Citadel Dispatch

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EPISODE: 52

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TOPICS: venezuela, latin america, hyperinflation, mining, p2p markets, stablecoins, el salvador, sanctions

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[00:00:00] Unknown:

One company is continuing its push to bring the crypto to countries around the world. Joining us now is Strike CEO Jack Mallers. The company announcing its expansion into Argentina   today.   Jack, it's great to have you back. This is a big deal, but do you think the government will be as receptive as El Salvador's   was?  

[00:00:20] Unknown:

Yo, Kelly.   Happy New Year. Let's change the world.   No. I don't. Listen, Kelly, I'm not a government consultant.   I'm here to change the world, push our species in a direction that I think will make the world a better place. And,   the Salvadoran government aligned with the vision and thought Bitcoin was a useful tool, for their citizens.   The Argentine government, that's not my job.   I'm just   impressed with my team, impressed with Bitcoin, and the tool set that we've been allowed for with what Satoshi created in making the world a better place. We're giving the people of Argentina   a monetary asset, a monetary policy, a monetary network that they can rely on and make free instant cross border payments that subscribe to an asset in a store of wealth that is external of any government or central party intervention,  

[00:01:06] Unknown:

that's really pained them over the last 100 years. And Argentina, obviously, has had such a tough time with inflation. I know when I visited there about a decade ago, they basically said just use your US dollars because, you know, that's a better way to do business around here. Don't even bother changing it into pesos and back. So I see the use case. In in El Salvador's case, it's not like you partner with the government to go in there. You launch the app, it got really successful and then they wanted to look into that. So I'm just gonna be curious to see if you're successful in Argentina, if you're met with sort of similar,   sort of, should we say, tacit approval by the authorities there or if they would have any reason to say, you know what? We don't want our citizens doing business this way.  



[00:01:45] Unknown:

Yeah. So, Kelly, here well, this is what I think is interesting is that you're exactly right. The inflation that has plagued Argentina, they now their unit of account is US dollars and demand for dollars is through the roof. In the parallel black market, a dollars worth,   twice as much as it is as according to official rate. So they are looking to to store their wealth in something else. Many of them use Bitcoin, but even that is too volatile for them. However,   their ability to make payments Kelly, this is a a cash economy.   People buy houses with cash. They're not even allowed to use,   payment networks that are denominated in dollars. The Visa network   that operates on US dollars does not work in Argentina. It is banned. And so for Strike, what's really interesting for us is offering them a convenient cash collateral. They like their daily spending cash collateral to be in dollars,   but interfacing that cash collateral over the Bitcoin and Lightning Network, making it seamless to make instant free cross border payments. And so to the individual, if you wanna hold as much Bitcoin or as little Bitcoin as you want, that is up to you. What we allow you to do is hold a dollar like cash collateral,   but then use the Bitcoin network under the hood to escrow the value to make for digital seamless payments and excuse them of this really monstrous  

[00:02:57] Unknown:

cash based economy. They're telling me I have about 2 minutes, Jack, and I have about 10 minutes worth of questions. So let me just try to get through this quickly. Is Venezuela next   for you?  

[00:03:08] Unknown:

Everywhere is next for us. The the novel thing about Bitcoin   is it takes the property that makes Internet companies valuable and important is that they have a target audience of about 8,000,000,000 people. It is an open global singular network. The good thing about strike is that we get to sell them money, not advertising. We're delivering one of the most viral products in human history, and that's money. It's akin to, like, water to live a high quality of life. And so the combination of that, we get to try and sell money to all 8,000,000,000 people, a better financial and superior financial experience. So I'm on a mission to deliver this to everyone that has a pulse on this planet.  

[00:04:16] Unknown:

Happy Bitcoin Tuesday, freaks. It's your boy, Matt Odell, here for Citadel dispatch   52.   Citadel dispatch is an interactive live show about Bitcoin distributed systems privacy and open source software.   As I went over last week,   dispatch is no longer available on the TFTC   podcast feed.   So if you enjoy podcasts,   go search Citadel Dispatch in your favorite podcast feed and subscribe there instead.   Also, we have moved our live chat over to Matrix, a distributed   open source   protocol that allows messaging,   to be done in an encrypted way,   from self hosted servers around the world that are federated.  

That might sound complicated,   but, it's a lot easier to use than you might expect. If you go to citadel.chat,   you can join that live chat.   That is not exclusive to Bitcoin Tuesdays. We have over 500 Bitcoiners in there now that are just constantly talking about   very important topics,   that affect all Bitcoiners and different tips and tricks. It's a very cool little community we're building over there, so come join us.   My favorite matrix client there's a bunch of different matrix clients you can use,   to chat in the room.   My favorite one is Element. You can go to   element.io   to download it on your computer or your or your phone.  

Huge shout out   to the freaks that are joining us in the live chat. We do appreciate you.   You guys make this show unique.   And a really big shout out to all of our supporters,   that keep dispatch a 100% audience funded   without ads or sponsors and purely focused on actionable Bitcoin discussion.   I if if you wanna support the show,   it is all being done through Bitcoin.   So there are 2 ways you can do it. You can do it through podcasting 2.0 apps.   My favorite are Fountain Podcasts and Breeze Wallet.   They operate as traditional podcasting apps,   where you load SATs up though. You put some SATs on it, you search SITL dispatch, and then as you're listening, you can stream SATs directly to my node.  

The other way is through BTC payserver,   which you can access at silodispatch.com.   You can send funds on chain or lightning that way.   I also have a pay name,   with support for samurai or Sparrow Wallet. My pay name is Odell. It's very easy to remember.   So to all the freaks out there that continue to support the show, I really do appreciate you.   I really do not wanna adhaz or sponsors.   I think that   keeping this completely a 100% audience funded   is   quite an undertaking, but it is rewarding long term,   and I really do appreciate all of you that continuously support the show, so thank you.   With all that said, we have a very fun, interesting topic today that I'm really looking forward to with some great guests. This is serial dispatch 52.  

The focus is Venezuela, Latin America, and Bitcoin.   Our first guest is Sultan Bitcoin. How's it going, Sultan?  

[00:07:33] Unknown:

Yo. How are you all doing?   Stoked for having me here.  

[00:07:37] Unknown:

Cheers. Thank you for joining us. And our second guest is Mauricio.   How's it going, Mauricio?   Did we lose him?  

[00:07:52] Unknown:

We cannot hear you. Sorry. Sorry. I'm back. I'm back. Unfortunately, I had to press the mute button. Sorry, guys.   Very very happy to be here and always happy to chat Venezuela and Bitcoin.  

[00:08:04] Unknown:

Awesome. Awesome.   So, I mean, I don't have   Sultan reached out to me,   asked if I was interested in this topic. I am very interested in this topic. I very much feel   like Latin America   this has been this has been the year of Latin America   entering the Bitcoin scene in a big way,   and I think a lot of people are underestimating,   what the significance of that can be.   But overall, I mean, you guys are both,   Venezuelans.   I am not,   this is not necessarily my area of expertise.   So I'm gonna be leaning on you guys to kind of lead this discussion.   So with all that said, I mean, where do you wanna start? Where do you think is the best place to start here?  



[00:08:58] Unknown:

There there's so many places,   that that we could take this. But I think,   maybe to to set the to set the stage for for, I guess, broadly, what are the situation that a lot of Latin America finds itself in, Maybe we could speak about the the sort of history of Latin America that has had with inflation.   And I could speak to, I know Venezuela's kinda history with inflation quite well. I'm not, you know, I know of the,   the other inflation problems that the other countries have had, but I wouldn't consider myself an expert. But I I'd be happy to kinda,   you know, set the stage for what kinda led to hyperinflation in Venezuela and and and kind of how that kinda   not corner, but ushered people   into into Bitcoin out of necessity. I don't know if you agree with that, Ale.  



[00:09:46] Unknown:

No. Com completely, man. Just, let's take it from there.  

[00:09:52] Unknown:

Sure. So   maybe maybe to start, you know,   I guess, Venezuela,   you know, it's maybe I'll try to kinda start from the beginning, but Venezuela has always been a very resource rich country.   And for very like, known by most people because we were great producers of oil. We had massive, you know, massive oil production capacity. We still have the largest oil reserves in the planet,   but still, it is one of the most impoverished countries in the world. So a lot of people wonder   how that how that happened. You know? How how do we go from   still the country with the most sort of,   you   know, potential resources in terms of energy? How how is everybody starving and people,   you know, not have enough money to to eat?  

And and the answer is complicated.   Then it's it's not as it's not really a simple answer.   But, you know,   I think one of the things that stood out to me as as I was growing up, and and this is a problem,   not just for Venezuela, but for for many economies that are resource rich,   is that once you have,   once you have a way of of, you know, fabricating money, whether it is by sort of yanking it out of the ground   or printing it. Like Venezuela was able to to get away with murder for a lot of years because they didn't really have to manage a a a type book in terms of, like, the money they spent and the and the and the money they they they collected in taxes because they always had this   massive kind of oil subsidy that they could just be yanked out of the ground. But they got really,   you know, the the the problem with oil is that also,   because the country relies on oil so much and the economy relies on oil so much, whenever oil prices   rally or crash,   that led into   political turmoil as well. Because every time oil prices dropped, you know, the economy suffered and we got into this, you know, everybody started pointing fingers.  

And,   you know, that makes it very difficult to run the country, but I think what really tripped things over the edge in Venezuela   was obviously the the political event that occurred, which was when, you know, the the sort of communist party,   took over at first democratically,   but slowly over time, it started dismantling   the democratic institutions,   which turned into sort of a fallout dictatorship,   and and that's what kinda led to the the the the the first round of people trying to look for the door and and and causing that first bout of hyperinflation.   Ale, I'll I'll pause.  



[00:12:32] Unknown:

No. Yeah. I guess it's just a very interesting way to start the conversation here. And related to what Mauricio was saying, like,   you know, it's it's mostly related to what economists now call the natural resource score. CERS. Right? So,   there's this famous, you know, famous words from from a Venezuela in   1976.   His name is was Juan Pablo Perez Alfonso.   Basically, this was the Venezuelan diplomat   that in in the seventies going all the way into the eighties,   he he was the pioneer at structuring the OPEC,   the the OPEC cartel, right, and the organization of petroleum exporting countries.  

And and in in 1976,   he said that 10 years from now, 20 years from now,   Venezuelans would has would start seeing that oil would bring us ruins. Right? And and he called it the devil's excrement.   So I guess it's it's,   it's   funny because every single time it's as Venezuela has started approaching, you know, but but the   nowadays,   what what we basically experienced   as Venezuelans was just the government trying to find   other ways of financing   itself.   And that's how gradually   the government started, you know, breaking breaking down the rule of law that was created during the the thirties, the forties, and fifties, and sixties   that basically created what what what was at its time the most stable banking system of   of all of Latin America. Right? So, eventually,   to to Mauricio's point, right,   when whenever that started happening,   you   saw how the the tissues of the system started tearing apart. And so the democratization of Venezuela started becoming the socialization.  

Right? And so Venezuela diving into socialism   and eventually dictatorship.   To to the point,   it it in in to today. Right, you you need the the after government started financing itself using using its   the the Venezuelan banking system and using the savings of of people in 1983,   Venezuelan experience what we call our own Black Friday event.   So,   essentially, you know, after a huge shortage shortage of cash,   again, related to the volatility or volume of prices and and and the international oil market,   this this,   Luzera campaigns, the Venezuelan president in the eighties,   he basically   devalued   by over 50% overnight   all of the Venezuelan savings,   by essentially forcing, right, and putting in place,   country current currency exchange rates in the country. So since the eighties,   we started we started   truly seeing   our our our currency, the Venezuelan   Bolivar,   depreciating   against   the dollar   because of this shortage of cash and and this and and that was basically the initial stages of   just, you know, just to quickly summarize it,   bad monetary policies and administrative policies   coming from different Venezuelan regimes   since then.  



[00:15:54] Unknown:

So this is interesting.   I never really,   thought about it from the resource rich angle. So, like, the way you guys   are describing it here, would you say it's, like, kind of similar to,   like, what we see happen to, like, lottery winners   or professional athletes that just they, like, get a lot of money and they just don't know how to spend it, so they just end up broke at the end of the day.  

[00:16:20] Unknown:

Or ICO companies, I would add as well.   So it it it's it's a similar kind of culture or or because it it creates this this sense of there is no need to be accountable. Right? Like, there's always more where that came from kind of thing. And, and it just doesn't, you don't have an incentive to run a tight ship.   And so that that sets   kind of a bad culture to to start with. But I think one thing that I've   you know one of the lessons that I've learned over the years is that   people tend to think of inflation and hyperinflation   as, like, an extension of the same thing. And I actually think they're both caused by very, very different reasons.  

So what I mean by that is   inflation   is typically an economic phenomenon. Meaning,   what's happening in the US right now is that the government printed, you you know, 40% of extra dollars and prices of things have rocketed by more than 40%, and that's   inflation. That is very much,   you know, related to the extra money that was printed. Right? And so what you see in the prices is simply a reflection   of the new size of the money supply. Right? That's just your basic inflation. That's just a math like, just a a rational reaction   to an increase in money supply.  

Hyperinflation   is actually an a complete loss of faith in the system.   Right? It's not necessarily you reacting to an extra 10 or 20% of money that got printed by pricing your assets by an additional 30 to 40%, right, or 20%. That's just proportional.   Hyperinflation   happens   when you've lost complete faith   in that the value of the currency that you're using,   is is gonna hold any any of its value. So you basically proactively   start getting rid of any exposure   you have   to that currency   actively, like, in a matter of time. And and and the other thing, just to put it in Bitcoin terms,   the higher the inflation,   the higher your time preference.  

You cannot have low time preference or it's incredibly   difficult to have a low time preference in a high inflation environment because you you're you're trained to spend it as soon as you get it. And you're trained to think in increasingly shorter and shorter time frames because there is no ability to project anything 5, 6 months out because inflation makes that impossible.   And so it just throws society   into this   shorter and shorter cycles of things and and and more and more uncertainty,   and it gets you to the point where you you lose faith in holding the currency, you lose faith in investing in that market locally, you lose faith in your property assurances in that market. So it's basically,   hyperinflation   really hits when a large majority of the economic participants in that country   see that   state or that political project   as a failed project.  

And so while I think countries like Venezuela,   Turkey,   you know,   Sudan, others that are sort of   their entire democratic institutions are just completely out of whack, that's when you see hyperinflation.   I find it personally   very difficult   to think that we're gonna have anything close to hyperinflation   in a place like Canada or the US   anytime soon, and that's because   it's really only because the the fiat system is just a a set of dominoes   and the base domino is the US. So before the US goes into hyperinflation,   we're gonna have to see hyperinflation in a world of other currencies,   like the bolivar, like the peso, because these currencies are gonna get,  

[00:19:59] Unknown:

sold off much before the dollar does. Well, like, what happens, right, is is so, like, if if Venezuela's experienced hyperinflation   or Argentina's experienced hyperinflation,   people tend to escape to other fiat currencies first. Right? So they they look for those stronger ones,   and, typically, that'll be the US dollar to a lesser extent, maybe the Canadian dollar. Right?  

[00:20:22] Unknown:

Completely only the US dollar. So, like, euros only really will enter the picture in there if there is a full out sanction of dollars, like what happened in Venezuela. But broadly speaking,   when co when currencies fail,   the the the in the the participants   inside that society rush to the dollar. It's just it's what they know. It's what they are it's what they pay their invoices in. It's what they do all international trade with. And so,   an economy, like, for example, Venezuela   today is a fully dollarized economy.   The only people that use boriodas in Venezuela are the people that absolutely have to because they have no choice or they do not know any better. So, you know, and this has been the case in in many places in Latin America. So for example,   Panama is a dollarized society, 1 to 1 peg. Ecuador,   dollarized society, 1 to 1 peg. In Peru, you can legally use a dollar, 1 to 1 peg. El Salvador is a great example of a country that lost its seniorish and used 1 to 1 dollar. So we are   there is already so many presidents of Latin American,   currencies that have failed, and then the dollar has been adopted by proxy. And that is just,   in my view, that is sort of, a a a sort of currency subordination,   in a sort of a global,   scale   because the that particular country was unable   to maintain demand for their own local currency. That they're just they couldn't instill enough trust in their own country to hold their own currency.  



[00:21:55] Unknown:

Right. I mean, that makes sense to me.   But then you also see there's another dynamic at play, right, where   these these governments,   when when their backup back is up against the wall and they see people leaving   their currency,   they tend to try and close the exits. Right? Like, in Argentina   Mhmm. Right now, it's very hard to use   dollars in the traditional financial system. Like, there's a   there's massive usage of my understanding is there's massive usage of dollars in in form of cash.   But in terms of actually trying to move it through banks and whatnot, that is being blocked actively by the government.   Do you are you are you seeing that same thing in Venezuela, or are they just allowing people to   to use to use dollars in in   traditional financial ways? And, like, how does Bitcoin enter that equation? Right? Because I feel like it's harder to block the Bitcoin exits   than it is to block   the USD ones.  



[00:22:58] Unknown:

Right. So I think that it could expand on that one, and and it's pretty much related in a in a in a huge way to what Mauricio was saying about, you know, the the system at some point completely   fallen down the cliff,   after coming from inflation rampant inflation to high inflation all the way down to hyperinflation once you fall down the cliff.   So, let me give you the boots boots on the ground experience of 2017 pre pre   like, a couple of months before   hyperinflation   started to kick in in in the Venezuelan economy. So,   it it is amazing how at some point after, you know, you're not able any longer to,   you know, like,   close some contracts with our agreements with anyone because after a month or potentially weeks,   the the currency that's,   that's part of you know, the underlying currency that's part of that agreement   lost 20 to 30% of its value. Right? So,   which makes   the jurisdictional system   in the case of in in this case, the Venezuelan jurisdictional system, which had completely   banned,   right, the usage of other fiat currencies,   it it it loses   people lose trust in it because it stops   functioning. It doesn't   function efficiently, and people just can't rely any longer on that on the, on that jurisdictional system. So so,   basically, what started happening is   after the government started financing itself   by,   you know,   fixing   forex rates and the forex market in Venezuela.  

That started trickling down to the banking system and the banks   that were basically assigned   with the power   to assign dollars to businesses   and tourists.   So essentially, Venezuelans traveling abroad the country with this preferential   exchange rate for the US dollar to Bolivar rate. Right? So it   started at a governmental level. It grinds down to a banking system level, public banks, private banks, then it trickles down to businesses. And then at some   point, the people on the ground, right, on the streets, they start noticing. The people that live in the informal   economy,   right, that didn't own a bank account or whatever, they start noticing and they and they say, okay. I can no longer rely on this form of cash.  

What else can I do? And so in 2017, you started seeing this   very interest interesting trend in Venezuela,   whereby,   informal   merchants,   right, and informal businesses   were basically forced because of the velocity   of of of, you know, of of of of of money   and inflation and how rapid it starts increasing.   They were forced to open up bank accounts so that they were essentially able   to,   you know,   open up more ways for receiving and and commercializing   their their their merch. Because, essentially, it was   it was almost impossible,   you know, to just, like,   receive cash   in the morning, and then by the afternoon or next day, go to the supermarket and you had already lost,   you you know,   the value of your, of your savings   would have already depreciated so much that you were not able,   you you were no no longer able to buy the same amount of goods. Right? So it's just a it's just a matter of speed to Mauricio's point. Speed in the economy starts increasing, and you just try to become this person that is,   that you're essentially trying to look for more ways to,   intake money and then get rid of it faster.  

So in 2017,   I remember when at some point,   you were still able to, you know, transact and live and believe it is in the country.   If you had dollars and you exchange your dollars or Bitcoin, right, to your point, Matt, you were essentially financing   a lifestyle   for a couple of 100 of dollars a month,   which you couldn't finance yourself with   1,000 or tens of 1,000 of dollars   abroad.   Right? So outside of Venezuela.   So   when that started happening and people on the ground started noticing,   you you saw   I remember telling my girlfriend that I was so worried because $1 was already worth 3 believers in the country. And then after a couple of months, it was already, you know, like, worth a 100 a 100 believers, 200 believers, 300 believers, and then hyperinflation started coming in. Then   the problem here is   when hyperinflation started coming in,   the Venezuelan   government had banned,   you know, had banned the usage of of dollars,   whatever, euros, whatever.  

People started,   you know,   essentially reverting to their family members that had already left the country, and they would try to send them money back into the country via this,   you know, in,   informal money transmitters   that would essentially assist these people that and businesses mainly that would that wanted to get rid of the currency   and receive essentially dollars in a US bank account abroad   or people that would travel into other country, family members that would come into the country to visit their family would essentially bring cash,   piles of cash, as as much as they could,   just to bring it to to their families. Then the thing is that in 2017,   the other important thing to mention that happened is that the US sanctioned the Venezuelan regime.  

So,   the Venezuelan government started plugging right? Started   as as they try to come up with ways   to continue moving the economy   and and treat this hyperinflation   anomaly, which was,   you know, in part also because   of not being able to access   dollars within the international   you know, the global banking system nor the euro because they were banned by the EU as well.   They just they were forced   to   hit the money printer harder.   Right? And so   what what they started doing after that was essentially   plug cash   into the Venezuelan economy   to the point in which right now 90% of all transactions   done to merchants   in Venezuela   is is done is is dollars, dude, honestly. Like, if you go to a favela   or, you know, like a small town in Venezuela right now, and you wanna buy, you know,   a glass of of juice   from a teenager that is selling used to make, selling juice on the streets just to make a living,   He or he doesn't want bond of ours anymore. It's all being priced in dollars.  

It's   so, you know, as the And that's all That's mostly cash based or they're using Exactly. That's mostly that's mostly cash based. And then you also have, you know, certain people,   do commerce over, you know, like PayPal accounts or or Zelle or or Zelle payments. So, like, payments within the the US banking system. So it's it's at a local level that the exchange is happening, but it's at a at an international level that the,   transfer value is happening. So it's it's essentially not happening   within the Venezuelan banking system any longer.   Now if you look at the reports of certain firms that, you know, they they have, like, their own,   statistical analysis and and models, and they're backed by the IMF to come up with, you know, like, real data for the Venezuelan economy.  

1.9%   of all payments being done to   major merchants in this right now   is being done with cryptocurrencies.   If you look at the IMF standards,   based on their standards,   anything above the 1%   threshold is considered as relevant.   So it is huge it is at a huge level, very relevant, the amount   of payments that are being done,   with cryptocurrencies within the Venezuelan economy.   And that just,   you know and if if we take 2 steps back   between   2017 and today,   what we saw happening,   Marisha and I and I started and I started seeing this when I went to college. My friends started doing this. I started doing this. Essentially, we just found a better way   to beat a, like, a faster, more efficient way to beat the, you know, the the the old informal   money transmit   money transmitters   that were, you know, just receiving Volibars and making payments,   within within US bank accounts or Panamanian accounts or whatever outside of the country. We just found   LocalBitcoins,   Store Bitcoin.  

Now we have, you know, Binance speed up here. Paxful used to work in the country at its time. But we were just able to beat them at their own game   by using Bitcoin as the underlying currency to essentially   exchange bolivars   for dollars   outside of Venezuela.   And that will bring us to the point where Mauricio will start explaining us his whole story of how his brother started mining Bitcoin in Minnesota. And then when Mauricio traveled back to Venezuela from Canada,   he was mind blown by his brother showing him how in under an hour,   he was able to get him all of ours into his bank account   from his computer   without resorting back to, you know, any this of this, what we call, informal money transmitters.  



[00:33:08] Unknown:

Yeah. That that, you know, that that's a good point, Alessandro. And I and I think I   I wanted to extend a little bit on what what Matt said earlier, which was,   governments   make it hard for you to protect your savings,   once inflation starts hitting. And and I just wanted to give   maybe, like, a quick like, a story or or not a story, but essentially kind of paint a picture as as I see it and as as in my view, what kinda went down in Venezuela.   So,   typically, what happens is most governments look at their local currency exchange rate   against the US dollar as essentially,   a barometer   of how well   the investment community or their own citizens   perceive   their country. And what I mean by that is   if your government is doing a a great job and people want to invest in your project and they think you're going in a right direction,   you don't really have an incentive to sell your local cash into dollars. If anything, you have an incentive to bring your dollars from overseas   and invest them in the country.  

And when you do that, you're effectively buying local currency with dollars. And what that does is that that elevates the price of your local currency relative to dollars. So if your if your government plan is great and your and your constituents are all aligned, what you should see is you should see a stable currency that in fact could even become stronger or remain at a level, you know, of ground relative to the dollar. K?   If you're if you come out with a wild plan, like what happened in Venezuela, where Travis's plan was literally to give free things to everybody for free, everything for free for everybody.   The investment community, understanding that money doesn't grow on trees, was absolutely freaked out, and they said, I will not be caught dead financing   you know, giving everyone free everything with my money because that's the only way they're gonna get the assets to give people free things is they're going to print more and they're going to debase   my savings. So I'm going to take my savings away from this currency and I will not be exposed to that ridiculous   plan of government that will surely fail. K?  

What the government does is they say, no, mister investor, you are wrong. Our plan to give free things to everybody   will work, and you just haven't we you know, you just haven't seen this done right.   And what they say and eventually, they they come at odds. Right? And investors continue to sell off their local currency to buy dollars, to get the money out, and what this does is that it starts   ramping up the rate of exchange,   and and the government starts looking really poorly   because now   the the person an average person   needs more of the local currency to buy the same good. So the government wants to prevent,   you know, they do not wanna look bad. So   instead of fixing the problem at the core,   what they do is they try to fix   the price   of certain things. And they they at first, they try to fix the price of a particular asset or a good, and later they go on to fix the price of the exchange rate of the actual dollar.  

So   what I what I wanted to say is is to your point, Matt, they will as they see that people do not agree with the government plan and they start selling off their local currency for dollars, things that they do believe in,   the government starts saying, you cannot do that. That is not allowed. They they don't say,   you know, we're we're doing something wrong. Let's fix this so you don't wanna take your money out. They say, you are not allowed to take your money out. And what what that has created over the years in many Latin American,   societies   is this idea   that because our governments have been so volatile   over time,   most wealthy people in Latin America,   once they make a little bit of wealth, the first thing they do is they send it out of their local banking system, out of their local currency.  

And so   Bitcoin is not really that different in the sense that it is just one more exit door and to your point,   when things go tough,   they will try to ban Bitcoin, and they will try to ban Bitcoin because it's working. And that is exactly what I think is happening in Russia right now, in Turkey, in China, and any other place that wants to ban Bitcoin.   And what that tells me is that it's actually doing precisely what it's designed to do for its citizens.   Hey, guys. No. Sorry if I lost you. Sorry.  

[00:37:50] Unknown:

Hey. No. We're here. I don't know if Matt's still here though.  

[00:37:54] Unknown:

No. No. That's fine. I I I yeah. To me, it's it's,   it's really just that the government tried to to to   never they just wanna keep their optics at all cost, and it's all a big theater,   which is which is unfortunate. But   but, yeah, they can't really do much.   Once people discover Bitcoin and once people   realize that they do not wanna hold that asset, they will do whatever it takes to get rid of it.  

[00:38:22] Unknown:

I I think Mbak is back. And as, and as Matt gets back, I I love, you know, reading here, you know, blog. We're a blog 700,020,000,   whatever. And then   it says   2,710   sats per dollar,   but one sat is already worth more than 1 ball of it right now. Right? Like like, if you take into account the 14 zeros that the Venezuelan government   took off the the bolivar,   Right now, you need approximately, like,   480,000,000,000,000   bolivars just to buy a dollar   in the country.   So,   you you know, Fiat Fiat Fiat is an illusion of the power.   Go ahead, Matt. I think we lost you.  



[00:39:11] Unknown:

Yeah. I'm back.   Sorry about that.   I had a little bit of an Internet issue here. Seems to be resolved. I was afraid it was gonna kill the whole stream, so I'm glad that we are still live, it appears.   So where are we in this conversation? Don't let me don't let me hold you guys back. I know one of the big things that I wanted   to touch on,   just to go back a tiny bit,   is, you know, there was some conversation there about,   Venezuelans using the traditional financial   to to move dollars around, whether that's Zelle or some other kind of   finance app.  

You know, Venezuela   has a little bit of a unique twist   on other Latin American   hyperinflation   stories in that it's also a sanctioned country.   How do, like how does, like, the whole like, how are people able to use   apps like Zelle if   if the country's under sanctions?  

[00:40:15] Unknown:

So this is a very interesting,   nuance   about Venezuela that many   people don't know. And I think this nuance,   illustrates   a couple of things quite well. It illustrates   how well the Venezuelan government is able to spin propaganda   to make people believe things that aren't actually true.   And the other piece that I think it it this illuminates   is   how strategic,   the flip side of that is how strategic,   the US government can be,   on certain things. So let me let me kind of explain.   Venezuela   is not a sanctioned   country.   Venezuela there are   several Venezuelan   entities   that are sanctioned.  

So the country itself   is not sanctioned.   The people who are sanctioned   are rogue government officials   and the state oil company.   And   interestingly,   the United States over the last 3 years continues   to be the biggest buyer of Venezuelan oil.   And so the   the sanction   narrative is really an, a a a a fabrication   of the Venezuelan regime,   to essentially   paint the US as a boogeyman   that prevents   better people from thriving,   but is actually   very, very,   misunderstood   in the sense that   the United States does not fully sanction the country. McDonald's is still there. Coca Cola is still there.   You know, Procter and Gamble, Oreo is still there.  

It's really   a a facade.  

[00:42:01] Unknown:

Gotcha. Gotcha. So what's what's the deal with the the oil purchases?   Like, can we unpack that? I don't even know if it's that relevant to this conversation, but I'm curious.  

[00:42:12] Unknown:

So I'll I'll caveat this when I'm I'm not necessarily, like, an oil   expert.   What I will say is that,   Venezuela   is is is a unique oil producer   for a few reasons.   1,   so   before this whole mess with Chavez started, there there's actually a a pretty tight link between the US and Venezuela, and and it's broadly   because of a company called Citgo,   c I t g o. And you probably have seen the Citgo gas stations throughout the US.   Citgo is actually a Venezuelan company, and Citgo used to be a joint venture between the Venezuelan state company and some US,   oil companies.  

Now,   because of that, the the other interesting point there is that Venezuela doesn't have refineries,   so Venezuela actually cannot process its own gasoline.   So it's dependent   on exporting its oil   to,   yeah, so so I see the comment here, Citgo is Venezuelan oil, if you see one we have their oil. So, yes, he he Narwhal is, like, Narwhal is exactly right. Sidgo is Venezuelan oil. And there was at one point,   a a a Sidco ad that had pictures of Chavez and other politicians back when he was in Vogue,   which actually made me wanna throw up when I saw it,   but, but that that did happen. And so that is,   largely, I believe, why the link is still there.  

I think in in many places in politics, you will see,   groups or entities that's that that that seem to have a a   public sort of narrative of not being friendly,   but in the background, they're actually, you know, never stop doing deals with each other.   And and I think that's very much the case,   with the kinda US Venezuela relationship.  

[00:43:56] Unknown:

Got it. Got it.   Yeah. Well, you're absolutely correct that it's a common misconception because I did not realize the sanctions were   specifically targeted.   I thought they were more broad.   I I   I mean, I don't know if you guys know. I I my understanding is the sanctions on Iran   Iran is for   all their people.  

[00:44:18] Unknown:

Yeah. I don't know if that's correct. I don't know now. So we got I'll let probably some lawyers in the room confirm, but that is that that is the case. You know, my understanding is that some countries like North Korea, for instance, they are fully sanctioned as a country,   but there are others like Venezuela,   where   the rogue   criminals,   which actually are elected officials, ironically,   are the only ones that are sanctioned. The rest of the people are not. And the intent here   was really   the the the intent of the US was to say, you know, they were trying to be as explicit as possible that this was not meant to hurt the Venezuelan people, only the bad people in Venezuela. But, of course, the Venezuelan government is gonna try to paint a completely different picture.   Right? And so one group was trying to say, hey, this is how we did it. The other one was trying to say, you know, completely   a lie, but as you can tell,   once any regime whether it's Venezuela or any other actually,   this is something that is not talked about enough, in Venezuela, but so Chavez, when he came in,   he the first thing he did is rewrote the constitution. The second thing he did is he   the second thing he did is he dismantled   every single media outlet that was against him. So in Venezuela,   in the 4 years after Chavez was selected, Ale, do you have the number? But I think it's over 1,500   radio licenses were revoked.  



[00:45:41] Unknown:

I don't have the the exact number, but it yeah. It it it's crazy, dude. It was that was hectic. Yeah.   Yeah. Look. I I and I guess it related to what Mauricio was saying.   You know, the the problem with with Venezuela, and it's all related back to, you know, what we were we were just discussing   this.   It's it's basically,   the government,   swallowing,   you know, limitlessly   the different economic apparatus in in parts of the industry in the country. So the broad a huge problem with with, Venezuela   and   and the bad administers policies with the was that essentially,   you you know, Chavez started   expropriating,   companies in in Minnesota. So Chavez, for example, took,   made public   the national state oil company, PDVSA,   right, that we were just talking about that has its subsidiary or a Cinco in the US.  

That was it used to be a private company, man. I mean, like,   over the 30 thirties and forties, the the first   main highways   in Germany   were were built using Venezuelan   asphalt.   Right? So,   during during Chavez's presidency,   over $1,500,000,000,000  

[00:47:15] Unknown:

in revenue,  

[00:47:18] Unknown:

fell into the hands of.   And so, essentially,   completely   into the hands of the government because it it became a public company. Then Travis started nationalizing   banks,   nationalizing   factories,   you know,   whatever, man. You you name it. So,   it's just to say that the more   the the more control over the money supply   and,   you know, the revenues   of a certain country or whatever,   the more you give to the state,   the the more greed that you will just get, man. Honestly, that's that's that's part of what I live in a in a short summery sway   in in Venezuela do.  



[00:48:05] Unknown:

So, I mean, on that note,   so in a lot of ways so so we see these countries, they move to dollars,   because   that is what they know. It's accessible. It's, you know,   the undisputed world champion in fiat currencies.   Aren't they kind of just   are are are we ending up in a situation I know Mauricio said earlier, like, we shouldn't expect, like, a hyperinflationary   event in the United States anytime   soon. But we are seeing, you know, the official inflation numbers are coming out of, like, 7%,   which is   historically pretty high for the United States, and that that's, you know, a discounted number for all for all intents and purposes is probably much higher. That's the one they're willing to admit. Are we, like   is is the world putting all of their eggs in one basket, so to speak? Like, is it are we just compounding risk instead of you have all these countries that mismanage   their treasuries, mismanage   their currencies, and then   if we're all moving   towards a single country's currency,   when that eventually collapses, it's gonna be   way worse. No?  



[00:49:22] Unknown:

It it it's a very it's a very good point, Matt.   You know,   the way the way I see this the way I I kinda see the the the transition   and to say it, like,   from one fiat to the other is is really,   it's hard to kinda put it to words, but it's almost   a Fiat is nothing more than a belief. Right? Like, the the the the the power of the dollar is just as good as the or as Europe belief in that the United States will be able to manage   their finances accordingly   and and meet their obligations. Right? Like, that is really all that backs fiat, is the belief in whoever the operator is of that fiat. Right? Like,   you know, the the   how you manage the issuance of that fiat relative to your reserves and and relative to, like, you know, the the the other value that you can create within your economy.  

Now   what what happens   what I see happens when a when a country's currency   fails and it moves to, say, a different country   is, that country loses   a tremendous amount of independence   because it loses its right to do seniorage.   So it it essentially is now bound by the the monetary policy that the United States has.   It it puts the US government at a massive advantage   relative to other governments   because it can control its monetary policy and and others cannot.   So   I   it it really,   whether we're making the problem bigger, I mean, we're just trading one problem for another. Right? Like, we're we're training the the what what we're basically saying is this particular group is unable to manage their books, and we're going to use the currency of the group that we believe can manage their books.   To your point, if we start seeing   concerns or doubts start to emerge around the US being able to maintain its book,   then you might see people interested in other monetary instruments and that might be Bitcoin,   you know, or that might be the country that is doing things better, you know, come 10 years from now or 5 years from now if if the US stops or, you know, starts creating doubts. So do you do do you think it's a valid perspective that the way we've seen dollarization  

[00:51:45] Unknown:

happen   in these other countries is the way we will see   Bitcoinization   happen   as the dollar fails,   or is it not a complete analogy?  

[00:51:56] Unknown:

I I'll I'll let Mauricio expand further into that. But but   yeah. Like, if if I I look. I I I lived the hyper dollarization   process of Venezuela and had been, you know, in mind in the country back in 2013, 2015. And then I I had some hope that more   you know, we would we would have seen more retail adoption, although it's pretty big in in in in Venezuela. We could dive more into that. But but, truly,   it it went already through a hyper dollarization   process, and   that's what,   eventually starts,   you know,   ground grinding down towards,   hyper Bitcoinization   and more usage of Bitcoin,   as people just some people start understanding Bitcoin in this country as a more,   you know, rapid and less costly medium of exchange   to reach   other local currencies and make international payments. Because because the other problem is okay. Right.  

The problem with hyper dollarization   is if it's done in cash,   sweet.   But then   it's it's a dollarization   that will live   just if if if if the banking system of that particular country does not embrace   the dollar as legal tender and does not abide   to the rules and the regulations   of of of US,   then and and if you're not essentially a green or or a goodwill   trading partner of of the US,   then there's there's no way to, you know, provide, like,   real global   exposure to that dollarization.   And so it's just a it's just a closed door   it's closed doors economy. You know what I mean? Like,   and and and so that's and then and then we'd have to speak about, of course, the problem of confiscation.  

Right?   England confiscated,   Venezuela's gold.   If you don't use dollar and and if you don't have access to   using dollars and the global banking system, what are you gonna use other than gold? You just you just have Bitcoin. You know what I mean? And so I'll I'll let Mauricio give his stake on that.  

[00:54:14] Unknown:

Yeah. It's a it's a really good point, Matt. I think   if if you look at, you know, if I try to look at things as as as sort of human events, and I think when you when when somebody thinks macro and how this happens or how that happens, I like to think of macro events as a as a combination   of just individual actions.   K? And if if you look at how,   or why people drop the bolio out of for the dollar   or why somebody would drop the dollar for a bolio out or sorry, the dollar for Bitcoin,   In my view, it would happens a little bit like this and and for this, I I wanna give a quick story about mining in Venezuela, which I think can illuminate   a lot of things about how how this transfer of knowledge happens.  

So the way,   people don't find out about dollars or hyperinflation   or inflation all at the same time. They do this,   by by, you know, living certain experiences and seeing people do certain things. So I'll give you an example. When we first started setting up mines and build and installing miners in Venezuela,   we were using,   the electrical contractors that would that came from the,   from from residential construction because that's what my dad used to do. And so we started calling up our electricians to help us do the the sort of electrical upgrades that we did to run the power, feeds to to our miners and to set up our our networks and to bring in our sort of Internet,   to to to our our Internet networks, like our LAN networks.  

And in the first time around they came, they were like, oh, this is cool. You know, we were we were installing miners and building something in the time where everything else in Venezuela was falling apart. So naturally they were curious and they were like, oh, what are you doing this big installation for? And we said, oh, it's who gonna install these machines, they mine these things called Bitcoin.   And, and so the second time around,   we called them up for a second installation.   And when they came to do the second installation, they saw that we were growing and that we were installing more and they said,   hey, what is this Bitcoin thing? Where can I learn more about it? You know, can you can you tell me a bit more about it? And there was very little Spanish resources, but we kinda pointed them out in a few in a few directions.  

And,   a few months later, we called them back for a 3rd installation.   And when they, when they came in for the 3rd installation,   they said,   this time I wanna get paid in Bitcoin. And,   and they had their addresses and they were able to receive Bitcoin for payment. Again, what I'm trying to say is   people   emulate,   when people see other people doing well   and they're doing a certain action and that action leads them to them doing well, people emulate that action. So the same way these people saw us installing miners and gotten interested in Bitcoin,   other people will see other people spend and hold dollars over Bolivariz,   and they will then start emulating that. And they will benefit from it. They'll run their their math at the end of the week and they said, holy crap. I am better off. And then they start moving on to dollars. And eventually, I think the migration to Bitcoin is actually gonna be very similar to your point, Matt, because it's gonna start out of necessity   and governments are likely going to fight it at first. But there will be a government or a group in that government that says,   this is inevitable.  

So they get behind it and they rally the population and then it becomes law. And so I I think we're gonna see   that that's how I picture it, and transitioning,   but I do not,   I do not think that, that governments are gonna do this without a fight. I I do think that there will be some contentious part of this journey, and we just need to be ready for it.  

[00:57:47] Unknown:

I mean, you crystallized something there that I talk about a lot, which is   which I I think is lost on most Americans   and and probably Europeans as well and Canadians   and is this idea of of necessity,   this idea of actually realizing there is a need for something better and going out and seeking it.  

[00:58:12] Unknown:

Yep.  

[00:58:13] Unknown:

Right? Like, that is that is the key. Right? As people start to realize the need, they will seek out a better alternative,   and we basically just need to be ready   with tools, resources,   education,   for people when they realize that need rather than necessarily trying to   convince someone to use Bitcoin that doesn't necessarily need it.  

[00:58:38] Unknown:

I mean, a 100%.   And,   it's it's   it it happened to me that way. Right? Like, I died with Bitcoin because of necessity. My family lost its savings, almost all of its savings in in 2008 with the great financial crisis.   And,   the only thing that allowed me as a Venezuelan   after   after that and the whole, you know, depression of the Venezuelan economy,   the they completely wiped out all of our savings and local currency as well.   Jurisdiction doesn't work.   It's only based on, you know, trust and pay somebody nowadays. It's it's it's been Bitcoin. So I do,   and and then the other thing,   you know, in the in the case of Venezuela that creates a need,   it's like if you   if you   leave the country   and you go to, say,   Spain,   whatever, right, You still have to go through this bureaucratic   normal process of establishing yourself as a resident of that of that country. And until you don't do that, you don't have access to banking,   you can have a job, you can't do anything, and you continue living in the informal economy.  

And   what I learned by that   is that   the best way   to, like,   best way to monetize the informal economy is through cryptocurrency peer to peer markets. And so, essentially, I made a living out of, you know, peer to peer arbitrage   by arbitrashing   different different currencies and and   and South America by using,   you know, local Bitcoins or whatever. So   So  

[01:00:19] Unknown:

go ahead. Let let's let's talk about that a little bit because Mhmm. You know? So I have a buddy   who is only a buddy because he's a Bitcoiner,   and he's from Columbia.   By the way, this is, you know, one of the coolest aspects   of being active in the Bitcoin community is that I just feel like I have   friends around the world who I have not met yet in person,   but that I can just have these these great conversations with. And   he mentioned that in Colombia,   the main way people are buying Bitcoin and selling Bitcoin trading   is through Binance peer to peer marketplace,   which is something that was just not even on my radar at all. Like, we all know LocalBitcoins.  

We know PAC's full.   But apparently, Binance's p p market is blowing the fuck up. Do you guys have any insight on that? Oh, you hear the Latinos giggling. You hear the Latinos giggling.  

[01:01:15] Unknown:

Dude, I have all of them, honestly. Look.   Binance fear to peer market.   The Binance fear to peer marketplace started   booming in South America after, you know, SurveyCoin, Paxful, LocalBitcoins,   whatever. There's so many.   Because they introduced   the 1st peer to peer marketplace   that used   stable coins.   In this case, dollar tether.   So the problem that most of this, let's call them informal OTCs or, again, the term that it's, you know,   generally used in the financial world and the banking and the banking world is,   informal money transmitters.  

The problem that crypto this cryptocurrency   informal money transmitters or informal OTCs had with Bitcoin   peer to peer marketplaces was essentially volatile.   Right? So it was a problem that you were charging somebody someone between   1 or 2%   or even 3% sometimes, right,   to associate receive the local currency and make a payment for them in dollars wherever. Right? And so,   you you made 1% to 2% on one side of the trade, and then you made 1% to 2% on the other side of the trade by selling   by selling Bitcoin to a Bitcoin buyer in another country,   right, to access dollars in the other country. So,   or or whichever whichever currency. It could be Colombia Colombian pesos or Peruvian soles or whatever.  

Again, the wrong with that was volatility. So whenever you were carrying on a trade   and within a matter of hours,   Bitcoin dropped, like, 5% or 10%, whatever,   you were essentially losing all of your profits.   So it was a thing about speed   and liquidity in the market. As peer to peer marketplaces started started booming and and and and being more used,   in South America,   then   Binance   Binance   really understood that,   and they really cashed in that opportunity.   And and they really solved the volatility problem by essentially essentially   just pegging dollar tethered to a peer to peer marketplace.  

And so that's essentially   why Binance is currently functioning as the back end   for peer to peer trades,   especially   being done in South America.  

[01:03:45] Unknown:

But how do they that's very interesting. How do the users   get   Tether?   Are they getting Bitcoin first, and then they're just when they want to sell, they're just holding Tether? Or No. So the the it's basically the the way Binance innovated, and I'll let Ale,  

[01:04:04] Unknown:

confirm this because he uses these these platforms more than I do. I I heard anecdotally from a lot of my friends, but,   what I essentially, Matt,   it it it goes back to this idea of Bitcoin versus dollars.   And what became very clear,   or what Binance saw,   in in in some ways, what we have seen in in in but we we can get into that later. But   Venezuela and Latin America in general   has a huge appetite for dollars on crypto rails.   So,   it's it's hard to to explain because most people in the listening to this will have   likely held dollars and and transacted in dollars and they've never had an issue sending dollars around the world.  

But   to to a Venezuelan to be told that you can send a dollar   to Mexico, Colombia, the US,   Spain,   and that you don't have to go through your bank to do that. Most Venezuelans face a world of restrictions to move dollars around, Most people outside of the US do. In fact, I remember, just so that you guys know how terrible this is,   my family had,   some of our dollars in a in a bank account in Panama as did many other Venezuelans.   And there was one time we were trying to pay for a surgery for one of my, relatives, and this surgery was going to the Anderson Clinic in Texas,   and they were the wire recipient.  

I was not we were not allowed to wire that money.   It took us 2 weeks to wire that money, and it was an emergency surgery.   So   just to give you   the the excruciating   I don't even wanna use bad words, I'm trying to limit my language, but when you're trying to move dollars   outside of the US, you're made feel you're made to feel like a criminal,   and that is   fucking unacceptable,   in my books. So when you give somebody   in that part of the world a dollar on Crypto Rails,   you are literally   changing   the realm of opportunities that that person ever had a chance to transact with. So, yes, Bitcoin is amazing,   but it takes people a really long time to understand it and why it's important and how it works.  

If it's it's much simpler to explain a dollar on crypto rails that you can send to anyone.   And I think that that's why,   stablecoins are gonna be such a great segue   into Bitcoin.   And so, I I think that was They're basically they're basically getting  

[01:06:37] Unknown:

a lot of the benefits   that Bitcoin provides without having to understand   the necessarily, like, the monetary policy specifics.  

[01:06:44] Unknown:

Bang on.  

[01:06:47] Unknown:

But then but still,   how   how is Tether entering that economy?  

[01:06:53] Unknown:

Is it entering through It's just what's available. It's just what's available, and it's stable. Maybe, Ale, you can take this one. Do they have, like is there is there are there places where you can  

[01:07:03] Unknown:

just exchange cash  

[01:07:05] Unknown:

directly for Tether? Is that the answer to it? Oh, dude. Oh, dude. That's a that's a thing now. But it did it it that was not the case   4 to 5 years ago, man. And so what happened what what happened was essentially this. Look.   Venezuela is still functioning as the heart like, it's the heartbeat   for Latin American   peer to peer vault cryptocurrency peer to peer vault.   So   back in 2019,   if you look at LocalBitcoins volume,   in Venezuela,   was being transacted, like, around 25 100 Bitcoin per week. Right now, that came down to, like, 30 Bitcoin.   Sometimes it's, like, 40 Bitcoin.  

Because, you know, you you do have to take into account, the Venezuelan economy shrinking and Bitcoin going up in price, etcetera.   So before Tether,   it was all Bitcoin.   When Tether joined the scenes,   Tether was not a trusted thing   within all of the of these,   you know, again, OTC dealers, whatever. I did this for a living in Minnesota. Right? So,   essentially, at some point   after the 2017   bull run-in Bitcoin,   some of us   some of us cashed out   and put some money within exchanges and stable coins or whatever.   And that's how   they that's how, really, it started growing this usage and understanding of stable coins. Like, what is the stable point thing? What can I do with it? Whatever. So the problem was that   before   they were,   you know, they became part of this peer to peer markets. And and right now, even Paxful has USDT as well. Right?  

Nobody care about that, honestly. It was mostly   it was   mostly a thing that people that were trying to do trading on exchanges   were getting   that's how people started getting familiar familiarized with Tether. But right now,   after seeing,   you know, the usage of stablecoins   evolve   throughout all this past, you know, 5 years what whatever,   Dude, you go to play soccer   with your crypto buddies,   a Bitcoin buddies or whatever in Venezuela,   and you would see you would see people making payments,   you you know, between each other   in in in in dollar Tether, man, and Binance purely. So I guess that it's it's   a mixture of   the people that are early   Argentina   or Paraguay,   etcetera.  

And then   you have,   you have to add this whole, you know, mon informal money transmitters and OTC deal dealers that were digital dealing with digital assets for their daily operations as the underlying currencies.   And then you have the traders,   on experienced traders or whatever you wanna call them.   And and then you have and now you have   the layer of,   you know, businesses   and day to day people   that understand that, okay.   I need to travel all the way to the US.   I need to have access to an address in the US just to own a bank account in the US.   My bank account can get frozen. I need to spend sometimes day hours, days, if not weeks,   trying to reach out to customer support at a at my US Bank.  

Right?   Sometimes I make a Zelle payment of a $100,   and my account gets frozen or blocked.   And yada yada yada, same story, you have to reach out to customer success from the h x y z bank in the US or Panama or whatever.   So it it's right now, to Mauricio's point, it's just a more comfortable and accessible way   of moving dollars   within payment rails.   That it's pretty much it. And in a digital in a purely digital manner. Right? Because you don't have to travel anywhere. You just need an email, a phone   number, and set up a TOTP security on your phone or whatever. And so you essentially have access to dollars and your phone,   and   that I I think that that's that's how it started evolving, honestly. It was Bitcoiners who brought it in. Exactly.  



[01:11:41] Unknown:

Exactly. Had Bitcoin, so they had access   to Tether,  

[01:11:45] Unknown:

and then it spread from there. And and, like, I'll give you another example. I have a buddy of mine that used to have this Western Union franchise,   right, in Peru.   Eventually, this dude   started mining with us in Venezuela.   And then he said,   So wait.   I have a better way   for doing the same thing that I doing with Western Union,   but with this LocalBitcoins   thing that you're showing me. So why don't I try to plug that as a back end for my Western Union business   just so that I can make more money   and and and move it faster, move it more times,   you know, spend keeps keep the wheel spinning, but at a faster pace and just just make more profits   with the same infrastructure they have. But I'm just I'm just opening myself an account   at a,   you know, at a marketplace   similar to opening an account in Amazon or Mercado   Libre   or whatever. Right? So what you're seeing in South America is an increasing   trend, an ever increasing trend of even   traditional   money remittance services   and money transmit and services   diving into digital assets because it's just   cheaper, faster, quicker, better.  



[01:13:13] Unknown:

Well, I definitely feel that.   I appreciate the insight, guys. So,   I mean, so with this reliance on are are you guys concerned   are you guys concerned about the reliance on stable coins? Like, they are pretty much all centralized.   You know, Tethr is a massive   regulatory target.   Do you   or or is is that something that's on your radar, or do you think it's overblown?  

[01:13:45] Unknown:

So I think going back to to to your concept or your question about,   you know, are we trading one problem for another by letting these countries use a dollar rather than their own local currency?   I think   what what I see in this   in in the way people are are behaving and and the and the the stable coins and and the choices that they're making   is essentially they're saying,   yes. You know, I may not know who's behind this Tethr organization.   I may not know who's behind this   other group that is that is managing these these other assets,   but I do know what my option is.  

And my option is staying in my broken system, which will certainly lead me to failure.   And so,   again, it's really,   you know,   if you think Tether is bad, like, you should see the books of the Venezuelan government. You know what I mean? And and I think that that's what what people are saying. You what the the people that you see going to Tether, you know, they don't have the greatest central banks in the world. They may not have the full information to your point, Matt. And if they did know   everything they need to know, they may choose to use something else. But I think that they're making this decision based on what they know. And I think what is,   sometimes missed by by people outside of North America or Europe   is   how much fear   there is and how much power   a country has   when it turns against you or your group of friends or or your peers or your industry.  

In in in in Latin America, we've seen the government   expropriate our savings from the bank. That's happened many times.   We've seen governments,   expropriate   assets like factories,   houses, farms.   So we have very shaken   property assurances.   And so,   so what what you see is people have have very little trust   in in the tools that are at their disposal, and they're willing to place   blind faith almost   on these options   that other people are using. So   I I I don't I I think it's basically training one problem for the other, But what I think is is important to highlight is as bad and as scary as we think some operators of these coins might be,   the people that are switching to these operators   see way scarier boogeyman and way scarier outcomes  

[01:16:21] Unknown:

if they don't move over to Tethr, if that makes sense. Right. I mean, ultimately, everything has trade offs. Right? I mean, I think Yeah. Most people wouldn't argue   against the fact that using something like Tethr,   gives you   additional censorship resistant guarantee. Like, Tether has been frozen and seized,   but compared to something like Zelle   or a traditional bank wire or something, it is obviously   a massive improvement on that trade off balance.  

[01:16:49] Unknown:

Yeah. The the other assumption that I wanna challenge there, briefly is the idea that you have privacy in some of these authoritarian countries. Like,   there is no privacy in Venezuela. If the Venezuelan government knows everything you do in the banking system, They have a system that knows how many times you've been to the doctor, how many cars you drive, how many pets you have, how many kids you have.   So the surveillance state is already here. I I think a lot of people just don't really appreciate that.  

[01:17:20] Unknown:

I mean, on that point,   there was a lot of there was a lot of writing and articles about   the Venezuelan government seizing Bitcoin mining operations.   Mhmm. I was one of them.   That was one of them. You wanna talk about that at all? Or  

[01:17:40] Unknown:

sure.   So   how do how do where to start?   So as many Venezuelans,   back in the day, when when many when the first type of group of Venezuelans got into Bitcoin,   we,   you know, many quickly saw this connection,   between   Venezuela   and subsidized electricity,   and our   strict currency control that enabled us or or prevented us from from protecting our savings.   And they saw Bitcoin, and they saw mining,   and connected the two dots, and in a very similar way that that China did, and we get that get into that in a second.   They started using Bitcoin   to essentially extract   an incentive that was being provided by the government by way of subsidies,   and essentially,   use Bitcoin to   be well better off in a system that,   did not let you acquire dollars at the time.  

So a lot of people start mining Bitcoin, and they start doing really well.   And,   at first, it was a bit secretive. People were scared. They didn't know how the government was gonna react,   but it wasn't illegal. So me my family and I, we just got we were so excited. We were just telling everyone that would come to us and helping them how to mine, set up facilities,   figure out the electrical work, and essentially,   started helping many people set up their mines.   And, and mining starts getting quite viral in Venezuela because,   you know, you were getting   I remember back in the day, you were getting a 3 to $400 a month from a rig, and minimum wage in Venezuela was about $20.  

So people were getting, like, 20 times minimum wage   by by just setting up a rig,   even if it was a GPU or or a basic, they were kinda at the same revenue at the time.   And,   and so   what happens,   and and the the the the this is where the Petro comes into the story. And,   what happens is this is happening in the middle of an ICO boom.   The Venezuelan government oh, man. This is gonna be a long story, but I I have to tell it. So the Venezuelan government,   once they once Chavez died and they started facing issues,   they they they they got on this trend   that every year towards Christmas, when when people were most upset, because usually by then, you know, people were just mad that they didn't have money going up to Christmas to buy gifts and and the country was just in shambles. So they would they would find a way to give to get to do freebie, to do giveaways. So in 2017,   they they took the largest,   electronics   company, in the country. So like equivalent to like Venezuela and Best Buy,   and they went into Best Buy and took all of their stores   countrywide and said that   these stores   had been bringing in goods   at, at speculative prices and that the government has essentially slashed all of their prices by like 70%   and they were going to distribute them to the people, for Christmas.  

And so, of course, people lined up to get 40 inch TVs for $20,   and, and they absolutely raided the inventory and stock of this company, and this company, essentially crashed and and seized existing. It could never recover from from that. But the government,   had happy voters for another year for another few months.   The the year after that, they, did the same thing with a big shoe company.   They essentially,   basically seized all their inventory, sliced, like slashed it in prices and gave it away to people and again, you know, photo ops for people walking out with 7 pairs of shoes for $7.   And,   obviously, as companies caught onto this, they stopped bringing inventory.  

And   come Christmas   2000 and I believe this was 2017,   right around the peak of the market, nobody had inventory. Nobody had been bringing inventory of the year because they wanna be they wanna be the idiots that that we're gonna be giving away free Christmas gifts.   And,   basically, the year was coming to an end, there was nothing to give away,   and, I I don't really have,   specific data for this, but I think what went down was something like this.   Maduro   is is trying to keep his crony officials happy. Crony officials are getting upset because they're looking at Christmas and they're not gonna get free money,   and, and so they say, what are you gonna do for us? And Maduro says, bring me all the importation records for what's been brought into the country this year. And there was a name that kept recurring   throughout 2017 as importers,   of shipping goods into Venezuela, and that name was Bitmain.  

And so they dug a little bit deeper in Bitmain, and they saw that these machines literally printed the dollars or Bitcoin.   And they said, oh my god.   There are machines that print dollars, and they are in this country.   How can we   redistribute these machines to our cronies?   And they advised this marvelous plan   that, involved   announcing a fake new cryptocurrency,   so that by promoting this fake new cryptocurrency,   they could educate their cronies   on what these mining machines look like and basically instruct them,   that they could go,   take them from these people and then start mining dollars for themselves.  

And so this is where the Petro push starts.   And if you look at the Petro,   and if you look at the,   promotional materials that were done for the Petro, they all revolved around mining,   mining equipment, and they would show ASICs and they would show GPU rigs.   And you wanna hear something funny?   The Petro was never,   there were never any miners for the Petro. The Petro could not be mined. It's a closed network.   So what these,   Petro advertisements   were was in fact education campaigns   for so that people could identify miners, understand miners, and then go seize them from the people that were legally mining in the country.   Right after the Petro   promotion,   we and many other miners around the country started seeing new strange visitors into our mining facilities,   and they would come dressed as,   utility people, they would come dressed as mostly utility people.  

And,   surely,   few days later, these utility people revealed themselves as not utility people,   and they started essentially harassing miners, threatening miners to to seize equipment, threatening miners to to shut down their facilities,   and then miners essentially,   you know, reneged and and they were basically   all the,   miners like ourselves that did not,   wanna accept that and would not ever get in bed with that type of government.   We basically rolled rolled up our facilities and left.   But what the government did is they continued seizing machines from a bunch of people, in fact, some of the machines that were shipped to Venezuela   were actually stolen from us at the dock and the shipping company called us to tell us that they had been stolen. And when we asked what we could do about it,   we were told that the last person   that had gone and asked about what happened, with their mining equipment was told never to go back to the,   army office where they went to pose the question.  

So   fast forward until today,   what ended up happening is the government,   of course, they saw something that could benefit   people or themselves   and they decided to   help themselves,   of course, they've created this entity called Sunakrip.   Sunacrip is the national cryptocurrency   body,   of course, it is one of the sanctioned bodies, one of the few fully sanctioned bodies in Venezuela is the Sunacrip, and another fully sanctioned,   part of Venezuela is the Petro and anyone that has to do with the Petro, ironically enough.   So so Nakrip created a national pool,   and it forces every Venezuelan miner   to   send their payouts to the government run pool,   and then they have to trust the government to disperse your Bitcoin back to you as a miner.  

So,   yeah. I'll pause there, but I'd love to hear your thoughts on that pool, Matt.  

[01:26:17] Unknown:

So I mean,   this is,   I I appreciate   the   this that's some story right there. So so a couple things to unpack there. First of all, you said   your family disbanded their mining operation   and moved it out of the country. You literally got the mining rigs out of the country.  

[01:26:38] Unknown:

We did not. We sold them to people locally that wanted to continue mining.  

[01:26:43] Unknown:

And then you can set up shop somewhere else if you want to.  

[01:26:47] Unknown:

Yeah. So the the the way out was there's obviously a lot more nuance to the way out. They you know, in fact, what ended up happening was they they raided one of my brother's facilities.   They threatened us   to, you   know, to extend us, or or, you know, place charges   against us.   They they they tried to threaten with all these weird scary sounding,   charges and allegations.   Of course, legally, that's all been you know, they you know, we won that case. There's you know, we set the record straight. There's absolutely nothing wrong with what we did. But at the   time, as   as as Ale will and then many other Venezuelans will know, like, Venezuela is a very lawless place. So everyone's gonna try to bully you into something. And it's really a dog eat dog,   world.  

So,   basically we, we did not play ball with with those guys at the time, with the cronies at the time, and we, instead, decided to take it up in court and and clean it up that way, and and that's what happened.  

[01:27:48] Unknown:

Got it. Got it.   What I mean, the other I mean, there was a lot there. The other thing I wanna unpack, the Petro still exists. Right?   Like, aren't they is it true that they're, like, giving it out as welfare as well? Like, you get you get Mhmm. If you register, you get free Petro? Or  

[01:28:05] Unknown:

Yeah. Because, essentially, it's just 2, 2 basically related to what Maurizio was saying. It's it's, again, just like a government's,   a government ran social program. So there's, like, this special ID in Minnesota, which is like,   you know, if if you if you issue yourself that ID, then you have the ability to register in the Petro app,   which is essentially like a national   a national wallet.   So similar to, like, the Chivo wallet in El Salvador, but in this case, it's, like, you know, connected to the the the Venezuelan government's   monetary network, so so to speak. So it's more like a a a   put it into context, I I think it's it's kinda like a national PayPal. You know what I mean? So that's like the Petro doesn't have any blockchain.  

You can make Petro payments   with within the natural app.  

[01:29:02] Unknown:

And They don't even have a centralized there's not even, like, a centralized blockchain attached to it. It's   just completely  

[01:29:10] Unknown:

Yeah. It's a it's a low it's a low shit coin.  

[01:29:13] Unknown:

Exactly. That's Right. But, like, they haven't even gone the full they have there it's not even   it's it's not it hasn't even hit Shitcoin status. Right? Like, it doesn't have a blockchain or You can run a node. You cannot run a node.  

[01:29:25] Unknown:

Okay. Gotcha. Exactly. So so it was it was supposed to to be launched as a federated network,   and, essentially,   the initial white paper of the El Petro that came out back in 2017   was   a hard fork of Dash. So it was built on x11   it was supposed to be built on x11 on the x11 algorithm. Right?   That never happened. And then just the the,   government body that Mauricio was talking about, it was it just changed the the dude that was, you know, like, the the minister of of this government body. They changed them, like, 2 twice or or 3 times or whatever. And so plans would just would just change.   It's it's mostly based on purely lobbying.  

You know what I mean? And and and it it it essentially became just like,   the closer you got to Sunacrip,   the closer you had the opportunity of being granted a permit   to become,   you know, a cryptocurrency   exchange in Minnesota so that you could legally,   build a platform to onboard users and then, you know, receive their their ball of ours. And then you could you could, you know, legally go to to private banks or even public banks in the country and and open up a a corporate treasury account to receive, believe it is, under your Venezuelan Corporation.   And then there's some, like, very but this is really sketchy   little Petro thing, which is, like, you know, like, Petro   Petro Arbitrage   traders, which is essentially people that would buy   that would buy Petro at a discounted   prices   from from other people because they would pay them in cash or whatever. And so you would you would essentially be buying Petros   at, you know, like, 70%   discount or whatever.  

And then   and then these people's these people would change would either change petrol for   gas at gas stations because you can get you could get,   discount rates   at at   at, at the gasoline gas stations if you pay with the petrol, essentially,  

[01:31:46] Unknown:

at certain gas stations at least. And so there's different The gas stations down there are state owned. Right? Or all of them Exactly. All of them. Yeah, man. It it's  

[01:31:55] Unknown:

it's all a government sham in trying to get you to use the petrol,   and again,   it it all comes back to optics.   So if you have 2 currencies   at the same time,   you can inflate the 2 of them and you'll have 2 separate rates of inflation, and you won't pile on the whole inflation onto one of them. Does that make sense? It's so fucked up. It's all optics, bro. It's all a game of optics.   And the Petro was nothing more than a tool to manipulate   optics.   But you keep talking about it in the past tense, like, it still exists. Right? Like, people are I've I've already written it off with some bullshit token, like, you know, whoever whoever is using it, I can't help you if you're still using the Petrobrill, like, you're lost. Like  

[01:32:38] Unknown:

But people are. Right?  

[01:32:40] Unknown:

No. I mean, the only people that I would argue are using the Petro are people that are being lied to and people that are being told miss   people that are getting complete misrepresentations   about what this thing does. The people that are using   Bitcoin today or, sorry, the Petro today are the same people that still believe in Chavez's government plan.   So Yeah. Like, you will still have those people. They're just hopeless.  

[01:33:03] Unknown:

Yeah. Yeah. Yeah. Like, dude, you can't cash out of the Petro. Like, you can't cash out of the Petro. You would see Petro's international   Bolivarian   wallet or whatever, but you can cash out of that thing. And nobody get wants to get near that thing. To the point that Are are there no, like, Bitcoin Petro markets?  

[01:33:24] Unknown:

Or No. I told you no Bitcoiner would be caught dead doing that. Like, no real Bitcoiner would ever accept that. You know what I mean? Like, they they know too much. They know so much better than to accept the petrol. At least if if anybody that's taking the petrol right now is trying to pull a fast one, thinking that they know more than someone else,   and most likely they're gonna get cut. There's a saying in Spanish   that I remember oftentimes it says,   if you like butter, it's been butter in Venezuela used to come in a tin can   So,   there's,   there's a saying that says, if you like eating if you like dipping your your finger into the butter can to eat the butter, you may cut yourself when you do that. And so what that is meant to say is if you like   easy money and if you look at easy things, like, you will get cut. Like, there is a very good chance you'll get cut because it's very risky.  



[01:34:19] Unknown:

Yeah. That makes sense to me. Too good to be true.  

[01:34:23] Unknown:

Correct.  

[01:34:25] Unknown:

Correct. So then the other interesting thing to unpack from your   from your story is,   the Venezuelan government mining.   So you said there's a government mining pool.   Presumably,   that mining pool is   is not a public mining pool, so it's registered in the unknown if you look at one of the mining pool charts.   Would you agree with the statement that   the Venezuelan government is the single largest   government based   mining operation that exists in the world today?  

[01:35:05] Unknown:

There's a I don't know Turkey, but there's a very good chance.  

[01:35:09] Unknown:

Is is Turkey mining Bitcoin, the government?  

[01:35:13] Unknown:

They they have a a a pool as well, my understanding.  

[01:35:18] Unknown:

I wasn't aware of that.  

[01:35:20] Unknown:

Yeah. I believe they have a Right.   A a a mining pool on Turkey.  

[01:35:25] Unknown:

Right. So if I were to buy some insight,   Hit us. Like, look look, Matt. It this all brings this all of this amazing conversation that we've had so far between the 3 of us, it all brings back, if you notice, if you go deep into it,   to 2017.   2017 was the year of hyperinflation in Minnesota.   2017 was the year that dollarization   started, like, ticking up in Minnesota.   2017 was the year that the Venezuelan government introduced their plans to, you know, launch El Petro.   2017   was the year when the Venezuelan regime got sanctioned by the US, and 2017   was the same year   because of all that scene of events   that the Venezuelan government started, you know, seizing   mining   equipment,   you know, from people that were essentially mining Bitcoin in the country. Because   for for a great period of time, that was like a black hole year, dude, in in Venezuela. And, you   know, the government not being able to move   their dollars,   their euros   deposited   in EU bank accounts,   their gold   deposited in gold vaults,   right, in England,   They're dollars   deposited at Citibank   in in in the US. I'm sorry.  

So what else what else could you do   to finance yourself   other than   using the already almost,   like, wiped out local currency?   Mine   Bitcoin   with your cheap electricity   rates.   And before you started figuring out, you know, as a government, right, like, how how am I gonna buy this mining equipment? Where does this actually come from? How do I set up this? What if it was essentially trying to tap   into the already existing mining infrastructure that was   that was built in the country. And so tapping into private individuals that would try to agree to go rogue,   to Mauricio's point, and did not agree, your your mining equipment was just seized. So  

[01:37:43] Unknown:

It was easier to extort   individuals or pressure individuals than start from scratch.  

[01:37:49] Unknown:

Yeah. And so one one thing that I will say that I that just to challenge the idea that Venezuelan government could be mining Bitcoin is 1.   They are the most inept   and incompetent group of people I have ever come across.   So I do not know that they even have the capacity to organize themselves to mine for their own collective good. I have a feeling that a lot of these miners were ad hoc assigned to their top cronies so that they could mine for themselves, and they would have to and they would basically come off the payroll.   Right? So I think they've given a bunch of,   generals or army this or army that, like, a a set amount of minors to sort of, you know, keep them happy, but I I I I there are 2 things that I know to be true. 1, is these are   very short term oriented and and not very sort of intelligent in terms of financing.  

And the second one is   they I don't think they have the capacity or the resources   to have invested   or grown   beyond the machines or the assets that they, extorted from people that have already done that work. Basically, is they saw something that was working and they took it, but they are incapable of building something that works from scratch.  

[01:39:06] Unknown:

Yeah. I mean, that makes sense to me.   I guess in a lot of ways, probably   even excluding Bitcoin. Right? When when someone says, like, the Venezuelan government, it's really a collection of cronies, right, rather than,  

[01:39:22] Unknown:

like, some It depends on who you ask, but for sure, in my view.  

[01:39:27] Unknown:

So, I mean, the story of Venezuela is really interesting,   especially how it relates to Bitcoin and the broader ecosystem there,   where it's, like, almost   it's a story of the people getting fucked by their local,   their their local,   you know, their local economy, and then it's a story of the government getting fucked by the global economy. Right?   Like, the global financial system. Like, the local financial system failed   the individuals, and then the global financial system   failed the government   both at the same time and both kind of moved towards Bitcoin and the greater ecosystem?  

[01:40:09] Unknown:

Yeah. I would challenge this idea that the the the the world the financial world failed Venezuela. I I think Venezuela   was,   Venezuela was responsible   for their own   failure.   They,   they had they still have all the resources to do things right, but they just chose not to. And Well, I meant, like, specifically,  

[01:40:32] Unknown:

like, the gold in the UK vaults,   European bank accounts, stuff like that. Right?  

[01:40:39] Unknown:

Yeah. And listen, at the end of the day, this this is a very difficult thing for me to answer because I'll speak very candidly. Okay?   When you are in a country   and and you see a a a a government   literally   chase   a group of people out of the country and   rob every opportunity   that they had, take away their factories, make it impossible for them to hire people, make them unable to access financing, make them unable to buy dollars. You are essentially   kicking people out of their own country,   and you're doing this not through democratic means, you're doing this by force.   You're doing this as you're getting millions of people on the street protesting and when people go out and protest, what did you do? Maduro went out and shot them. I had friends   literally, and this is gonna sound dramatic, but I actually had friends, people I knew died in protests   trying to get a recount of our election that was clearly stolen.  

When you see a group of criminals   chase   a group of hardworking, honest individuals out of their own country,   and you see what they're trying to do,   I   do not   I have a really hard time, even though I am a Bitcoiner and even though I believe in open permissionless   access to transactions,   I do think that there is the possibility   that very, very bad   agents   can get   circumstantially   a lot of power   And we, as a global society,   should have   checks and balances   so that we can bring that bad agent or prevent that bad agent from create causing damage in other parts of the world.   And   I thought,   as I've been a student,   we have been going through this for 20 years.  

20   5 years, this has been going on for it. Or it's not as came in in 99. It's been 23 years.   23 years, man.   In 2017,   that was 5 years ago,   after we had already been going through the grind for   18 years.   For the first time ever,   the US government stood stood up and said, what you are doing is wrong. The the government of Venezuela should not be called the government, they should be called a group of terrorists   and they sanctioned them. And you know how that made me feel?   Like there was a little bit of justice in the world.   And of course, it didn't work because they're still there, they kicked out my family, they kicked out Ale, they kicked out all of us,   and they separated all of our families, they broken our finances, they've given us a new life, sure, in a different country, all separated.  

But   I worry   about   the the world losing its ability   to,   I would say without the use of force because you can still coerce somebody by twisting their arm financially without having to go use force,   but   we were unable to do that and   the Venezuelan government because they have this   magical thing that comes from the ground that is oil,   they can literally sit there   and have zero popular support from their voting population,   but they still have the resources   to keep them all down from rising up. And they will stay that way until someone's willing to do something,   and we won't. So for us in Venezuela, that just means we have to write off the fucking country,   and we have to leave,   because we knew nobody was gonna come in and do things right.  

So I I   I do not think that Venezuela not being able to access their gold or their dollars is necessarily all that bad because if they had,   I don't know what would have happened in Venezuela.  

[01:44:50] Unknown:

Yeah. Agreed. And I guess at an interesting point there yeah. Sorry sorry about that. I I guess at an interesting point to bring up, and shed shed some light on, right, is is   whenever Travis precedent and you were,   you know, a government contractor or you did some project with the government or even if it it was the state oil company or whatever, right, or or public bank,   the perception   was that you were you were doing business   directly or indirectly, whatever, with the Venezuelan government. Right? Which was okay. But right now,   to be completely honest, the perception and the vibe is that   you are doing business   with   the most powerful families in Venezuela, which are 5 families, which are essentially the 5 families   that divide between themselves   with $25,000,000,000   in revenue   coming from oil that Venezuela receives   every single year. So it's $5,000,000,000   going to each one of these families, and you're no longer doing business with Venezuelan government or you're no longer being paid with the with, you know, the country's   money, the the the citizen's money or whatever, you're being paid   their mentality is that you're being paid   with their money.  

You know what I mean? So it's like   various I've got to it's like all the cards. Honestly, they're they're all the cards, dude. And then it's it's fucking crazy. It's similar to, like, this rushing all the cards thing or whatever. By the way, just side note comment, Matt. I sent you via private message on a Twitter chat with Mauricio some screenshots of CryptoLago. CryptoLago   is essentially the only cryptocurrency exchange in Venezuela   that has a marketplace   for Petros.   I send you, like, a screenshot of my   there. I only have a user just to peek into that some from night. You will see that it's it it it only has a liquidity of 20 Petros.  

20 Petros. 20 Petros by $90 that what's what's currently more or less trading the the the barrel of oil right now in international markets.   What is that like?   Nothing, dude. Like   like, not even   $2,000, man. Right? Worth of liquidity and petros that I at a national exchange. So it's a complete failure.  

[01:47:19] Unknown:

Yeah. I'm gonna pull those screenshots up on screen,   shortly.   Before I do that, first of all, I mean, obviously, this whole   it's complete fucking tragedy what is what happened to your country.   I absolutely hate to see it,   but I I feel like Mauricio   touched on a very interesting   conversation there in terms of sanctions.   I mean,   if Bitcoin's successful   as we expect it to be,   that cat is kind of out of the bag. Like, how do you circle that how do you circle that square? Like, there Right. I mean, to   to protect to the way I always looked at it is to protect   a dissident or opposition   or protester or refugee   from   exclusion from the financial system,   from a dictator or an authoritarian,   the   the trade off there is that a dictator and authoritarian   is also gonna have that same type of access   in terms of the global financial system.  

And this is a topic that I think is just not often discussed   in Bitcoin land just because it's so sensitive.   Yep.   How do you feel about that? Like, do you think it's a net benefit? Do you think   it it it it ends up in a worse situation? Or  

[01:48:51] Unknown:

I wanna I wanna I wanna give you my my heartfelt   answer.   There's one thing that I believe   that I that is true, and that is that there are more good people trapped in bad regimes   than bad people,   you know, that need to be,   that that can be empowered   by, an open currency.   So I do think   at a base level that this will have a net benefit   to the world because I think that there are more people   being treated unfairly under these wild regimes   than there are,   than there is an absolute number of bad regimes.   Right? It it's kinda similar to the to the, to the Internet theory, which is, you know, if you put it out there, people are gonna start spreading bad information,   but they're gonna be spreading good information too, and the good information is gonna outnumber the bat by multiples. And so that that's kinda why that works. There are obviously trade offs.  

As a as a Bitcoiner,   I to me, it was a very, very difficult time,   2017 when when people were raving about the Petro   and where, you know, in in many ways,   I've I've I I thought that the Venezuelan government was using   in some ways, Bitcoin   to,   circumvent some of the challenges that were that were posed by the sanctions.   And,   and and and so much so that, you know, a lot of people would reference the p to p volumes in in local Bitcoins in Venezuela.   And and I always thought that that was interesting because I would look at the math and I would speak to my friends, and I would try to understand who was on the other side of those trades.   And I   I have a pretty strong inclination   that the government was the one buying   Bitcoin in those b two b markets with printed fiat,   and they were using that Bitcoin to then pay   vendors   internationally. And so they were flooding the p two b markets with fiat to just acquire Bitcoin in exchange of worthless,   tokens in a in a in a in a  

[01:50:57] Unknown:

anonymous way. Right. That makes sense to me.  

[01:51:00] Unknown:

And so during that time,   I was I was I was really struggling because   I was finding a new career and a new love in Bitcoin,   While at the same time,   I I saw Bitcoin   basically   being Bitcoin and and being open and permissionless, and and and I couldn't   stop, even if I knew that it was them, I could have stopped them from using it. And I knew that by using it, they were benefiting.   As as much as I   would love   to   stop the Venezuela's from happening.   I think   if I knew   that regardless of where in the world you are, the next time a dictatorial   president comes around,   you will have the tools to escape   and that tool will be Bitcoin,   I I think that's a win because   I don't think that we'll be able to predict how humans behave.  

I think that we just need to arm and educate people so that they can   defend themselves against a potential   attack. Right? So people need to be able to fend for their own. And so,   as much as I think it's a risk   that   globally, we might lose   some some of our power to kinda whip some rogue states back in line,   I do think that we only,   we can regain that ability   by all coming together and and try to coerce   potential rogue states in a different way that's not choking them out of the financial system.  

[01:52:47] Unknown:

Yeah. I mean, that makes that,   we're, we're on the same page on that. I mean   I mean, a lot of ways, the way I tend to look at it is   maybe it's a little bit different with the Venezuelan government,   But the way I look at it is it kind of gives individuals the same power that that elites, kind of, already have in the traditional financial system anyway.   Yeah. When there's a will, there's a way. When there's resources, there's a way, and and the elites tend to figure it out regardless of Bitcoin.   So to me, I mean, it's a it's a clear massive net benefit,   and there's no real   if if if   I mean,   let's be absolutely clear here. Like, the US government is not   is not this bastion of   of good judgment and   reason and fairness.  

There's a lot of   misjustice that has happened that happens in the traditional financial system that is practically run by the US government.   So if you wanna guarantee individuals rights,   there's really no way to do it unless you guarantee everyone's rights in a properly permissionless way.   So   there's really no alternative.   There's no alternative where bad people get blocked, but good people don't.   So, ultimately,   you just need to build a system where   no one can control it, period, and anyone can use it regardless of   where they stand morally or ethically.  



[01:54:32] Unknown:

Yeah. It's, it's it's it's leveling the playing field, right, in many ways. It's it's making their reserve asset the same as your reserve asset, and and you have equal access and equal information   to what's going on with that asset.  

[01:54:45] Unknown:

Right.   So, I mean, we're getting close to the 2 hour points,   where I like to try and,   you know, keep our discussions too. But before we do, I mean, I   El Salvador has been a massive,   topic of conversation with how they   adopted legal tender,   and also   just, you know, how president Bukele over there is running things.   I'm curious with, like, your experiences,   both of your experiences with Venezuela,   Latin America in general. Like, how do you view the whole El Salvador movement towards Bitcoin? How do you view Bukele   specifically in his regime?  

Like, what are your thoughts there on on what maybe we might see over the next 2 years? What are your thoughts over   what we've seen over the last year?   Pretty curious.  

[01:55:41] Unknown:

Right. So,   I mean,   Mauricio and I went to solve them to represent   letting at LaBitcon. Right?   This was recently in November. I think it look. Look. As a as a Venezuelan,   right, and and taking into consideration that regarding South America,   Venezuela is the country   with the highest   percentage   of of of of citizens   and families, in this case, families,   owning   a bank account.   Right? So in the case of a solid Venezuela has, like, 30,000,000 people.   Almost   almost a 100% of Venezuelan families   own a bank account. So maybe your son doesn't have a bank account. Maybe your your wife doesn't have a bank account in certain cases,   but as a family,   you have a bank account. Right? In the case of El Salvador,   it's completely   different. Right? So, like, only 1.2 or roughly 1.5, I don't recall the exact number   of people on a bank account,   in a country that has over 6,000,000 people.  

Right? Over population of over 6,000,000 people. So   the thing is that   El Salvador,   right, if we take into account the numbers that were being provided from   the Venezuelan the   the Salvadorian government. Right?   You can't use government.   More more than 4,000,000   Salvadorans   right now   own,   chi have have downloaded Chivo Wallet. Right? So they have some sort of,   you know, access   to the formal   financial system.   Right? And and so I think that the powerful   the powerful   side of that approach   is that   El Salvador achieved in a matter of months   what South America's   biggest cryptocurrency   exchange   hasn't achieved   in over 9 years. Like Mercado Bitcoin.  

Right? So so Brazil's biggest exchange and Latin America's biggest exchange   has roughly over 3,000,000 users,   and they they launched back in 2013. Right? So so right? So I I think that's it is an interesting approach.   This,   the one that El Salvador's government took because   they literally banked over 4,000,000 people again in just, like, what, 2   months. And   and, you know, the the biggest   the the biggest private   cryptocurrency company of the continent   was was wasn't able to do that. Right? So,   if you ask me, it's it's a it's an interesting way, and it's just the initial state. It's just at its initial stages. Right? Like,   of course, this like, we could dive into,   you know, what we already discussed that this   this part of the world has volatile   volatile economies,   volatile governments. Governments can be thrown out or whatever, but it's more of, like, a political   pure political discussion. Right? So so I guess that, it has positive things. Just like anything, it has trade offs.  

But it it was amazing, man. Honestly, it was amazing seeing this swath of swath of   Bitcoiners traveling globally in the midst of, you know,   pandemic times or crisis times or whatever you you whatever the term you wanna use,   everybody flew there just to see what was happening, contribute to the economy,   have Bitcoin discussions. How can we further help us solve their what is actually happening in.   I paid for some   on the street, like, a dollar of   using Bitcoin.   You you know what I mean? Like, these these 2 teenagers that sell pupusas and coffee on the streets   to make a living,   they now have access to Bitcoin, and they have their $30 in Bitcoin that was deposited to them by the Salvadoran government. So if you asked me as a Venezuelan,   I would have loved,   a long time ago, seeing my my government, right,   do   a similar approach,   right, which which is the complete   opposite. Right? Like, they tried creating their own   like, look.  

Venezuela Central Bank is trying to look into ways to custody by themselves   Bitcoin and Ethereum to make international   payments through the central bank.   They even, at some point, evaluated, you know, like, issuing a Petrol, the Ethereum blockchain, the Dash blockchain, whichever blockchain, whatever. You know what I mean? Like and   and they they came back to the same conclusion that was,   we can only do this at some point   with Bitcoin with, like, RGP, smart contracts, or whatever. You know what I mean? But but if we do that, we're just gonna be we're just gonna be   losing some of our power, and we're gonna be giving that back to the people. And we're gonna be doing free marketing for Bitcoin, and that's not and that's a pretty much   at least a more democratic approach to it   than issuing your own sovereign cryptocurrency   that nobody knows where it lives in and that is backed by your, you know, national reserves that you pretty much control by yourself, whatever. So if you ask me,   I   it   I feel invigorated,   you know, and and I felt, you know, this this vibrant   passion   when it went to El Salvador just to meet other Bitcoiners   coming from all over the world   just to do whatever it is that we love doing that. So I think   it's a net   positive approach, deal solvers approach so far. Go ahead, Mauricio. I think you could you could expand on this very well.  



[02:01:41] Unknown:

Yeah. Thank you, Elliot. No. I think so. The first off, I wanna say kudos to the Lightning Labs guys. I came back from El Salvador, a absolute lightning believer.   It was crazy to see it in the wild,   and and it's just amazing to see how the fees are basically 0. So I I came back a very much a lightning   believer. I I I didn't have a chance to, like, be, interact too much with lightning before the trip, but when I saw how people were using it, I I it really changed my view.   What I will say,   as Venezuelans,   we're very jaded by politics,   and we've seen politics   essentially   look great one day and 6 months later,   the entire country hates you and you're you know, you can't be voted out. And so that all can change very quickly in terms of politics.  

I think it was,   it was a very interesting move from their part. One one thing to consider is El Salvador   did not give up senior rich rights by adding Bitcoin. They never had senior rich rights to begin with because they were dollarized.   So it's easier in some ways for El Salvador to adopt Bitcoin than it is for someone that has their own local currency. Because by doing that, El Salvador isn't making their own currency look like crap, it's making the dollar potentially look like crap,   as as its value inflates away against Bitcoin.   So in that sense, I think it's it's very forward looking. It's it's it's it looks   like a genuine attempt to help the people of El Salvador because as a government,   you're introducing a currency that you cannot control or manipulate.  

So I thought that was pretty interesting.   What I what I   the only thing that I worry about or one of the things that I worry about is,   one is this idea of Bitcoin becoming politicized.   So I I don't think we should have   politicians lead Bitcoin because what that when that happens, you'll have one political party that is very pro Bitcoin.   The other one will take the natural opposing view, which is anti Bitcoin. And I think that as the democracy kinda ebbs and flows between the 2, that could hurt Bitcoin in the long term. I would love to see a fully bipartisan support for Bitcoin   in in any sort of, you know, house of government because that ensures that there's not gonna be this passing of the baton between the pro Bitcoin and the non pro Bitcoin groups. So,   that that concerns me a bit that we're maybe we could potentially pigeonhole Bitcoin into one side of the political group and and and essentially   not get the full benefit of having a bipartisan support on the 2.  

And the other one, which is, you know, Matt, going back to this sanctions   world,   the the the El Salvador bond is a very interesting development in the sense that it will be if it if it's successful or when it's successful, I do believe it will be successful,   it will be the first time that a sovereign country has raised debt,   sovereign debt, outside of the rails of the traditional   finance world,   I e the IMF, I e the US controlled bond markets.   I think that   right now, it sounds a bit benign when we see El Salvador raising these bonds and blah blah blah, and we all like their sort of project that they're behind. But what that what quickly will follow   is a every other rogue state   that has been blocked out of these financial markets   is going to try to do the same.  

And so going back to the point we had earlier around around sanctions,   I I think there's a lot of,   unintended consequences that that some of this could have   that are you know, it it it warrants a conversation.  

[02:05:33] Unknown:

That's interesting.   I appreciate both your insights.   I'm I made a similar conclusion on the it it's interesting that I mean, it makes a lot of sense to me that, you know, one of the first the first country that adopted Bitcoin as legal tender was already a dollarized country, so they didn't give up their seen senior,   rights,   which is that just makes sense to me.   The Chivo wallet concerns me.   Reliance on the Chivo wallet concerns me.   In a lot of ways, that seems, you know, very much   very similar to, like, the CBDC   strategy   or   if if you're gonna be extreme, like, the Petro strategy, but obviously, it's using dollars and Bitcoin instead of some made up shit coin.  

But there's some concern there. The the bipartisan comment is interesting because   do you not agree that   it that might that might that aspect might not even matter because by the time opposition   gets power, I mean, if if the people are already accustomed to Bitcoin and using Bitcoin,   it might just be completely   unpalatable for anyone to   kind of pull back on that decision.   Like, I feel like it's really sticky once once they have access, especially I mean, it's not just Bitcoin. Right? Once they have access to Bitcoin and the broader ecosystem, they're able to   stable coins and whatnot.  

No. But it's it's pretty hard to put that cap back in the bag. No?  

[02:07:09] Unknown:

Yeah. But the fear is always the charlatan politicians that'll turn this the the the the speech around and say that Bitcoin is the cause of your hyperinflation.   Bitcoin is the reason that you're being left behind. And with their program to get you free stuff, you won't have to think about Bitcoin anymore because it's you have to work to get the Bitcoin. Whereas with their program, you'll get everything for free. Right.   Free stuff.   People vote for free stuff. Believe me.  

[02:07:35] Unknown:

Yeah. I feel that.   Awesome. Well, I mean, I think this discussion was absolutely fantastic. I hope the freaks agree with me.   We're past the 2 hour point. I respect and appreciate both your time,   coming on here and sharing with us.   Before we wrap this up, you guys, I like to finish this with some final thoughts. So, Salton, final thoughts.  

[02:08:05] Unknown:

His final thoughts is that,   listening into our Venezuelan   story,   you need to understand that Fiat is a hard bitch to kill.   It's not   it's it's not gonna go it's not gonna go away anytime soon.   So   you better keep stacking sats   because you're doing the right thing by doing it.   And, ultimately, just   be wary out there, honestly.   Nobody's coming to save you. And   I do feel that   we still haven't   felt the the true need   as a, I'd say, as a global community to   get into a   we have to build until we die,   like,   vibe. But I think that at some point with   more government pressure and etcetera, that could become a thing.  

So   keep building out there whatever it is that you're building on top of Bitcoin and understand that education is still needed. And,   yeah, not only in the US. It's   it's a global thing, and we need to continue, like, untapping.   Right? Like, I'm sorry, tapping into those.   You know, there are some voices out there that need to be heard, and we're not hearing them right now. And we gotta continue doing a better job of doing that. So I'm thankful for,   you know, approaches   like   the Citadel   dispatch   that help helped at doing that, man. And   I say that from, you know, the from the bottom of my heart as a Venezuelan that for many years, I just wanted to   I just wanted to have voice, and what gave me voice is Bitcoin.  

And thank you all.  

[02:09:59] Unknown:

Cheers. Appreciate you.   Mauricio, final thoughts.  

[02:10:05] Unknown:

Man. Final thoughts.   You know, I I I I think it's easy to think about all the the   the stuff that is kinda falling apart around the world. But I I what I do love about Bitcoin is that   it does it feels like it's the complete opposite. It feels like we're actually rebuilding the entire system from the ground up in a way that   we,   you know, we wanna see into the future. So I I I just think being in this industry has has shifted my perspective into the world is ending to we're rebuilding the world into a better place. And so I I,   yeah, I just want to,   thank you all for for for, you know, making Bitcoin what it is today. And and, you know,   4 years ago, 3 years ago, we you know, I was I was listening to these podcasts just the same way many people are, and and   Bitcoin is so new and is so filled with opportunity   that, I I think the best way to make sure that it goes in the direction that we want is to be involved and stay involved   and to and to always have a say. I think one of the biggest problems with politics is we've all become so disenfranchised with politics. We always we we feel like it's it's not good enough for us to deal with, someone else has to deal with it. And and when that happens,   you get that someone else in power, and that and that is much always way worse than if you had stayed and try to try to express your view. So I encourage everybody to to get involved in Bitcoin and continue defending their beliefs so that we can play your role in in keeping Bitcoin in the direction we all want it to be.  



[02:11:40] Unknown:

Thanks, Mauricio. Very well said.   So I just wanted to thank our guests. Thank you for your time. Thank you for all your work. It is appreciated. I wanted to thank the freaks for joining in for another SIL dispatch.   Dispatch is is meant to model   the open source projects that we so much   rely on today,   and we will rely on going forward if we want this movement to be successful.   And with that, it means I'm relying on on you freaks to   to support the show, to provide feedback, to participate.   All those links are available at sill dispatch.com.   Don't hesitate to reach out.  

Join the chat. The link is there.   Subscribe to the podcast.   All the archives are there.   There's links to support the show using Bitcoin.   At the end of the day, it's all about   you guys.   I think together, we can truly make this world a better place. Hopefully, put some of these stories behind us   rather than relive them over and over again in the future.   Thanks for joining us, guys. I really do appreciate you.  

[02:13:00] Unknown:

No. Thanks for having us, man. Thank you for the opportunity, dude.  

[02:13:04] Unknown:

Cheers. Until next time. I look forward to meeting you guys in person someday.  

[02:13:09] Unknown:

Farewell, my friend.  

[02:13:11] Unknown:

Cheers.  

[02:17:49] Unknown:

Come calling   home back   to   you.  

[02:21:30] Unknown:

Rest in peace,   Meatloaf.   Love you, freaks. See you next week. Stay on, both stacked sets.   Cheers.