see it as trading, because you don't care about the price, you're just transferring to Bitcoin at the end of the month, you're following that strategy, "I want more Bitcoin at the end of this month than I had at the previous month", which I think, going back to that ten-year time horizon, in the end who gives a fuck? You kept stacking and in ten years' time, you've elevated your position.
Sahil Chaturvedi: Bingo. And, Pete, I think why I like your show so much is you ask questions, like infinity amount of questions, to get to the core of what is the first principles here, and I really appreciate that. My favourite episodes are when you get the most technical people on, and you keep asking questions, and eventually you get to the root of the problem.
Peter McCormack: Do you know why it is?
Sahil Chaturvedi: Why?
Peter McCormack: I'm pretty fucking dumb!
Sahil Chaturvedi: I don't believe that, I think that's part of your brand and I think it's a really good one.
Peter McCormack: No, genuinely I am, I don't get it. I still don't fucking know what an xPub is. I can explain it, it's like your extended public key, all your other keys derive from it, but… But what I will say is I'm a marketing person and we need marketeers.
Sahil Chaturvedi: Well, we need marketeers, but again, I think the way you ask questions is amazing. As a designer, that's my whole job.
Peter McCormack: Danny writes all my questions.
Sahil Chaturvedi: Hey, Danny!
Peter McCormack: I've got a little earpiece in, he's like, "Pete, say this"!
Sahil Chaturvedi: Yeah, love it!
Peter McCormack: Right, so I get the whole strategy, actually it makes a lot of sense. I can't do it for my football club, because I cannot risk the -- my football club isn't about stacking sats, it's about being sustainable; sustainability is the most important thing, especially when income can be irregular. I have fixed costs in fiat, but I can stack a small amount, and I can stack the amount over the next year, two years, I know we're not going to spend, because if I don't spend that and we see the price increase, that puts the club in a much better financial position.
The podcast is a business. For similar reasons, I can't do the same, because we can't live month to month. I have to ensure that this show is here in a year, Danny's still paid, Jeremy's still paid, Emma's still paid, Freddie's still paid, Neil's still paid, Ben, and the whole team is still paid. I cannot risk them not being able to pay their mortgages, because we live in a fiat world. But again, we do stack, but I run a strategy of making sure I have enough fiat for a year. We're always a year, we're protected for a year. The worst things happens, we've got a year, but we still stack Bitcoin.
Personally, I can get nearer to what you're doing, because my risks are lower on that side, because it's about me.
Sahil Chaturvedi: As opposed to a team of other people with their salaries and stuff?
Peter McCormack: Yeah. I mean, with me, I risk me and my kids, but the kid risk is low, because I still have that income that comes in every month. If it doesn't work out, I still have it in, I can still pay the bills. My business risk is higher, because there are seven people who rely on this business, it pays their wages, and the football club's even higher, because there's not just me and the management team, but there's the playing team, there's the management staff, and then there's the community that I can't risk. So, as a small unit, it's easier.
Sahil Chaturvedi: No, that's such a good point, and maybe another way of thinking about this, and again, if you find a way that works for you, totally fine, it's not a requirement in any way; but here's a different way of thinking about it. Maybe if you have enough savings in Bitcoin to weather the storm of 80% drawdowns, and I don't know about you guys, but I don't think these 89% drawdowns are going to last three, four years; I mean, it could be, I don't think so. So, if you can ride it out with enough savings, with enough Bitcoin cash, not Bitcoin Cash, Bitcoin (cash/savings), you can weather the storm of a year and then just wait until it rips back up, and you're fine.
Peter McCormack: You're stacking at the bottom, and then go back to the psychological thing; some of us are bad at stacking at the bottom. We're better at stacking as we're going up, because we think, "Yeah, bull market!" and we stack as we go up. And then it crashes at the bottom and, "I'm not stacking that, I might get --"
Sahil Chaturvedi: Yeah, which is why if Bitcoin is your money, you're always stacking. And then to me, stacking sats equals saving money. To me, stacking sats is not DCA; stacking sats is saving money, it's very simple.
Peter McCormack: There's another potential curveball. You get it now, right, Danny?
Danny Knowles: I mean, I get it, I'm just -- yeah.
Peter McCormack: I mean, you could do it, right?
Danny Knowles: I mean, to be honest, what I do is not that far off it.
Peter McCormack: But it's not a big jump for you to go, "Right, I'll dump my savings in, I'll buy all the Bitcoin, and then I'll run my expenses.
Danny Knowles: I mean, I run my expenses off a credit card, pay it off the end of the month. I'm not a million miles from it.
Sahil Chaturvedi: Exactly.
Danny Knowles: But I have a buffer, I still keep a buffer.
Peter McCormack: But you could go that full way.
Danny Knowles: I could, yeah. Except, my wife would kill me!
Peter McCormack: I was just about to say, that's the curveball!
Sahil Chaturvedi: I'm also not married!
Peter McCormack: That's my next curveball, that's where I was leading to! I know your wife.
Danny Knowles: And she'd fucking kill me!
Peter McCormack: And then she'd kill me!
Sahil Chaturvedi: I don't have any tips there unfortunately!
Peter McCormack: Stay single, stack sats!
Sahil Chaturvedi: That's the secret, yeah.
Peter McCormack: Stay humble, stay single, stack sats.
Sahil Chaturvedi: So good; that's the best!
Peter McCormack: I think stay single, stack sats is an evolution of stay humble. I'm going to tweet that in a minute.
Sahil Chaturvedi: I love it.
Peter McCormack: Okay, go on.
Sahil Chaturvedi: No, I was going to say, I think one interesting effect of what's happened is, I feel so much more free to spend Bitcoin. A lot of people are like, "I never want to spend my Bitcoin or sell my Bitcoin". We'll go out to drinks and I'll pay over Lightning with Muun and I don't feel bad, because all I have is Bitcoin to spend. I don't have any fiat to spend and feel bad about, "Oh, I lost out".
Peter McCormack: Well, you psychologically have to do that.
Sahil Chaturvedi: Exactly, so I think that's another big shift. When you're on Bitcoin, that is your money, so spend your Bitcoin, it's totally fine.
Peter McCormack: Yeah. Are you using Lightning more because of this, or has it not made a difference?
Sahil Chaturvedi: Absolutely I'm using Lightning more. Obviously not a requirement, but most people that I know accept Lightning payments, so Muun or Strike, or anything like that, or BlueWallet, they're all Lightning. There's some cool stuff coming with the FediMint stuff, I don't know if you've heard much about that.
Peter McCormack: What is it, Obi?
Sahil Chaturvedi: Obi and there's a bunch of other.
Danny Knowles: We're doing a show in Bedford.
Peter McCormack: Yeah, Obi's coming to Bedford.
Sahil Chaturvedi: I'm very excited for that stuff. There's some really good people working on that. We'll talk about it afterwards, I don't know if I should say who's working on it, but very promising. Lightning interface, but a very different interesting custody model, and very good for privacy.
Peter McCormack: Okay. So, based on what you've done and what you've experienced so far, you must have been able to spot gaps in the market, things that are needed within the ecosystem? Like, if you didn't have LVL, some of this shit you wouldn't be able to do, so you must have spotted things that LVL need to do, but wider, things that are needed to help make your life easier; what's missing?
Sahil Chaturvedi: Yeah, one thing I've been thinking about a lot, even though I'm a UX guy and I think about seamless experiences and stuff, I'm getting more and more to be a privacy-minded person. I think about all my KYC footprint and stuff like that. I'm learning about it from Odell and our friend, Seth For Privacy, who you had on your show, really good episode.
Peter McCormack: Yeah, great guy.
Sahil Chaturvedi: Yeah. Listeners should check that out. So, I'm learning more about KYC and going down that route. So, I'm trying to think about options for people who want to go down the no-KYC route and still hold no dollars. I know The Bitcoin Company, Ben Price and Ben Carman, they were thinking about some of that as well. It's challenging in the US, but they're thinking about some stuff. You can already buy no-KYC Visa cards, and you can top that up; that's very interesting. But it's just interesting to think about those ways to spend Bitcoin, no KYC.
Imagine this. Imagine if Muun wallet, you've CoinJoined your Bitcoin, you bought on no KYC, CoinJoined it, put it in your Muun wallet, now Muun is your bank account. Whenever you need to interface with ACH, what if you could spend that Bitcoin with a service like Bitrefill or bylls.com, that's Francis' company. It's only in Canada unfortunately. But yeah, Bitrefill. I believe -- do you know Edge wallet?
Peter McCormack: Yeah, I know Edge. They've got a no-KYC card.
Sahil Chaturvedi: Exactly. I haven't used it, but I've heard about it. That's kind of cool.
Peter McCormack: Yeah, I don't know how they've got away with that.
Sahil Chaturvedi: I have no clue. I want to talk to someone about it, because I'm like "How?"
Peter McCormack: So, infrastructure-wise, the main thing that's missing is the no-KYC stuff?
Sahil Chaturvedi: I think that's one thing. There's different parts of it; that's one I'm partly interested in. I'm also partly interested in advancing the LVL stuff, so making it more seamless. You hold dollars, I don't want to have to think about selling Bitcoin for dollars and vice versa. Income comes in, I see this Bitcoin, I spend money out, it gets converted automatically. That's missing, that's really -- it's like Strike, I mean you know Strike?
Peter McCormack: Yeah, of course.
Sahil Chaturvedi: You use dollars on Strike, there is no concept of Bitcoin at all. You scan a QR and your dollars are sent. So, I want the reverse. I want the exact reverse of that, and I think we're going to see that from, I'm guessing, all of these financial services apps are going to converge, Fold, Strike, Cash App, LVL; that's my guess.
Peter McCormack: Yeah, and I think that's what it is. It needs somebody to connect all the dots into a single service, because at the moment it's quite disjointed.
Sahil Chaturvedi: Exactly.
Peter McCormack: You get paid, it goes into LVL, you need a card for this, you need that app for that.
Sahil Chaturvedi: Which makes it hard to recommend, frankly. When people ask me, "What do you do with Bitcoin?" I'm just, "Just DCA". The stuff that I don't do personally, I'm like, "DCA, 5% of your income, 10% of your income, and move it into your Unchained vault". That's what I recommend, because the tools aren't there yet for me to be like, "Go use this thing".
Peter McCormack: And you've got to have a certain amount of Bitcoin knowledge, technical proficiency. Trying to get some people just to even buy some, just to buy some Bitcoin, that's a big leap. Now you need to self-custody, just get a Ledger, or whatever. I say Ledger, they're a sponsor, but COLDCARD's a bigger step. Getting them to do that, to go where you've gone, that's a long way. Eventually, we'll get to a point where everyone will be doing what you're doing naturally, but we're a long way from having those services.
Sahil Chaturvedi: But there's kind of an interesting question there, like how can you design an app like that to facilitate that experience and think about, "What is a new user going to think about?" What if you could say, "I want 80% of my chequing account to be Bitcoin?" and it automatically does that in the background, so you're always 80% Bitcoin and 20% dollars.
Peter McCormack: We need to find a bitcoiner who is also a UX designer. Hold on, this is it, isn't it?! You've grifted us! This is our scam! Oh, man. Okay, we know what you're doing, we know why you're doing it, we know other people are doing it; how ahead of the curve are you with this? Are you running this part as a test yourself to learn from it? What I'm trying to get at is, are you kind of a martyr in this as well?
Sahil Chaturvedi: I think maybe the first month, I kind of felt that way. It was like, "Oh, yeah, I'm just testing this out, not going to talk about it that much". But the more I was thinking about it, it's just it makes sense. Taking the philosophy to the logical extreme, it's like, "Okay, this makes sense". And then, it also adds to the fact that I'm not the first person doing this, this isn't a new thing. Like I said, Max and Samourai and all these guys have been doing it, so I was like, "Yeah, Bitcoin's my money and I'm interoperable with anyone. I prefer to be in Lightning, because it's faster and more private, but I'm happy to work with whatever you want to work with, I'm not going to beg for it".
I think, when we all independently upgrade to Bitcoin independently, we sort of upgrade the world in our own personal ways, so I think that's the most exciting part.
Peter McCormack: Okay, have you done a tax return yet?
Sahil Chaturvedi: Yes, so I filed my taxes, what was it? 2020/21.
Peter McCormack: Hold on, but you started this in November?
Sahil Chaturvedi: November 2021, yeah. So, there wasn't a lot of buys and sells, but we can talk about what are some issues there.
Peter McCormack: Yeah, because Senator Lummis, Senator Gillibrand put in this great Bill, it was an awesome thing in there, and they wanted to remove transactions under $600, I think it was, from having any tax liability, and that would grow with inflation. It's a great Bill, it's a great part of the Bill, but it doesn't exist right now. So, for you, every transaction you do -- hold on, again, you're doing everything on the credit card in the dollar, so you pay the dollars off and you stack the sats.
Sahil Chaturvedi: I do sell some Bitcoin though.
Peter McCormack: You do?
Sahil Chaturvedi: It does happen, and I think here's the thing. And again, I'm not a tax advisor.
Peter McCormack: But you're only paying tax when you've made money on the Bitcoin?
Sahil Chaturvedi: Bingo, only when it goes up. And there's some more interesting things, some more interesting nuances that you might find interesting. Again, not a tax adviser, look it up, talk to your CPA. But as far as I know, as far as I can tell, within the tax year, you can offset gains and losses such that they cancel out within Bitcoin. The wash-sale rule, as far as I know, doesn't apply to Bitcoin. So, most of the time, you're going to be coming out zero anyway.
Peter McCormack: Yeah, I guess the biggest one in this is, imagine you weren't doing that and you were doing everything with Lightning, you would have an administrative pain in the arse.
Sahil Chaturvedi: Exactly. Now, I'm not going to say don't report stuff for taxes, you should report, but some people may choose to not do that, and that's an option if you're doing no-KYC transactions. I don't think you should do that, I don't do that.
Peter McCormack: I file all my taxes and I declare all my Bitcoin buys and sells, but I definitely don't go through my Lightning purchases. I didn't go through my Lightning ones in El Salvador, I was like, "Fuck that, I can't be bothered. Come and complain, give me the fine", because the amount I spent on Lightning, the fine would probably be less than the time wasted doing that bullshit.
Sahil Chaturvedi: Exactly.
Peter McCormack: Okay, so that's tax covered.
Sahil Chaturvedi: Yeah, I think a combination of no-KYC, plus some new regulation that comes in hopefully, will ease up a lot of these smaller transactions. Then the bigger stuff, yeah, it balances out and LVL gives you a really nice spreadsheet. You literally give the spreadsheet to your accountant and they deal with all the headache. So, it hasn't been a problem in my experience. I'll keep you all updated!
Peter McCormack: Is there anything I've not asked you yet as part of this; have we missed anything?
Sahil Chaturvedi: I think we talked about the mental model, we talked about risks, how to manage the risks. I just really think it's so exciting to think about how Jack -- oh, spending Bitcoin; we totally missed a lot of the stuff that Jack Mallers is working on, he was on your show, with spending Bitcoin directly.
So, a lot of this mess of bank middlemen stuff, hopefully is going to go away in the medium term, with things like Jack hopefully will enable with NCR systems and you can go to Whole Foods and pay with Lightning directly, you don't have to deal with all this middlemen stuff. But even then, you're going to have to pay rent, and maybe you can negotiate with your landlord and say, "Hey, upgrade to Lightning".
Peter McCormack: Have you got any more questions, Danny?
Danny Knowles: No, I think you guys covered it.
Peter McCormack: I'm going to extend it out, I do this very occasionally. Jeremy? Nothing? You've got nothing?
Jeremy: I appreciate. It's just the taxes that scared me. All that work.
Peter McCormack: Microphone.
Jeremy: Yeah, it's the taxes that are scary. I think you literally --
Peter McCormack: Come on, Jeremy, everyone knows I've called you out now, you've got to come and stay something.
Jeremy: Well now you're answering the question! It's just all that work for the taxes that scare me. I love the idea, but the taxes.
Sahil Chaturvedi: You get a spreadsheet, you give it to your accountant, or you put in some software, you get a number that comes out, it's very easy. It really is not a big deal. And remember this, you're only paying money, you're only paying tax if you're up in fiat terms. If you're up in fiat terms, that's a good thing. I think the taxes are probably one of the easier things to talk about, because it's not -- I don't see it as that big of an issue.
Peter McCormack: I like it. Fuck it, I like it! Like I say, me and Danny beforehand were talking about it and we were like, "He's fucking crazy, what the fuck's he doing?" But now, the lightbulb on that was, as long as my outgoings are lower than my income, then I'm always stacking. But the difference between you and, say, me and Danny is that we make a choice, "Right, I've got this much dry powder, I'm going to buy this much Bitcoin".
I don't know about you, Danny, but probably similar to me, you maybe go a few months where you don't do it, then you do a bit, then you don't, whatever; you're just not even thinking about it. You're just going, "Whatever I've got left, I'm buying more Bitcoin. Let's go next month".
Sahil Chaturvedi: Yeah, exactly. And it again just comes down to the mental model of, Bitcoin's your cash and the dollar is not an asset you hold on your balance sheet, it's not. Fiat is not an asset you hold on your balance sheet. Fiat is the payment rail, it's a legacy inferior payment rail to move the Bitcoin through space, and then it's dropped off at your counterparty, and you don't have to think about it. You don't touch it for more than the millisecond it takes to transport.
Peter McCormack: But you're not thinking about it, you're just doing it. And then probably right now, your average buy price over the next year is going to be probably lower than ours, because we think about it, and you're just fucking doing it.
Sahil Chaturvedi: Yeah, and as long as you're, over a period of time, five years, you're buying it $3,000, $5,000, $60,000, $3,000, $20,000.
Peter McCormack: As long as Bitcoin doesn't die, yeah, otherwise you're rekt! Dude, it's wicked, man. I'm so glad you came in and told the story and I appreciate you for doing it, because it is bold, but at the same time it's totally logical that somebody who stacks sats and hodls, it totally makes sense. We're going to have to do a follow-up on this in a year.
Danny Knowles: We're also going to speak to Max hopefully in Bedford.
Peter McCormack: Yeah, we're going to get Max in about it.
Sahil Chaturvedi: Oh, yeah, that will be great. I'm actually very interested to hear more of his details, because I'm pretty sure he's more of a no-KYC-type person.
Peter McCormack: He's a total, be-your-own-bank dude.
Sahil Chaturvedi: Exactly, that's going to be fascinating.
Peter McCormack: Sahil's going to come in, there'll be no whiskey, no gift, the shirt will be all torn!
Sahil Chaturvedi: Oh, I lost it all!
Peter McCormack: "I've been living in my car! But I'm still on zero!"
Sahil Chaturvedi: I'm still on zero, guys, I'm a zeroer!
Peter McCormack: Yeah, "Let's go, zero gang!" Sahil, I love you, man, that's fucking brilliant.
Sahil Chaturvedi: I love you too, man.
Peter McCormack: Keep doing it, dude, come back in, let's get an update in a year. Keep crushing and I think Danny's about to make us a barbecue.
Sahil Chaturvedi: I'm pumped, I'm excited.
Peter McCormack: Wicked, thank you.
Sahil Chaturvedi: Awesome.
