WBD637 Audio Transcription
A Bitcoin Reality Check with Sergej Kotliar
Release date: Monday 27th March
Note: the following is a transcription of my interview with Sergej Kotliar. 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.
Sergej Kotliar is the founder and CEO of Bitrefill. In this interview, we discuss enabling Bitcoin circular economies, the mission of Bitrefill to be a financial empowerment company, the risks and rewards of using zero-confs for processing transactions, and the many different cultures and communities Bitcoin has spawned.
“Do we want everybody in the world to be orange-pilled, and to share in all of the shared values of the Bitcoin community? And do we think that’s a realistic goal? Or do we want as many people as possible to use Bitcoin as a thing, even though they might not share in the values and just don’t give a fuck?”
— Sergej Kotliar
Interview Transcription
Peter McCormack: But I'm not a fucking leftie!
Sergej Kotliar: I didn't say you were a leftie!
Peter McCormack: You fucking did.
Sergej Kotliar: No, I was saying that bitcoiners hate on you for being a leftie.
Peter McCormack: Some do.
Sergej Kotliar: That's a different thing, yeah.
Peter McCormack: Some of the older ones or the larpers.
Sergej Kotliar: I think it's actually some of the newer ones, if that's what you mean. But I consider 2017 and the past to be the new ones.
Peter McCormack: Well, even newer than that.
Sergej Kotliar: There are even newer than that of course.
Peter McCormack: When I say the newer ones, there are going to be people who are trying to make a name for themselves. So, it's hard to make a name for yourself going against consensus.
Sergej Kotliar: Tell me about it!
Peter McCormack: So you go with consensus and I sometimes think of it like, I remember when Pomp said, "They're like extremists", and he got so much hate for it, but I understood his point in that it feels a little bit like extremists, like who can be the most extreme, who can be the biggest cock, and sometimes that happens. But I've stood my ground now for five years, my friend.
Sergej Kotliar: Yeah, I respect you for it.
Peter McCormack: Now we have an army of lefties coming into Bitcoin.
Sergej Kotliar: Do we? Which ones?
Peter McCormack: So, Jason Maier's just written a book called A Progressive's Case for Bitcoin; Mark Goodwin; Anita Posch, but she's been around for a while.
Sergej Kotliar: There's a bunch. I mean, there's also vegetarians, or whatever! It's like I think if there was a university course in Bitcoin or Bitcoin culture, their classic homework assignment is, "Explain why a left-leaning person would like Bitcoin", and it's not so hard. You don't even have to be left leaning to understand it.
Peter McCormack: How the fuck do you open this?
Sergej Kotliar: I have no idea.
Peter McCormack: Is there a trick to this?
Sergej Kotliar: I don't know, man, it's an IQ test!
Peter McCormack: Oh, there you go, I beat you.
Sergej Kotliar: Fuck!
Peter McCormack: Oh no, I'm still not open. Yeah, I did it.
Sergej Kotliar: What do you pull?
Peter McCormack: I'm not telling you. Oh, this is so tasty. Oh, this water's so tasty! There you go, there's a little bit of paper over it protecting it. It's all a bit unnecessary. They've reinvented the wheel here, haven't they? They said, "That wheel's not round enough".
Sergej Kotliar: It's Bitcoin UX. It's a self-custodial water bottle!
Peter McCormack: Yeah, this book that Jason's writing, I think it's the most important book being written in Bitcoin for conservative bitcoiners.
Sergej Kotliar: Yeah, I mean you need to always, even if you don't agree with the political opinion, you need to be able to articulate it in a strong way, otherwise you're just repeating the same slogans.
Peter McCormack: I think for a different reason. I think we do not need partisan politics in Bitcoin; we want unity on this issue.
Sergej Kotliar: I absolutely agree, and I mean it is the money for enemies, so it kind of is for everyone, it should be for everyone. I mean, I don't even see how it needs to relate, it's just a thing.
Peter McCormack: It's just a thing!
Sergej Kotliar: Bitcoin's just a thing, it's an app, it's an app on your phone! You have a number on it and then you make a thing and it signs a cryptographic transaction and the money comes out on the other end!
Peter McCormack: Sophia here is running production for us today. We got her to download her first wallet.
Sergej Kotliar: Nice.
Peter McCormack: I gave her all the Bitcoin I've received on Nostr, which is like 177,000 sats.
Sergej Kotliar: Wow, that's a lot! Cheers!
Peter McCormack: Yeah, we've orange pilled her. All that, or she'll just convert and sell them and buy some beers later and go, "Yeah, thanks, Pete. See you later, dick!"
Sergej Kotliar: Maybe buy something nice from Bitrefill!
Peter McCormack: Yeah, get than in there; Bitrefill. Let's talk about that, let's talk about zero-confs.
Sergej Kotliar: Yeah, go straight for the --
Peter McCormack: Well, let's get that one done and out of the way so I fully understand what happened; because, do you know what, I still don't fully understand what's been done that's kind of affected that part of your business model. So, explain. You actually get a chance to do a little ad here, and I won't charge you! Explain what Bitrefill is and what zero-confs are and why they're an important part of your business.
Sergej Kotliar: Sure. Bitrefill is the number one largest store for real-world things with Bitcoin.
Peter McCormack: Is that true?
Sergej Kotliar: Yeah. I mean we're larger than most payment processing networks.
Peter McCormack: You're the Amazon of Bitcoin.
Sergej Kotliar: Yeah, that's the goal. So in practice, the main thing that we sell is gift cards. So, you can go on Bitrefill, you can buy a gift card for Hotels.com or for groceries or for electronics, or whatever, and then you can go on the ecommerce site or in the physical world or Uber, or what have you, and you just click, click, click and you enter the code and you've bought something with Bitcoin. But at the same time, you don't need to educate everybody that works at the merchant company, because they just see it as a gift card and they know they have systems for how to deal with the gift card. So in the end, it's actually faster, more convenient than even regular credit card payments online with all of the 3D security, all the stuff that's going on these days.
So yeah, I mean gift cards are the number one non-crypto things that people buy with Bitcoin and we're the leading service in that space. It's still quite small, we're maybe almost medium-sized fish in a very small pond, let's say, and we're trying to make it grow obviously and on a visionary level, we're trying to create a circular Bitcoin economy, a world where opening up your Bitcoin wallet to pay someone or get paid, or whatever, is no stranger than having a call over Skype, or something like that.
We accept Bitcoin, and we have Lighting, we were the first ones to integrate Lightning, we do stablecoins, Ethereum as well and some other stuff. And when it comes to Bitcoin, if you're not using Lightning, and today 20% of Bitcoin users are paying with Lightning, but the other 80% are paying with regular on-chain, classic transactions.
Peter McCormack: And is Lightning growing, or has that 20% been stable?
Sergej Kotliar: Lightning is growing as a fraction of the Bitcoin share, but the Bitcoin share as a whole is declining compared to the general volume. I mean, two years ago, Bitcoin was 95% of our volume; today, it's just under 30%.
Peter McCormack: And do you know, or is your suspicion that that's because there are more crypto people coming in, or there are bitcoiners who are just starting to use other crypto?
Sergej Kotliar: There's a lot of reasons. I think the biggest thing is that in the last two years, stablecoins have really been taking off. You have the rapid rise of Tether and TRON in Latin America, and so on, because it turns out that a lot of people -- I mean, if you're getting paid online, say you work remotely, or whatever, maybe you don't want your monthly paycheque to be in a currency that is volatile, even if it goes up more than it goes down. You need to pay rent at the end of the month, or whatever, so a lot of people prefer to use a stablecoin. I mean, it has a lot of downsides, it exposes you to risk of the issuer and all of that stuff. Nonetheless, a lot of people prefer that, because you get a normal number, if you have $10, it's $10, I don't have to do the maths of how many sats that is, and so on. So, there's a lot of growth in those things.
There's also I think a tendency that in the broader crypto ecosystem, it used to be that Bitcoin was the base money. Bitcoin was the store of value, medium of exchange, unit of account. If you're trading shitcoins on an exchange, it used to be that you have to buy Bitcoin, or you send it to a special shitcoin exchange. The trade, you count how much Bitcoin you made in the end. So, it was medium of exchange, unit of account, store of value. And when the shitcoins are in a bear market, everything's tanking so you have to fly to safety, so you go out to Bitcoin. That was the dynamic.
But in this cycle, we're seeing a different dynamic, because Bitcoin dominance is not increasing, even though we're now in a pretty significant bear market. And the reason is because that role is more and more being played by stablecoins. So nowadays, most shitcoin casinos have fiat onramps right away. But if they don't, maybe you get a stablecoin, you keep it in your MetaMask wallet, you do whatever trading, gambling, etc, that you want to do and you cash out back to your stablecoin. And so, there is a flight to safety, but that flight to safety I think right now is happening towards stablecoins.
So, a bigger part of the crypto economy is moving to stablecoins from Bitcoin, but also there is a lot of circular economy growth, like real people that are getting paid online for doing work. I mean, this is a massive trend and I think we're just at the start of it. I mean, we live in a world where more and more people are -- what we produce is information. And when you produce information, it doesn't matter where you live, so long as you have internet and a laptop. So, people work everywhere. I mean, if you live in Nigeria, it's a lot better to work in the US than to work in Nigeria. But how do you get paid? It's surprisingly hard, it's super-hard for the companies as well. I mean, we have a bunch of people at Bitrefill who work all over the place. We have people in 26 countries on 6 continents.
Peter McCormack: Wow!
Sergej Kotliar: Yeah. I mean, if we had to deal with the banking systems of all of those countries, it would be a mess.
Peter McCormack: So, does everyone pretty much get paid on crypto rails?
Sergej Kotliar: Sort of. I mean, we also use some employee record and so on for some of the bigger countries, but a lot of people do.
Peter McCormack: So, can you give examples without giving stuff away about employees; can you give an example country and what you do?
Sergej Kotliar: I mean, for European employees, we use a company that that company employs the people and invoices us and there's companies that offer this service basically.
Peter McCormack: Okay.
Sergej Kotliar: But we also use things like, I guess I'll plug Bitwage, it's a great service, so we use that to pay people in a lot of places, and they can plug in how they want to get paid, if they want to get paid in Bitcoin or in a stablecoin or in a Payoneer card, or something else; just agnostic, and can handle that in a good way. So anyway, there's a lot of people that are making a living online, and for a lot of them it's hard because payment systems in each country are designed in a world where a country is an island and it's isolated from the rest of the world. That's not the world we live in; we live in a very globalistic world, where most of everything we produce and consume is information and information travels freely. And then it doesn't make sense that money still follows old shipping rules, with customs and rules and --
Peter McCormack: Gatekeepers, man.
Sergej Kotliar: Yeah. So, there's a lot of growth in that regard and Bitcoin is still growing, but stablecoins, I reckon, are growing faster, so the share is going up. Anyway, you want to talk about the zero-confs! Sorry, we digressed there pretty far.
Peter McCormack: Well, look, some people listening won't actually know what confs are or why they're important.
Sergej Kotliar: Sure. Well, when you make a Bitcoin transaction, you've probably heard of something called the blockchain. The idea is when you make a Bitcoin transaction, you have your cryptographic key that shows that you're the owner of this unit of Bitcoins. And you sign the transaction saying that this fraction of it goes this way and you publish it on the network. So, you've probably heard of people running nodes. A node is a piece of software that connects to the internet, talks to other nodes, sees this transactions, validates it, makes sure that there's nothing iffy going on and then passes it around to all the other nodes. But the thing isn't done yet, because then you have the miners. I mean, there's been a lot of episodes about miners.
Peter McCormack: Yeah, we don't need to cover it too much.
Sergej Kotliar: Yeah, so in the time between this transaction in some seconds, it gets passed around the internet, and then it sits waiting for an average of something like ten minutes until some miner picks it up, puts it in a block, mines it and then it's on the blockchain forever, and it can't be reversed and all that. But before then, it's called an "unconfirmed transaction". So, everybody can see it.
Peter McCormack: It appears in your wallet straightaway.
Sergej Kotliar: Sometimes wallets will, and they should, indicate that you shouldn't really trust this because it's not yet in a block, something could happen to it. I mean, the point of Bitcoin is that we have mining and so on, but the transaction is visible and it's there. And so, for the longest time, the way that Bitcoin nodes were working, and still mostly are, is that if they see a transaction that conflicts with another transaction that they have, they're going to throw it away, because they say, "No, I already have a transaction for that cryptographic key. I don't need another one, go away", so that transaction goes bad.
This means that there is a certain level of reliability to it, in that you could still have a miner, or someone in cahoots with a miner, that would be like, "Aha, there is this transaction waiting to be confirmed. Let's replace it with another one", and that's completely valid according to the Bitcoin protocol rules, but in practice it's quite hard. And if you're buying a $100 Uber Eats gift card, people don't go through the hassle of involving miners to do something that is what I think many people would consider unethical, even though it follows protocol rules.
Peter McCormack: So, whenever you replace it, is that when it's still in the mempool?
Sergej Kotliar: Yeah, or just a block comes out and there's a transaction it conflicts with. And if a block comes out with a conflicting transaction, then what's in the block is what counts. So, what's in your mempool gets evicted automatically. But this dynamic makes it possible to have it much less secure than a confirmed transaction, but it's still somewhat secure. You can absolutely theoretically invalidate, but in practice it doesn't happen. We've done millions of transactions; we've got a double-spend I think once, and it was kind of because of a bug many years ago that we fixed.
Peter McCormack: So, one double-spend in how many transactions?
Sergej Kotliar: Millions. So, it's sort of --
Peter McCormack: Super-low risk.
Sergej Kotliar: Basically, yeah, compared to credit cards, where you have 5%, 3% of all transactions are fraud, it's miniscule. But there's still a risk it's insecure. It's not as secure as taking a flight, but it's more secure than taking a bus; it's somewhere in that order of security, but since it's not on the chain, it's seen as "not as" and we need perfect security, even though a confirmed transaction, there's scenarios in which it can get reverted in different ways, like blocks can be what you call rewritten, and so on.
Peter McCormack: Yeah, reorg.
Sergej Kotliar: Exactly. But that's seen as unsafe and you shouldn't do it, but everybody that accepts payment with on-chain Bitcoin does the same thing that we do, which is you see a transaction, you check for certain properties, like you do a risk analysis, and it's not that complex and you accept, "Okay, this is our level of risk that we can live with for the sake of --" because it's a big difference, say you're --
Peter McCormack: You're trying to be ecommerce, right, instant transactions?
Sergej Kotliar: Yeah. I mean, someone's trying to -- their phone data ran out, and they're sitting on their phone doing something exciting and then it just stopped working, and they need to refill it, right. And then it's like, "Yeah, it's going to be ten minutes, but maybe not, it might be a half hour, it might be an hour, it might be two days, it might be a week". It depends on things that are outside of your control, and that's kind of the default user experience and people live with it when it's an exchange, but when you have your shopping cart ready, you're ready to click and move on with your life, you just want it done.
So, what we've found for us, and again all of the other companies that do payment stuff with Bitcoin have found the same thing, is that the amount of risk is less than the benefits in terms of user experience and you can manage it; there's a lot of safeguards, and whatever. So, I'm not saying that you should treat an unconfirmed transaction like a confirmed transaction, it's very clearly not. But someone said, "It's like writing something on a postcard"; it's not, it's surprisingly hard.
There was an incident a year or so ago, there was a prominent Bitcoin community influential person who got scammed somehow and he was like, "This is my transaction, I need to double-spend it", and this is a very well-connected guy, and I actually clocked it, because the transaction was far down in the mempool and after I think it was four or six hours or so, he managed to get in touch with a miner that then replaced the transaction for him.
Peter McCormack: Why did he want to do that?
Sergej Kotliar: Because he had got scammed on some Bitcoin somewhere, and then realised along the way, after sending it that, "No, shit, this is actually a scam!" So, he wanted to revert it and he actually succeeded, but it required to be a well-connected person to get a solid intro to a miner, get that transaction in, explain the situation to the miner, get them to buy in and understand, and then they did it.
Peter McCormack: But in that scenario, that miner has to find that block, right?
Sergej Kotliar: Yeah, exactly.
Peter McCormack: Yeah, what if a different miner finds that block?
Sergej Kotliar: Well then you're out of luck.
Peter McCormack: So, it's a bit of a gamble as well?
Sergej Kotliar: Yeah, of course, that's the thing. If you're colluding with a miner and the miner has 5% of the hashrate, you have 5% chance of succeeding in each block. So, if your transaction is some blocks down, then you can play that game many times, so the chances go up a little bit. And so, there's this policy in the Bitcoin Core notes that dictate this behaviour that it won't send around a transaction that conflicts with previous transactions, and there was a feature introduced five years ago, called Replace-by-Fee (RBF), which lets you replace by fee, and that it was a specific flag that if you have it, then this transaction is replaceable. Then they will say, "It's a replaceable transaction, I can replace it with this one instead". So, what happens is merchants such as us would be like, "This is a replaceable transaction. All right, that guy's got to wait".
Peter McCormack: Oh, so if it's one that can be replaced, you wait for what, one confirmation; two; three?
Sergej Kotliar: Yeah, one confirmation. But that feature's only available for very power-user wallets and so on, so it's someone that knows what they're doing, it's their choice, we'll let them do their thing. But you've got to wait, because otherwise it's trivially abusable.
Peter McCormack: Yeah, because that person might buy something from you and then once you've honoured the sale, they might replace that transaction, etc.
Sergej Kotliar: Yeah, and gift cards are reversible of course, so it's very desirable for fraudsters and whatever.
Peter McCormack: So, it's a useful service for you guys?
Sergej Kotliar: Which?
Peter McCormack: Being able to identify.
Sergej Kotliar: Yeah, so there's this flag and that flag was sort of on default in certain wallets, but in practice very few people know how to use it. So in the end, they end up with a transaction that's replaceable, but they don't know how to do it and they don't know how to find that feature in the wallet, "What does that mean, RBF, what's that? It's a three-letter acronym, etc". In practice, we saw during the Binance dump, for example, where there was suddenly 100 MB of data showed up and some people got stuck below it, so they have to wait for at least a day. And there was a researcher, Ox10BC, that actually we collaborate on projects. I asked him, "Check this transaction. How many used that functionality to get unstuck?" and he found that around 1% of the stuck transactions successfully used the RBF functionality. The other 99% did not, even though they were stuck, and it was the perfect scenario for when that feature would be useful. But I digress.
Recently, there was a push for making a feature in Bitcoin Core nodes to have nodes treat all transactions as replaceable always, no matter what, and it's off by default. But there was a political campaign from certain Core developers talking to miners that you should do this.
Peter McCormack: Why; why do they want every transaction to be like that?
Sergej Kotliar: Well, there's many reasons. First of all, there's certain attack vectors, like pinning attacks and so on that can, what's the word; annoy people, because you could like, "Hey, let's open a Lightning channel with each other and then I'll do this pinning thing and then you can't move your Bitcoins until my pinning attack transaction confirms in a block, which could be a day, and so I just froze your Bitcoins for a day, haha!" stuff like that. In practice, I don't think there's ever been an instance of such attacks, maybe correct me if I'm wrong on this, but it is a theoretical vulnerability in some other smart contracts and stuff as well.
So it was decided that, "Let's let every node decide, should you treat all transactions as replaceable or not?" but also politicking the miners, because in the end what matters is what setting the miners run. A regular non-mining node is like, okay, you can think you have whatever transaction. What matters is what transactions the miners have. So, that's kind of where we are now, where I think there is one mining pool that runs this setting and we still, so far, we have safeguards basically; we accept a certain amount of risk and if we ever get double-spent ones, then the feature automatically disables and then we investigate what happened, is it something we can fix or not. And when it flips and we're like, "Okay, it finally happened", then that functionality's going to be gone and then everybody will have to wait for confirmation, even the people that don't have RBF functionality in their wallet; they couldn't replace, they couldn't fee-bump even if they wanted to.
Peter McCormack: Right, okay.
Sergej Kotliar: So, in the end, the user experience for the vast majority of people that are buying stuff with Bitcoin, like scanning a QR code with your wallet, will no longer be almost instant. And there's a significant chunk of transactions every month that are for commerce and I think the inconvenience of it will reduce the number of commerce transactions on Bitcoin, which in the end is going to lead to a suboptimal outcome, even for the individual miner who earned 10 sats replacing a transaction, but from then on they're going to earn less because there are fewer transactions on the chain.
Peter McCormack: So, that's going to lead to more of your business coming from other alternative cryptocurrencies?
Sergej Kotliar: Probably, but also Lighting maybe. And we have accounts, you can deposit Bitcoin to account in advance, so then you can just charge from your account and it's going to go faster. But that's not great for decentralisation. You need to pre-deposit, there's custody, you need to trust us with your money as opposed to now, where your money's in your wallet and we only get whatever you actually paid us, and it's kind of nice and Bitcoin-y, and so on. Then, if every merchant needs to run an account, it's going to be messy. What if I want to buy something on some service that has OpenNode, or another service that has BitPay or something else; you should have money with all of these accounts, so what do you do?
Just use Lightning; well, you should use Lightning. I love Lightning and it would be better on Lightning but so far, again 20% of Bitcoin users use Lightning, but the other 80% do not. If you dig into it, there's reasons to it and dynamic, and maybe we can discuss that as well, but I don't believe that the way to get more people to use Lightning is by making the basic user experience worse. I think Lightning is good enough to be competitive on its own merit. And some people don't use Lightning, not by choice, but because the exchange they use, or whatever, doesn't have that functionality or the wallet.
Peter McCormack: So, with you running essentially the largest ecommerce business within Bitcoin, and you following your users, or monitoring the data on users, that must be a really interesting lens into how Bitcoin is going, how crypto versus Bitcoin is going; it must colour your views on the industry and the expectations or the goals that some bitcoiners have?
Sergej Kotliar: Yes, very much!
Peter McCormack: Because you're a bitcoiner at heart.
Sergej Kotliar: Definitely.
Peter McCormack: But your business will accept Ethereum?
Sergej Kotliar: Yes. And there's been a big debate. I mean, in the olden days, when we first started Litecoin and this and that, and Bitcoin was still 95% and so on, but at this point the question is I think, are we a Bitcoin company; and what is a Bitcoin company? At the end of the day, nobody really knows and can define it in a good way. I think if you go up a level, what's Bitcoin about in the way that we use it? It's about financial empowerment, it's about letting people do transactions on the internet that they couldn't otherwise do.
So, we're a financial empowerment company, and I think that if a user uses a stablecoin in order to, again, achieve some kind of commerce that they couldn't otherwise do, or whatever, then that provides empowerment to them and that's good and we support that. But obviously, that goes against the Bitcoin-only vision and all of these things. So, that's where we've landed. It's not like we accept every weird shitcoin out there. These days, we mainly look at stablecoins and things like that. But we look at the networks on which it's happening. We added TRON a year or two ago, and then stablecoins on Ethereum and Polygon, and so on.
Peter McCormack: Do you get much shit for adding these?
Sergej Kotliar: We do, but I mean usually it's not shit from our customers; that's much rarer.
Peter McCormack: Of course.
Sergej Kotliar: Because I mean most people, I was talking to someone about this, imagine you're installing -- for most people who use Bitcoin, Bitcoin is a tool, it's an app. They use it to do whatever they want to do, they don't think of themselves as a bitcoiner. I mean, we have hundreds of apps on our phone; I don't identify with everyone, it's just an app on my phone. I use it because I got paid for a job I did and then I bought some stuff with it and that's it. Think of it like if you want to install BitTorrent, if you want to download something legal like Linux distribution.
Peter McCormack: I'm not a BitTorrent maximalist, I'm a -- where's my film?
Sergej Kotliar: Exactly. So you type in "BitTorrent client" in Google and you click someone that looks legit. You're not going to go into, "I want one that doesn't have this, that and that feature".
Peter McCormack: "I want the Torrent one where the creator only eats steak and doesn't have seed oils, otherwise I'm not using that fucking Torrent".
Sergej Kotliar: Yeah, something like that. And so, the absence of a feature is not a big benefit for most of our users. And even of the Bitcoin users, we ran a study on which wallets they're using, and the vast majority of the wallets that are being used are wallets that have many cryptocurrencies. And this is an exercise that anybody can do, just open your phone, click on the Appstore or the Google Play Store and you type in "Bitcoin Wallet" and you see what Apple's or Google's algorithms say are the most popular ones among people that do that query, which ones they install.
Peter McCormack: I'm going to search for "Bitcoin" on mine. So, the first thing that comes up is an ad for Plus500 Trading. Interestingly enough, that's the first place I ever traded Bitcoin as a CFD.
Sergej Kotliar: That's how they got you!
Peter McCormack: Well, no, Silk Road got me first but buying Bitcoin on LocalBitcoins, which RIPd recently, it's shut down, that's very sad. It was a pain in the arse, whereas here I could just buy and sell like that. So, the first one is Binance, "Buy Bitcoin securely".
Sergej Kotliar: It's more fair if you type in "Bitcoin wallet", because now you're going to have people who sell you Bitcoin. But it's going to be a similar result.
Peter McCormack: So, the first one is an ad for Whitebit, "Buy and sell Bitcoin", never even heard of those; then it's Bitcoin Wallet, "Buy BTC and BCH", that's Roger Ver's wallet.
Sergej Kotliar: Yeah, Bitcoin.com.
Peter McCormack: Bitcoin.com, that isn't an ad. Then it's Coinbase, Trust, Blockchain.com, AMLSafe, Binance, Bitcoin Wallet for COINiD, I mean there's so many; crypto.com. I mean, it's dominated by ones that traditional bitcoiners would hate.
Sergej Kotliar: Yeah, and I mean we see that in our users as well, the wallets that the Bitcoin community likes. Electrum shows up, BlueWallet, Muun show up somewhere in the top 20, maybe one of them in the top 10, but most of Bitcoin users are also crypto users. And I think if you view it through the lens of, again, say you're an Argentinian web designer doing gigs and somebody wants to pay you in Bitcoin for work, and you say yes; and somebody else wants to pay you in Tether and TRON for it, you say yes; and somebody else wants to pay you in Ethereum, you say yes. Okay, what wallet lets me do this?
Peter McCormack: Yeah!
Sergej Kotliar: And so, in the end, of the people that are transacting with Bitcoin, you see such wallets, especially with -- I mean with stablecoins, I don't know, I think stablecoins kind of were the end of Bitcoin maximalism, because there's no way to fit it. Maybe this can be a soundbite that Bitcoin maximalists are like stablecoins a little bit like Jews for Jesus!
Peter McCormack: No, I've had the conversation plenty of times. I think it was Knut Svanholm I even had a conversation on Twitter about and I was saying it's very hard to deny people their own truth, in that Bitcoin is not the right answer for a lot of people. If you're in, it could be Turkey, Lebanon, Argentina, anywhere, you want some form of digital money which has some amount of decentralisation that you can be able to get paid or pay in, and some people really like stablecoins. How do you square that circle where you hate shitcoins, but this platform is providing a service that people want? Sorry, Knut, if I've got this wrong, but I think he still said, "No, they should just understand Bitcoin". No, you should understand their life, and that's where I really struggle.
Sergej Kotliar: It comes down to the clash of visions, and there is a clear clash of visions where there are two visions of Bitcoin: there is the sound money vision; and then, there is the internet money vision, or the freedom money. They overlap, to a large extent, but the thing is with values is that discussions about values are only interesting in relation to other values; that's why it's called values. Do you want freedom or prosperity? Yes, both. Yeah, but you have to pick one in this situation, you have to pick. And so, in terms of do you want the sound money vision, yes; do you want the internet money vision, yes; okay, but there's situations where they conflict. And you often see that in the transactional usage of Bitcoin's base. People talk to customers and so on, they kind of understand that these things actually solve some kind of need for some kind of customer.
I mean, maybe we should talk more about how these visions contradict, because the sound money vision, maybe I'm not doing it full justice, but the idea is that because it has a limited supply and predictable issuance and these things, it's going to be the best money and at first it's going to be a store of value, and then one day some kind of miracle is going to happen, we can call that hyperbitcoinisation, and then suddenly everything will fix itself and everybody is going to use Bitcoin all the time.
Peter McCormack: Done!
Sergej Kotliar: It is slightly messianic in that sense. And then you have the internet money vision which is, okay, somebody wants to make a transaction by making a cryptographic signature, and you know what, you can make transactions with a cryptographic signature on things that are not Bitcoin, that also achieves financial empowerment; it has different sets of trade-offs and you're free to choose that. I would still say that I think Bitcoin is better according to my preference, but I can understand why people would choose some of these other things. And they're not my enemy.
I want more people to be financially empowered to do whatever they want, so if they're like, "How do you do a stablecoin?" so be it, I'll still try to get them onto Bitcoin as well. I mean, stablecoins, who knows, maybe they won't even be around because of regulatory reasons, or whatever. But fundamentally, there's a conflict there, right, because there is the maximalistic view and also more recent, the Bitcoin-only view, which is that you must not have anything that is considered a shitcoin, and that's that, and basically you don't even need to have Bitcoin.
There was this couple of years ago the Bitcoin Pizza, do you remember that, where you could buy it with Bitcoin, but it was very compliant with the ethos, because you couldn't buy it with shitcoins, versus the sound money vision, which in the end is actually similar to how other cryptocurrencies promote themselves, in that it's like, "Yeah, one day everybody is going to use it, and here's a celebrity that thinks it good, and we're going to have a conference and invite this random politician that's been disgraced in the country", or something else, to show that they like the thing. But it's not so much any more about using the thing.
So if we zoom out, the origins of the Bitcoin community. In the olden days, Bitcoin was a thing that some nerds used and they realised that some other nerds were using this thing and they would hang out and talk about using this thing. And in the group, there formed a certain camaraderie and a set of shared values. This grew and grew and also things that this group did not like. There were so-called premines, which were all scams, and so there was this culture that all premines were scams and it was a strong norm, sort of like a community value.
Then, as time went on, people would hang out in that community talking about this thing but in the end, it was less and less about the thing, much like a Bridge club for old ladies over the years becomes less and less about the Bridge and more about the hanging out and the shared values, and so on. So I think in the end, I mean you were joking about seed oils, and whatever, but there are a lot of things that are important in the Bitcoin community, and I don't know where signing transactions with cryptographic keys ranks, but I would maybe think that it ranks lower than not using shitcoins, for example, or something like that.
So then there's a clash here, because there's the other group, they're for financial empowerment and so on. They might use Monero for privacy, they might use Lightning, they might use stablecoins, whatever. So, even though these two visions overlap to a very large extent, there is a tension between them and that often leads to these conflicts. In the end, I think I share the original ethos in terms of, yeah, most cryptocurrencies are scams and we should not promote them. I agree with that, I would never promote any cryptocurrency in any way. We still don't accept the vast majority of cryptocurrencies.
Peter McCormack: No Dentacoin?
Sergej Kotliar: No, and there never will be. I mean, we look at where there's activity with people who are using it.
Peter McCormack: Do you accept Doge?
Sergej Kotliar: We do.
Peter McCormack: Why are you huffing?!
Sergej Kotliar: Because --
Peter McCormack: It's got a big community.
Sergej Kotliar: Not any more.
Peter McCormack: And it's alchemy.
Sergej Kotliar: We added Doge in I think 2018 as an April Fool's joke, where we went too far and we actually did the joke. So we were like, "Bitrefill is going to do Dogecoin" and we rebranded it Shitrefill and we added Dogecoin.
Peter McCormack: Shitrefill; did you really do that?!
Sergej Kotliar: Yeah!
Peter McCormack: I love it! I actually prefer it!
Sergej Kotliar: So we added Dogecoin and some people were using it, so we kind of kept it around because it doesn't cost us a lot of upkeep and actually at the time, I thought Dogecoin was great because it's funny, it uses humour as a defence mechanism. And it's somewhat decentralised in the sense that there's no leader, there's no Dogecoin company, there's no one profiting from it.
Peter McCormack: That's because he rage-quit!
Sergej Kotliar: But that counts! I mean, that's maybe not entirely similar to Satoshi. But I think over the last cycle when it got pumped and Elon Musk and all of that, a lot of people got hurt.
Peter McCormack: Yeah, of course.
Sergej Kotliar: So, I don't think the joke is funny any more, and we said that next time when there's an upgrade needed, then there won't be any more Dogecoin on Bitrefill. So, that's why I sighed a little bit, because it's complex. We were in on the joke when it was funny and we kept it around a little bit longer until it's no longer funny; and now it's like, yeah…
There are still some people, not that many, but there are some people every day that are buying stuff with Dogecoin, so it's like, maybe they're going to be upset, and so on. It doesn't cost us anything to keep it up; we've already built the stuff.
Peter McCormack: I'm trying to think how to word this. So, running a company that actually deals with Bitcoin users and crypto users --
Sergej Kotliar: It's amazing. We're hiring!
Peter McCormack: You're hiring, yeah?
Sergej Kotliar: Developers.
Peter McCormack: How many do you need?
Sergej Kotliar: How many do you have?
Peter McCormack: Are you growing fast?
Sergej Kotliar: It's harder in the bear market, but we haven't had a big downturn and we're still going strong. I mean, we're still small given the world and vision.
Peter McCormack: I can only offer you brand awareness. No, what I'm saying, how do you see the world differently then from the general -- there are different subcommunities in Bitcoin, I know that, but there are also some consistent trains of thought, or consistent narratives with Bitcoin, but I think a lot of these come from people who aren't running a business like you. So, how do you think maybe you see the world, or the Bitcoin world, differently from them?
Sergej Kotliar: Well, I see the users of Bitcoin, which is a group that overlaps but not at all completely with the people who participate in the movement. And Bitcoin is both a thing, a tool, and also a movement, a community. So for example, somebody who listens to a podcast about Bitcoin is probably a member of the movement who identifies as such. They wish Bitcoin to succeed, they maybe go to a conference, they consume content about it, they learn about it, they maybe invested in it; they truly, deeply wish for it to succeed.
But some of these people might not have a need to make Bitcoin transactions on a regular basis. I'm in that group as well. It can happen weeks go by, I haven't made any Bitcoin transactions, because I live in a country where everything kind of just works in the old-fashioned way, and so on, so I have a lot of understanding for that.
But then there's also the people who use the tool who are not part of the movement, like we were talking about earlier. For them, Bitcoin is an app, you just type in "Bitcoin" in your search thing, you install the thing, you do whatever you want to do and that's that. They don't care about Bitcoin and they wouldn't -- you might use a VPN, but you wouldn't go to a VPN conference, or even think about it. It probably exists, right. You use a car every day and there are car conferences, but why would you go there, and so on. There's a lot of debates in the car industry about, "A real car's a veteran car. No, a real car's a --", whatever.
When you're a transactional usage of internet money company, you talk to the people that use the thing. And again, some of them are part of the movement, but the vast majority of them are not, as was evidenced by this wallet experiment that we saw, that you wouldn't get one of those wallets after going to a Bitcoin conference or by listening to podcasts or hanging out on Twitter, or whatever. And I think that within this community, there are certain dogmas and sometimes…
I mean, you asked me the question of how do I see the world differently because I'm interacting with users of Bitcoin all the time, right? The other side of that is that many of the thought leaders in our industry do not interact with users of Bitcoin all the time. And as such, the body of knowledge within the community, within the movement can be wrong; or not wrong, doesn't accurately represent the user base of the thing that the movement is about.
Peter McCormack: Or, trying to be as fair as possible, doesn't represent that part of Bitcoin that you're seeing. Because some other people might say, "A circular economy doesn't matter. What we need is Bitcoin to be big enough that it holds so much value that we can bring down fiat currencies". It's a different ideology.
Sergej Kotliar: Absolutely. But you know what, in that group as well, if you say, "Hodling is using", okay, sure. You look at that group, you still have the vast majority of people that hodl Bitcoin do not participate in the community, do not go to conferences, and so on. For them, it's a risk-off asset in a wallet, "Click, click in my stock exchange thing, I just bought it", and whatever.
Peter McCormack: Yeah.
Sergej Kotliar: So, it's always I think like that, but I think that we've gotten a little bit too far apart in these two things, in that where the community is versus where the users are; it's a little bit too distant. I mean, it's super-strange that at a highly technical conference you ask people, "What are the top three Bitcoin wallets by users?" and people don't know the names of them. I think that's weird. Then there's people building a wallet and, "You're building a wallet and you don't know the name of the largest wallet in the world? You should at least look at them to see what they're doing right, I mean maybe their marketing at least".
Peter McCormack: Well, shall I tell you where I'm going with this?
Sergej Kotliar: Okay.
Peter McCormack: Is the mission losing a sense of purpose? The thing about Bitcoin that I romanticise about, that I wasn't part of, but I can see it as everyone was on this mission together. And now the mission has become fragmented because there's so many different users coming in for different reasons. There's speculators, there's builders, there's OGs.
Sergej Kotliar: But that's also natural.
Peter McCormack: Of course.
Sergej Kotliar: Over time, every community -- I've been to internet conferences, that kind of silly!
Peter McCormack: No, I agree, it was always going to happen. But therefore, there can't be a unified mission because there's multiple missions. You have a mission: circular economy; Udi has a mission for NFTs. He's probably going to Telegram me now, "No, that's not my mission". But I've got a mission to --
Sergej Kotliar: What is your mission?
Peter McCormack: My mission is to get Real Bedford in the football league and on the way, orange pill a bunch of football fans.
Sergej Kotliar: Right. What's your primary mission then, because there are moments when your Bitcoin mission and your Bedford mission are in contradiction; so which one's your primary?
Peter McCormack: No actually, my primary mission is to raise up my town, opportunity and success for my town, and right now what does that mean? It's very small. We've got 12 guys who've come in from Eastern Europe that I'm going out for dinner tonight with in Bedford. Do you know what it is? I went out to Bitcoin Beach, I think I was the first person to go out to meet Michael Peterson and see his project, and I've watched that grow. And now I get hundreds, well not hundreds, yeah probably about 100 emails from people, maybe 200 emails saying, "I'm going to go to El Salvador, I'm going to go to Bitcoin Beach".
Sergej Kotliar: Good, you should.
Peter McCormack: Yeah, you should. "Is it safe; where do I stay; etc?" "Go and stay at Garten Hotel", I always tell them. And I was like, "Wow, isn't this cool?" And then when I started the football team, I was like, "I wonder if anyone will come?" and they're coming. I've got 12 guys who are coming in to Holmer Green. Now, maybe they've tied in the conference at the same time, but they're coming in. I had four guys fly in before from Czech Republic; I've had people who've come on holiday from Canada or the US and they're in London and they're like, "We're going to go up to Bedford". People are coming into my town and spending money in my town.
Sergej Kotliar: So, here's the question --
Peter McCormack: Hold on. But also, I will go to the Bitcoin Conference in Miami and there will be people walking around in T-shirts that just say "Bedford" on it, and it's a shit, little town I'm from and it's raising up.
Sergej Kotliar: It's amazing. Here's the question: do you sell tickets with Bitcoin; and do you pay the players with Bitcoin?
Peter McCormack: So, okay. You can pay in Bitcoin at the club. So, if you come to the club, you want to buy your tickets with Bitcoin, your beer with Bitcoin, your burgers, your merch, absolutely. You can buy your merch online with Bitcoin. You cannot buy your tickets with Bitcoin because the ticket company we use don't accept Bitcoin.
Sergej Kotliar: Are you sure it's not on Bitrefill?
Peter McCormack: Yeah, Ticket Tailor, you check out Ticket Tailor, the one we're using. I looked at Eventbrite; they don't. Now, the reason I went with Ticket Tailor is they're smaller and a bit unique. So I thought, in my head, I'm going to work with them for a year, use their thing, and then I'm going to go to them and say, "Hey, I think you should have Bitcoin and I will connect you with someone to do it", and that would be really cool.
Having Bitcoin alongside fiat currencies is basically a big fucking pain, because there is no integration between the, say OpenNode that we're using and the POS, which is Zettle. And so all the Bitcoin payments, we literally have a spreadsheet and we write them down. And then I have to go into Zettle and then -- it's just a pain, someone hasn't solved that. But yes. And also, the players could get paid in Bitcoin if they wanted. Nobody does, because they don't care too much about Bitcoin, they're players. We had one player last year who did, Connor Okus, who you will know. So that's not a thing.
But my approach with the football club isn't to throw Bitcoin down people's necks. It's like, "Here's a football team, come and watch them. Oh, by the way, before the game we've got a meetup, do you want to come?" "Oh, yeah, we'll come". But if you come to the game, you don't feel like you've got one of the annoying bitcoiners going, "Buy Bitcoin. Fiat money's rubbish". It's there, but it's not in their face.
Sergej Kotliar: Because you're a socialist type of guy!
Peter McCormack: Shut up, man! I'm a realist.
Sergej Kotliar: Yeah, and you've just explained some of the difficulties in terms of enjoying this thing.
Peter McCormack: Listen, I fucking hate the government right now as much as anyone, right. I am completely anti. My government here in the UK is fucking shit. We have got an unelected Prime Minister, who I think is pretty much a psycho, who's pushing forward CBDCs, who talks to everyone like they're 5-year-olds. We've just got an appalling government and we've got no viable, credible alternative; they're both shit, right.
Do you know what, the other thing I should have said to people, it's not that I'm pro-democracy, I think government is reality. You get rid of government, you get new government; but you get rid of democratic governments, you might get something worse. So, I'm a realist, it's like, "How do we make this better? In a democratic society, how do we give more control to the electorate and less control to the elected?" But I'm not a "burn it all down", because if you burn it down, it can come back worse. Look at Turkey. Turkey was a thriving democracy until Erdoğan took over it. Now, he's a fucking dictator who's killing their economy, and I've seen that in multiple countries.
So, strong institutions and a strong electorate to me are important because government's a reality. Did I explain that well?
Sergej Kotliar: Yeah. I mean, I don't know, is that controversial?
Peter McCormack: Well, no, but it is, it makes you a statist cuck.
Sergej Kotliar: Yeah, fair enough, I guess. But you own it and I mean I agree with this stuff, so maybe I'm a statist cuck as well. I mean fundamentally, the primary function of a nation state is to protect you from other people, nation states, and if you don't have a nation state, they will invade you and slay you and rape your women and murder your children, and so on, and we can watch that happening in Ukraine right now, and you kind of learn the lesson that maybe we haven't figured out yet a solution that is better than nation states for this specific case of, again, protecting you from other nation states. And, if you get rid of all the nation states, we don't know what that world would look like.
Peter McCormack: Yeah, so I agree with you, protect you from other nation states, but I'm not too keen on this growth and protect you from yourself.
Sergej Kotliar: Yeah, I agree.
Peter McCormack: It's like, let us live freely as much as we can within our own country. Although, I find it so fascinating, this contrarian, and I do think it's contrarian, the contrarian view that I've seen permeate through Bitcoin of a certain group of people who are defensive about Putin and defensive about Russia. Or, if their accusation is against Putin and Russia, then with that they're like, "Well, what about the UK or the US; they're exactly the same?" I cannot for the life of me see how people --
Sergej Kotliar: Which is a classic Russian propaganda argument. It's called "whataboutism" and there's an excellent Wikipedia page if you search for "But in America, they're lynching Negroes", which was in the 1970s, when the Soviet Union was critiqued for, I forget which atrocities. And they went, "Look at the US, they're lynching Negroes". "Okay, how does that make your thing better?" but it's just point at someone else doing something bad and then we're no worse than that.
Peter McCormack: Well, I got this tweet sent to me by this Layah Heilpern, where she was tweeting about Putin, saying about, "How is it he makes so much sense in this weird world?" and so I retweeted and said, "Well, no, actually he's a psychopathic dictator who murders journalists, assassinates opposition leaders and has invaded multiple countries and leads an army of rapists and murders". I think that's a fair depiction of him. And I said, "See below for whataboutism" and literally people kept delivering whataboutism. And yeah, look, the Allied invasion, let's call it that because it was the UK and the US, invasion of Iraq was a crime, absolutely. George Bush and Tony Blair should have been up in The Hague. But to try and say that our countries are the same is absolutely fucking ridiculous.
Sergej Kotliar: No, but you're literally repeating Russian propaganda.
Peter McCormack: I know. Sorry, can I just finish my point I was trying to get to, is that when I put it out, these people are saying, "You're just falling for BBC or western propaganda". I'm like, "No, you're fucking falling for Russian propaganda".
Sergej Kotliar: Yeah. I mean, I've been getting into this whole situation in the past year with the Ukraine War, and so on, and I speak Russian and consume a lot of content about those things. A cornerstone of the strategies of Russia, also China, not just Russia, to undermine western democracies is to sow discord in society. So, whatever group they find, they don't particularly care about Bitcoin or shitcoins, or anything like that, but they find a group that is against the status quo; it can be Bitcoin, it can be QAnon, it can be anti-vax, it can be a lot of these things. They will get involved, promote some stuff, have some bots, this and that, just make sure to amplify the message to boost it. And I'm completely sure this stuff is happening in the Bitcoin space. Again, I don't know that they would pay particular interest to the Bitcoin community, but definitely it's there.
It's just again, there is a very clear thread. The thread is, "I'm against the current thing". So, any community that is against the current thing, whatever the current thing is, is going to get support from those sides. They've been sponsoring the far right and the far left since always, and you go to a so-called anti-war rally and there's going to be Russian flags and anarchist left and far right, anti-immigration, and all these things, together in this weird Kumbaya. And it's like, "Why do they hang out together?" Well, they share one thing: they're against the current thing.
Peter McCormack: Yeah. But the shame about that, against the current -- which by the way was brilliant, because as soon as, "I'm for the current thing" came out, somebody really went, "Well, yeah, but I'm against the current thing". So, the amazing thing about that is, a whole group of people identified that Ukraine is part of the, "I'm for the current thing". And so then, a whole group of people felt like, "Well, I cannot support Ukraine in this situation when they've been wrongfully and illegally invaded by another country".
Sergej Kotliar: It doesn't matter. If the current thing is, "The sky is blue", there's going to be a set of people that are like, "Don't tell me which colour the sky is!"
Peter McCormack: Yeah, but why can't we be nuanced about the current thing? Let's be nuanced about this, let's discuss the facts as they are.
Sergej Kotliar: Because you're not an independent thinker if you're always polar opposite to the mainstream opinion!
Peter McCormack: Well, I sometimes prefer some of the mainstream opinion than I do from this contrarian opinion, but then sometimes I'm on the contrarian side.
Sergej Kotliar: I think you need some of your hate now.
Peter McCormack: No, sometimes I'm with the contrarians, like I'm contrarian with money, I think it should be out of the hands of the state.
Sergej Kotliar: Are you contrarian with Bitcoin, or bitcoiners?
Peter McCormack: Well…
Sergej Kotliar: You are somewhat.
Peter McCormack: Yeah, but I stick to my guns on that. There are a few things I've stuck to my guns on. One thing I've stuck to my guns on is that most people aren't going to run a node or give a shit; it doesn't matter what you say, they aren't. Most don't give a shit about what an xPub is, what a UTXO is, they don't care. They want to buy it, see a number and move it, and that's it. And however much you want them to care, they're not going to care, they just don't. And, yes, a small percentage will care, but those small percentage tend to be the techy, the early ones, and they think everyone should be like them, and they won't be.
Sergej Kotliar: Which brings us to another vision conflict that we have, which we think is important to articulate and think about, is the vision -- so, everybody wants more people to use Bitcoin in whatever definition of use you want to choose. But do we want everybody in the world to be orange pilled and share in all of the shared values of the Bitcoin community, and do we think that's a realistic goal; or, do we want as many people as possible to use Bitcoin as a thing, even though they might not share in the values and just don't give a fuck?
Peter McCormack: I think the want doesn't matter, I think it's the reality; it goes back to my point earlier on.
Sergej Kotliar: But also the first point, it's unrealistic. There's no ideology that's covered the whole world ever, no one at least. We have Christianity, a billion or two, Islam is similar, but that's still just a fraction of the world.
Peter McCormack: But the adoption of Bitcoin is going to happen faster than you can scale Bitcoin ideology, or a Bitcoin ideology that you think everyone should adhere to. And that's why, again going back to that earlier point, Jason's book is so important, because Bitcoin is now getting into progressive groups, okay, and it's getting into different geographies and different countries and different cultures, and therefore we need to get out of this monoculture of Bitcoin, which kind of drifts between -- it tends to go more to libertarian ideas and conservative ideas, which I've nothing against; it's just that's not going to dominate the conversations in the future. It's going to be just a layer through all of culture.
So, I think any conservative bitcoiner who hates a progressive should actually put their hand out to them and lend them a hand and teach them about Bitcoin and why it's good for progressives, because we don't need to fight this issue.
Sergej Kotliar: But I think fundamentally, as we said, as communities grow, they fragment and they fragment and the Bitcoin community has fragmented so many times. I mean today, what we call the shitcoin community was a part of the Bitcoin community. It fragmented and then it fragmented again in different ways, and so on, and so in the end, I don't even know if it's the most worthwhile to try to change the community, because there's many flavours of it. I mean today, there's a lot of Bitcoin conferences and they have different flavours, and you can't go to all of them at this point, so you have to choose a little bit, and so on, and you go to the ones that are more aligned with your vision and all of that, which is great.
But fundamentally, I think that the community as a whole does not scale enough. I think the tool scales, the community does not because again, we're not going to come up with a set of shared ideals that we can convince everybody in the world to partake in. I mean, we can't even explain it in all languages; whereas, if it's a thing and it's useful, then actually a lot of people are going to be using it, it's going to empower them.
I can give you an analogy to this. I think that VPN is a good model for how we can grow the transactional use of internet money. So, VPN is a $44 billion per year industry.
Peter McCormack: Really?!
Sergej Kotliar: Yes.
Peter McCormack: Holy shit!
Sergej Kotliar: It's huge. And so if you run the numbers, so say half of that is corporate, whatever, and the other half, $20 billion, is people who pay $5 a month for a VPN service. Okay, $5 a month, $60 per year, and then you divide $44 billion by $60 and it lands at like 200 million to 300 million in the world use VPN.
Peter McCormack: That's to get free Premier League football!
Sergej Kotliar: Right, so all these people are buying privacy and internet freedom and empowerment, but they don't know that they're buying that. They're buying to watch Premier League football, or to watch American Netflix. They're paying for, "I can do stuff on the internet I couldn't otherwise do".
Peter McCormack: Yes.
Sergej Kotliar: And when it comes to the money stuff, there is massive demand for that. We talked about getting paid in different countries, I mean even ecommerce in a lot of countries is really hard. If you're in the US or UK, you don't know that if you're well banked, and so on, but in certain countries, even if you have a credit card, which not everybody does, your credit card might not be accepted at most ecommerce stores because your country is seen as at high risk of fraud and they decided that, "It's just a couple percent; fuck that", and they cut you off, and you can't buy the sneakers you want to buy.
There are solutions. You can acquire Bitcoin somehow, you figure it out locally, and for example things like Bitrefill, or you just find a merchant that accepts Bitcoin and then suddenly, it lets you do things that you couldn't otherwise do. So, if we think about how VPN got to this stage. So, VPN is a 25-year-old technology. I'm sure there are conferences but again, most of these hundreds of millions of people have never visited a VPN conference.
Peter McCormack: VPN FIRST.
Sergej Kotliar: They have never listened to probably a podcast about VPN. They probably heard ads about VPN on other podcasts about other things.
Peter McCormack: Really? What VPNs Did?! That's what we need!
Sergej Kotliar: Exactly.
Peter McCormack: It sounds boring as fuck, a VPN conference or a VPN podcast.
Sergej Kotliar: Sure. But you know what, most of the world sees the Bitcoin conference as the same way!
Peter McCormack: No, I'm with you.
Sergej Kotliar: And so, how did VPN get to that point? Well, you build something useful, you do different marketing tactics, you present marketing messages to groups of people that you think might be receptive to the value proposition, right. I mean, it's very basic stuff if you just zoom out from this all-encompassing Bitcoin community where you hang on Twitter all day, and so on, and you know who the leaders are, etc.
So, if you just zoom out and think of normal companies, normal businesses, industries, that is how things grow. You build something useful and you try to present it to somebody who might find it useful; maybe they would, maybe they won't, you try different things, and so on, and it's grown steadily. There's no big uptake, there was no one day where everybody signed up to VPN, it's just been steady, steady and then people in different countries discovered it, "Oh, wait, actually I want to watch Premier League, I want to watch cricket, I want to watch American Netflix, I want to buy a plane ticket from a different country", and all of these reasons that are, again, very convoluted ways of saying, "I need privacy on the internet". And then it grew.
I think that we need to be looking at these things, because it's a similar technology. It is freedom and privacy empowerment, we should take core values of Bitcoin as well to see how can we replicate these things. Imagine if VPN told you which food you should eat, or which political opinions you should have, or whatever; what's your stance on wearing a mask, or Putin.
Peter McCormack: They're neutral, they're software.
Sergej Kotliar: Exactly, they're a thing. It's just an app, it doesn't have to have a political opinion.
Peter McCormack: Well, that's the same as Bitcoin. Bitcoin's just an app.
Sergej Kotliar: There we go, and that's what we're trying to grow at Bitrefill and we're trying to interact with all the other services companies, people who want Bitcoin to be this global thing, because I think that it can't be -- this is also going to sound very simple. It can't be the money of the world if it's not the money of the world, and it's not the money of the world if you can't use it to buy stuff. It's very simple! It's like, "Oh no, first it must be sound money, and then --" okay, who came up with that and what's the underpinning of that? Where does that come from; how do you know? "This is what happened to gold". I very much doubt that in the early days there was a gold community of people that say, "You should buy this, it's going to go up in value", and then, "One day, everybody's totally going to use gold!" No, that's not how it works. It has two properties: it has a scarce supply; and it's useful in commerce. You combine these two things, it becomes a good money.
Peter McCormack: Hey listen, Satoshi said that in the whitepaper, he specifically talked about online commerce.
Sergej Kotliar: Look, everything that happens in Bitcoin was said by Satoshi and the following at least within six months. Satoshi also said you might want to get some in case it catches on. That was the kick-off of the speculative mania that is not just Bitcoin, but also the entirety of the cryptocurrency industry, but also Bitcoin. It started right there, the first weeks, and so on. So, all these things were there but fundamentally, if you couldn't use Bitcoin to make transactions, then it would just be an NFT, I think, just a meme thing that people assign value to for some arbitrary reasons and it goes up in speculative reasons, because they think that that value's going to go up and it becomes this game that Bitcoin haters see it as. That's not my vision.
My vision is, again, for everybody to be able to click to pay in a world where remittances is in the same part of the dictionary as long-distance phone calls; it's just an outdated concept that we don't have any more, where if you can talk to someone, you can pay them. If you can visit the website, you just click a button, you pay, all these things. If money worked in the way that the internet works, what an amazing world we'd have. And then this was and still is the original vision of Bitcoin. Even though that now there's many different visions for Bitcoin, there's still a very vibrant community who see this as the vision of Bitcoin.
I think that now in the bear market where, "It's going to go up forever" vision of Bitcoin, is kind of on the down temporarily. More and more people are questioning things and maybe we do want a world where your Bitcoin wallet is opened every day for one reason or another. We could do this for hours!
Peter McCormack: I know, but that was such a lovely way you ended it, money for the world. Okay, tell people where to go, where do you want them to go, go and check Bitrefill out. And bring back Shitrefill!
Sergej Kotliar: Yeah, I don't know if that domain works any more. But go to bitrefill.com. If you want to buy something with Bitcoin, it's a good place to do so. If you don't, that's completely fine, we'll have you anyway.
Peter McCormack: Well listen, congratulations, you've built a company that's survived for many years in Bitcoin and is growing and everyone loves and respects what you've done, and I love you and I respect what you've done as well, man. So, I wish you a wonderful weekend, and we should do this again sometime with Danny.
Sergej Kotliar: I hope so.
Peter McCormack: We'll have Danny next time; no offense! All right, brother, take care.
Sergej Kotliar: All right, thanks.
