Kevin Rooke - 00:00:00:
Tom Chojnacki is the founder of Satsback, a platform that helps you save bitcoin whenever you shop online. In our conversation, we discussed the concept of Satsback rewards. We discussed why consumers love bitcoin as a form of loyalty point and the addressable market for retail and ecommerce loyalty rewards. I also got Tom all set up on Fountain. I've added him to of the show Splits. So if you enjoyed this conversation and if you learned something new, you can send in some sats. You can send in comments and questions. 50% of the sats will go to Tom, 50% will go to me, and both of us will be able to read your comments and questions. Just a quick shout out before we get into the episode. Today's show is sponsored by Voltage. Voltage is the industry standard and next generation provider for Lightning Network infrastructure. Today's show is also sponsored by Zebedee. That's Zebedee. And Zebedee is your portal into the world of bitcoin gaming. We'll have more from Voltage and Zebedee later in the show. Tom, welcome to the show and thank you for joining me today. I am really excited to talk to you about Satsback. I think for for listeners who aren't familiar with the platform. Can you give us a brief background on what the platform is and why you decided to build it?
Tom Chojnacki - 00:01:21:
Yeah, thanks for having me, Kevin. First of all, I wanted to say congrats with the podcast. I've had a chance to see a couple of those episodes and you've been doing a great job and some amazing guests that I'll have a hard time to live up to, I guess, but yeah, sure. So the idea for Satsback was born through, I guess it's wanting to scratch your own itch as bitcoiners. Based in the EU in Europe, we also wanted to earn sats when shopping online and we didn't have any service like Lolli or Fold available here yet, so we decided to go out and build it. And it turns out that there's other people like us and it's other bitcoiners that like to save in sats. But as well as it's a great way to get newbies on board and help them experience bitcoin and the Lightning Network in a low friction no KYC way. So we think it's hard to convince someone to buy something they don't understand, but it's a lot easier to tell them, like, hey, here's this loyalty platform where you can just do your online shopping and earn some sats while you do that.
Kevin Rooke - 00:02:47:
Right. And do you get the sense that most of the users on Satsback are in that first camp where they recognize bitcoin is a thing? They may want some, but they don't really want to go through the process of buying it? And is it really just like reducing the friction for all the users? Or do you also have bitcoin power users that are at all costs trying to stack as many sats as possible and using this as a mechanism to do that.
Tom Chojnacki - 00:03:16:
Yeah, definitely. I wanted to say that we're still pretty early on our journey to still pretty early stage, and till now I would say a big part of our users are Bitcoiners. So they were like the early adopters that for them it was a no brainer. We didn't have to convince them they were familiar with similar platforms in the US. So I would say many of them are existing Bitcoiners that already have Bitcoin and just want to get more of it, want to save more when shopping online. But definitely they would then invite their friends or their no coiner or precoiner friends that haven't bought Bitcoin yet. So we're seeing more of those and I think we will increasingly in the future as well. Sorry if that was your question. Did I answer it?
Kevin Rooke - 00:04:15:
Can you describe the process of you have different kinds of Satsback rewards in the bitcoin ecosystem today? What you guys are doing is more like an affiliate model approach, as I understand it, but there's also more traditional sats back offerings on credit cards. I know some exchanges have or debit cards. Can you explain the distinction between the different platforms that offer cashback or sats back rewards?
Tom Chojnacki - 00:04:45:
Sure, I can try. So the one area that's been pretty getting pretty crowded recently was the card, the debit or credit card rewards where you get a fixed 1 or 2% back whenever you spend at stores. And that's a different model that basically takes the how visa and Mastercard would charge a merchant a small fee for accepting payments using cards. They would take part of that and reward users with it. So it's also called cash back. And it's also what companies like Gemini would launch their own card and say, here's 1% or 2% on every purchase, so we don't do that yet. At least. The other model would be through selling gift cards or vouchers for users to go and then spend at various merchants. And we wouldn't do that either. What we're doing is more of this affiliate model where you would click on a link that would redirect you to the shop's platform and as long as you buy something, we earn a small commission for that. We would then turn that commission into Bitcoin and share most of it with our users. Yeah, you're right. There's various models of how you can save or get sats back for what you spend. Many users would actually use a certain card that gives them sats back for every transaction they do and then use that card on our website and like double stack. So that's like the pro level of getting the most that you can from shopping online. We've seen that happen before, but yeah, we're focused on this single affiliate model for now, which was like the easiest to launch with and try out. But yeah, we're definitely looking into the other areas where we could offer higher rewards to our users.
Kevin Rooke - 00:06:57:
Yeah. So in this affiliate model, what's a typical reward? I know they probably vary across retailers, but is it reasonable for someone to expect the reward to be higher than what they might find with one of the debit cards or credit cards?
Tom Chojnacki - 00:07:16:
Yeah, maybe. I guess in all cases, yes, because it's like with the debit and credit cards, the only reward that the company can offer is the interchange fee, which is usually in the US. It's a lot higher around 2%. In Europe, it's even lower around 1%. So if you're getting stats back or cash back on every transaction that you make with your card, it's usually a lot lower. What we do is we'll work with these merchants that, depending on their, I guess, margin model, are able to offer a lot more. So if it's someone like, I don't know, a domain registrar or like a VPN provider, his marginal cost is a lot lower, and they can offer up to, you know, even 50%. If it's like someone selling software that would come. You'd get a lot lower deals with something like electronics. But then if you look at clothes or shoes, it would average out to something around 4 to 5% for all of our transactions. But yeah, it's generally a lot higher than what you would get with these cards.
Kevin Rooke - 00:08:34:
Interesting. So that's a cool way of framing it because I guess, like, if the addressable market for a debit card or credit card is that 2% or whatever the interchange is, then the rewards basically cannot sustainably be higher than that for everyone. There's just no way. Right. Like, if the processors are earning 2% from merchants, they have to take their own cut somewhere along the line and then they can give out much of that to users. But they can't go above that. Really? They can't give out 5% if they're taking 2%?
Tom Chojnacki - 00:09:08:
Yeah, in that case, yes. But then they could have a special deal with someone, let's say I don't know if Coinbase has their card. They could say for anyone using Coinbase card, we'll offer this extra reward. Generally, yes, you're right. But in some cases you could have offline cash back offers that are higher. And then in some cases, like with crypto.com, they're able to offer a lot higher with the condition that they paid out in their own coin, which they obviously can print as much as they can. So they actually go and say, like, we'll refund your whole Netflix or Spotify subscription, but we pay it out in our own coin, and then you need to stick that coin. So in that sense, they could do these things. When you're printing your own money, you can do whatever you want. You could pay people like 100% of what they spend.
Kevin Rooke - 00:10:06:
Right, yeah. They've kind of warped that business model because they have their own money printer, pretty much, generally. Yeah, I get the idea. There that there's a pretty low ceiling on the rewards that a credit card could provide. And then if you go directly to merchants, you now have access to, basically merchants can go up as high as their marketing budget. Right. Because that's really what they're passing on, is like, if they have a 50% marketing budget or a margin for marketing, they can pass that on to you guys.
Tom Chojnacki - 00:10:38:
Exactly. You're right. So for the merchant, the proposition is that they would usually spend money on acquiring a user using various channels online and offline. What we do as a cashback platform is we bring that user directly to them that is most likely ready to purchase something. They can see that that user came from us. And we would say that. And what we see in many cases is that our users are so passionate about earning stats that they would specifically look for stores that are listed on our website in order to buy their, I don't know, pet food, for example. Right. And they would specifically try to buy at those stores. So our argument for them is that this is like actually incremental sales. Yeah, I'm sure there's some people that would buy stuff from those places anyway, but in most cases, we would argue that these are like incremental sales where bitcoiners and our users would go to these stores specifically because they're getting a deal there in Yelp.
Kevin Rooke - 00:11:48:
Yeah. Now, what is it that keeps users going back to you guys specifically? Because I imagine for a merchant who, you know, let's say a merchant has a 50% margin and they're looking to get new users, the merchant wouldn't really care, I guess, if the users are coming from you specifically or from another competitor. Right. Like, how do you make sure that how do you build a moat around this idea that merchants are allowing anyone to earn these affiliate rewards?
Tom Chojnacki - 00:12:23:
They usually would. Right. So the merchant actually doesn't care. He would be open to working with any cash back company that can drive sales to him. And yeah, they would make some special deals for whoever is driving the most sales, I guess. But in many cases, the merchants wouldn't even know that they're working with a bitcoin company paying out sats, because they just have so many that it's hard for them to keep track. They're just open to the general cash back model, and then providers would do what they do, whether it's like points or sats or cash or whatever. So I think what makes our users super interested in using us for their shopping is, you know, obviously a far superior reward in in the form of bitcoin and sats that, you know, tends to go up in in value over time. But I think as well as what differentiates us from other even bitcoin rewards companies is that we're Lightning native. So we launched with Lightning only withdrawals. And thanks to that, we don't have like a minimum amount before you withdraw. So you could actually order some lunch online and like a day or two later, when your transaction gets approved, pay that out, even if it's like something as small as 500 sats. So I think that that Lightning element there's a growing community of people that are fascinated and passionate about Lightning and for them, they'd rather maybe if they can get a better deal even in Bitcoin somewhere else, they'd rather support a company doing it over Lightning and get their sats into their Lightning wallet.
Kevin Rooke - 00:14:22:
Yeah, that's awesome. Can you provide some perspective on educating people about Lightning, especially the users that might come just for the rewards and maybe aren't Bitcoiners to begin with? How has that process been of teaching users about what the Lightning Network is? Because I know even for Bitcoiners, it can be a daunting task to get set up on Lightning and there's a different format for transactions and get QR codes. How do you simplify that process for an end user?
Tom Chojnacki - 00:14:56:
Yeah, I think what we did is we just sort of forced users to use Lightning because that was the only way for them to pay out. And when you look at at least where we are right now, the UX improved a lot and you have multiple wallets that would I would say paying out using Lightning and using LN-URL is maybe even simpler than paying out to your Bitcoin wallet because all you have to do is just scan a QR code. But there has been an element of education. Some people are coming in and saying, like, what is this Lightning bitcoin? I want real bitcoin. But thankfully, the growth of the Lightning Network in El Salvador adopting bitcoin thanks to the Lightning Network made it easier for us. And now generally, people understand that it is the same thing as just another layer, another way that helps them pay out their rewards easier and cheaper or for free. In our case. Bitcoin is generally, and I mentioned that most of our users are, that they tend to be up to date and they tend to be pretty tech savvy to understand. I guess we will need to do some more in terms of education when we go to the public, but I'm hoping that when we go like, mainstream and maybe cross the chasm into the general public. But what I'm thinking is that at least when you look at wallets like Muun, they're kind of abstracting the difference between Lightning and on chain, and you have one balance and then when you can scan a QR code and I think eventually, soon enough, people won't really know the difference. It's like when we're having this chat over whatever app we're using, we don't know the tech behind it. We just know that it works right. We have streaming video and it works great. So I think we're going to get to a similar stage with Lightning and bitcoin. And maybe people won't really need to know. They'll just be happy to see their sats streaming into whatever wallet that they're using, or with podcasts even. Actually, one thing I wanted to mention that we're really excited about and is that we recently implemented Lightning address withdrawals. So we completely eliminated the payout process, and I think we were the first to do that, at least when you look at Bitcoin rewards companies, you could enter your Lightning address into your account with us, and then you wouldn't need to withdraw your stats anymore. They would just come into your Lightning wallet. So you just get a push notification whenever a transaction gets approved. And you would have I like to think of it as streaming stats as you would like with the Podcasting 2.0 that I'm sure you're excited about. I think you had Oscar from Fountain as you're maybe one of the first few guests, right?
Kevin Rooke - 00:18:11:
Yeah, that's awesome to hear. The Lightning addresses are now integrated. They just integrated Lightning addresses on Fountain.
Tom Chojnacki - 00:18:17:
Yeah, I just saw that yesterday. Maybe even today.
Kevin Rooke - 00:18:20:
Get your Fountain username and I'm going to set you up on a split here because I can now add anyone in to the show. If I have a guest on, I can add that user, their Fountain username, I can just plug it into the show Splits and it just works.
Tom Chojnacki - 00:18:34:
I read that announcement. It's really incredible. It's like these things that are possible. It's almost like we're talking about the future, but it's now. So the same thing with us. We could easily split your sats back rewards if you decide to donate a part of it to, let's say, HRF or OpenSats, something that's supporting open source developers. We could do that as well. Or maybe even you could dedicate some of your sats to your favorite podcast creator. And the fact that we're interoperable between each other, like, every app that's on Lightning can work together. It just means that as this ecosystem evolves and grows, there's a lot more value added to our users as well, who then have sats and can do a lot more with them. So, yeah, it's really exciting to be at the forefront of this. And definitely I'd love to share. Actually, don't yeah, I think I might need to update the Fountain app to get my Lightning address, but I'd love to try that out.
Kevin Rooke - 00:19:44:
Yeah, we'll get you sorted out. I had an idea as you were talking through these. The interoperability, I think is a really cool idea. But also if we step back and think about a Lightning transaction from a merchant standpoint, what if we get to a point where merchants are accepting Lightning transactions? Can they split the payment from their side and instantly send it? Like, send a split to you, and then you send a split to the user, and then a user decides to donate a split to HRF, like, how far can this. So there's levels to this, right?
Tom Chojnacki - 00:20:23:
Yeah, that's the idea. We keep thinking about what is Satsback going to look like in a hyper Bitcoinized world? And we think that definitely Sat back and cashback is still going to exist. Even though most businesses will be accepting Bitcoin, most users will be paying in Bitcoin. But then with the use of Lightning, how will that affect the industry that we're in? And like you mentioned, it's maybe hard to imagine even at this stage. But yeah, it makes sense that because right now, the partners that we have pay us out in Fiat and we have to wait like a month or two before they pay us. And part of that is because they need to verify these transactions, but part of it is also because they're using legacy financial rails that cost money. And there's no reason why they shouldn't, why they couldn't, unlike Lightning Network, stream these commissions to us as well. Why should we wait weeks or months to get paid? And yeah, and they could just easily split that, I guess, automatically between us and our users. Yeah, it's really fascinating. I think. I keep thinking about internet in the 90s where we couldn't really imagine we were there, like, visiting websites and waiting for pictures to load. And now we have streaming 4K video and everything we do is online. So I think similarly with Bitcoin and especially the Lightning Network, we're going to see use cases that we can't even imagine right now. Like, back then, imagine an Uber or Airbnb or something like that. So, yeah, it's crazy to think, but yeah. So this is just one of the industries that we're confident that Bitcoin and Lightning will disrupt, but it's going to disrupt many others. There's probably not an industry where it's not going to affect it. Right. You As a podcaster, I'm sure with Podcasting 2.0 and everything going on there, it's fascinating to see that your users can stream stats and then you can share them automatically with your guest or your producer or, you know, it's incredible.
Kevin Rooke - 00:22:48:
Yeah, 100%. I also have the same feeling that the innovation happening today in the Lightning Network is only a tiny fraction of what it will eventually become. And we're only kind of tapping into the kind of, like, adjacent possibilities and not examining the ones that are, like, ten steps away. But as we build these building blocks, I think it gets us closer to being able to do interesting things. Right. Each new building block and each new element in the Lightning community can be then combined with other elements to create new business models and new opportunities for interesting ideas and entrepreneurs to build things. So I think it's really cool that we're coming up with all these new ideas in the Lightning space. And it seems to me that Lightning has now hit a critical mass of excitement. It just seems every day there's a new company building on Lightning now. There's a new announcement, there's people hiring, there's fundraising happening. There's a lot of VC money now lining up, ready to get into Lightning startups, and I don't get the sense that that was happening last year. What's your opinion on how kind of the growth of the Lightning ecosystem has evolved?
Tom Chojnacki - 00:24:15:
Yeah, you're right. There's definitely a lot more happening. But I still think it's easy to get caught up in this bubble because we're passionate about this, so we live this and we're following the same people on Twitter and everyone's excited about the same things. And yeah, there's companies raising more money. But at the same time, when you look at, like, I think Lightning is still the best kept secret, when you look at the crypto industry or when you look at the general public, not many people are aware of it. Of course, everyone's heard about bitcoin at this time, but Lightning is still something very new to them. So I think when we're talking about mainstream adoption, I think we're still pretty early. And then what we keep thinking is that generally when you look at the wider crypto industry, you still see a lot of people distracted with those tokens. That when you actually spend some time thinking about it. Like the whole use case of these alternative altcoins or shit coins. It was the faster transaction speed. And now if you only spent like an hour thinking about it, it's like bitcoin obsolete that. But then people are so invested in those projects that they will maybe even deny it themselves. And when you look at the whole industry, Lightning is still a small part and I would still think it's like the best secret because it just works great and it's been a few years and it's almost like magic. And I think you had Pierre Rochard on a previous episode and he said, there will never be another blockchain that's quicker than Lightning with like, infinite throughput. I'm still a bit maybe not frustrated, but I think we I don't know what it is, but like a lot of the new people coming in, I guess nowadays it's a lot easier for you to find the signal. It was a lot harder a few years ago, maybe, when we were coming in to find that. But it's still most of these new users would come in and just dive into crypto and buy these mean coins and buy these tokens. And I really think that's like a distraction to adoption that I'm sure it is for Lightning as well. You could look at the amount of developers that are working on Ethereum versus that on Lightning, even though it's improving. And there's a lot more, like you mentioned investments happening in the space, but still when you couldn't sit there or where you look at how much money goes into crypto compared to bitcoin Lightning businesses, we're like a drop in the ocean. It's like maybe 1%. Every other day you hear of another crypto fund raising billions. Right. I guess maybe it's a little bit frustrating, but at the same time, we're so confident that we're right that it tends to bother you less with time, these people will come forward.
Kevin Rooke - 00:27:38:
It's like, on the one hand, yeah, you're not going to attract all the capital that's looking for a quick win and a token pump. But on the other hand, you're going to get the users that you do get, you know, they're there for the payments and you know, they're there for the actual use case of using Lightning. And you can be pretty confident that they're not there, you know, to pump some token because there's no token to pump.
Tom Chojnacki - 00:28:06:
Yeah, yeah. Even though they could. Right. They could. Like, we have users, like, we're not stopping anyone from sending their sats over lightning to Kraken and buying Shiba Inu or whatever. They can do whatever they want. We're just trying to do our part in focusing on what we think is important, on what we think is the signal. And we always recommend stacking sats. Saving your sats sure, participate in the economy, but there's no better technology for saving than bitcoin. And yeah, I think everything else is noise.
Kevin Rooke - 00:28:44:
In the context of the larger economy. If we're going to kind of zoom out and think about how small Lightning is today in comparison to not only the crypto space, but the world economy, I was doing a little bit of research and found some high level numbers. You can correct me if any of these sound off, but I saw that $108,000,000,000 is kind of like an estimated annual cash back volume. The e commerce industry is roughly 5 trillion and global commerce, so ecommerce will be five. Everything else would combine to be 20 trillion. Those numbers sound roughly correct. And how do we get from the point where we're at today in Lightning, tapping into probably 1% of 1% to now, how do we get to the scale of trillions of dollars and billions, hundreds of billions in cash back awards?
Tom Chojnacki - 00:29:48:
Yeah, those numbers are insane and they're really large. And all these industries that you mentioned, ecommerce especially, has been still growing very quickly. So those are the numbers, but they're still growing at like a rate of maybe 10 or 20% per year with cashback. That's correct. We have similar figures. When we look at at least the initial addressable market for what we think it's obvious that bitcoin is going to disrupt this segment of the loyalty industry, if not all of it. I think this is just the biggest no brainer. Like, why would you want cash back where it's just like 100 times worse than bitcoin? It's obvious for us, it's obvious for bitcoiners, but still, bitcoiners are a small percentage of the population. So I think as more people come to realize that there's this bitcoin thing and I think the whole macro environment is sort of, in a weird way, helping us with increasing inflation. I'm based in Poland and we just had a number of I guess it's the official CPI, so it's not even probably accurate to look at that. But it's twelve, I think twelve and a half percent compared to last year. Which is which is, you know, I think US is us is probably nowhere as high, but we still know that the realistic numbers for inflation are a lot higher. Like, when you look at the things that you're buying or whether if you're interested in buying a house, you know that 10% is nowhere close to what you experience. So I think with that, as people come to realize that their money is at an increasing rate, losing purchasing power, bitcoin will become more obvious. Just, as, you know, many people say it's a lot easier to explain bitcoin to people in Argentina or in Venezuela, right? Or maybe nowadays in Lebanon. And unfortunately, I think we got to a stage where you're going to see these hyperinflationary events in more places around the world and that's going to obviously accelerate the adoption for Bitcoin, right? And it's not going to make sense anymore. If my local currency is hyperinflating, why should I use a cashback service that's going to pay me, I don't know, a month after I buy something in a local currency that's losing like half of its value in a month? So I think this adoption will happen, would have happened naturally anyway, as more people realize and understand. But I think the whole macro environment will just accelerate things, right, as these fiat currencies lose more value.
Kevin Rooke - 00:32:50:
I hope you're enjoying the show so far. I just want to give a quick shout out to our sponsor, Voltage. Voltage is the industry standard for Lightning Network Infrastructure, creating layer two applications and services on top of Bitcoin starts with Voltage, where you can spin up nodes, get access to liquidity, optimize your node, and much more. Voltage is leading the way as the next generation provider of Lightning Network Infrastructure. And if you want to get a free trial and start using Voltage today, you can do so at voltage.cloud. Now, if I'm a user on Satsback, can I get a payment back to me instantly or is it still because the merchant is accepting fiat? You have to wait a few weeks before the transaction confirms on their side.
Tom Chojnacki - 00:33:39:
Yeah. So again, not instantly, and it depends what you buy. Again, if you're ordering food online, then there's no returns there, and you're usually going to get your transaction approved within a day or two. If it's something like shoes where you have a return policy, then we obviously can't pay out the reward while you can still return the product that you bought, because otherwise people will just be hoarding a bunch of stuff, returning them and taking off with the sats. So there. Is a wait period involved there, but many of our users would do a lot of their shopping regularly and that wouldn't bother them because they would have this constant stream of sats just coming into their wallet as they continue their normal online shopping. So, yeah, it depends on what you buy. Like with booking.com that I think even users in the US. Could use. With us, Booking will not pay out the commission before you had your stay. So if you're booking like holiday for three months from now, they're not going to pay out the commission until your holiday is complete. So it really depends on what you buy. But yeah, in most cases there is a wait period of like a month, if not longer.
Kevin Rooke - 00:35:05:
So the value prop then for users today is maybe it's a little bit faster, but realistically there's still going to be some delay from the merchant side and then you're going to get instant, you're going to get zero cost, basically transactions, and you get to store it right away in this money. I imagine that as this takes off and as this becomes more widely adopted for, for all cashback programs offering bitcoin rewards, that's quite a bit of buy pressure on bitcoin the asset, if you think about it, if it's a 100 billion dollar industry today, and if a portion of that moves over to bitcoin, all of a sudden you're getting like billions or tens of billions of dollars that are just buying bitcoin. And I don't know, do you get the sense that people are kind of storing this once they get it or personally like the cash back rewards that I've gotten at credit cards in the past, they're never big enough for me to do a whole lot with them. I just kind of let them sit there and I let them accrue value and I sit on it. Right. It's not like it's going to pay my bills when I get $7 back or something in a month. So what do you think people are doing with this? Do you think this is realistic, that this is actually going to be meaningful buy pressure on the price of bitcoin?
Tom Chojnacki - 00:36:35:
Yeah, definitely. So you mentioned like 100 billion estimated value of the global cashback market, but then there's the loyalty market. That is another likely 100 billion on top of that there. And together with the DCA army of more people just stacking regularly and buying bitcoin, these types of reward platforms like us, where we need to buy every day no matter what the price is. And we're pretty small at this point, but we're going to grow and there's going to be more companies like us and eventually the whole industry will naturally gravitate towards bitcoin. I think that's inevitable and definitely that's going to create this floor of just constant buying pressure like you realized accurately. Let's say we're able to offer 2% on booking.com purchases for all of our users booking.com alone does so much volume that if everyone realizes we exist and did what I think is the no brainer, that every time they book something on Booking, they'd go through us and earn a few percent in sats. If everyone went and did that, that would be huge for the price of bitcoin. And then you look at every other ecommerce platform. Definitely that's what we're seeing right now is like, even though the macro environment would suggest that there's this risk off environment, maybe Bitcoin should be dumping and we're still stuck there at like 40k for the past couple of weeks. Maybe that DCA army and rewards that need to constantly buy Bitcoin, maybe that's what's causing it. And I think it's a good thing the more services we have like that and the more people DCA, the less volatile bitcoin will be. And the faster I think, the faster and I guess the easier adoption will be for users in especially developing countries where volatility for them is still an issue. So, you know, if you have someone in El Salvador looking at their balance, all of a sudden their bitcoin is worth 30 or 40% less. That's going to make them a bit uncomfortable with storing more of their savings, even though it's like on a short term basis. They don't look at things. They live from, like, month to month, so they'd be worried about that. So I think definitely, yeah, it's a good point.
Kevin Rooke - 00:39:25:
What do you think about bitcoin as a medium of exchange? And how we get to a point where people are not only earning in bitcoin, but then also able to spend in bitcoin? What are the constraints today? Because I know in different countries it depends on you have different capital gains requirements and different tax reporting. Is that the primary constraint to getting people to spend bitcoin, or do you think price plays into this too? And how do we get to a point where we can develop a circular kind of spending and earning economy?
Tom Chojnacki - 00:40:00:
Yeah. So actually, one of the reasons why we started with rewards and we started with Satsback is we believe that it's not necessary for a money to be a medium of exchange before it gets adopted widely and before it gets mass adoption that it's enough if it's a store of value first, which was there was this large push of companies trying to get everyone to pay with Bitcoin for things online in the early days where it didn't really make sense for these merchants to integrate because not that many people yet more do nowadays. But still, not a large portion of the population has Bitcoin. So that's why we focused on helping people save in bitcoin. And I think it obviously makes sense because everyone who has spent bitcoin in the past, maybe unless it's like supporting a podcaster or spending some stats in El Salvador, which is fun, but pretty much every time you spent bitcoin on buying something maybe you didn't necessarily need, you regret that. Because then a few years later, you keep thinking like, oh my God, if I just kept those sats, that'd be worth so much right now. And there's that great website, Bitcoinorshit, right? And I don't know if you know, it's like, instead of if you didn't buy that ipod wherever, like seven years ago and bought bitcoin instead, you would have had that much. So I think that might be at least for people that understand bitcoin and understand how early we still are in the monetization phase. Yeah, I don't like spending my bitcoin, right? I'd much rather earn it. But I'm still happy to spend sats on. So maybe there's something about Lightning that makes it that people spend their sats more because I don't know if it's more fun or if the experience is or maybe bitcoiners also want to support these new ideas like Podcasting 2.0 and other businesses that are enlightening. So I think that the tax treatment in various countries definitely plays a role. I just don't know if it's that big of a role because I don't think most people there are spending sats online, like whether it's like a few bucks here or they are going to report that because at the end of the day, it's like almost unenforceable. Plus, I honestly believe that it's now a foreign currency, right. Bitcoin is now legal tender in not one, but two or three countries.
Kevin Rooke - 00:43:02:
Yeah.
Tom Chojnacki - 00:43:02:
So, so, you know, I definitely don't think it should be should be treated. There shouldn't be any capital gains on on spending Bitcoin. That's, that's ridiculous. But, but yeah, I guess it's I don't I don't think it's slowing down people from spending their bitcoin. I think possibly the element of we know that it's going to be worth a lot more in the future. So maybe if I spend bitcoin, I'd want to make sure that I replace it as well. So I don't like, yeah.
Kevin Rooke - 00:43:36:
There's going to be an opportunity cost for sure. For me, it just seems like I agree that there's some constraint on capital gains tax. I don't know how big that one is, but there's also a constraint on price. People want to hold on to something they know is going to go up. So I see that, but I also see the side from the merchant on Lightning. It just makes this whole economy so much smoother. And it just like I think eventually merchants are going to come to realize that they can save a lot of money on Lightning and they can save a lot of time and fraud and chargebacks and all this stuff that they have to deal with on credit card networks may be abstracted away. If we get to a point where everyone's on Lightning, from the merchant perspective, I think it makes this loop a lot smoother. Right. You can go from spending to instantly blasting it out to all the merchant suppliers to you guys. You can then blast it out to all your users and then it lands right in the user's wallet and it's like instantly there and they can go spend it right away once again. So it does really speed up that circular economy, if we can get rid of that. The Fiat is the slowest part of this spending and earning economy.
Tom Chojnacki - 00:45:01:
Right, of course, yeah. We didn't mention that if I said I don't like spending my bitcoin. But if you're earning in bitcoin, then you kind of need to and as more people are in bitcoin, businesses are going to feel the need to start accepting it, apart from what you mentioned of just the obvious benefits of accepting bitcoin, like with chargebacks and whatnot. So, yeah, I think it's obvious and I think what Jack Mallers is doing with Strike is incredible and it's definitely important. And we do see the immense value in a circular economy. Like, we don't think it's enough for you to hold. Like if everyone was just holding their bitcoin, then there wouldn't be much activity and miners wouldn't be getting paid. But I think these circular economies are popping up organically in these places like El Salvador and I think in Africa, there's this massive potential for communities and cities to maybe leapfrog even like they did with telephones. They just went to mobile directly. They never had a landline, they just went straight to mobile. Maybe that's going to be similar for them where they're unbanked completely and then they're jumping onto something like bitcoin. Yeah, because it just makes sense because most people there have a mobile phone, but many of them wouldn't even have an ID. Right.
Kevin Rooke - 00:46:41:
Right. I want to get into a discussion about Satsback in the way you guys do it today, and loyalty rewards, and I'm thinking more like airline miles. Let's use that as an example. To me, rationally, it seems like the use case is for like, people will want sats if they can choose between sats or the sat value of airline miles. But airline miles are still a thing. And this was true with dollars, too. Right. It's preferable to have the dollars over the miles, but miles are still a thing. Do you think that sats can kind of like earning bitcoin, can replace some of this loyalty card industry, or is this going to be a use case that bitcoin doesn't kind of disrupt?
Tom Chojnacki - 00:47:39:
I'm confident that it will eventually. All you need is a major airline that will do the new thing and start offering bitcoin rewards and then all of a sudden everyone's flying with that airline. So I think eventually, yes, it might take longer than we think because I guess it's similar with these in game tokens with like, you have the Vbox or I'm not much of a gamer, but I know many of these games have their own ingame currency and they're not too interested in letting people pay out that currency. They kind of want to keep it in game, control it, control the supply of it, make it expire whenever they want people to go spend their miles. And I think it's similar with airlines and with retailers. There is a lot of benefit for them to have their own loyalty point. Right. It doesn't cost them anything. They can print as much as they want. Users are kind of tied to that ecosystem that if I wanted to use my points somewhere else, it's hard to do. If I wanted to sell them, I can't really do that. So I think you're right that eventually we're going to move towards that direction. But I think they're going to do it when they're forced to. They wouldn't do it just because they wanted to. Just like, I guess this adoption of stats within games is maybe slower than we expected. There's a lot going on. But it's like these games prefer to have their own, I guess shitcoin. Right? There's advantages in printing your own loyalty point, just as there is with printing your own money.
Kevin Rooke - 00:49:30:
That's a really good point because to the user, the user is probably always going to want the money that they can use at the most places, which which would be cash or Bitcoin, right? Like they don't want the loyalty points. But it's the merchant, I guess, that is benefiting from issuing their own token or gift card. You know, if I'm shopping in the mall, I'm going to get a gift card. And the merchants happy about that, I guess, because they can kind of set the terms and conditions on that money and how it's used and they can kind of direct that flow of capital.
Tom Chojnacki - 00:50:06:
I just had a similar situation when I was looking at flights to Miami and I had some loyalty points and I realized that they were expiring soon. So I had a bunch saved up through like just passively I was I had a card linked to some points and they were going to expire. So it's like, whoa, what's the you know, it's good for the company, not good for the user. And I think eventually there's going to be more solutions that are better for the user and maybe less so for the large companies. But it will be interesting to see. I think we're still early. We're at the beginning early phase of Bitcoin disrupting these industries.
Kevin Rooke - 00:50:46:
Yeah. I want to get into your favorite Lightning applications so far. Is there anything that you've used that you're particularly excited about in the Lightning ecosystem?
Tom Chojnacki - 00:50:58:
Oh, yeah. I've actually mentioned a couple of times I've used the Podcasting 2.0 and that's just fascinating. But Lightning address like wallets that support that as well has been really cool as a kind of UX improvement compared to sending invoices generating invoices sending those. But yeah, those are the two. I think those applications that are showing people what is possible with Lightning and what might be possible, as well as things as like Lightning login, Lightning authentication. We're thinking of implementing that. We actually started working on doing that with Satsback. There's no reason why I guess there's reasons why I would want your email address, but we don't do much email marketing anyway. We don't need to know your identity when you're shopping with us. And we could just as easily let you log in with your Lightning wallet. So it's just like apps that are using these new features that are showing people what's really possible. Those things have been accelerating, really. Like it's even hard to keep up. Even if you're focused on Bitcoin and Lightning, it's really hard to keep up with everything that's going on, especially for me, because I'm not nearly as technical as I'd like to be led on or CTOs on top of those things. I try to keep up, but it's fascinating.
Kevin Rooke - 00:52:43:
Yeah. One idea that I hear mentioned quite a bit but hasn't been fully implemented yet, is the idea of putting a Lightning address as an email. And I think Zebedee is working on this. I think there might be a couple of other teams working on it so that you can just have an email client that is your Lightning address and it can pay wall content.
Tom Chojnacki - 00:53:09:
Yeah, I've actually been looking I'm wondering, I guess these are one of these things that you think is just like, yeah, of course, this is genius. Someone should build this and it's not going to happen until someone does. Yeah, I was actually looking I forget the name, but I was looking at a company, maybe a startup that's doing that. But I don't think it's with bitcoin. So I think they're called Gated or something like that. And it's obviously a big problem because most of our email inboxes are just flooded with a lot of it is spam, a lot of it is unnecessary messages. And I think Michael Saylor came out and said with Twitter, sats could be a way of combating the spam on Twitter and the spam bolts, I definitely think with emails. I haven't heard that Zebedee is working on doing that, but that would be super cool.
Kevin Rooke - 00:54:06:
They mentioned it on a past episode. That's why I know it. Oh, really?
Tom Chojnacki - 00:54:09:
Yeah, that would be amazing.
Kevin Rooke - 00:54:13:
There's also another company working on anti spam for calls and messages, kind of like Twitter DMs. It's called Vida and they just launched recently. But pretty cool idea. Basically you can charge, you can set a rate and anyone can I can have a Twitter bot in my DMs that anytime someone tries to start a message with me, it can say, hey, I don't check my Twitter DMs. If you want to message me, you can message me on Vida. It's going to cost you five cents per minute or five cents per minute for a call or maybe it's ten cents per message or something.
Tom Chojnacki - 00:54:53:
Yeah, I've seen that. I noticed that, I think, yesterday on Twitter. Whether it was like a Jack, I don't know who it was, but that's, yes, super fascinating. And I think it does there is like an overlap with bitcoin and what how bitcoiners start to value their time more. Our attention and our time is super valuable and we start thinking more about how we can preserve it and maybe be more effective or present when we're working and then spend the free time that we have with our family. So I think these things, these types of products, there's some alignment with bitcoiners, right? I'd rather especially if it's me trying to reach out to someone I don't know, or speak to an investor, I'd be happy to show them I'm serious by paying like a few thousand sats, but it would definitely filter out. And I think maybe even the early days of was it proof of work? Was actually intention. There was to use it for spam. These ideas were around for ages. I think it was meant to combat.
Kevin Rooke - 00:56:14:
Yeah, they've been around for a while, but it's nice to see it. They're starting to be appreciated and started to be you're right, people are recognizing their time is worth something. And I think the early internet, we got so good at distributing content for basically no cost, and the money side of it didn't keep up to speed. Right. We still had these antiquated fiat rails that had such high fixed costs and such long delays that it didn't make sense to gate all of these communications platforms with fiat. But now that we have the tools to make it instant and to make it granular, you can go down to any denomination. Now, we can monetize any amount of time, whereas previously we can only monetize, like your nine to five job. You get paid for it, but you're not going to get paid per email or per minute you spend working on a project. Now you can get paid for per minute that someone listens to the podcast, per email open every time a page loads, you could get a payment. And I think we're just kind of rebuilding the gates there because the stuff on the internet has to eventually, I think it has to be paid for by someone. It's either going to get paid for directly by users or by audiences, or it's going to get paid for by advertisers. And then you're going to have all the platforms that are saying it's free, but really just feeding you ads and taking your data and all that. So it's like there's no free lunch here. And I think now what we're headed towards is a more sustainable path where the money that is being spent by users is going directly to the people creating content and people building businesses on the internet. And it's a one to one relationship and you don't have to worry about this kind of, like, hidden cost of free on the Internet.
Tom Chojnacki - 00:58:16:
Definitely. I'm not sure if you were aware of that error code that was, I think, programmed into the internet protocols. That was payment not found and it was unused for the longest time because we didn't have a way of sending value over the Internet seamlessly and we now do. So it's yeah. Tying a monetary value to those things I think will change the way for the better. I'm hoping actually these business models will change and maybe I'm okay with receiving some ads, but I'd like to decide what data of mine gets shared with who and then get compensated for that directly, potentially, by the company. So I think that's like a separate rabbit hole, but I think those things are going to change the Internet and advertising in so many industries. 100% fascinating.
Kevin Rooke - 00:59:17:
Yeah, it's a lot to think about. I really enjoyed this conversation. We got into a lot of different rabbit holes here for listeners. Where can they go to find out more about you and Satsback?
Tom Chojnacki - 00:59:29:
Yeah, so it's obviously the website satsback.com, and the social media platform that we're most active on is Twitter, and we have the @Satsback handle there, and then we have an active community on Telegram as well. And that should be the same handle @Satsback, but you could also find a link on the website. So, yeah, this has been so much fun. Thanks for having me, Kevin. It was great to speak to you and get to know you better and yeah, let's do this again, for sure.
Kevin Rooke - 01:00:02:
Yeah. Thank you for taking the time and I can't wait to do it again soon.
Tom Chojnacki - 01:00:05:
All right, awesome, thanks.