WBD597 Audio Transcription
How Lightning Drives Global Bitcoin Adoption with Danny Scott
Release date: Friday 23rd December
Note: the following is a transcription of my interview with Danny Scott. 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 episode of the podcast, I sit down with Danny Scott, the CEO of CoinCorner, a bitcoin exchange based in the UK. Danny has built CoinCorner into a successful business without relying on VC funding, and he shares his insights on the challenges and opportunities of doing so in the highly competitive world of bitcoin.
“Visa and Mastercard, SWIFT… the innovation on them has grinded to a halt, it doesn’t really change, nothing really happens, it doesn’t move, it’s very centralized, it’s very controlled. What we have with the Bitcoin Lightning network, it’s open, interoperable, that allows for innovation to happen overnight.”
— Danny Scott
Interview Transcription
Peter McCormack: Morning, Danny.
Danny Scott: Morning, Peter.
Peter McCormack: Morning, Danny.
Danny Knowles: Morning, Peter!
Danny Scott: Morning, Danny.
Danny Knowles: Morning, Danny.
Peter McCormack: We've got a couple of Danny's on the show. Danny, nice to finally get you on the show, man.
Danny Scott: Excited to be here. It's been a long time and nice to finally get on, which is good. So, thank you for having me.
Peter McCormack: No, any time, man. It would have been nice to have Molly here too.
Danny Scott: Yeah, I think a couple of the team were jumping and wanting to join in as well, but yeah, unfortunately too busy in the office at the minute.
Peter McCormack: We'll get Molly on some time. So listen, man, firstly big credit, everything you've been doing for the UK market. I've been neglecting it, running over to the States and talking to all the Americans, everyone over there; but I know you've been working very hard on the UK market. It was great to see you in Edinburgh and hang out and see everything you're doing. I mean, Danny here, Danny Knowles, has been talking about the fact that we should be doing a bit more in the UK market, and so we're going to be dedicating a bit more time here ourselves.
But just for people listening, if people don't know you, Danny, they don't know CoinCornerDanny, just do an intro to yourself, tell everyone who you are and what you do, where you're from?
Danny Scott: Okay, cool, thank you. So, yeah, I'm Danny Scott from CoinCorner, which is a UK Bitcoin company, sorry, a British Bitcoin company, shall we say! So, we're based in the Isle of Man, headquartered there. We've been around since 2014. I'm Founder and CEO of CoinCorner, still have quite a small team over there, but we've been heavily focused on Bitcoin and what Bitcoin can do from a utility and a use case perspective.
Peter McCormack: Last night, we were hanging out with a beer, and you were telling us, you're not just really an exchange, you're building a Bitcoin ecosystem. So, can you talk about the ecosystem of products you're building and what are the kind of strategies behind this?
Danny Scott: Yeah. So, I think initially, when we first started out with CoinCorner in 2014, it was people wanted to buy Bitcoin, so we wanted to create an easy onramp, get people on to buy Bitcoin; that was the use case back then, buying it or getting exposure to it, whether it was investment, store of value, whatever you want to classify it as.
Once, I guess, myself and some of the founders got our heads into Bitcoin and how it works properly, it was kind of a, "Okay, this is a real-world use case, it can be used in certain ways". We all go through that cycle I think of understanding and the cycle of, "It's going to solve everything", then, "It solves nothing"; you're back and forwards all the time with various concepts and ideas. But once we created this fiat onramp for bitcoiners to come and buy Bitcoin, we wanted to say, "Okay, what's this long-term project? Are we just trying to get people to speculate on the price; is Bitcoin actually going to be used in the real world?" and a lot of the competitors at the time, going into 2016/17 times, they were just creating altcoin casinos, to be polite! So, they were creating casinos effectively and it was all speculating on the price of things, and there was no what we saw as value there in terms of real-world value, real-world use case, there was just nothing there.
So, we wanted to try and come away from that and push ourselves away and be more of a niche and go, "Well, how can Bitcoin actually be used in the world?" So, we started introducing all sorts of things really throughout. So, you can obviously buy Bitcoin, you've got the wallet on the app, you can send a receive now with Lightning; we've introduced merchant services so merchants all around the world can have an account with us, they can pay invoices, receive payments. That can be, for example, an Isle of Man company can invoice somebody in South Africa and South Africa can pay them via Bitcoin, it comes straight into their CoinCorner account, and it can be flipped to pounds or euros.
So, it was then a focus on, "Okay, there's real-world use cases here, there's cross-border payments". We're kind of seeing it in El Salvador in certain areas; obviously, it's a bit of a top-down approach, but there are real-world use cases for this. And it was like, if it's going to be a payment system that everything thinks it is with Lightning, can we also relate that to the real world and what people are familiar with in the real word, and especially in the UK. 93% of in-person payments now in the UK are contactless payments. So, that was where we thought, "How do we create products like people are using them for the traditional financial legacy, financial world; how do we bring that into our world?" so we then created the Bolt Card, which was then contactless Lightning card to tap and pay.
So, that ecosystem has slowly evolved out, we've got recurring payments, we've got all sorts of things now that we're trying to build around, without say copying or cloning the traditional financial system, but all on Lightning. So eventually, we see this as the long game, as what we have with Bitcoin and Lightning is far superior as a technology to what the current financial system has and is, and over time that will migrate over to Bitcoin/Lightning. So, that's going to take years and is decades away, but that's where we're positioning ourselves to make sure we're driving that, for one, and showing that it can be done, which it can be done, and then trying to actually position ourselves in future to be that company there that supports this ecosystem.
Peter McCormack: So, where some exchanges really just give you the ability to buy and hold, or sell and maybe custody, you're thinking of kind of the next step? You're almost kind of like a bank in some ways, in that you're helping facilitate payments and convert back to fiat. Is that the kind of strategy, to be more bank-like?
Danny Scott: We're not a bank!
Peter McCormack: No, I know you're not a bank.
Danny Scott: I have to say that, but yes.
Peter McCormack: But you're providing almost banking-like services.
Danny Scott: It's kind of Bitcoin banking, yeah, is the way you go down. So, yeah, it's cloning the legacy system and trying to bring that onto the Bitcoin standard and run that level of technology. But the way I see it and the way we look at legacy technology and legacy systems, Visa, Mastercard, SWIFT, everything else, the innovation on them is grinding to a halt, it doesn't really change, nothing really happens; it doesn't move, it's very centralised, it's very controlled.
What we have with the Bitcoin/Lightning Networks, open, interoperable; that allows for innovation to happen overnight. We released Bolt Card in end of May/June this year and already, because it's open and people can go and play with it and use it in different ways, you can already do it in a non-custodial way, people are creating their own versions of the cards, people are using it in Brazil and El Salvador. All of a sudden, within four or five months, it's being used I think in about 45 different countries, where we've had videos of people using it and showing it. And it's not all CoinCorner's customers, it's the card itself just being used. So, it shows how fast innovation can happen.
Peter McCormack: A lot of this stuff will make sense for bitcoiners. If I called you up and I was like, "Danny, I want to integrate some of this stuff into the football club, we want to be able to allow people to pay for shirts online and accept it and convert it back to fiat, and we want to take money at the ground", that all makes sense to me because I'm a bitcoiner. In terms of, how are you orange pilling companies, because you've created some adoption obviously with retailers accepting Bitcoin, and you've probably spoken to various companies who are doing remittance; but what is the process of orange pilling them into using Bitcoin; what are the hurdles for them; and, what problems have you been solving?
Danny Scott: So, the main thing, and this is a little bit of a reality check thing for a lot of the industry and what we have to do, stop forcing Bitcoin down people's throats, it doesn't work! Okay, it might work 10% of the time, but a lot of it is a wasted resource and energy, as such. What you need to do and the best experience we've had over the years is, make sure we can find problems that we can solve for people using Bitcoin.
So, what you've touched on there with the cross-border payments side, there are companies all around the world in different jurisdictions that may struggle with banking, that may struggle with access to SWIFT networks; we've been through these issues ourselves. The amount of bank accounts we've lost, I've lost count of, as a company, and we've ended up banking in Eastern Europe and Hong Kong and everywhere over the years, because we couldn't access traditional banking. We're a legitimate banking and running as fair as we can, but there's nothing we could do; UK banks wouldn't touch us.
Peter McCormack: Well, you know the experience I've had with banks, all based on Bitcoin.
Danny Scott: Yeah, exactly. I mean, I've personally lost bank accounts because of it, the company's lost bank accounts because of it, it's been hard. And that was a bit of an eyeopener and it will be to yourself as well how, yeah, there are so many people and companies around the world that have those same struggles every day, just because of jurisdiction or industry, or anything to do with them potentially.
Peter McCormack: Yeah, I can't figure out if this is down to these companies being scared of Bitcoin, or it's because of the restrictions and requirements put onto them by the government for money laundering and KYC, and it's just too much risk for them. The conspiracy side says, "The banks, it's like Turkeys voting for Christmas, I'm not going to do that", but I actually think it's probably more to do with the requirements put onto them by government.
Danny Scott: Yeah, I think quite heavily, yes. So, back in say 2015/16 times, I put it down to they were just uneducated, didn't know what it was, they were scared of it, they were just like, "We don't know, we haven't got the expertise and the resource to deal with this, so we're just going to leave it alone". As time's gone on, they've always been interested in the banks, especially like you say, UK mainstream banks, we've spoken to them many times over the years in all different capacities. As that's gone forwards, that's kind of changed where they know it's coming and they know they've got to do something and get involved; they're just now trying to figure out, how do I get involved and what do we do.
I guess now is the time where we're seeing, is it an anti-competitive thing, or are they still just unsure of it, I'm not quite sure? Years ago, 2016, I would have said, yeah, they were just uneducated and scared of it because of the regulations they had around them. Now, I think it's starting to become more of an anti-competitive move. I say anti-competitive; anti-competitive and I know full well resource as well. We have something called APP fraud, I don't know if you guys are familiar with that, Automatic Push Payments. So basically like a romance scam style thing, so somebody's getting scammed by somebody else round the world and they tell you, "I need some money. Come and buy Bitcoin from [wherever] Coinbase, CoinCorner", and they buy some funds and they send it.
We have I guess built internally a process to catch these and handle them, and we have done this over the years. It's taken us many years to get to the point where we're comfortable with that, but a lot of the banks, if anything flags up from that perspective, we've actually spoken and tried to educate the banks on how to handle these sorts of things, and they just haven't got the time and the resource. So, they just say they're not going to let them send GBP to CoinCorner to buy Bitcoin, because they don't have the resource; it's easier for them to just say no. Whether that's internal banking policies, in terms of where the funds are going, to which department, I think is generally the thing that people are shouting at.
So, there's so many nuances, I guess, to the point of why are banks not banking some of these industries like ourselves, and there's loads of other sectors out there, your CBD, your gaming, everything, the high-risk industries that banks struggle to bank.
Peter McCormack: When you've had banks remove your business from them or decline your business, usually -- for me both times, it's been while I've been with a company for quite some time. So Lloyds, I'd been with them for 25 years. I've been through the story of why they've kicked me out. Then I moved to Wise, for both personal and business. I actually quite liked Wise for a while, it was a great service. The reason they closed my account is they said, "You cannot make transfers to exchanges", which I didn't. But what would happen is, whenever I had a significant invoice being paid by a sponsor, I would have to go through this lengthy KYC process, which was, "Who's the money coming from and why?" and I'd explain. Then they'd say, "Okay, can you send me a contract and an invoice?" I'd have to show them contracts and invoices.
They actually closed my account because of Gemini, okay, because even though it wasn't in their terms of service, their terms of service says, "You cannot send money to exchanges", they actually said, "Well, seeing as you're doing business with a cryptocurrency exchange, we won't allow it", even though Gemini are probably the most regulated exchange, we have a full contract and it's for buying advertising services, they still closed my account based on that.
Each time it happens, it's actually quite a headache, because they don't give you long. Lloyds gave me six weeks; Wise froze my account immediately, immediately froze access to the account so I couldn't do transfers. I had to put in a request to have the money withdrawn, which would take ten days. Did I end up paying your wages from my personal account?
Danny Knowles: I can't remember.
Peter McCormack: Yeah, so I was like, "Where do I go and get an account?" I eventually got one with Revolut, but for ten days, I had my business frozen with no warning.
Danny Scott: Yeah, it's insane. I think, yeah, we've not had the frozen piece in that scenario just yet. Obviously we've lost accounts over the years. Mine was a personal one at HSBC, and I'd had that, again since I was 12 or 13, at the time when you first get your first bank account, and that I think was in 2016. They closed my account with 30 days' notice, and I was trying to contact and they wouldn't talk to me. I eventually went into one of the branches, caught one of the guys there that was trying to help me through it; he was just as lost as I was at the time. It had come from London HQ, he said, so he couldn't tell me the reason why they were closing it.
Eventually got it out of them; I said, "It's because of Bitcoin", and the guy kind of looked at me, didn't know what to say, panicked, and then as I was leaving, he said, "If your circumstances change, we'll welcome you back", and I just kind of left!
Peter McCormack: Really?!
Danny Scott: So, it was effectively just because I was an owner of a Bitcoin exchange, they just didn't want to touch me as well.
Peter McCormack: You fucking criminal! Dude, listen, I had it with Lloyds. The one there was they just called me up and they wanted to ask me about transfers and I said, "It's none of your fucking business"; I mean, not in those words. Then, I got a letter two weeks later saying, "We're closing your account in six weeks", and I called them up and said, "What's the reason?" They said, "We don't give out the reason". I said, "I've been with you for 25 years. I've had every mortgage payment go out. I don't think I've been in an overdraft for 20 years". I said, "You have never had anything to complain about. I've had a loan once, which was paid off in full. I'm the perfect customer. Well actually, I'm a shit customer, because I don't use overdraft fees, but I've never done anything wrong and you're closing my account and you're not telling me?" I think it's fucking terrible.
Danny Scott: It is, yeah.
Peter McCormack: I blame the government for this though.
Danny Scott: It is, yeah. Sometimes the banks are not to blame. I'm not saying the government's to blame.
Peter McCormack: I am, because they outsource surveillance to the banks.
Danny Scott: Yeah, I guess I'm more saying the individuals within the government at that time are potentially not; it's the laws we now have in place and the regulations we have to work through. And we're seeing that in our industry already now, we're seeing regulation become tighter and squeezing us in different ways, and they're trying to still force legacy concepts, I think, into a lot of the Bitcoin industry, which it just doesn't work. So, there's quite an uphill battle at the minute, I think, for that.
Peter McCormack: Well, it's holding the UK back.
Danny Scott: It has been for a while, yeah, unfortunately I think. I mean, we're Isle of Man, we fell under what we call Designated Business in the Isle of Man with the FSA, which is kind of the equivalent of the Crypto Register in the UK. But we've been under that since 2016, so we've been one of the longest running exchanges that fell under any formal obligation to do AML KYC. That was done by the Isle of Man in 2016 and it's only just getting done by the UK now, which is we're six years later and I guess the first batch of them went through maybe a year ago, so it was five years to get to that stage.
I appreciate the UK's a much bigger country than the Isle of Man is. The Isle of Man's a tiny, little place, so it can be nimble and react quickly, but yeah, governments, especially with Brexit with the UK at the moment and the way that's been and the financial industry in London slowly jumping ship and going to Paris and elsewhere, that's got to be a wakeup call to them and they need to react. But I think the likes of the FTX saga and everything is just not going to help and it's just going to make things ten times worse.
Peter McCormack: Not helping, man, yeah. Explain the Isle of Man to people listening, because obviously we've got listeners all around the world, and they probably don't even know what the Isle of Man is!
Danny Scott: So, the Isle of Man is, I always get this wrong; so, it's in Great Britain, but it's not within the UK. So, it sits in between the UK and Ireland, so it's a tiny, little island just between the two of them. It's a self-sovereign state, so it has its own government regulation. It's the longest running government in the world, I think, called Tynwald.
Peter McCormack: It's like our Hawaii, isn't it?!
Danny Scott: The weather's just like Hawaii, yeah!
Peter McCormack: But what is it, 80,000 people live there?
Danny Scott: Yeah, I think 80,000, 85,000.
Peter McCormack: So, on such a small island with a small population, does that mean you have the ability to have a direct dialogue with lawmakers?
Danny Scott: Yeah, massively helpful. So, back in 2015, or 2014/15/16, when we were first getting up and running, we were working with them to help create something that would work for the industry and let us grow, and let them have an oversight of us of what's going on, and make them comfortable effectively. So, yeah, I can drop them an email, call them up, and I can go in and meet them the next day in person and have a conversation with them. I appreciate again, it's a small country, so you get that flexibility and that opportunity, whereas in the UK, it's much bigger, many more clients and businesses to deal with, so it's harder to do that.
But yeah, the communication has been incredibly good and even with the Dubai side of things, where we're opening an office in Dubai at the moment, in the UAE --
Peter McCormack: Are you?
Danny Scott: Yeah.
Peter McCormack: You didn't tell us that.
Danny Knowles: He told me that, yeah.
Peter McCormack: Oh, was that when I was out on the phone?
Danny Scott: You might have been, yeah!
Peter McCormack: Oh, right, so you need to update me on that.
Danny Scott: That was back in September, so we did a partnership. So, we've got a partnership with a Royal Family office over there.
Peter McCormack: Oh, yeah, with the sheiks!
Danny Scott: It's with one of the sheiks, yeah --
Peter McCormack: Nice!
Danny Scott: -- which has been a bit surreal, a bit weird.
Peter McCormack: How the fuck did that come about?
Danny Scott: Honestly, I've told this story so many times now, but we got an email, I think it was about March time, from some lady and I kind of ignored it and thought, "I don't know what this is".
Peter McCormack: Sounds like a scam.
Danny Scott: I thought it was like a Nigerian Prince-style scam, like they wanted to partner with us and do things. So, I was kind of ignoring it, ignoring it, and I think I ignored it for about a month. Then eventually, she kept chasing, so I messaged her on LinkedIn just to chat, I googled her, checked her out, checked the family office out, messaged her on LinkedIn and said, "Is this really you emailing me?" and she was like, "Yeah, please can you reply?" I was like, "Okay, sorry!" I think I replied too quickly! So, that was in April/May time properly conversations picked up.
What they do over there, so they have a royal family office for one of the Al Maktoum family members, one of the sheiks there. They find companies all around the world that are in innovative technology industries and they try and help bring them to Dubai and the UAE. So, they help partner with you, they help introduce you to their network of companies, which is incredibly vast; they help you with regulations and banking and everything there. So, they helped us effectively set up office there, set up shop there and get up and running.
Peter McCormack: So, what is it; is it an investment; is it a partnership on a secondary business?
Danny Scott: JV partnership sort of thing, so not an investment.
Peter McCormack: So, you're basically replicating your services there?
Danny Scott: Yeah.
Peter McCormack: Wow!
Danny Scott: So, the company will be open any time now. We've got the regulation. The regulation over there, or the regulator, is called VARA, and we're just going through that process with them at the minute. That probably will be Q1, Q2 next year by the time we can get the licence and start operating there.
Peter McCormack: Have you been out?
Danny Scott: Yeah, went out to meet them.
Peter McCormack: What was that like?
Danny Scott: It was amazing, to be fair; it was the first time I'd ever been. Dubai itself is just incredible. Have you guys been?
Peter McCormack: I've only transferred there when I went to Mauritius. So, I've flown in and even flying in you're like, "What?" It's insane.
Danny Scott: Yeah, everything is luxurious, everything is big. It's so clean. Even just walking down the main streets, everything's so clean, so nice. Everyone's polite, from my experience there anyway; maybe other people have different experiences.
Peter McCormack: Did they treat you like royalty; did they take you out to dinner?
Danny Scott: They treated us very well! But yeah, not quite like that. But yeah, it was very organised, very professional.
Peter McCormack: So, what do you think this means for the business then?
Danny Scott: I guess from our perspective, again this is like this use case and how do you find the use case in the UK? This is a big thing in the UK. Bitcoin as a payment method doesn't have a massive use case right now and that is a reality; people need to wake up to that sometimes. We've got merchants in the UK and you can go and pay with Bitcoin and it's great, and it actually gets people a lot of marketing and it will bring customers that you wouldn't normally get, so there's positives. However, everybody has a Visa card, Mastercard. People generally don't struggle with banking and access to the system, so there's no real use case for it.
Looking outside of the UK, that's where we've been and trying to look to different jurisdictions and different ways we can help Bitcoin as a utility. So, Dubai, UAE, has an incredibly vast amount of immigrants. So, I think it's about 25% of Dubai is Emiratis, which is the local people there; then, 75% is made up of all sorts of cultures and people from around the world. What that opens up to is remittance markets.
As an example there, I think we have 250,000 Filipinos, I think, in Dubai alone that will remit every month back to the Philippines. So, all of a sudden, you've got markets there that if we can open up in Dubai in the UAE, then we can hopefully help people with remittance products to remit Bitcoin, or value, whatever that may be, dirham in Dubai, back to the Philippines PHP there.
Peter McCormack: So, why would they use you instead of, say, Western Union? Do you have to have therefore a shop in the Philippines?
Danny Scott: No. So, you saw, Danny, didn't you, Strike's announcement this week with Bitnob?
Peter McCormack: Yeah, very similar.
Danny Scott: That's effectively allowing -- so, the way that's done at the minute, people seem to be a little bit confused with that as well on socials, but you can go into your Strike app, you can put some bank details in for Kenya, Ghana or Nigeria, and who it's going to, and then you can click send. That in the background is getting a Lightning invoice from Bitnob, and then Strike are paying that Lightning invoice, or flipping the dollar to Bitcoin, paying the Lightning invoice. At the Bitnob's end in Africa, they're flipping that Bitcoin back to their local currency and sending that onto potentially the bank accounts, to the M-PESA accounts, their money mobile accounts, all sorts of things.
Peter McCormack: Wow!
Danny Scott: So, it's instant and ridiculously cheap, when you start looking at the remittance fees around the world. I think Nigeria's average is around 9% fees on remittance. We're also doing the same thing with Bitnob, sat here this morning waiting for the announcement to go out, which hasn't yet, but I think when we've been testing, we're looking at maybe a 1.5% to 2% fee, and that's including FX rates and fees all combined.
Peter McCormack: So, you're going to cut rates by like 7% there?
Danny Scott: You can almost hit spot rate, and 24/7. FX World obviously operates Monday to Friday, so it's 24/7 you can do it, weekends, any time of night, any time of day. It's instant, it costs next to nothing.
Peter McCormack: But, Danny, we keep hearing about the Bitcoin remittance story, we heard about it with El Salvador, we've heard about it with Strike, we keep hearing about it, yet we haven't seen an explosion of it. Is this really just about education then?
Danny Scott: Yeah. It's been a combination of education and infrastructure. So years ago, we were talking to a venture capital company, back in 2015/16, and they wanted to do a remittance product from UK and Europe back to the Philippines, I think it was. At the time, we were saying, "Okay, yes, you can send Bitcoin. You can buy it with us, you can send it over to the Philippines, but we don't have access to the banking, to the system, so how do we get that back into their hands? There wasn't really a Filipino exchange, you couldn't really do anything, that infrastructure wasn't possible. And that was also with on-chain Bitcoin, rather than Lightning.
Now we've got Lightning, now we've got the infrastructure there. Pouch, for example, are in the Philippines and we can do that with Pouch.
Peter McCormack: What's Pouch?
Danny Scott: Pouch is a Bitcoin/Lightning wallet for --
Danny Knowles: I think they're the one doing the Bitcoin Island, aren't they?
Peter McCormack: Oh, the place you want to go?
Danny Knowles: Yeah.
Danny Scott: They stole our name, Bitcoin Island! But yeah, Pouch are doing it in the Philippines and we can then send Lightning payments to them and they can auto-flip to their local currency and straight into their local bank accounts, and vice versa back to the UK or Europe with ourselves. Bitnob are the same in Africa; there's Neutronpay in Vietnam, there's Bipa in Brazil, there's loads of these now being built out. So these now are Lightning companies that are effectively just building out a Lightning wallet that you can receive money into, and it will auto-flip to fiat and go the other way, the same with Strike in the US.
Danny Knowles: So, you need to partner with these all over the world?
Danny Scott: Yeah. So, what we're already doing in the background, we're already working with pretty much all of the guys I've just mentioned, and trying to help bring together more of an agreed structure, shall we call it, of how the remittance should work for Lightning payments, so it becomes as easy as, you open your CoinCorner app, you type in, for example, do you guys know what Lightning addresses are?
Peter McCormack: Do I know what a Lightning address is?
Danny Scott: A Lightning address, yeah.
Peter McCormack: Of course, I'm not that bad!
Danny Scott: Just checking. You have a Lightning address, don't you?
Peter McCormack: Yeah. I know what an xPub is!
Danny Scott: Could you explain?
Peter McCormack: Did you see the tweet I put about that the other day?
Danny Scott: Yeah.
Peter McCormack: Did you know that was Chat AI one?
Danny Scott: Oh, was it? Oh, okay.
Peter McCormack: That was the point, because everyone was doing Chat AI. So, I went onto the Chat AI and I said, "Write me an intelligent tweet of 280 characters explaining what a Bitcoin xPub is"; that's what I put out!
Danny Knowles: A few people spotted it. I didn't know. I mean, I knew you'd copied and pasted it!
Peter McCormack: I got an email from a guy saying, "I've just seen your tweet about xPub". He's like, "You've come a long way, man, you're really learning"! I was like, "Dude, that was a Chat AI; I couldn't come up with that shit!" Yeah, I know what a Lightning address is.
Danny Scott: Yeah, so you can think about it, obviously for people listening, if you're not aware, a Lightning address kind of looks like an email address, and you can then effectively type in like danny@pouch.ph and that could be your Lightning address for your Pouch account in the Philippines. From CoinCorner, you can just type it into your app, send £100, press the button, it will pull £100 from your CoinCorner balance, turn it into Bitcoin, send the Bitcoin over to you via Lightning and you'll receive it and flip it the other side.
Peter McCormack: Does every Lightning payment need to start with an invoice?
Danny Scott: Yes. Well, there's keysends and you can kind of do it with a keysend, but it's not widely used.
Peter McCormack: But can you have auto invoice creation? So, if Danny had an address, I just want to send him Lightning tips, right, how does that invoice get created for that tip to get sent?
Danny Scott: So, for a Lightning address, what you need is a Lightning address. Just type it in, press a button, and it will --
Peter McCormack: You don't need to create an invoice?
Danny Scott: In the background, it's creating an invoice for you, so it's communicating with that other service.
Peter McCormack: So it's saying, "Give me an invoice, because I'm going to pay it"?
Danny Scott: Yeah.
Peter McCormack: Right, okay.
Danny Scott: And you wouldn't be aware it's even creating an invoice and doing that in the background. It's kind of like sending an email, you're not aware of what's going on in the background with SMTP.
Peter McCormack: Why does Lightning require invoices to be paid; what's the idea behind that?
Danny Scott: You're asking too technical questions here: why does it require; Jesus!
Peter McCormack: Let's ask Chat AI, see what Chat AI says!
Danny Scott: Actually, I'm interested in this as well!
Peter McCormack: Has it got it?
Danny Knowles: It's still working. "In order to make a payment over the Lightning Network, the sender must provide the recipient with an invoice, which is cryptographic proof of the payment terms agreed upon for the channel. This invoice contains information such as the amount of payment, the payment's recipient, and the CTO associated with the payment channel".
Peter McCormack: I love this bloody software!
Danny Knowles: "The invoice also includes a payment pre-image, which is a secret value that the sender must use to prove that they actually have the ability to make the payment".
Peter McCormack: Don't you love this thing!
Danny Scott: That's impressive.
Peter McCormack: Do another one in the background, "Tell the story of the Bitcoin Cup football final between Real Bedford and Oxford City". You can't ask it who's a better team because it says, "I'm not going to tell you that shit", but it might come up with stuff.
Danny Knowles: "Not able to browse the web and therefore do not --"
Peter McCormack: Yeah, "We do not give predictions". Have you played around with this Chat yet?
Danny Scott: Not properly yet, no.
Peter McCormack: Oh, man, it's insane, the shit that you can do.
Danny Scott: I've seen a lot of it at the minute. I'm trying to still grasp whether it's actually using AI, as is AI behind the scenes, or is it just scouring the internet to grab what it can, and so the result is a better Google?
Danny Knowles: I don't know, but it's unbelievable. So, I asked it to write a description for a podcast, and I gave it a few prompts. It was the Nate Harmon and Steve Barbour --
Peter McCormack: Did we actually use it in the end?
Danny Knowles: No.
Peter McCormack: Why not?
Danny Knowles: Because it wasn't quite good enough. But it was unbelievably good.
Peter McCormack: Could you have just edited it?
Danny Knowles: Oh, you could have used it as a basis for the thing and just edited it.
Danny Scott: Can we use it for this one?
Danny Knowles: Yeah, all right, we'll use it for this one!
Peter McCormack: I also did one, I was like, "Give me a series of unique questions to ask Michael Saylor about Bitcoin for an interview", and it came up with like 15 questions, or whatever it was. And, look, some of them were shit questions, but some of them I was like, "Yeah, that's a fucking great question". It's insane.
Danny Scott: Yeah, it is really good, it's scary.
Danny Knowles: If you use it as a template to start from, I think it actually gives you some quite good stuff.
Peter McCormack: Who won the Bitcoin Cup?
Danny Knowles: It said it couldn't do it.
Peter McCormack: What?
Danny Knowles: It said, "I'm not able to browse the web and therefore don't have --"
Peter McCormack: Let me look! I'm going to get this shit, "Tell the story of a football match between Real Bedford FC and Oxford City FC".
Danny Knowles: It should have hold music!
Peter McCormack: Yeah! Oh, weird.
Danny Knowles: It doesn't like sports.
Peter McCormack: "I don't have the ability to create original content --", well I've had it tell the story. "Tell the story of how Danny Knowles --"
Danny Scott: We could be here for a while!
Danny Knowles: Yeah, you did the story of how I was the downfall of the podcast, which is true!
Peter McCormack: "-- killing Peter McCormack".
Danny Knowles: You were overloading it with story requests!
Peter McCormack: I did. "I'm sorry, but I'm not able to --"
Danny Knowles: It definitely used to do that.
Danny Scott: If it is AI that we're talking about, then it's self-learning, it's hopefully going to be learning what you previously put in and it will be adjusting its answers accordingly.
Peter McCormack: So it's thinking it shouldn't be doing this.
Danny Scott: It shouldn't be telling you how to kill Peter!
Peter McCormack: Or, maybe it's learning in the background and it's like, "Right, we should hide this shit". It's the rise of the robots.
Danny Knowles: It's scary, it's very scary.
Peter McCormack: This is weird, because it was totally doing this and that was fun.
Danny Knowles: And it was doing poems and stuff like that.
Peter McCormack: So, "Write a poem about Oxford City Football Club playing Real Bedford".
Danny Knowles: You're the reason it's under too much demand!
Peter McCormack: "In Oxford City of dreaming spires, where history and learning never tire, the football club known as the Us, gather strength to take on their foes. In the field of play, the players met, Oxford in Blue, Bedford in White, the fans are cheering, the tension's high, as the teams clash in battle for pride. Oxford attacks with pace and flair, looking to score to show they're a force to bear. Bedford defends with heart and soul --", just give us the fucking score!
Danny Knowles: Before that, I'd say it sounds like a bedtime story, doesn't it?!
Peter McCormack: "So, let's raise a glass to the Us for their victory over Real --", fuck off! Yeah, that's weird though, because I got it telling some stories. So, I basically just said, "Tell me a dark story about this" or, "Tell me a dark story about that", and it was fascinating little stories. It's weird that it's…
Danny Knowles: It's learning.
Danny Scott: It's learning, yeah.
Peter McCormack: Do you think there's like… Yeah, weird. Anyway, so back to Lightning payments and adoption. Ask it actually, "How do we drive adoption of remittances?"
Danny Scott: That's a very good question.
Danny Knowles: I mean, Danny, do you just want to go home?!
Peter McCormack: "What would Danny think?" In the future, it will just be me and AI; the whole podcast is me just talking to AI!
Danny Knowles: You're asking the AI for questions, so it's just AI.
Peter McCormack: Yeah, but then I can ask the AI to answer the questions. There's going to be some people listening to this right now going, "This is fucking bullshit. I want to learn about Lightning invoices"! What's it saying, Danny?
Danny Knowles: "There are a few different ways people are working on to drive Bitcoin adoption and other cryptocurrencies".
Peter McCormack: Oh, fuck off! All right, so the big thing, the technology works, it saves money, it's open 24/7, you don't have to go to Western Union, you can literally do it sat in your pants on the couch; is there any part where the traditional remittance industry is better?
Danny Scott: I think at the minute, for physical cash, yes, because that infrastructure isn't there yet for the Bitcoin side.
Peter McCormack: So, if somebody wants to get cash the other end, that's the one thing they've got?
Danny Scott: Yeah, which is, as we know, dying out, so that is a dying sector, shall we call it.
Peter McCormack: But for most people, there's no logical reason for them not to use what you're using over Western Union?
Danny Scott: Not at the minute. It is really the physical cash side; if they were in Philippines and they didn't have a bank account.
Peter McCormack: Do you know what percentage of people using remittance end up with physical cash the other end?
Danny Scott: Let's ask Chat AI!
Danny Knowles: That's amazing. Is this the new factchecker?
Peter McCormack: Who factchecks the AI?
Danny Knowles: I'm just going to ask Google this one.
Danny Scott: All right!
Peter McCormack: But whatever the number is, it's a decreasing number. But for anyone who is not needing cash the other end, there is no reason they shouldn't be using yours?
Danny Scott: Yeah, I agree. And that's part of, at the minute, it's still scary a little bit and people obviously don't know about it, people have never used it, they're unsure.
Peter McCormack: Even though they're using Bitcoin?
Danny Scott: No. So, somebody like Strike have been pushing that for a while now. They're trying not to be Bitcoin, they're trying to be dollar but actually in the background, it's using Lightning to move the money around the world.
Peter McCormack: But some people might want Bitcoin, so it's like, how do you do both?
Danny Scott: It's difficult, yeah. I think you've just got to give customers the option. So, the remittance products, the way you market that almost has to be, you're actually moving value around the world, whatever currency to another currency. But then at the same time, if you're advertising your Bitcoin buying service, so you want them to just come and buy or sell Bitcoin, you are advertising to a different crowd, and it is completely different audiences you have, or generally; we're obviously the crossovers.
Peter McCormack: So you could just end up opening an office in a few of these countries?
Danny Scott: Potentially, yeah. I think the way I'm seeing it at the minute, I've explained this to a couple of people recently, they've asked me the question, "How do we compete with Visa and Mastercard, Western Union and the likes in all different areas of payments?" The point is, we don't have to. We are, in a small piece, but there's lots of CoinCorners out there. There's Strike, there's Bitnob, there's Pouch, there's all these ones that we talk about that are all now starting to build this infrastructure all around the world. We don't need offices in the Philippines because Pouch are there, so we can interact with Pouch and make the payment and they receive it on their end.
So, whereas with transfer wires, or say Western Union, there's Western Union at each end, and the infrastructure they've had to build out to do that, the physical infrastructure to do that, has been massive; whereas now, we just don't need that any more.
Peter McCormack: They're kind of fucked really when you think about it. It's a little bit like, you can think of so many industries, think of Blockbuster, right. They built out their infrastructure of having all their shops in every major town, so you could go and rent your DVD or your video; do you remember videos?
Danny Scott: Oh, yeah!
Peter McCormack: Do you remember videos?
Danny Knowles: Yeah.
Peter McCormack: And then, I remember before we had Netflix, it was LoveFilm; do you remember LoveFilm?
Danny Scott: Yeah, I remember LoveFilm.
Peter McCormack: It was like, you could just have it posted to you. Now, that was a bit annoying, because that was kind of --
Danny Scott: That was what Netflix was originally.
Peter McCormack: Yeah, it was posted. But I always found that annoying, because I was like, "I have to order it two days early", and I liked the experience of going to the shop and flicking through. But that kind of removed some of the infrastructure, but Netflix just destroyed the infrastructure. I can sit on my couch in my pants and I can just surf and find the film I want to watch. And essentially, that is what is going to happen to Western Union, because they've got the expensive legacy infrastructure that is not required.
Danny Scott: The little quote I say in the team back home and get laughs at that is, "People are lazy", and at the end of the day, without wanting to insult people, "People are lazy. Innovation is created off the back of laziness".
Peter McCormack: Well, you have insulted them, and I think it's okay!
Danny Scott: Good!
Peter McCormack: People are lazy.
Danny Scott: People are lazy, and if you look back at innovations, they are created off the back of people being lazy. The webcam is always the example I use. It was created in Cambridge University, I think, and it was purely some tech guys in the university couldn't be bothered walking to check if the coffee pot was ready and boiled in another room, so they created the webcam so they could watch it and check when it was boiled, or when it was empty, I think it was, so they could go and refill. So, things like that, innovation in technology is created by laziness and exactly what you're saying there, you can stay at home and watch Netflix, you don't have to go to the video shop any more.
You'll be able to do the same. Western Union, you have to get out your house, go and pick up the cash, do whatever. Somebody in the UK will be able to stay at home, sending to somebody at home in the Philippines, and you'll be able to both sit on the couch and send the money over and you just receive it instantly. So, yeah, the way I see money moving around the world with Bitcoin and Lightning, it's playing out similar to what you're seeing with Blockbusters and all the industries I guess we've seen over the years that have slowly died out due to not keeping up with innovation.
Peter McCormack: Do you know what I hope? I kind of hope this utility builds out to the point where we get rid of bear markets.
Danny Scott: Yes. I think people will be speculating on that this time, and I think we're obviously way to early. But yeah, that would be really, really interesting, because that means it's no longer the hype cycles we've lived and experienced; they are difficult to operate as a business especially, and I think you had Jesse on, didn't you, from Kraken the other week, and his comments around that. As the hype cycles go, the businesses follow the hype cycles.
So, during the bull period, great, we get lots of customers, lots of trades, lots of money; bear periods, it's the complete opposite way, and you're seeing that at the minute. People are laying off staff at all the exchanges, and that is hard to run a business when a lot of the businesses in the industry are venture capital backed and the VCs are looking for returns at some point. So, they're trying to effectively force the industry, where it's just not ready to be forced.
Peter McCormack: You cannot force it. I mean, look, you can organically support it, but you cannot force adoption like you can force speculation. A speculation hype cycle, that can go crazy, right, but you cannot force adoption of Bitcoin as a utility outside of that. And that's why I think you're company's super-interesting. You've not raised money; we can talk about that, right?
Danny Scott: We raised £150,000 in 2015 from just a high-net-worth local --
Peter McCormack: So, you did some seed capital. But you haven't then gone series A, B, C, D?
Danny Scott: No, never touched venture capital money or institutions.
Peter McCormack: I think that's really cool, and I'm going to say for a couple of reasons. Firstly, you're not under pressure to have an accelerating, growing bank balance, which isn't forcing you to take risks, and I think that's maybe what happens to some of these companies; because every round they want a much higher valuation, therefore with those higher valuations they need to have more business, and I think a lot of companies have just taken big risks, or have witnessed these down rounds because of it, because it's just not possible to have that kind of accelerated growth. So, I think it's cool because of that, but I also just think it's cool because you've got the right time preference. Your time preference is matching Bitcoin's.
Danny Scott: Thank you, as well, really appreciate the comments there; but yeah, that is the way my mind is and the way I'm wanting to move forwards and the way I've always moved forwards is that long-term time preference. You're looking at the long-term sustainability of the company, not just get in, get out. That is unfortunately the VC world, Silicon Valley world. You see down rounds and down rounds are generally the killer of a lot of companies traditionally, in the Silicon Valley world. In our industry, I don't think that's quite going to be the same, because we have these four-year hype cycles.
So, yeah, going back to your original point, I'm looking forward to a time when the cycles slowly come to an end and we can actually just be using Bitcoin in everyday life. And whether you realise it or not, an analogy I'd like to touch on, if that's all right; bear with me is what I'm saying! So, if you look back on the internet, people compare Bitcoin to the internet, and you go back to the 1990s and people try and compare it. But they're comparing it against users of the internet and users of Bitcoin.
When you look at the internet and how the internet grew, and initially it was universities around the world sending research papers to each other and data; then you had emails and you had basic websites; then you had ecommerce; then we had dating; then eventually social media; then eventually you had smart phones, and this is going over decades now. We're getting to a point now where you eventually get to streaming and Netflix, and that was probably back in the 1990s!
But every single one of them introduced a new wave of customers and a new wave of users, and sometimes, I remember my dad back in maybe early 2000s, I'd be saying, "No, he doesn't need a computer, he'd never use the internet". Now, he uses the internet, I would pretty much guarantee, every single day, whether that's watching telly and it's being streamed, whether that's picking up a laptop and you're straight on the internet.
Peter McCormack: Is your dad the same?
Danny Knowles: No, he used to work in IT, so he's always been pretty on it.
Peter McCormack: My dad was pretty dad. So, my dad worked for an airline, he was an aircraft engineer, and he was quite late to computers, and he only had to use them for emails. But now, my dad does online banking and if you know my dad, that's incredible to do shit like that! He has a Facebook account, he emails. Just to put it in perspective, my dad only got a phone about five years ago, a mobile; he just didn't have one. But he does it all as well. Eventually, everyone gets there.
Danny Scott: Yeah, and they do it because, this is the point earlier on, don't force Bitcoin down people's throats. Give them the utility, give them that. What our version of the smart phone is at the minute, I have no idea in the Bitcoin world of what that might be. What I'm looking at there is products, so your smartphone or ecommerce, or eventually Netflix and streaming. In the Bitcoin world, it's probably going to be slightly different to that, and remittance could be one and FX money moving around the world; one of the other ones could be like El Salvador adopting it, and that brings in a new wave of users and it slowly gets there. And each time a new country brings it in, it's more and more people every time, and that's kind of our versions of, I guess, the smartphones and the Netflix.
Once the US adopt it in a better capacity, maybe that's our smartphone point in time, and that's where we see more adoption. This is one of the things that people need to understand and people need to be patient. There's a 40-year timeline I'm talking of there on the internet, from starting on the internet to where we are today. That is going to be, in my head, a similar capacity to Bitcoin. So, we're going to expect, you know, we're 12/13 years are we in now to Bitcoin? So, you've got to think back then, we were in the early to mid-1990s in terms of technology advancements in comparison to the internet, so we've got to give it time and you've got to see another 5, 10, 15, 20 years for it really to be at the Netflix stage maybe, where your mum and your grandparents are all using it on a daily basis without realising as well, I think, and that's the key for me.
People don't like to hear that, I think, and people want it to happen overnight and tomorrow and they're impatient. But the reality is, it's not going to happen overnight, it's going to take time, it's going to be hard, it's going to be an uphill battle with regulators and banks and everything else. But in my head, eventually it gets there, whether that's 10, 20, 30 years' time, and that's where we want to aim as a company, to be there at that point.
Peter McCormack: So you're very practical about it all?
Danny Scott: We try to be!
Peter McCormack: Does that mean you sit outside and observe a lot of what's going on in the Bitcoin industry and, are you inside calling, "Bullshit" in your head?
Danny Scott: It's a lot of noise, yeah, definitely. I was telling you guys last night about, you know, I don't like going ambulance-chasing and grave-dancing, and that sort, when things are blowing up and you're jumping on it and doing that, which I don't want to do as an individual and I don't want to do as a company.
Peter McCormack: Bitcoin or crypto?
Danny Scott: Yeah, either one. Either one's not good in reality. I think FTX going under and all that side, it's good for a clean-up of the industry, but the negative side of that and if we keep shouting about that and making a big song and dance about it, Sam has to, in theory, go to jail at some point, or something needs to happen to him in whatever capacity; but if we keep shouting and making a song and dance about it, it gives the regulators more ammunition to say, "These guys are still going on about this. We should clamp down on it; if the people that are working in the industry are singing a song about it, then we should be also clamping down", and it creates a negative perception as well for the outside world. And the more noise we make about that, the worse that gets.
So, yeah, rather what we try and do is try and ignore a lot of that noise as much as possible and just focus on what we're doing, what we're building and which direction we can go. We want to find companies around the world that we can work with, that are in the same kind of mindset and the same direction as we're going, which I've touched on before with Bitnob and the like, and we can then drive together and create something together while the noise is happening around us. We just have to kind of ignore it.
Peter McCormack: Well, you guys are pretty much all signal, especially Molly. You always seem to stand out to me when you're doing little demos, or showing shit that's happening. That really cool thing where they were in a circle passing a Bitcoin around, it was so cool!
Danny Scott: Yeah, did you see the El Salvador one with Joe?
Peter McCormack: Yeah.
Danny Scott: That was good. That was something I wanted to do for a while.
Peter McCormack: Were you on that trip; I can't remember?
Danny Scott: Yeah.
Peter McCormack: You were? I just remember seeing it, because Molly ran it and I saw it. What did you make of El Salvador; was that your first time?
Danny Scott: No, sorry, I've not been to El Salvador.
Peter McCormack: Oh, you weren't on that trip?
Danny Scott: Oh, sorry, I thought you said on the video. No, Joe Nakamoto was in El Salvador, and we were just sending to him. So, I was in the office in the Isle of Man, and we sent to him. Then he was there and he went and paid in person.
Peter McCormack: Wasn't there another one though, where Molly was in a circle?
Danny Scott: Yeah, I think that was one a couple of weeks before maybe, when we did that one. So, we've done a couple of them where it's just to show I guess the power of what you can do with Lightning. I think one of the big things for education and helping people along in their adoption is actually showing them how something works. We don't like announcing something if we haven't got something to show with it. So, we could be doing all sorts of announcements, but if there's nothing to show, I feel like people don't really understand what it is, there's then loads of questions, it creates more questions and problems. Then, when you finally release the product, the excitement's gone because everybody already knew it was coming and they're not bothered.
So, every time we want to release a product, we don't shout about it, keep it quiet, and then we'll shout about it but it's in action there working. So, we've done that all the way through and we want to keep doing that, I guess, and it's more authentic, I'd say. I don't like letting people down, I guess, in some way when you shout about something and then it doesn't happen, which happens all the time. There's so many in-the-background things that we've come very close to, and a lot of the companies do similar, and it's out of your control a lot of the time and out of your hands, it's no one's fault. But these things, sometimes you don't get them over the line for X, Y and Z reasons and, yeah, I think I've learnt my lessons over the years of not to get too excited and shout about something. Originally, we would have done that, but now I think we've learnt to wait until it's over the line, it's live and then we can shout about it.
Peter McCormack: Going back to the Isle of Man and driving merchant adoption and usage out there, when you get a merchant to accept Bitcoin, could it be that they only get maybe one or two transactions a week; and how do they feel about that? I ask for a reason, because I'm obviously thinking we have Bitcoin Beach, we have Bitcoin Lake in Guatemala, we've got Bitcoin Island original, we've got the Bitcoin Football Team. I'm thinking about Bedford and driving adoption, like going around my town and trying to introduce it.
But I can imagine going into a place saying, "Yeah, you should accept Bitcoin", and they do it and then nobody comes in. What kind of a requirement, what kind of a burden does it put on them to accept it?
Danny Scott: Okay, reality check again for everybody!
Peter McCormack: Yeah, reality check.
Danny Scott: Yeah, adoption is very, very difficult, in terms of payments in person especially, even payments online. In the Isle of Man, for example, yeah, we onboarded very quickly 50 physical point-of-sale shops, where you can go and pay with Bitcoin. You are right, they may only get one or two orders a week some of them, so they're few and far between, and some of them may got for a couple of weeks without an order because no bitcoiners are going there. We have quite a lot of bitcoiners on the island as well for the size of the island, there's quite a good density of them.
Peter McCormack: How many do you get at a meetup, say?
Danny Scott: It varies, because we do a weekly lunch thing with maybe 10, 15 people. And then we'll do the monthly, or every couple of months there'll be more towards 50 maybe.
Peter McCormack: Yeah, a good size.
Danny Scott: It kind of cycles around really for how many people come. So, yeah, there's a number of companies now that are in the industry and then a lot of other people that have moved there to come and live there for most of the time, capital gains tax purposes, and they've come and set up there and they're literally just coming and living there. Some of them don't work, they're just bitcoiners that are coming and settling down.
So, the adoption, it's definitely -- we've done that initially for the Bolt Card and to show people the familiarity of what you can do with contactless cards and you can make that payment. We onboarded all the merchants; they came onboard because we had that card. Before that card, explaining to them about accepting Bitcoin was so alien and it was so complicated, they didn't understand scanning QR codes and from the UK perspective, we're just not used to that. So, with that familiarity of the Bolt Card and the contactless payments, that became such an easy settlement. So, we onboarded them very easily and very quickly at that point.
Peter McCormack: What new infrastructure do they require to accept it; or, is it really just like them accepting a card?
Danny Scott: Yeah, they just to have an app on the phone. So, they can literally just have CoinCorner app on the phone, Breez wallet works with their POS version, loads of other ones.
Peter McCormack: So, say it's a kebab and they put in £5 and that person taps?
Danny Scott: Yeah.
Peter McCormack: So, an interesting point on that, this is one of the things that's frustrating for me. So, at the Football Club, we use Zettle for our point of sale, and we have all our merch in there and we have all our stock in there. And what's really cool is, you know, we've got a game next Saturday, I will go in and I'll have a look -- do you know Zettle?
Danny Scott: Yeah.
Peter McCormack: So, I'll go in here, here we go, so here's all our stock, and I can go into inventory and I can go down here; right, I've got no bags of Maltesers, I've got only seven cans of John Smith's, I've got no cans of Stella, and I can just go to the cash and carry and stock up and we have it there. And then it's really cool, when I do want to do a sale, I go like this, I've sold a pint of beer and I've sold a packet of crisps, I go to charge them and I can take the cash, card or PayPal and it all manages.
But when I accept Bitcoin, I have to go into a separate system, take the payment, which is super-quick, and then on a piece of paper, we have to write down what the sale is; and at the end of the day, I have to go in and take that off the inventory.
Danny Scott: Yeah, it is a pain.
Peter McCormack: Yeah, but also, it's not marked as a sale. So when I go and look, it's just a deduction on the inventory. So, when I go and look at the reports of what we sold that day, I won't get it from there. So, I have to do a manual report separately in Excel, where I take it from there and do my Bitcoin. It's annoying. When do you think we get to the point where someone like Zettle -- I just want to have Bitcoin.
Danny Scott: Bitcoin on there, that's what it needs, and that is when, I'll go back to the legacy piece in a minute, but when you go and pay in the shop and you've got a point-of-sale device, which is a card machine, and you can tap your Visa or Mastercard and it just knows, eventually the idea is it will be Bitcoin there as well, so you'll be able to tap your card or tap your phone and it will pay in Bitcoin, Visa or Mastercard, and the merchant doesn't need to know which one. Because, you know when you go into a shop and they say, "Are you paying with card?" do you say, "It's a Visa card"? You don't, you just tap and pay and off you go.
Eventually, that needs to be embedded, like you're saying there, there needs to be a Bitcoin option and it actually just naturally works.
Peter McCormack: If we spoke to Zettle and they're like, "Yeah, cool, we want to do this", and they had a Bitcoin button, would it be very easy for them to integrate with you? Is it literally like an API call and you're displaying something being done?
Danny Scott: Yeah, we've just done our first legacy integration with a POS provider. They're a fairly small one at the minute, but I think they've got about 100,000 POS machines.
Peter McCormack: Who are they?
Danny Scott: A small company in the UK, we've not announced the name yet; on the Isle of Man, sorry.
Peter McCormack: Okay, you can tell me afterwards.
Danny Scott: Yes, but I've put a video out on Twitter in a couple of weeks' time.
Peter McCormack: Is it basically that?
Danny Scott: Yes. Their POS system, very much, yeah. You got into a pub and most of these are pubs and it's got the pub POS system, and you'll pick your drinks and everything else and it's got all the stocktake and everything in there; and then when it comes to payment, you can pay card or Bitcoin, and you click "Bitcoin", and it's got an FC adapter.
Peter McCormack: So, we could just sack off Zettle and just go with them?
Danny Scott: Yeah, you could do.
Peter McCormack: Tell me who it is afterwards.
Danny Scott: Okay.
Peter McCormack: Obviously, you can't say on air, and I will have a look into it.
Danny Scott: But there's more of them coming. We're working with quite a few others at the minute. Again, I'm just doing contrary to myself here, announcing something that's not ready!
Danny Knowles: You're announcing an announcement!
Danny Scott: Yeah! But that's coming in the background, is kind of where I'm getting to. The adoption is coming there, but it takes a long time. This small one has taken many months, nine months, or whatever it's been, of initial conversations to where we are now, and it's still probably going to be about another month or two before we get live and in a physical shop with that. So, these things just take time.
The adoption, going back to the original point, the UX, especially in the Isle of Man shops, merchants, exactly what we've seen from El Salvador from a distance in this last couple of weeks, people are going into the shops saying, "Can I pay with Bitcoin?" they're pulling out their phone or a device trying to charge it up because they forgot to charge it, because they don't get many orders, and the user experience is terrible for the consumer and for the merchant. A big part of that is because there's not enough people regularly going and paying. So, even though we onboard all of the merchants, it doesn't mean to say that the consumers are going to come.
You've then got the problem of, if the consumers are not coming, then the merchants are going to start switching off, is what happens there. We've seen that historically exactly the same, years ago, back in 2014/15, and we onboarded a few back then, and then people stopped paying because the hype cycle disappeared.
Peter McCormack: You've got a chicken-and-egg problem as well. At the club, most games we don't get any Bitcoin transactions, unless a couple of random bitcoiners have come in and they would do it. But the days where we have a meetup before the game, we take hundreds of pounds in Bitcoin, because all the bitcoiners want to pay in Bitcoin, and it's such a hard chicken and egg.
Danny Scott: I think what you've got to do is fast-forward, going back to this time preference of, take a step back and look at the bigger scale, and look at say 10, 15, 20 years in the future, you say you've got your Barclays, your NatWest and they've got 6 million customers with a Visa debit card out there; that Visa card eventually could just be a Bitcoin-backed card, like a Bolt Card or Lightning Card. They can effectively give that to their customers because all the merchants around the country accept it and use it. So, at that point, it doesn't matter if they've got a Visa, a Mastercard or a Bitcoin card, they will be able to go and tap and pay and it will just pull from their bank accounts.
That's the point where it's no longer forced. It's in some point forced on the customers and the consumers of NatWest, for example, there but it's now just another version of Visa, Mastercard. You've got Maestro, you've got American Express, it's another version of that, and the customer doesn't really -- do you care if, from your bank, you get a Visa or Mastercard, which one it is? It doesn't really make a difference. So eventually, the banks, as they start to adopt Bitcoin infrastructure and make the payments from a Bitcoin/Lightning perspective. They will then eventually, the market will dictate which one they go with. Will they go with Visa, or will they go with Mastercard because of the pricing; or, will they go with Bitcoin/Lightning, because maybe it's slightly cheaper now and it's not restrictive of what they can do and how they can operate the business?
So, the market, I guess, will dictate which one, I'm not going to say "wins" at the end because they'll run in parallel for many, many years, I'm sure, but that is the way I would see it, taking that step back and seeing, that is where, from the football club perspective, people coming in and paying; they'll be coming in and paying with Bitcoin without even thinking about it and realising. But still, we are 10, 15, 20 years off that happening, but we have to build that infrastructure in place now and build that up.
So, in the meantime while we're building that out, we need to find the current use cases around the world, which comes back to remittance and FX and money moving around the world. In the meantime, you keep building those products out and making use of it and every time you're making use of that, the remittance products, for example, that's pulling in hundreds of thousands, if not millions of people eventually, they all then start to get comfortable with Bitcoin. Then over time, they start using it in different ways, different capacities, and that then drives next waves of adoptions.
That's the way, I guess, I look at it and the way I'm looking at Bitcoin in this long-term timescale, and not this short-term hype cycle, if we can avoid it.
Peter McCormack: You're very patient, Danny Scott, very patient.
Danny Scott: Yeah.
Peter McCormack: I'm conscious I just really want to support everything you're doing. Like I said it to you earlier, I feel like we've neglected the UK and after going to Edinburgh, I feel like we want to do a bit more and I know you guys have been working super-hard here and you've been doing some great stuff, and I feel like if we can help you, we can. But is there anything we've not talked about you want to get into?
Danny Scott: Got the cards. Would you like a present?
Peter McCormack: Yeah, show us! These are the Bolt Cards?
Danny Knowles: No way!
Peter McCormack: I didn't know you were doing this.
Danny Knowles: So, is this a world first, or have you been doing these for a while?
Peter McCormack: Oh, this is fucking cool!
Danny Scott: No, these are purely a one-off run for your guys. There's more in the bag down there.
Peter McCormack: Right, so for people listening, Danny Scott is a legend. He has handed me these Real Bedford Bolt Cards. Explain the Bolt Card to people listening.
Danny Scott: So the Bolt Card, similar to what I was talking about there with the Visa and Mastercard, it's a contactless card that you can go tap on a POS device, a Bitcoin POS device, and it will make a Lightning payment effectively to make the payment, rather than Visa or Mastercard rails.
Peter McCormack: So, how do I load it up?
Danny Scott: That's what we can show you.
Peter McCormack: Right, let's do it. This looks so staged, doesn't it?! Trust me, this was a surprise. This is cool, dude.
Danny Scott: A live demo is never going to work, but we'll see. So, in the CoinCorner app, you can go onto your cards. Shall I go that way? You can go into your cards, and then you've got your Bolt Card, which is like your debit card as such, tied to your account; you can then tap and pay with that. Or, you can set up the gift card. So, if I set up the gift card, 2,000 sats on, I click "create" and now say, "Tap the card on the phone", I tap the card and that's done. So, you've got 2,000 sats on there ready to go.
Peter McCormack: Did you see that, Sean? That now instantly has money on it, Bitcoin.
Danny Scott: So why I was giving you these guys, these four, is to help with the club, you're wanting to help with the players getting into Bitcoin and things; it may be a good Christmas gift for topping them up with some free sats.
Peter McCormack: And so, how do I know where I can spend this?
Danny Scott: Generally, there is a website out there that you can go to and it will show you all the different places that accept Bitcoin. It's few and far between in the UK at the minute; the Isle of Man is more dense, so there's plenty in the Isle of Man.
Peter McCormack: So, if we wanted to accept it at the club, what app do I need?
Danny Scott: You can use CoinCorner's POS, without wanting to shill that! Wallet of Satoshi works it, Breez, BTCPay Server works with it, pretty much any Lightning wallet these days now is compatible with that.
Peter McCormack: Wow, that is super-cool, thank you.
Danny Knowles: You need to have that on your phone to get the balance, right?
Danny Scott: You can tap it and sweep it into any of your -- if you do it now; have you got a Lightning wallet, just any Lightning wallet? If you tap it on your phone, it will pop up with the wallet.
Peter McCormack: Oh, there we go, ZEBEDEE NFC tag, oh, it's taken me to ZEBEDEE.
Danny Scott: Has it defaulted to ZEBEDEE?
Peter McCormack: Yeah.
Danny Scott: Yeah, sometimes your phones dictate which one you can go onto.
Peter McCormack: ZEBEDEE's that gaming thing I told you about.
Danny Knowles: Oh, right, okay.
Peter McCormack: But anyway, that's very, very cool.
Danny Scott: That sweeps the sats straight into whichever wallet you've got.
Peter McCormack: Can I switch what it defaults to?
Danny Scott: I don't know. This is an ongoing question online at the minute. Everybody's got this problem. iPhones seem to pick one and Androids didn't used to, and Androids have kind of started doing that a little bit now.
Peter McCormack: It used to be BlueWallet was my default.
Danny Scott: I'll just tap that on the back of mine. That will then pop up and give you all different wallets that it's compatible with.
Peter McCormack: That's so cool, these are so cool. Thank you, Danny.
Danny Scott: You're welcome.
Peter McCormack: You can't have one. Oh, you've still got it! That is very, very cool. Okay, very cool, thank you, appreciate that.
Danny Scott: You're welcome, as well. And I think the innovation for that is the highlight piece of what I touched on earlier on. We released these in May and people are creating things off the back of them, all the wallets are compatible with them. There's just so many different -- we saw one the other day, I can't remember the name of it, it's one for electric charging points, I don't know if you've seen that one going around Europe, and he's actually using one of our Bolt Cards, which can also be dual use all of a sudden, so he can tap it and take their user ID effectively from that and charge his car from it from one of the charging points. So, it's not using a Bitcoin/Lightning payment, it's just using the information that's on there.
But that in itself is like your Visa/Mastercard, but you can now set your Visa and Mastercard up yourself, you don't have to wait for your bank to send you one and wait six weeks, and so on. You can tap that on your phone and set that up and off you go and use it. It doesn’t have to be a card, it can a ring, it can be a sticker, it can be all sorts, anything NFC-compatible.
Peter McCormack: It will be cool when lots more places -- well, you can go almost anywhere and just go tap, done.
Danny Scott: Yeah, and that's where we need the legacy integrations really, because they're the ones that have the mass merchants and we need to build that infrastructure out. But again, time preference, it's going to take time.
Peter McCormack: So, I have actually once had somebody at the club ask, "Can I pay with Bolt?" and I was like, "I don't know how to do it, I've got to speak to Danny". So, I'll have a look into us being able to accept these as well at the club, we could do that. That's very cool, thank you, man, appreciate that.
Danny Scott: There's more down there as well, we've got a whole run of them.
Peter McCormack: Oh, you've got loads of these?
Danny Scott: Yeah, just one-off run for you guys.
Peter McCormack: So, I might give one to each of the players, stick like £20 of Bitcoin on it. And listen, Danny, you've got an open invite to come on the show whenever you want. We want to support you and help you, everything you and Molly are doing. So, anything, just give us a shout, let us know.
Danny Scott: Thank you, appreciate that.
Peter McCormack: And, we'll push this out. Where do you want people to go if they want to find out more?
Danny Scott: Twitter as always, @CoinCornerDanny. The CoinCorner account, just the whole team is CoinCorner followed by their name, so you'll find them easy enough; and, coincorner.com. If you have any interest, just reach out to me and any questions, I'll answer away.
Peter McCormack: And if you want to come down and do a meetup and explain these, we do one a month at the club and we need to organise the Bitcoin Cup between Real Bedford and Oxford City.
Danny Scott: We do.
Peter McCormack: We don't want to play their first team just yet, they're a bit above us!
Danny Scott: Open invitation to Oxford City though.
Peter McCormack: Yeah, definitely.
Danny Scott: I think we briefly spoke to them about that, so we'll see what we can do there.
Peter McCormack: We played a game at their ground last year, because they've got a 3G pitch, haven't they?
Danny Scott: I think so, yeah.
Peter McCormack: It was our last game of the season, because they were playing there as well, so we've been to the ground. And I've got a feeling my manager, Rob, played for Oxford City, weird feeling.
Danny Scott: Oh, yeah?!
Peter McCormack: Anyway, listen, anything you need, give us a shout, come to a meetup, stay in touch. We'll come to the Isle of Man, come and check it out and, yeah, just good luck. Keep doing what you're doing, I love it, I love the time preference that you're working to and I love what you're building out. So, thank you for coming in, and good luck.
Danny Scott: Same to you guys as well, thank you very much.
