← The Bitcoin Treasuries Podcast with Tim Kotzman
The Bitcoin Treasuries Podcast with Tim Kotzman
This Austrian Economist Explains the Ultimate Evolution of Bitcoin
00:47:15
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- [00:00]
A
Welcome back to the Bitcoin Treasuries podcast. I'm Tim Kotsman, I'm here with Hubertus, the founder of Bitcredit. Hubertus, thanks for your time and for joining us today.
- [00:11]
B
Hey Tim, pleased to meet you and good to be on your show.
- [00:15]
A
So I'm based out of New York. Where, where are you based out of?
- [00:20]
B
I'm mostly based out of Vienna, Austria. And it's actually quite easy to remember because I'm an Austrian economist, I am from Austria, so it's kind of Austria Square and Vienna is the capital from Austria. So this is where Mises, Baver, Friedrich, all these people started to teach.
- [00:38]
A
Can we start with a little bit of your background and how you found Bitcoin and some of that journey?
- [00:46]
B
Oh yeah, happy to. So I'm Hubertus Hofkin, I'm the founder of the Bitcredit Protocol. And so to say, in terms of my journey, I started out in banking, in commercial banking with Citibank in the international expat division, working from starting in Vienna, then in Zurich, Geneva, London, New York, Amsterdam and even a stint in Bombay as it was called at the time, now it's Mumbai in India. So I was always doubling as, so to say a business oriented Citibanker mixed with Citicor Technology Group. And so for instance, I wrote at the age of 21, together with a team, the euro securities system for euro bonds and euro equities, which was a big thing in the 80s, which was then adopted with all the smaller Citibanks in the world. Anyway, I went on to become an investment banker with a the investment bank which was later acquired by Jeffries, then became managing director of the IT and telecom practice of KD Dunstalt Investment bank, which is a Vienna based investment bank operating throughout central Eastern Europe. And yeah, then I got, so to say, made troubleshoot the CF CEO of a company here in Austria, telecom operator, which was hemorrhaging hundreds of millions of dollars in losses every year. So I got put in place as a troubleshooter to turn it around, which started in 2001 and turnaround worked. So it was a very strong strategic position and we sold it to T Mobile for more than $5 billion euros, excuse me, 1.5 billion euros in 2005. And I've been a serial entrepreneur ever since. So I founded the first digital options exchange in the world, sold it to a British company called CMC Markets in 8, founded a prediction market which, which had been dabbling with essentially since 2004, still running it as a hobby, actually running two prediction markets as a, as a little side hobby. Yeah, that's, that's the kind of thing. I also founded an, an online brokerage for the central Eastern European markets, which was bought by the Austrian erste Bank in 2001. And I think turns it up. I found bitcoin. I had been aware about it for a little while already, but at some stage in 2013, I was in San Francisco and I read this weird announcement somewhere that there was a Bitcoin $100 party starting at some really dingy bar called Knock Knock in San Francisco. So I went there and so it was a real eye opener of, of an evening. So that, that's how it started. But I did drop out of Bitcoin in 2015, essentially after putting the proposal for Bit credit protocol into the public domain.
- [03:52]
A
That's pretty wild that you were at the hundred dollar bitcoin party, not the 100k Bitcoin party.
- [03:59]
B
Oh yeah. And there were crazy people there. Like there was a guy with the, with the, let's say, initials A.A. i won't mention his name, who ran around with funny paper strips and with a QR code and said, oh, this is money. Are you crazy? I can just copy that at the print. That's how little I knew at the time. And at another table, there were three guys sitting from Ripple and telling everybody why Ripple is so much better than bitcoin. So it was weird. I even bought a T shirt which says I cost one T shirt. And I said, are you guys nuts? I mean, hundred dollars for a T shirt? I said, no, we made the T shirt a month ago. It was $25 then. So. Yeah. Anyway, I don't have the T shirt anymore because the cleaning lady found some moth holes in it and threw it out. So I was really cross. But anyway,
- [04:50]
A
so the strips of paper were these like private keys or public keys or what, what, what was that?
- [04:56]
B
I guess I'd need to, to ask Andreas. It was a QR code. I didn't have a wallet, nothing. I just came there to have drinks. And finally here was this strange bitcoin thing was. And so I've never tried it out actually. What it was. So QR code to trans for, for bitcoin transactions at the time. Yeah.
- [05:15]
A
Okay, so you mentioned prediction markets and several different things. What, what's your kind of overall view on where all of this is going? We see a lot of like, like themes consistently now. Energy, bitcoin, AI, prediction markets, robotics. How different could the world be? Just even in a handful of years based on all of this? Or is it, is it like a lot of hype and it's going to take a while? Or is it like, no, this is real and like just two, three, five years from now, things could look a lot different and hopefully for the better. I feel like that's a lot of the maybe debate going on right now.
- [06:02]
B
Yeah, I think it's already taken far too long. I mean, in my mind, when I gave the presentation about BitCredit protocol in 2015 at Bitcoin Austria, everybody said, yeah, it's clear that's what we need to do. Yeah. And I had other things to do, so I thought, okay, somebody will do this. And then I didn't really watch much until 2022 when there was this story in the press about Silicon Valley bank on the brink of a bailout. And kind of it reminded me, okay, oh, bailout Bitcoin. What happened? Did somebody finally do the missing credit layer to, to, to, to make sure that Bitcoin can become a money and nothing? Yeah, the only thing I found was a dozen or more of, of companies which, which used Bitcoin as a collateral to get fiat loans, which is entirely not the thing which will help. Okay, I'll be a little bit softer, which is not the same, which can help Bitcoin to monetize, to become a proper general money for everybody. So no, there was nobody who took care of the credit layer on Bitcoin itself. So that's when I do a monthly seminar at the Hayek Institute in Vienna for people interested in Austrian economics. And I found, so to say, a brilliant young man, technologist there, Mikita, who said, okay, why don't we just do it? I said, well, the last time I wrote systems was at Citibank in 1980. The technology has moved on and said, no, I'll do that. So we said, okay, let's try. In 2024, we raised $7.5 million from a sponsor for the project. So we now have enough capital to make sure this becomes reality. And we are launching, by the way, next week.
- [07:53]
A
So can we dive into like what is Bitcredit actually? And what does a bitcoin credit meant do? Maybe just dive into what is the bitcredit Protocol?
- [08:07]
B
Yeah, so Bit Credit protocol is a free open source software so anybody can download it and run it, change it, whatever. And it serves to essentially rebuild the peer to peer liquidity layer in global trade by, let's say, reawakening the old bills of exchange framework just digitally. Now and all of this of course runs on bitcoin rails and we also had to, let's say a non custodial form of digital cash to work. So yeah, so on the wholesale money side we're using the electronic bill of exchange and on the retail money side we use non custodial E cash for various reasons which we can go into if you're interested. So the goal is to help real supply chains, the real economy to finance themselves directly to get liquidity like before central bank monopoly laws which put banks in between the natural liquidity which, which real trade of real goods actually produces. And we are starting to launch this as a, let's say initial beachhead with SMEs in emerging markets. So wherever fiat money is at its worst, where the banking systems don't really work, while where the FIA money is inflationary by some, by some investment by some central bank which prints too much of it, that's where this can start to take root. And the plan is to take root and then go it from there into further and further countries.
- [09:46]
A
What do you think in your view is the importance of what we're seeing right now, the corporate and institutional adoption of Bitcoin as a treasury asset for the overall bitcoin adoption story?
- [10:03]
B
Look, it's very important I think what's happening as long as we consider that this is just the first stage of what will be happening now, now that we are starting to get a credit layer on Bitcoin. So I call it let's say the institutional accumulation phase. So when I talk at trade finance conferences about this thing, because I'm making the trade finance people aware of it too, is I can say now hey guys, who wouldn't know anything about Bitcoin in the traditional trade finance area? They just don't really know and you don't want to know what to think about crypto at this moment. They don't even differentiate to bitcoin anyway. So it's very good. If I can say look guys, Bitcoin already price was higher but it was already 6, 6 largest money in the world. It was bigger than silver, it's bigger than Australian dollar and Canadian dollar joint. Yeah, only gold is bigger and five more world currency answers truth, they get that. They get when I can tell them there's already 100 million in ETFs. Bitcoin is getting institutional. It's all very, very important. So I call this the let's say accumulation phase, the institutionalization of Bitcoin. And yeah, I think it's a good thing as long as we are aware that this is really just a first phase of what must happen now so that bitcoin can become general money. And I call this monetized, to introduce that word. So if it monetizes, essentially it will rise to its proper fundamental value, just like gold had a certain fundamental value in purchasing power over centuries, millennia. And then we stabilize there. And that's so to say what happens with any commodity money which gets a credit money layer. Sorry for a bit too macroeconomics, but so to say the treasury companies and some other companies which are trying, for instance, to build bitcoin banks, they are already a visible piece of infrastructure to help bitcoin monetize. So very important. We just need to find the cutoff point correctly. When is the time to. To come from accumulating passive bitcoin on balance sheets to putting operationally into the real world and how and do it correctly so we don't repeat the mistakes of the fiat system.
- [12:31]
A
Do you think that bitcoin matches gold's market cap and, and kind of stays there, or that's just one step on the journey?
- [12:43]
B
I think you have a good intuition there, Tim. Yeah, with one caveat. Gold used to be absolutely stable in purchasing our power. I've already said that. So a $20 bill, yellow back of 2000, excuse me, of 1913, which was $20 and was redeemable in one gold coin, had essentially the same purchasing power back to when Marcus Aurelius was Roman emperor of the Roman empire here in Vienna. So a quarter of a gold eagle bought you a business suit, and you can buy a business suit, I always say, Even today, for $1,000 and a bit, if you're not too lavish. So that's stable. Since then, it has demonetized gold, but it's still being propped up by people worried about the fiat system and by central banks trying to have, let's say, geopolitically neutral reserve. Especially the Asian central banks, as we know now, they're buying gold heavily. So the question is, is the price of gold today that which it would have been until 1913, it could be too high, it could be too low. But in general, your intuition was correct. In general, bitcoin is digital gold. So when it demonetizes gold, and Peter Schiff is not going to be happy about that, to hear that when it demonetizes gold, the monetary premium from gold will FL over to bitcoin. And I suspect that gold will be become ornamental like it used to be with the Incas, you know where it was Decorating houses, temples and, and bars probably.
- [14:32]
A
I have heard a lot of analysts saying that this is the first phase, the accumulation phase of these Bitcoin treasury companies. What comes after the initial treasury company accumulation phase?
- [14:47]
B
Yeah, so this is so to say important. And I think it's not like there's a switch. It will be gradual. So in short, Bitcoin will become operational instead of just sitting idle on supply chains, more or less, it will enter this, excuse me, idle on balance sheets. It will enter the supply chains as a geopolitically neutral, permissionless finality asset for international trade. We're seeing a little bit of that already right now in the Iran conflict. I'm not taking sides here, by the way. I'm an Austrian. Austrian, as some people may know, has sworn to perpetual neutrality. So not arguing about the sides of the war, but I'm arguing, I'm taking sides with the types of monies involved. So I'm not taking sides with the US currency, I'm not taking sides with Iranian fiat currencies. I'm taking side with Bitcoin as a geopolitically neutral commodity money, which obviously Iran is now adopting because it can't trust what today is the reserve currency of the world. And it's only a fiat. So it's absolutely impossible to have a geopolitically neutral monetary system in international trade in times of geopolitical conflict and frankly lots of geopolitical conflict which come comes because of the fiat system, like I'm mentioning just trading balances. They never existed when gold was money, if gold was money. International trade balance is always equalized because the gold from the deficit country would go to the surplus country. The prices and the production cost in the deficit country would fall, it could export more and the trade balances were never out of whack for more than a couple of years, three, four years, and it would equalize. Now there's huge geopolitical, I wouldn't say conflict, but strife because some countries have hugely going paths of reserve currency, others have huge deficit and they just don't equalize because they can just print new fiat money. But coming back to the topic already now we see that some Treasuries, particularly the younger ones, are trying to differentiate themselves. So if they don't want to run sailor's flywheel or if they're too small to differentiate, think, oh, what can we do with our Bitcoin? And I've already talked to Bitcoin Treasuries who said, for instance, oh, we're going to put it to work by running lightning channels. We're getting such and such apr, not mentioning any numbers here. And so part of our pile of bitcoin is already moving up from the investment section of the balance sheet to being put to work in channels. And if this is something of interest, we can also later touch what the new layer, the credit layer, so to say, means in terms of possibilities to deploy bitcoin in the real economy. And I think this is going to make a hell of a little, excuse my French here, a big difference in the perception of bitcoin because right now many detractors can say, oh, but what does it do in the real world? I cannot buy things with it. The supply chains run on dollars. So this is going to be a very important point to make bitcoin much more palatable to many more people once we get it in the supply chains. And the technology is now here. We've been testing it for 7, 8 months already now in alpha. We're moving to better on bitcoin main chain next week.
- [18:25]
A
How long do you think the accumulation phase of all this is going to last? When you think about how few bitcoin there really are, some bitcoin treasury executives have said it's like a 21 year digital gold sort of race where there's only so much bitcoin to kind of. And maybe you could, you can really only get to a certain. It takes a certain amount of bitcoin to get to where you can do certain things. Like Maybe you need 5,000 or 10,000 or more Bitcoin to really get to the next level, to do certain things operationally in the capital markets, things of that nature. How long do you think that's going to last? And why would an individual, or with bitcoin treasuries, a company want to change or shift and migrate from investment to active deployment. How do you kind of think about that and how it kind of plays out?
- [19:32]
B
Yeah, I mean, I have to give you a warning. This world, which we are working and developing, building software for, is quite different to how most people think today. But I think there will be some thinkers in your show which already think along the lines. So answer first, how long is this accumulation phase going to last? I think we are already at a stage where there are two paths. Some people will keep mostly accumulating and others will, so to say, accumulate up to the point where it's needed to put bitcoin to work in the real economy. And you know, for instance, that the lightning, lightning capacity, I don't know what it is today, but at least in the public channels, I think it's 5,6000 bitcoins or something like that running the entire lightning network today. And of course they're the private. But anyway, so it's not that much which you actually need. And so some of the younger treasuries who were not in the comfortable situation of, let's say, strategy microstrategy, to start early with this and go in it early, they were now mostly thinking about how to put Bitcoin into the real economy. Which means for me that the question will not be how much bitcoin you have it, but what you do operationally with your bitcoin, what APR you earn in the real economy. Because in a way what we are doing with the, let's say the fiat flywheel, however you want to call it, is we are still treating Bitcoin a little bit like an air mattress. We're pumping it up with clever financial engineering to a value where it should approach slowly, its fundamental value. Yeah. But there's still no bedrock of actual trade for which Bitcoin serves as finality asset. That's what gold used to be. So when a bill of exchange, which is what the wholesale money layer of bit credit is, when a bill of exchange in the old days settled, let's say it was an Argentinian steak producer selling to a restaurant in New York. Yeah. The settlement of the bill of exchange, which was usually drawn on London. Yeah. When the sterling, pound sterling was world currency, it only meant that on Lombard street in London, one banker essentially would take a satchel of gold, walk over on the other side of the street to the next bank and deposit the gold in finality of that bill of exchange with the other bank and the bill of exchange ripped apart, extinguished. So what that means is that if bills of exchange settle on bitcoin main chain only, which is what bit credit protocol does, we are taking that physical bit out of the equation. And bills of exchange come in all sizes. When you talk soft commodity, sometimes just couple of tens of thousand dollars. If you talk about the big trading companies in the world, like the can cause the traffic errors of the world, those kind of guys, they deal in tens of millions of dollars in today letter of credits in a fiat banking system. So there's going to be a whole range of credit means, as we call them, which can deploy very different sizes of bitcoin. So for a small credit mint specializing on SMEs in small emerging markets, a couple of bitcoins might be enough for one which tries to serve the big trading companies in Switzerland. And I'm flying off there for a talk to 200 commodity traders on Thursday. So I'll get some feedback to our latest thing. Those guys might need something like 50 million 500 bitcoin, but you don't need hundreds of thousands. So there will be some readjustment as so to say we are building the bedrock of real economy activity with bitcoin.
- [23:51]
A
Got it. Why do you think besides maybe like the very obvious reasons that come to mind that fiat based trade finance is, is broken? Like is there, is there more to it than meets the eye or is it just, well, it's fiat and you're inflating it, you're printing more and that just doesn't work.
- [24:14]
B
Yeah, yeah. Have you on your show ever talked about trade finance?
- [24:18]
A
So far, I don't believe so.
- [24:21]
B
Yeah. Okay. It actually doesn't surprise me. No, it's terribly broken. I mean most bitcoiners are very rare. How broken the normal monetary system is. Right. But in terms of trade finance, it's really, I mean people don't know. So for instance, even the governments admit that there's something called a $2.5 trillion trade finance gap in fiat. And this is so to say almost a high, single, maybe almost 10% of actual world trade. So we are talking significant thing which is less than, which is pretty much more than the market cap of bitcoin itself. Where does this trade finance gap come from? So many things which go wrong, like small and medium companies don't even get it because the banks have so much compliance and regulatory over regulatory burden these days that they won't look at you if you don't have at least 5 million in trade volume. And some significant farms in emerging markets have far less than that and are still very important for the local communities, which can't drive if they can't get credit to bridge the supply chain liquidity gap. There are of course the sanctions and they depend very much on which country you live in, which geopolitical camp you're in. And always remember, Austrian economists are neutral. We care for ideal money. The politicians do their thing, but money has to be neutral. Then there is debanking. So for instance, there was this case where in 2014, one of the largest trading companies of the world, one hundred and more billion dollars in trade, get debanked overnight by a French bank, them in Switzerland, them in France and say, okay, we can't do your business anymore, sorry, overnight. And this is a company running 100 billion where the supply chains of the world depend on factories, need just in time goods. We've seen with Suez, with COVID what it means when the supply chains get broken. So all of a sudden one of the biggest supply doesn't have a bank account anymore. You can imagine how crazy that situation was. And when he called the bank manager, so Kyod is the manager at the trading company, without mentioning names, the banker said, well look guys, you've been importing sugar from Cuba and said it's fine. I'm Swiss, we're fine with Cuba. And you're a European bank, you're fine with Cuba. And to say, yeah, that's true, but you gu built in US dollars. And once it's built in US dollars, the trade is supposed to be under US jurisdiction because of such and such law. And we've just been whacked with 9 billion. Yeah, $9 billion of a fine because of alleged sanctions violation. So on a geopolitically neutral money like Bitcoin, of course this wouldn't happen. There's no CEO in Bitcoin who would sanction Cuba. Although if he had such a CEO, he'd probably recommend to Cuba to adopt Bitcoin very fast. So other cases, you know, like, like governments abuse fiat money to weaponize. To weaponize money. Other things are things like export regulations. Yeah. So when an Indian trading company, for instance, arranged again a sugar trade between Brazil to Indonesia, his Indian banks wouldn't possess the payment because India had an export ban on sugar at the time. Now, the ship never touched India, but because of the ban, it was impossible to process the payment. The deal fell through and I don't know, I could now bore you with seven other complications in the fiat system which hurt trade and result in those 2.5 trillion dollar which are not being served and which keep countries and people poor.
- [28:37]
A
Got it. You talk about how the bill of exchange worked on gold and how it might be on bitcoin if bitcoin is digital gold.
- [28:52]
B
Okay. Yeah. So it was always very important for the honest trader that bills of exchange be settled in real gold. Because shenanigans in the bill of exchange system, which are very well documented, it was called, for instance, bill kiting is the English word I understand vexleiterei in Austrian economics, where one bill got paid back with another bill and they ballooned it, always bigger bills until it finally exploded on Bitcoin. That can't happen because for instance, in the Bitcredit protocol, every bill of exchange is paid back to a public key of the bill itself and the public Key of. So the taproot address, aggregating the public key of the recipient. So you can always prove that a bill of exchange has actually been paid and you can prove it immutably on bitcoin main chain. So we have absolute proof without any notary public, any state involvement, whether the merchants are honest or not. Because in the old days this was an honest system. If you were a merchant and you didn't pay your bill in gold, you got ostracized. Some people actually shot themselves because they couldn't participate in the trade network anymore, didn't even need a state. Okay,
- [30:13]
A
how is bitcredit different from lending? Can you talk about that a little bit?
- [30:19]
B
Yeah, I think I mentioned that when we started the talk. So lending, I think today, you correct me if I'm wrong, is understood in Bitcoin as, okay, I have Bitcoin, I want to avoid tax essentially prematurely, and I put my bitcoin up as collateral and I'm getting dollars, which I then can spend. Obviously the person then has dollars, spends dollars. So in reality he's a fiat person. Now, Bitcoin trade finance brings back the old, let's say free markets. Without sounding ideological, just talking about a model which from Austrian economics point of view, produces much higher growth rates, prosperity, wealth than, so to say the flawed experiment, which is fiat system, which we've had now for 50 years. So when you have digital gold or normal gold settling that all the money creation in the world has a saving against it. The saving being the goods which go into the supply chain until they leave the supply chain, at which time the credit is extinguished. Yes, you have a fixed amount of gold, 280, 88 tons of gold, or 21 million in the future, 21 million of Bitcoin, which is always a stock. And the supply, the medium of exchange for supply chains is always limited with the amount of goods maximum which go into the supply chain and it always shrinks again when those goods leave. So this is the analysis. Obviously there's always going goods into the supply chain, sometimes more, sometimes less. So it adjusts. But the important thing is there's never this possibility, this threat of fiat money where you can create unlimited amounts of money because countries can run up the deficits, unlimited if they want to. We saw that in Weimar, we saw that more recently in Zimbabwe, in Africa, we're seeing it in Venezuela, Bolivia. So this is now a system where Bitcoin is scarce and the credit layer is scarce because it always must be backed by real goods in the supply chain.
- [32:43]
A
What's Your view on stablecoins?
- [32:48]
B
Some people have called them a Trojan horse, which is so to say, I think, the generous interpretation of stablecoins. I usually call them pigs with lipstick because there's still inflationary fiat and we've recently seen they can be confiscated because it's not cypherpunk currency, it's not cryptographic real. It depends on fiat. It's regulated by nation states, by politicians. It's not regulated by mathematics and economic law. And we've seen, for instance, again, not taking sides, but the confiscations in Venezuela, I think it was $80 million or so. We've seen confiscations of $344 million in Iran. So that's the very typical downside of fiat. That's why I call them pigs with lipstick. But of course, they also have a big advantage as a troy and horse because it gets people used to transact digitally because you have really fast payments now. Even if they are on some crypto chains, it's really fast. It's 24 7. The banking system is not 24 7. And it used to be easier to cross borders. I doubt this will last much longer now, the way the stablecoin industry is going. So I think it's a good entry point to prepare the markets for when bitcoin becomes the world money. Yeah, so that's, that's how I see them. But good thing it's all a step along along the way.
- [34:35]
A
Why do you think we haven't seen bitcoin integrated into supply chains yet?
- [34:42]
B
Oh, yeah, yeah. And I've been teaching that since 2015. It's. It's very clear. So what's happening now? If bitcoin gets used in the real economy, let's say we travel to El Salvador. I don't know if you've been there, but you can spend bitcoin there. I've been to Berlin and El Zonte. But what happens then is. Except a little bit sometimes, which they can keep for profit. These are people who live hand to mouth. So they need to convert it into their local currency, which in El Salvador right now is the US dollar, and then they go into the supply chain and buy that the supply chain is still financed by fiat, by the letter of credit. That's how they get the goods which they sell. So the missing element so far, and I'm frankly totally surprised that nobody did that. Yes, it's complicated, but it's a bit of work. But it's not rocket science. So the missing element was we couldn't use it in a supply chain because bitcoin did so far not have the elastic layer of credit money on top of the stock of base money. And once this is there, we can start from bit heads where the fiat system doesn't work in this trade finance gap. Companies to start putting deploying bitcoin in the real economy and it will change. So those people in those countries, in these areas and regions where they will use a protocol like bit credit or maybe a fork, I don't care, they will pay the merchants and the merchants will have a possibility to get their goods in the supply chain on bitcoin credit. Yeah, so that's the thing with the bill of exchange. So which means that the shop can say, oh, I can't pay you now for I don't know, the flour or the bread. It's like something longer, like the fruit. I need two weeks to sell it or to produce it. And how do I bridge that? You can't do that in bitcoin. It's economically impossible. There's an economic law against it, which means the supply chain bridging. So now that we have the liquidity, the shop can say, okay, I'll pay with the bill of exchange. I'll pay you in 30 days. They can sell the goods, get the bitcoin in and with the bitcoin coming in, they can pay the bill of exchange and extinguish the bitcoin change. And that can work along the whole supply chain. So let's say the cooperative pays the farmer in a bill of exchange, takes 30 days to sell it, sells it, gets the bitcoin in, extinguishes the the bill of exchange, but he gets the liquidity in by let's say a bill of exchange which the trader which buys from the cooperative gets the goods. Then the importer, let's say in America, in Europe, pays the exporter with a bill of exchange which extinguishes the other. So all of a sudden we have a bitcoin system which can do real trade, which was missing till now and now do I know how fast it will work? I have some hopes, but we can talk about this another time. Once we, once we see we had fantastic response, really. I'm very, very happy actually about the reaction of people once they saw this live. The apps are available on the Internet. You can go to Testnet minibuild tech and use the electronic bill of exchange on the bitcoin standard. We are on test flight now with the retail money wallet which is a very, very simple non custodial wallet. Where you can do 200 millisecond transactions all over the world without touching a chain. Totally private capacity is just limited by the number of mints which operate. And there's no real reason why there shouldn't be enough mints because anybody can download the software and operate a mint just like you can operate a miner these days if you want to. So I think it's changed now with the new piece of infrastructure which you're switching on. But what we shouldn't underestimate is the time needed to deploy the infrastructure and the change in Bitcoin. Treasury strategies to deploy Bitcoin in the, let's say basically four basic areas of let's say deployment possibility in this new system. We can talk about this another time. This is a bigger topic. There's debt possibilities, equity possibilities. Run your own, mean, just participate. So there's lots of, lots of possibilities there.
- [39:12]
A
How do you think a Treasury company would participate or could participate with Bitcredit?
- [39:20]
B
Yeah, so that's what I say, what I just said there is and we know that from talking to treasury companies and emergent banks in Bitcoin. And there are very different strategies out there. Some want to have debt low risk, some prefer actually to have a larger equity type of stake, a real exposure in the system. So on one extreme you can use your Bitcoin to download the software and run your own mint. So if you have commercial banking experience, you probably know every or even just a merchant with big treasury department. You know everything what you need to run a mint. And the world will need lots of mints after ramping up. We're starting with six now just to have a full sub network but there's no limit. So any treasury can do that. And on the other extreme is they say no, all I want want is I have idle Bitcoin and I just buy a bill. Bills of exchange issued by companies which are like, like blue chip companies which manage their liquidity by paying their suppliers in, in 60 days, 90 days, 120 years. So they, they, they apply a discount. They, they don't pay the full face value of the bill of exchange. So if there's a, let's say an coffee beans in the value of 50 million, let's say, let's talk in Bitcoin. So it would be 500 bitcoin for 500 bitcoin. I don't pay 500 bitcoin because it's in 120 days I pay, I don't know, 490 bitcoin and after 120 days I have 500 bitcoin. So that used to be the largest money market in the world until 1913, but on paper with wet ink signed bills of exchange. Now it's all digital. So I can do bills of exchange now with our current version beta coming out next week. Some shilling if you allow. So I just go on. Should I open this? I can just go on my. I don't know if you can even see that. You can just go on your bill of exchange thing. You click on new bill, you get presented with the three basic types of bills of exchange which exist. The promissory note, the sole, sole, sole draft and the three party draft. And essentially you can do anything which a bank can do and shouldn't do, which it only does because politicians have written silly laws which allow banks to create money and they shouldn't. Banks should always be only intermediaries of money, collecting sound money and lending it out, transferring maturities, but never ever create money. Central banks shouldn't be create money. Commercial banks shouldn't create money. The only money which should be allowed on Bitcoin is money backed by real goods in the supply chain. No speculative credit should be created into money creation and definitely no consumer credit should be used for money creation. And even less government debt, be it war bonds to finance a war or just be general government debt. It should not be allowed. Yeah,
- [42:55]
A
I'll hand it over to you if you have any final thoughts and also if there's a good place for people to reach out to you to connect and have a conversation.
- [43:07]
B
Yeah, we do have. I can send you afterwards. So there's a link tree. So we run communities on Telegram. We have a discord group which we don't use very much. But we have channels on X and now increasingly on LinkedIn for people to read up what's going on and yeah, so I can send an answer. So the community is called Bitcredit Community on Telegram and on X for instance if you want to follow it's bitcorg. So it's a nonprofit thing publishing open source Software. And on LinkedIn you can simply find it as bit credit protocol. And so to say. The reason why I'm really happy about so to say our talk here today is as we are launching the the better version next week. We are currently in discussions all over the world. So there are already testers from Guatemala to El Salvador to Australia, South Africa in all kinds of goods like cocoa in Guatemala, coffee in El Salvador, timber in the uk, beef in the United States, wine from Australia, grain soybeans from South Africa. So we are looking for as many Ukraine use cases as possible and ideally from the Bitcoin ecosystem which understand both Bitcoin and trade finance. So that's the talk we want to have. And as you heard, we are also entertaining talks with Bitcoin Treasuries to try and understand how their thinking is about deploying Bitcoin in the real economy. Are they ready for it? Do they just want to have the financial engineering or do they already want to see bitcoin, so to say, applied? So those are conversations which we want to have and I think it's a, as always in bitcoin, it's good to engage with new things early. So.
- [45:09]
A
Absolutely. Well, thank you so much for your time today. Really appreciate you joining the Bitcoin Treasuries podcast.
- [45:15]
B
Thanks Tim. And if, if, if you're interested, we can give you an update in a little while. How, how Bitcoin Treasuries see see this for different deployment possibilities from actual feedback once we have a broader sense of it.
- [45:32]
A
Absolutely. Looking forward to it.
- [45:34]
B
Thanks Steve. Goodbye.
- [45:35]
A
Thank you.
- [45:36]
C
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