Preston Pysh (02:43):

I was like, dude, this guy is big, and he is deeply interested in helping humanity, and I felt a little honored to meet him. And I’m not a fan or anything, Jimmy Song reached out to have a conversation, and it was really neat meeting him. But anyway, so let’s go ahead and let’s dive into your story. So you’ve told your story a lot of times on different podcasts, I just want you to do a quick recap, maybe a cliff notes version of your story for folks that maybe aren’t familiar with it, and then we’ll dive into some other stuff that I think is, 44 countries coming to El Salvador about Bitcoin, I mean, there’s a lot for us to talk about here. So give people a little bit of your background and how you became this Bitcoin Beach figurehead for this movement that’s happening down there.

Mike Peterson (03:36):

Yeah, so we bought a place in El Salvador about 2005, went there on a surf trip and fell in love with the country and the people, and we’d spend a few months there every year, and started to get to know a number of people that were working in everything, from running children’s homes, to starting churches, to working with drug addicts, and we saw a chance to spend a good part of our year in El Salvador giving back and being involved in some of these projects. And out of that came a desire to impact the community that we were living in, which is El Zonte, and there was a big gang problem there, a lot of historical poverty, most of the kids grow up without their parents around because they’re in the US working, and so we saw an opportunity to start really pouring into some young promising leaders.

Mike Peterson (04:27):

Jorge Valenzuela was a guy who came and worked with us when he was, I think he was in his early twenties when he started, and we saw he had a real heart and connection with the community, and so we just started pouring into all these programs targeting the youth, and trying to help them stay in school, stay out of the gangs, get on the right path in life. And through that, as we were trying to bring money down in different ways, I just kept thinking, man, if we just used Bitcoin it would be so much easier, because it’s such a hassle with the AML, KYC laws, just trying to bring cash into the country, I mean sometimes the best way to bring it in was to fly back to the US and to bring back $9,800 with you.

Preston Pysh (05:11):

Oh wow.

Mike Peterson (05:12):

You’re always afraid to report it at the airport there, you don’t want to get mugged leaving the airport, but we just saw how much that was holding back. And then a few years ago we had somebody make a donation, and they actually put this stipulation on it, it was a Bitcoin donation, and they said, “Hey, you can’t just cash this in, you have to actually use it as Bitcoin.” And I started thinking about it, I was an economics major in university, I’ve always been fascinated about why some countries are successful, why their economic systems work, why others don’t, and so I pitched this idea of, hey, let’s take it a step further and actually develop this Bitcoin circular economy that gives these young people some hope and some stake in the future, and the rest is history, world history, as we’ve seen El Salvador adopts Bitcoin as legal tender, and now we see other countries, most recently the Central Republic of Africa, or Central African Republic, and then I have a feeling we’re going to see several more in then next year or two.

Preston Pysh (06:16):

I have a question about that later on. And for people that aren’t familiar, so Jack Mallers came down, integrated with you, Mike, and then Jack started having conversations with the president and his brother, and then that led a lot to the Bitcoin tender law. So at the heart of all this was this Bitcoin Beach initiative that you stood up to make this a circular economy around Bitcoin. So when you started pitching this, I’m just curious, when you started pitching this to various people, what was your distribution strategy? And then how did you bring businesses on board to start accepting it? Because I’m sure at first this was a very hard pitch for people to even, like what the heck are you pitching here?

Mike Peterson (06:59):

So we really wanted to look at how we could most effectively and efficiently get it out in the population, so we started looking at different UBI type programs that we could do where we would just do a distribution throughout the community. We did want to put some stipulations on it that it would be more targeted to people that had young kids, and the people that specifically had the needs. It got rolled out sort of like that, we did actually have a little bit different tack. Initially we started paying the young people in Bitcoin to clean the local river, the beaches, actually start doing some repair work on the homes of the elderly in the community, things where they could feel productive and actually feel like they were earning their Bitcoin rather than just freely giving it to them.

Preston Pysh (07:49):

Yeah.

Mike Peterson (07:49):

And then during the COVID lockdown we did switch to more of a UBI system, because at that point nobody could work, they couldn’t leave their homes, and they were going hungry, and so they had a real need to have a way to bring some income in. And they also had a lot of time on their hands so they had the ability to read about Bitcoin and learn and put the homework in that they needed to be done to really understand it, and so the COVID lockdown actually accelerated everything we were doing by a significant degree.

Preston Pysh (08:22):

And did the businesses, they were just open to accept it when the kids and the people that were receiving this just started showing up with $100 in Bitcoin and they want to buy whatever goods, the businesses were quick to adopt, or did that take some convincing?

Mike Peterson (08:39):

The first couple we leaned on our relationships, people that we already knew that we could strong arm into doing it as a favor. And so they were skeptical at first, but once they started seeing the percentage of their income that was coming from Bitcoin, then they actually ramped up the efforts, they ramped up the advertising, and that just led to the FOMO of the neighboring stores, they’re wondering, hey, why do they have lines? Why, when everybody else is out of work, are people still lining up to spend at their stores? And they asked how they could onboard. And so it was really a combination of a few early adopters, and then FOMO took it from there.

Preston Pysh (09:19):

So $100,000, how long did it take for you to insert that into the local economy?

Mike Peterson (09:25):

So that was over a several month period, that initial injection went in, and then we’ve had subsequent injections that have funded specific programs. We actually started the first life guarding program in El Salvador, and so we’ve done a number of things like that where there was something that was needed in the country, we started paying the people in Bitcoin, and like the lifeguard program, the government eventually took it over and rolled it out country-wide. And so that group’s actually super proud of that, that they were the ones that brought professional life guarding to El Salvador.

Preston Pysh (10:01):

Wow, fascinating. All right, so Mike, let’s jump into the current news. So 44 countries. When I saw this number, and I know that when they did the Bretton Woods Agreement it was also 44 countries, and Bukele was tweeting this out, but 44 countries show up in El Salvador to learn about Bitcoin, I want to say that this conference was what, three days long, a week, and the government of El Salvador put this on, very similar to the MicroStrategy conference that Michael Saylor put together for corporations in the US. You see President Bukele and his economic team put this together, and then I know on the last day they went out to Bitcoin Beach, and from what I understand, they all had their own digital wallets and were conducting transactions in Bitcoin to see how it worked. Talk to us about everything you know about this conference, because I really don’t know that much as to what took place and what the scuttlebutt was at the conclusion of it.

Mike Peterson (11:04):

Yeah, so this conference is put on by a global organization called AFI. It’s like some of those other big global organizations, but it doesn’t get as much media play because it’s made up of the forgotten countries, like El Salvador. And so I think it’s 90 or 89 countries in total, I think, whose central banks are members of this association, and it is, I believe it’s the Association for Financial Inclusion.

Preston Pysh (11:34):

Inclusion, yeah.

Mike Peterson (11:34):

Yeah. And so it just so happened that they had already planned on having this meet up in El Salvador even before the Bitcoin law was rolled out.

Preston Pysh (11:45):

Wow.

Mike Peterson (11:46):

And it was canceled a couple times because of COVID, and then when they actually went ahead, decided to go forward with it, they really wanted to focus on the Bitcoin adoption because El Salvador was the first one to do that, their whole objective for doing that was to increase financial inclusion, and so this was a chance for all these central bankers to better understand what was driving El Salvador to do this, what the results were, and how it might translate into their countries if they were to try to go down that same pathway.

Mike Peterson (12:18):

And so they reached out to us and asked, “Hey, can you guys come to the opening meetings, the opening sessions, do a presentation on the history of Bitcoin Beach, how the wallets are used, why this really increases financial inclusion, and then on the final day can you host everybody? We want to bring them down to El Zonte, help them set up wallets, have them be buying Cokes and waters at the local stores, have them try to send money home to family members that are in their respective countries,” have them set up even different wallets so they’re seeing how you can go from one wallet to another, because it’s this open protocol and how that works so differently than PayPal and Venmo, and those sorts of things.

Mike Peterson (13:03):

And so they really wanted us to be the experiential part of it, and of course we jumped at the chance, we printed up a bunch of t-shirts and hats and swag, so that central bankers across the world will be going in to casual Fridays wearing their Bitcoin Beach shirts. So it actually went way better than we were expecting. I mean, I thought there would be more resistance. The people were just fascinating, they were watching Lightning transactions happen so instantly they were just shocked that, wait, that’s it? It’s already there? That’s all it is? I thought it was much more complicated than this.

Preston Pysh (13:37):

I thought it took 10 minutes.

Mike Peterson (13:39):

So I think it was eye opening for them to realize, hey, El Salvador can do this, we can do this, anybody can do this.

Preston Pysh (13:46):

Yeah, how exciting. A little bit of a side note here, it’s just too ironic to me that you have the IMF, who puts on this presentation as if they’re all about financial inclusion, and they’re doing things to help developing nations, and things like this, and how against this they have been, directly to El Salvador, when it’s just an open protocol, it’s just an open mathematical crunching thing, computer code, that should effectively pose no threat to anything that they’re doing, if they’re doing things in a fair and reasonable manner. And I think that’s the concern, and that’s the issue, obviously, from our vantage point. But I just find it so ironic that they would have such heartburn over everything that’s happening down there, and boy, isn’t that the signal in all of this.

Mike Peterson (14:47):

It’s funny because I think that’s actually pushing countries to want to understand it better.

Preston Pysh (14:52):

Exactly.

Mike Peterson (14:52):

Because they’re so upset about this, it’s got their hackles up, and most of these countries have pretty mixed to negative history with the IMF, and so I think there’s assumption from a lot of these central banks of, hey, they want to keep us away from this, we need to figure this out.

Preston Pysh (15:11):

Exactly, you couldn’t have said it any better. What was one of the most interesting stories that you heard out of this event, this Alliance for financial Inclusion, the AFI event?

Mike Peterson (15:23):

I think the most interesting thing was for us to have a realization that the central bankers, they’re just normal people. I think a lot of times we put them up on this pedestal, we think that they operate at this different level. They’re just people with the same insecurities, the same hesitations, the same lack of tech technological prowess, and so I think that’s one thing that was very surprising was how much help these central bankers needed just to download an app, where we have these 10 year old kids in El Zonte that could download 10 apps in the time it took them to set up one wallet. But I think that that was helpful for us to see is we realized that a lot of times it’s not even something major, it’s these little things, these little hurdles we have to help them get over, and that will turn them from being a skeptic to somebody that realizes, hey, this is the future, this is the way forward.

Preston Pysh (16:21):

Yeah, isn’t that so true? And you’re looking at the central bank digital currency talk, and all the tech that has to go into getting something that actually has the technical maturation to release in a way that you don’t crash whatever economy that you’ve got going with enough confidence. And I don’t know, I look at that herculean effort that has to happen, with a no fail type outcome by these central bankers, and I think a lot of them are scared to death to go down that path, to move away from the existing system and implement something like that fully knowing that if you get any of that centralized code wrong, it’s going to be disastrous, absolutely disastrous.

Mike Peterson (17:09):

And it still has all the drawbacks of the current systems they’re using.

Preston Pysh (17:14):

Amen.

Mike Peterson (17:15):

There’s really not that much benefit to it.

Preston Pysh (17:18):

It solves nothing but their ability to control and interject their ability to cut off a transaction, that’s the only thing that it brings, which is no benefit to a citizen, that doesn’t benefit you, me, or anybody else, it’s just a worse money than what already exists.

Mike Peterson (17:39):

And I think for a lot of these countries it doesn’t even benefit them because then the US, or the IMF, can actually put more pressure on them and put more friction into the system than already exists, and it’ll actually cause a drag on their economy.

Preston Pysh (17:55):

Yeah, yeah. Hey, let’s talk about the benefits that you’ve seen to date, because you have been up close and personal with this for multiple years now, and a lot of it has had time to settle in and you’re actually seeing what’s percolating out of this. So walk us through some of the bigger things that you’re seeing that this has created down there in El Salvador to date.

Mike Peterson (18:22):

So I’ll hit it from two directions, one is on more the micro level with individuals. We see with them, these people who have never considered what money is, who have never saved in their life, have never even thought why they should save, they’re for the first time asking those questions, what gives this piece of paper value? How does that compare to Bitcoin? And they’re starting to think about the opportunity cost of spending versus savings, because they’re realizing, hey, if these projections we’re hearing are correct, and this Bitcoin is worth 10X in a few years, I don’t want to spend it now, I want to save it. And so it’s really turning them from spenders into savers. So that’s more on the micro level. It’s also giving them the sense of hope that they can actually save and get ahead and not just keep falling behind because inflation is higher than any savings rate, any interest that they can earn at the bank, and so it’s really making them optimists instead of pessimists.

Mike Peterson (19:24):

But what I really want to focus on today with you is more on the macro level, because this is where I think people are really missing the picture, is how big of a impact this is having on El Salvador in the long term. People keep focusing on, well, El Salvador bought Bitcoin when it was higher than it is now, they have 30 million in paper losses, this has been a horrible failure and nobody should go down this route. Well, they’re talking about this 30 million, they’re not talking about the fact that last year they had 1.5 billion more in private investment than they’ve ever had in any year before. In fact, private investment was, I think, 18.4% of GDP last year. The previous high that it had ever been was I think 15.9%.

Mike Peterson (20:14):

So they’ve seen this material increase in investment coming into the country. They’re seeing numerous companies come in, set up legal entities, and we’re just in the first innings, they’re just trying to staff up now. I think there’s probably been a couple thousand jobs directly created in the Bitcoin sector that will translate into probably 100,000 jobs in two years from now. And this is in a country of, 6, 7 million people, so this is very material.

Mike Peterson (20:44):

And even bigger than those things is how it’s changed the whole narrative about El Salvador. It used to be I couldn’t get people to come visit me in El Salvador, they’re like, “No, I’m going to get killed, all I’ve heard about El Salvador is gangs, they have the highest murder rate,” they literally overnight changed the narrative from gangs and murder rate to Bitcoin adoption, tech sector, becoming the financial center of Latin America. I mean, you could not pay a publicity agent a billion dollars and have that type of results. I mean just one example, the 60 Minutes episode that we did last month.

Preston Pysh (21:24):

Yeah, yeah.

Mike Peterson (21:25):

I mean, that’s worth literally tens of millions of dollars in positive publicity to the country, and that was just one out of hundreds of news agencies that have done big features on El Salvador. And so that’s what people are missing, they’re focused on this $39 million in paper losses and not these billions and billions of dollars of value that’s been literally created overnight in the brand of El Salvador.

Preston Pysh (21:51):

Unrealized losses at that.

Mike Peterson (21:53):

Yeah, and I think in five years even that nobody’s going to be talking about because there’ll be gains.

Preston Pysh (22:00):

Yeah, no, and this number that you said, 1.5 billion in private investment, and I’m thinking long term, they’re setting up infrastructure. The amount of capital that’s going to follow that is going to be pretty exciting. And I think, so people that might be listening to this from the US, or over in Europe, or whatever, because I hear this all the time, people were like, “Those numbers are small potatoes, Mike.” That’s what your typical Wall Streeter, or whoever that’s listening to this are saying, “Those numbers are small potatoes, that’s nothing in the global scheme of things.” But where I think that person is just so wrong is this is a shift, an incentive structure that can be replicated if a country decides to replicate it. So you had mentioned earlier that you think that there’s a couple more countries that are going to come out here, maybe by years end, or whatever, that are going to start announcing similar things. What are you hearing on that front?

Mike Peterson (23:03):

Definitely a lot of countries are watching El Salvador, and they’re watching how this plays out, specifically other Central American countries because it’s right on their doorstep. When people talk about, “Oh, those are small numbers,” you have to keep in mind that the total GDP of El Salvador is only like $30 billion, so a $1.5 billion swing massive in private investment is huge. They had an increase in tourism over projections of like $700 million last year. Now those are big numbers, those moved the needles, and we’re just in the first inning of this. Companies are just figuring out how they can staff up, they’re setting up their legal entities, they’re trying to scale, this is something that is going to, we’re going to see 20 fold this in a few years, and that’s what people miss, we’re still in the first year here.

Mike Peterson (23:57):

If you look at when Singapore made its sprint to become what it has today, it was nowhere near as fast as this has happened in El Salvador, this is going to be look like whiplash speed when you’re looking at it 10 years from now, where right now people criticize, oh, it’s so slow. I’ve seen tons of articles saying, “Only 20% of businesses are using Bitcoin.” 20% of business is using Bitcoin? I don’t know for sure that those are the accurate stats, but I’d be thrilled with those stats, I mean, that’s huge to have 20% of businesses using Bitcoin. They’ll say, “Only 5% of the transactions are in Bitcoin.” I mean, that’s much bigger than credit cards were when they were first rolled out. I mean, this is happening at a speed that we have not seen anywhere in history.

Preston Pysh (24:48):

I agree with you, and I think the important point here is the financial rails are being laid, the templates for businesses and countries are being set, those protocols for how this is done are now in place, and now you just need the spark to create the incentive for others to follow down this path that’s already been laid, and it’s already laid out there for them to follow. And so we talk about it on this show all the time, it’s all this macro backdrop, it’s this fixed income market that’s negative yields in real terms to the tune of a hundred trillion dollars, and it don’t seem like it’s going to be getting better anytime soon, is going to be that financial push that eventually pushes everybody to these tracks and these financial rails that are being laid and, I don’t want to call it experimental because it’s very real down there.

Preston Pysh (25:46):

But as far as people saying the numbers aren’t offsetting, I don’t think that you have the financial incentive, I don’t think you have the obvious financial incentive for people to start moving to these rails yet, but I think you might be moving there very quickly in the coming five to 10 years. And that’s what I think is just so important about this story, it’s fascinating. It’s fascinating.

Mike Peterson (26:12):

People are creatures of habit, especially when it comes to their money, so I’m actually shocked that we’ve seen the amount of adoption that we had, because people don’t like to change things if they’re working for them. But that’s the thing, this was not working for so many people, and that’s why we’re seeing what I would say is fantastic adoption so early, and I would be very scared if I were Western Union, or any of these companies that have made this their market, They’re going to have to adapt or they’re going to die.

Preston Pysh (26:46):

Talk to us about the remittance. I know this is something that Jack Mallers talks about a ton, what does some of those numbers look like? Do you know any of them off the top of your head?

Mike Peterson (26:55):

I don’t know any off the top of my head, I still think it’s probably less than 5% of the remittance market is happening in Bitcoin. But the remittance market in El Salvador is billions of dollars, and so these incremental changes, it’s something where it doesn’t look like that much, and then a year from now it’s like, wait, how did we get here? We have half of these remittances coming over Bitcoin rails, we’re saving the poorest of the poor literally hundreds of millions of dollars. And not just the money but the convenience, now they can get it direct to their home, they can send it to the store and have a delivery boy come and deliver the food to them, they can have Amazon-like services that they would never be able to have if they had to wait until they could adopt credit cards, or something like that, because most of them would never qualify.

Preston Pysh (27:46):

Yeah, it’s going to spread, word gets out fast when you don’t have to go stand on the line for 30 minutes or an hour, and all those benefits that you’re highlighting. So you’ve never had a meeting with a billionaire until this past year and then all of a sudden you have a meeting with three different billionaires in the past year. Talk to us about this experience, and what produced this, and then tell us about some of the questions. And you don’t have to name them if you don’t want to, but just tell us this story, what in the world’s going on with this?

Mike Peterson (28:21):

I mean, it just goes back to everything we’ve been talking about before, the world’s eyes are on El Salvador, all these companies and wealthy individuals who, quite frankly, couldn’t have pointed out El Salvador on a map a couple years ago, now feel they need to have an El Salvador strategy. They want to get boots on the ground, see what’s happening here, see how they can actually help, they’re not just looking what they can gain from it, they actually want to be part of this because they see this as being something transformational. They realize El Salvador is a small country, it’s not going to maybe move the needle for them financially, but El Salvador is the first to adopt and it could move the needle as far as Bitcoin adoption, I mean, it already has moved the needle, and so I think they want to make sure that it works.

Mike Peterson (29:10):

And so, yeah, it’s been a humbling experience, we’re in El Zonte, this small beach town of 3000 people, and I’ve never met a billionaire before, and now it’s a regular occurrence for them to come through town, to want to sit down, to want to understand what’s going on, how they can help, how they can participate, and I think it just goes to show this is the benefit that has come from the Bitcoin adoption, this is why it’s going to be transformational to El Salvador, because it’s opening all these doors, it’s opening an investment, and it’s bringing in good paying jobs, and that’s, when people focus on Bitcoin price they’re missing all that.

Preston Pysh (29:51):

What’s happened, so with all of this activity that’s happening, where you got 44 countries coming out to Bitcoin Beach, and when we started the conversation you were talking about that local community and how you were there to try to create a spark. Well, you didn’t create a spark, you created a bonfire, and maybe that’s an understatement. What’s the community think right now, if you were going to take the pulse?

Mike Peterson (30:16):

Just to circle back, one thing I wanted to mention on the 44 central bankers that were there, it was interesting watching their reaction to being able to make these transactions and buy things with Bitcoin, versus Americans. Americans are used to being able to do those sorts of things, it seems like no big deal, I could do this with Venmo. For them it was amazing that they could themselves do this without having to qualify for any account, with an open protocol that could be easily transported to their own country. And so I think it was a light bulb moment for them. And that goes to show how it’s impacted the whole community in El Zonte. This has made the people in El Zonte feel, a lot of them for the first time, like they’re not in some forgotten backwater, but they’re actually leading the world forward.

Preston Pysh (31:07):

Yes, yeah.

Mike Peterson (31:08):

It used to be everybody there was planning to try to sneak into the US, or a lot of them were joining the gang, now they feel like, hey, there’s all these expats wanting to come to El Zonte, there’s all these business opportunities here, I’m super fortunate to be Salvadoran, to have a Salvadoran passport. I live in the country that these other people are wanting to spend potentially hundreds of thousands of dollars to try to acquire this passport, I already have it, I’m going to take advantage of it and build a business here. And so we’re seeing the vast majority of locals sense that opportunity and want to make sure that they defer gratification, that they put the hard work in now, so that it can benefit long run from that.

Preston Pysh (31:54):

I love it. I could imagine the look on the central banker’s face as they were spending SATs immediately, and non-KYC wallets, and then zapping it back to wherever they’re from and looking at each other thinking, we’re not going to be able to stop this, this is going to be unstoppable. I can just imagine that sense that you get, because I think, I know for me the first time I set up my full node, I had my own wallet, I’m routing it through my node, and I’d call a friend and I’d be like, “Hey, download this wallet.” I said, “What did you notice when you downloaded the wallet?” And they’d be like, “Oh, I don’t know.” “Did you have to put your name or anything into this?” “No, I didn’t.” “Okay, now watch this, I’m going to send you five bucks.” And boom, and just send it off, and it immediately arrives as we’re having the conversation on the phone.

Preston Pysh (32:45):

And it’s just this realization, you can hear it over the phone, I can only imagine as they were witnessing this down there, all together, it’s unstoppable. That’s the thing you walk away when you have that experience, and for people that are listening to this, if you haven’t played around with Lightning and done this immediate settlement with a thing you can download on your phone right now as you’re listening to this, boy oh boy, you start playing around with it you realize real fast, how can anybody stop that? How can anybody stop? And you can’t.

Mike Peterson (33:19):

That’s part of why I think Lightning is such a game changer. When you have to wait for a confirmation, and you’re showing somebody that, it feels a little wonky. But when they see that, they hear that immediate ping on their end that they received it, I have not met a single person that I’ve onboarded and had do a Lightning transaction that still thought, nah, this Bitcoin thing’s not going to go anywhere.

Preston Pysh (33:43):

Yeah.

Mike Peterson (33:43):

They literally, once they do a transaction, they’re hooked. And so for a lot of these central bankers, some of them will go back and they’ll start pushing, hey, we can drive our country in this direction, we can be number three or number four, we can make history, we can invite investment. There’s others that aren’t going to take that initiative, but when somebody else in their country starts driving it, they’ll be less likely to want to try to stop it, because they’ll be less afraid of it, they’ll understand it, they’ll see the potential of it. And so I think we’re going to see this play out in these 44 countries in very different ways, but I guarantee that several of them within the next five years will have adopted Bitcoin.

Preston Pysh (34:24):

Yeah, there’s a huge advantage to be a first mover in this, to have the plumbing and have the rails laid. With so many bills for most people denominated in fiat currencies that are much more stable in the buying power, most people’s bills, very few people have much disposable income. And so to be placing a lot of your net worth, or whatever, in this when you don’t have a lot of disposable income, you can see why the adoption is slow, and it comes down to these ideas that if you’re having to pay the electric bill, and you’re having to pay a mortgage, and you’re having to pay all these things, you don’t want to convert it into Bitcoin and have to swap it back with the volatility that’s there.

Preston Pysh (35:11):

But I think as these things that we talk about, like the bond market, like I mentioned earlier, start to really debase, and start to really heat up, which I think is coming here in the coming five years, it’s going to become much more obvious to people that they’ve got to retain whatever disposable income that they have into this thing called Bitcoin. And so these countries that you’re talking about that lay that architecture and that foundation early are going to be the biggest beneficiaries of this financial shift and this change that we seem to be very confident is on the horizon.

Mike Peterson (35:53):

Well, and I think during that transition period, that’s why it’s so important to have the ability within the Chivo Wallet, that they can hold it in dollars, or Strike, we’re actually getting ready to roll that option out within the Bitcoin Beach Wallet, and so we see that as a bridge, when people first get into it they’ll choose to hold mostly dollars, but over time we see them gradually put more and more in Bitcoin until they become like me where they just want to hold everything in Bitcoin.

Preston Pysh (36:20):

Yes.

Mike Peterson (36:20):

And I think this is actually the most opportune time, in a down, cycle for people to be learning those lessons, to be getting their feet wet, getting burnt a few times, and understanding that, so that when we come into the next bull market, they’re going to be primed and ready to go.

Preston Pysh (36:39):

Yeah. For businesses, I mean, just look at micro strategy, from a business standpoint, Michael’s sweeping, whatever free cash flows he’s got into Bitcoin. All the other stuff you got to keep it in dollars so that you can pay whatever those fixed expenses are, and your variable expenses, for the business, and then you just sweep whatever your free cash flow, for the individual it’s your disposable income that’s those free cash flows, that’s what you should be sweeping into Bitcoin.

Preston Pysh (37:05):

And the rest, these wallets that are going to enable this in stablecoins, I think are going to be the wallets that really dominate the space, because it gives that person that optionality to, hey, I can retain 10% of what I earn each month, and that’s what’s going into Bitcoin, the rest remains into that until you get this really big move, and then people just want to be paid in Bitcoin. And you and I, Mike, we obviously think that day’s coming, and it’s just a matter of when. But it’s really fascinating to see how important it is that we have the El Salvadors, we have the micro strategies demonstrating and providing a template to the world for when that day potentially comes. If we didn’t have people-

Mike Peterson (37:53):

And I think we’re seeing more and more interest. Even this past week, after all the central bankers left, there was another delegation from Senegal that was there actually researching the surf industry in El Salvador, because they have surf in Senegal, and they want to replicate El Salvador’s success. And they were just fascinated by the actual potential of Bitcoin tourism, and the boom that El Salvador has seen from that. And so they came and spent the day, they want to, there was a mayor from a small island off of the capital of Senegal, he wants to roll out a similar thing. And so we’re seeing this constant inflow of inquiries of people wanting to have that advantage they see El Salvador having, and I think another place where the game theory comes into effect is just understanding what drives politicians.

Mike Peterson (38:48):

Politicians love to see their name in the news, they love to seem to be in the headlines, especially if it’s the big papers, the Wall Street Journals, the 60 Minutes, the CBS, the Fox News, those things, and so they’re realizing, wow, just by adopting Bitcoin, El Salvador has really catapulted itself into a country that everybody knows about. I would say Nayib Bukele is one of the most recognizable presidents outside of the US and some of the, maybe the big five. To have a small country like that to have the name recognition that the president has is phenomenal. And so I think that’s going to be a driving factor, along with the other things of them realizing, hey, I can put my name in the history books, I can go down as one of the first adopters that brought my country out of this decades of financial repression.

Preston Pysh (39:47):

Totally agree. You’re seeing that too, you’re seeing it here, even in the US with local or state, people running for office, everybody I see is pro-Bitcoin, it’s interesting to see them all latching onto it. I’m curious, have you ever had engagements with President Bukele?

Mike Peterson (40:05):

So the only engagement I’ve had with the president was on a Twitter Spaces that was actually the night of the law being signed, and so that was the only direct engagement. We’ve had a lot of engagement with the minister of tourism, the minister of economy, and more recently the minister of education. We’re working with the education ministry to roll out a countrywide program of Bitcoin education starting from seventh grade on. So they want to do financial education primarily focused on Bitcoin across all the public schools, and we’re working with MyFirstBitcoin, which is another nonprofit here doing Bitcoin education, to develop this curriculum that will really be the first in the world. I mean, really the first, most countries don’t do any financial education in the public schools, so not only are they doing financial education, they’re doing Bitcoin focused financial education.

Mike Peterson (40:58):

And that’s what we need to develop, the talent for the jobs that we’re flowing into El Salvador. To be quite honest, that is one of the bottlenecks right now, is there’s so many countries that want to be attached to the name of El Salvador, to the phenomenon that’s happening here, but they’re having trouble staffing up quick enough because there’s so much demand for these more highly talented programmers and people in the space. And so El Salvador’s trying to ramp up their education, there’s a number of nonprofits that are stepping in that are doing different courses to develop this workforce that these companies are demanding.

Preston Pysh (41:36):

You have a housing project going on down there. Talk to us a little bit about this.

Mike Peterson (41:41):

So we have two very different and very exciting housing projects that we’re working on. One is a social initiative that we’re doing, an affordable housing. We want to make sure that with all the development that’s happening in El Salvador, specifically El Zonte, that the locals participate, that they’re not pushed out to the margins. And so we have combined forces with New Story, it’s a very innovative housing focused nonprofit, and we’re going to do, it’s going to be between 300 to 500 homes in El Zonte that will be Bitcoin only mortgages.

Mike Peterson (42:17):

Now the mortgages won’t be denominated in Bitcoin, we wouldn’t want to saddle anybody with that, they’ll be denominated in dollars, but they’ll make their monthly payments in Bitcoin, and that’s going to allow New Story to significantly reduce the cost of servicing loans to low income individuals. In the past they’ve found sometimes just servicing the loans can cost 40% of the loan payments that are coming in because people don’t have bank accounts, they have to go out and collect in person, it’s very labor intensive, and so this is going to allow them to be much more efficient, and it’s going to allow the individuals buying the homes to have a record of all the payments they’ve made, they can pay from sitting on their couch, and it’ll also obviously increase demand for Bitcoin in the local community. So we’re super excited about that.

Preston Pysh (43:07):

Wow. So whatever the conversion rate is, their monthly payments denominate in dollar, so let’s just say that the payment’s $1000 a month, they take that thousand dollars, they immediately swap it in the Bitcoin, and whatever that conversion rate is, the person who lent the money is receiving that back in Bitcoin.

Mike Peterson (43:28):

Yeah, and so just for a frame of reference, the payments are $60 a month, so these are payments that even these people making $300 to $400 a month, they’ll be able to afford to own their own home, to be able to pay it off over a 15 year period with an interest free loan. Then those funds that are repaid will go to fund the next housing project. And so we’re super excited about it, actually Coinbase donated two and a half million dollars to fund this program. I know Coinbase sometimes gets knocked on within the Bitcoin space, but our hats are off to them for stepping up and really putting their money where their mouth is to support this project. And we’re super excited about that.

Mike Peterson (44:10):

The other project that we’re doing is going to be more focused on the expat Bitcoin community, people that are looking for second homes, looking for a plan B, or just want to get out of the US or Canada or Australia, which I get inundated with, with DMs from people that they want to escape, they want to come to El Salvador. And so we’re going to do a pretty substantial project there in El Zonte, in the hills, amazing ocean views, anywhere from 200,000 to a million dollar homes in the community, and it’s going to be Bitcoin only. I mean, the payments are all in Bitcoin, the HOAs will be in Bitcoin, this is going to be a gathering place for Bitcoiners who want to live their life in Bitcoin.

Preston Pysh (44:57):

Wow, I can only imagine the emails, Mike.

Mike Peterson (45:02):

Just a follow up on that that shows how much investments coming into El Salvador because of this law, it was actually a little over a year ago, or I guess it was about a year ago, at the Bitcoin conference in Miami, before the law was announced there was a developer, real estate developer in the commercial hall, and they had a couple projects in Nicaragua and Honduras, and they were denominated in Bitcoin. And so I went and talked to them, actually the president of the company was there so I came back to have a meeting with him, and explained about the Bitcoin Beach project, and that we had this vision to do a Bitcoin only housing development, and would they be interested in coming and looking and maybe partnering with that, or trying to do something?

Mike Peterson (45:49):

And he said, “I’ll be honest, it sounds exciting, but El Salvador, it’s maybe on our 10 year roadmap, but it’s just not a place where we see a lot of demand right now, and it’s probably not something we’d be interested in. But here, here’s my number, let’s keep in touch, if I can help in any way, let me know.” And later that afternoon the video came on and Bukele made the announcement that El Salvador was adopting Bitcoin. The next day I got a call from this individual and he said, “Hey, our whole team is coming next week, we’re moving forward on El Salvador, this is going to be our focus, to build this community,” and right now this is a hundred million dollar project that they’re looking to do, which in a country like El Salvador where the total economy in a year is about 30 billion, a hundred million dollars is significant. And that’s one little part, just one little of these hundreds and hundreds of big projects that are moving forward that are bringing jobs, benefiting the economy, and really driving El Salvador forward.

Preston Pysh (46:55):

Unreal. Talk to us about the volcano mining, and your thoughts on the energy and whether this is going to materialize into much.

Mike Peterson (47:06):

The volcano bonds, I mean the volcano, yeah, the volcano bonds and the Bitcoin City aspect, I think is a brilliant marketing campaign, I love the narrative, I love the thought of being able to mine with energy that doesn’t produce any emissions. I have my skepticisms, I have my doubts on whether, the combination of the warm weather in El Salvador, and then the current cost of electricity, I don’t know if it’s ever going to become a mining epicenter. I know for myself, right now I pay about, I think it’s about 30 cents a kilowatt for electricity in my home, which is about what I pay in my hometown of San Diego. And so neither of those, obviously those rates are not going to entice miners.

Preston Pysh (47:55):

No.

Mike Peterson (47:55):

I do know for the volcanoes, obviously they’re locating right at the source, they can be behind the meter, they don’t have the transmission costs. I’m not an expert in hydro-steam power, I don’t know if they can really be competitive. I would guess it’s going to be more of a niche thing, but I’d be happy to be proved wrong on that.

Preston Pysh (48:17):

Yeah, it’ll be interesting to see how that develops, and you’re very right, bitcoin mining just goes to where the cheapest energy, that’s the beauty of it, I mean, it’s just attracted, those rigs are just attracted to the areas that you can get 6 cent per kilowatt hour, 4 cent per kilowatt hour, those rigs are just going to show up in those locations. So yeah, we’ll see how it develops.

Mike Peterson (48:42):

I do think the bond issue, which has been tied to that, I think that is a whole nother story. I think that is actually going to revolutionize the world financial system. If this goes off as I expect it will, I mean, I think that will be what drives a lot of countries to adopt Bitcoin, because it could be done in a way that for the early… Obviously it’s not going to be sustainable for everybody, you’ll get to the point where the early gains will already be had, but I think for the early adopters that are doing this while Bitcoin still has a long way to run, I think they’re going to actually be able to pay off their national debt while borrowing money. I think it’s going to be mind blowing.

Preston Pysh (49:27):

Talk to us about how replicable you think Bitcoin Beach is in other locations. You said you had a couple people reach out to you to try to do this in their domains, but how replicable is it, what you’ve done? What’s needed?

Mike Peterson (49:43):

I think it’s super replicable. I mean, I’m nobody, I’m not a tech person, I’m not some high powered executive, I was just somebody stupid enough to believe that this could be done and that people would want to spend Bitcoin on their daily coffee. And so if I can do it, literally anybody can do it. And right now we are really focused on making Bitcoin Beach a worldwide initiative, and supporting, there’s a number of other great projects, a lot of them run by people much more talented than myself, that just haven’t had the media exposure and maybe the financial resources to get the momentum that we were able to get. So right now that’s where I’m focusing all my efforts.

Mike Peterson (50:29):

There’s a very exciting project in South Africa, in Mossel Bay, called Bitcoin Ekasi, and so many parallels to the Bitcoin Beach story. It’s also a surf town, they actually had an existing surf focused non-profit that they integrated Bitcoin in with, I think they have a half dozen stores now that are onboarded. They’re rolling out educational initiatives, they’ve actually started a lifeguard initiative, like we did, where they’re paying the lifeguards in Bitcoin. And so for me there’s no bigger joy than seeing this come out of El Zonte, come out of El Salvador, this light and this hope, and go into a place like South Africa.

Mike Peterson (51:09):

There’s another initiative in Guatemala, Bitcoin Lake, that’s a similar thing. A big initiative in Peru that actually has a ton of traction, they’ve they’ve onboarded I think like 100 stores, they have a couple thousand people using Bitcoin, the initiative is called Motive, and I’m surprised at the limited press coverage it’s gotten because they’ve actually, I think, are doing more than we’re even doing in El Salvador. So there’s a project in Brazil, there’s a Bitcoin Beach spinoff in Guatemala, there’s Bitcoin Jungle in Costa Rica, and so in true Bitcoin fashion it’s decentralized, we’re not some head organization that people run through, they’re doing their own thing and we’re behind the scenes helping support them, and push, and when we have extra resources we push them their way.

Preston Pysh (52:01):

So I’m curious Mike, do you have a 501(c)(3) here in the US that people can make donations to? Say somebody wants to send you $10,000 in Bitcoin, how would they do that? Do they get a tax write off if they’re in the US? How are you guys operating that?

Mike Peterson (52:18):

Yeah, so we do have a umbrella nonprofit in the US, it’s more focused on what our initial work, which was supporting different churches and working with different missionaries, that’s what this spun out of, and so we still have that available for people that want a tax write off that want to give to the local programs, specifically to the Bitcoin programs. And we’ll keep it in Bitcoin, that’s generally what we try to do. But a lot of people in the Bitcoin space will just want to give directly and so we’ll send them a QR code, or a lot of times we’ll actually encourage them, hey, we have enough right now for this month, send it to the project in South Africa because they’re being held back by lack of resources, and they’ll actually be able to get more bang for the sat right now than we will, because we’re set for the month. And so we’re really trying to be open handed about it and make sure we’re spreading these resources to all of these projects.

Preston Pysh (53:14):

Is there a site that lays out all these other initiatives that are happening that are similar to yours that a person can see the 10 different major efforts that are taking place and which one that they can reach out to, do you know of anything that lays that out?

Mike Peterson (53:33):

We’re working on that right now, I’m embarrassed to say that it’s not up yet, but that will be on our BitcoinBeach.com website, we’re in the planning process right now, we’ll actually have a landing page and links for them to donate to all of those organizations directly. We feel it’s always better for them to go directly if they feel comfortable. Some people would rather turn it over to us and sense that we have a better idea of who needs it most, but I like the direct contact, I like for people to feel like they’re giving directly, then they can go to South Africa and help do the English classes and participate in these things directly. But within the next month that will be up on our Bitcoin Beach website.

Preston Pysh (54:15):

Okay. Most of our listeners are from the future, so if you’re listening to this, from any future.

Mike Peterson (54:24):

Perfect, go to BitcoinBeach.com.

Preston Pysh (54:24):

If you’re listening to this in the future, go there now and I bet you it’s up on the site. This is phenomenal, Mike. I can just tell you from a person watching from afar, it’s just so impressive to see what you’ve done, and you’ve lit a fire that is just spreading, a torch, and you’re just lighting these torches all over the world. I mean, look at what’s just happened in El Salvador, now it’s happening in all these different countries, you’ve got countries showing up, learning about this, coming out to your site. What an exciting time. I mean, you just have to feel almost like pinch me, like how in the world is this real? How in the world is this played out, and in the timeline that it’s played out? How long have you been down there?

Mike Peterson (55:09):

So we’ve been down in El Salvador for about 10 years, but this project was only rolled out in 2019. So it’s-

Preston Pysh (55:17):

My God.

Mike Peterson (55:19):

It’s really been shocking how quickly it has rolled out. And it’s funny, I actually went back and I had written a white paper of sorts to present to the original donor that funded these things, and I laid out this very aggressive timeline of all these things that were going to happen, and I’m shocked, all those things actually happened as I described them, and even faster. And so it’s-

Preston Pysh (55:45):

And what’s the original donors-

Mike Peterson (55:46):

I’m actually going to probably try to publish that in the next couple months here, because I think people will realize this was a very stupid idea from a naive individual who thought they could do this, and it worked. So if I can do it, if our small team of, most of the people had never even left the village of El Zonte, and they were able to drive this worldwide phenomenon, then anybody can do this. You just got to step out of your comfort zone and do the work.

Preston Pysh (56:16):

Have you had a conversation with the original donor?

Mike Peterson (56:19):

Yeah, just through cryptic text messages. I’ve never met the donor, I don’t even know if it’s a man or a woman, but I have had some email messages back and forth, and yeah, obviously they’re thrilled about what’s happening.

Preston Pysh (56:35):

Unbelievable, unbelievable.

Mike Peterson (56:37):

And it’s shocking for, I mean, it was a very generous donation, and in comparison to the impact that it’s had.

Preston Pysh (56:45):

Oh, it’s unreal.

Mike Peterson (56:46):

I can’t think of anything else in the world that’s had this million-fold ripple effect impact. And it’s so fitting for Bitcoin, it’s so Satoshi-esque, it’s just right in the line with all that, that somebody that doesn’t want any credit, doesn’t even want to be known who they are, spurred this whole thing.

Preston Pysh (57:05):

Unbelievable. I’m speechless. Okay, so the Bitcoin Beach website, we’re going to have this in the show notes, is there anything else that you want to have added into the show notes, Mike, that you want people to be able to ping? Because they’re going to hear this, they’re going to be interested, they’re going to want to maybe donate and participate and be the next 100,000 donor that creates another massive spark in the world. What do you got for them?

Mike Peterson (57:31):

So we’re really more active on Twitter than anything else. I mean, the webpage is more of a landing page, we’re trying to be better about it, but Twitter is where we are up to date on everything. And then it’s also too, when people want to donate, if we have our budget met for that month we can push them directly to some of these other initiatives, and so Twitter is really the best place to follow us.

Preston Pysh (57:56):

Okay, fantastic. I know you’re very active there, you’re you’re very responsive, so just look Bitcoin Beach. Wow, very exciting. Mike Peterson, thank you for joining us, we will have that in the show notes. If there’s anything I can do to help out in the future, please let me know.

Mike Peterson (58:12):

Well, when are you going to come down? I mean-

Preston Pysh (58:14):

I’m going to come.

Mike Peterson (58:15):

We’re doing this remotely, we should be doing this in person.

Preston Pysh (58:18):

I am going to come down, I need to get my travel straight, I got a bunch of trips lined up, but I am going to come down there, and I look forward to that trip a whole lot.

Mike Peterson (58:28):

Come down for the Adopting Bitcoin Conference in November.

Preston Pysh (58:31):

I don’t surf though.

Mike Peterson (58:33):

Hey, we got the best instructors, so we’ll get you out there.

Preston Pysh (58:38):

I promise you I will be a disaster on a surfboard.

Mike Peterson (58:41):

The water’s 85 degrees, even if you’re a disaster you’ll have fun and enjoy it, so that’s what’s so great about surfing in El Salvador.

Preston Pysh (58:50):

Mike, thank you so much for your time and coming on the show.

Mike Peterson (58:54):

It was a privilege, Preston, can’t wait to see you down there in El Zonte.

Preston Pysh (58:57):

Yes sir. If you guys enjoyed this conversation be sure to follow the show on whatever podcast application you use, just search for We Study Billionaires, the Bitcoin specific shows come out every Wednesday ,and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review we would really appreciate that, and it’s something that helps others find the interview in the search algorithm, so anything you can do to help out with a review we would just greatly appreciate. And with that, thanks for listening, and I’ll catch you again next week.

Outro (59:31):

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