Excerpt
I interviewed Carel van Wyk, a Bitcoin innovator who implemented Bitcoin Lightning payments at PicknPay, one of Africa’s biggest retail chains. Get first hand insights into the challenges and successes along the journey. Delve into discussions about Bitcoin’s major use cases, how it’s transforming everyday transactions in Africa’s complex regulatory environment, and about the future of Bitcoin. I promise you, this is an episode you don’t want to miss! Enjoy.
Transcript
Hello, and welcome to the Anita Posch show, where I’m here to help you understand Bitcoin, realize its humanitarian implications for the world, and gain financial sovereignty. I’m your host, Anita Posch, and this is episode 177 of my show. And my guest today is Carel van Wyk. He’s here a second time. The first episode was number 155. Carel found out about Bitcoin as early as in 2010, and being a technically skilled entrepreneur, he realized Bitcoin’s potential to change the world very early. Carel was a cofounder at Luno, one of the biggest exchanges globally, and he is the mastermind behind PicknPay’s acceptance of Bitcoin payments with the development of the Crypto QR app, which is an app that is translating the unified QR payment codes from PicknPay to Lightning invoices. So if you want to go to PicknPay in South Africa and pay with Lightning, you need to ask at the till for scan to pay. I met Carel at Adopting Bitcoin in Cape Town in January 2024. It was the first Bitcoin-only conference in South Africa, and since then, I’ve paid all my daily goods in Cape Town at PicknPay with bitcoin. You can do the same, and you can watch me doing it in the course of the YouTube version of this interview. Sounds interesting? Please subscribe to my free newsletter to receive more content like this at anita.link/weekly. And now, enjoy the episode.
Hello, Carel. Hi there. Nice to meet you again. Thank you Anita. After.. Was it 2022? I think. Feels like yesterday. Really? For me, it feels like it has been a long time. So we are here because first Bitcoin-only conference in Cape Town. Exciting. Extremely exciting. I mean, I’ve been trying to organize Bitcoin meetups and groups for a very long time. This is the first time that we have a proper Bitcoin conference. It’s not blockchain and Crypto. Extremely exciting. I think it’s the first root that we’re setting down and can hopefully grow into a much larger tree. I hope so, too. And a lot of your work is focused also on Bitcoin adoption? Absolutely. And you recently, last year launched a app with which everyone can now pay at the largest supermarket chain in South Africa with bitcoin, with Lightning. That’s right. Maybe a small correction. We do call it the Walmart of South Africa, but it’s the second largest chain in Africa. Oh, wow. ShopRite being the first in South Africa. In South Africa as well. It’s the second largest, but that doesn’t mean it’s small. They have more than 1500 outlets to sell all kind of things, clothing and value added services, whatever. And they also have branches in Zimbabwe where I was recently. That’s right. Unfortunately, that tech isn’t available there now, but maybe in the future we can. Do you think they will open it up also in Zimbabwe? That would be huge for me personally. It depends. I think we can talk about what’s needed for the tech, but it’s not that straightforward. Obviously we need good liquidity and regulations need to be favorable and all of that stuff. So hopefully in the future. But South Africa is the perfect place for it at the moment. I mean, Lightning is still… I mean, you can use it as money. Do you think there’s the chance that they will KYC Lightning? Lightning wallets? Lightning wallets. Custodial? Definitely, I guess. I’m sure there’ll be significant government pressure over time. I mean, we’re seeing all the stuff from the US and Elizabeth Warren and even from the EU talking about what they call “unhosted wallets”. I hate that term, self custody wallets. And we can see government pushing back on those things. But at the end of the day, it’s actually extremely difficult to regulate because it’s possible to do it in a much more decentralized way. Still, we can talk about scaling and centralization forces, but because it’s possible to do it in a more decentralized way, it’s very much more difficult to censor and impose controls. But that doesn’t necessarily apply to the merchant side of the equation, because the merchant is not holding funds. So the wallet issue is something completely different from acceptance of payments. That’s right, yeah. So you’d say maybe explain a little bit, how did it come to the point where you offered them that solution? How does the solution work? So that’s a fantastic thing about PicknPay. They approached me. I didn’t go into their corporate offices and then try to orange-pill people, which most people assume is what happened. But the truth is actually that if you look at the way that people pay at PicknPay, I mean, in terms of value, most people probably use credit cards. So in terms of the rand amount. But if we look at how many transactions occur in cash, it’s the majority. So that means still the majority of people are paying in cash. And for large retailers, cash is a massive problem. We’re seeing an increase in cash and transit crime in South Africa. It’s huge risk and a burden to the retailer. So they’ve taken a stance and said, we want to engage industry players and help develop digital payment solutions. So for them, adding bitcoin was this stake in the ground to say, look, we’re taking a stand, we’re going to be adopting new technologies, and what more sort of forward thinking future technology is there than accepting bitcoin payments. Now they’ve done that and they can use that to drive a strategy even further. That’s fantastic. Tell us, how does it work in real life? I think I need your app. Yes, that’s right. Many people scan the PicknPay code. There’s a QR code that pops up on the display. You have to ask for QR checkout because obviously you have to pick cash, card, or QR code. If you pick the QR code option, that code is displayed and then a lot of people scan it with their Lightning wallet and doesn’t work and they’re confused. Why is that? So maybe just some background and context. There’s a lot of mobile payment wallet apps in South Africa these days. And what’s happened is we ended up with many QR codes. That’s a problem as well right now. Adding another one for Lightning, then adding another one for Liquid. I don’t know what. That becomes a big problem. So the industry has actually said no. Instead, what we’ll do is we’ll consolidate to sort of a universal QR standard. It’s not a Lightning standard, it’s just a reference to that transaction. So what needs to happen is there needs to be a translation from that QR code into a Lightning invoice if you want to pay it with Lightning. And that’s all we’ve done. We’ve put a companion app. It’s just a QR code scanner. It scans this universal South African QR payment code, retrieves the payment information, generates a Lighting invoice, and then you can pay the Lighting invoice. But we’ve tried to make it as seamless as possible. I know it’s annoying having another app, but what the app does is it launches your preferred wallet, so it’ll be very streamlined. If you’re the first time that you’ve set it up after that, you never think about it again. It’s actually not that awful. Yeah, you just need to know and you will get used to it. You get to pay at PicknPay very often with that version, like with Lightning, and, you know, okay, I just take my Crypto. Ah, how is it called? CryptoConvert. I get a lot of flak for the name. We can talk about that if you want. But it’s called CryptoConvert. We don’t need to talk about it because I know your stance on that. But let me just say this. We are a Bitcoin Lightning first company. But your company is called CryptoConvert. The company is CryptoConverted. Okay. So the application, the companion application, is called CryptoQR. QR, exactly. And it’s available for Android and iOS. iOS and Android. It’s just a QR code scanner that launches your wallet. But the QR code scanner is the translator. Yeah, it’s a translation. Ok. Exactly, yes. Because then it opens up the Lightning wallet and you can also select which standard wallet you want to choose or another wallet. So what we try to do is we try to detect the Lighting wallets on your device and then you can preselect which one will be the default that opens up. You can also copy paste the invoice, but that’s a bit slower. Oh, you could also do that. Yeah. So how’s the adoption of it? I mean, how many people are using it? Do you know that? I’m surprised by the adoption. I think when we first roll this out, there’s so many open questions. First open question is, firstly, will people spend bitcoin? Will they have Lightning wallets that’s funded? And then thirdly, will they go through the effort of installing this scanner application, this companion application, another app? So there’s quite a number of, if you look at it like as a funnel, quite a number of points that they could drop off. And what we’ve seen is extremely encouraging to me, is that people actually put in the effort, they make the effort to go through this process of finding a Lightning wallet, installing the companion app, linking it, going to the till, asking for a QR code and paying. So we’re seeing for the past five months, we’ve seen 30% growth month to month. Oh cool! And what I’m hoping is, so we launched this nationally in February in 2023, so it’s about a year ago. I’m hoping that we can see a four x in our numbers by Feb this year. In other words, 300% increase. I can imagine this weekend with the Adopting Bitcoin. I’m hoping so. I’m hoping so. I’m sure. I hope. We’ll send them all. I’m definitely encouraging everybody to try it because it feels like magic. And like some people that visit and I go with them to the PicknPay, we go through it. They say it almost feels like they just did an heist, like a bank heist. They just paid with this illegal money and walked out with goods. But it’s completely legitimate, completely functional. And yeah, it’s quite a nice feeling being able to buy your pizza or whatever with bitcoin. Question, do you as a company get a transaction fee from PicknPay for the services? Yeah. So that’s yeah. PicknPay, obviously being a large retailer had quite a lot of bargaining power and we didn’t have a lot of wiggle room on the transaction fee. We don’t take a lot on that. What we have instead is a service fee. Yeah. Okay. We’ve got a standard like a fixed service fee. Yeah ok. But you are a business. I mean you need to earn something. Yes, we do. And unfortunately, the reality is that this is a volumes game. Payments is a volumes game. So at the moment the volumes are quite small and we’re basically still self funding and bootstrapping the company. It’s not self sustainable, but if growth continues the way it does now, we will eventually get there not too long into the future. How easy would it be to do this for other merchants as well? Yeah, so it would actually be easy in the technical sense. The technical integration is not the bottleneck. Ironically, the compliance is actually a bit more strict. There’s always a customer acquisition cost, and because the volumes are still low, it’s difficult to cover that initial cost. But again, as it scales, as there’s more adoption and there’s more volumes, then it’s easier to onboard smaller and smaller and smaller merchants. But for now, we’re focusing on the largest aggregators and retailers. But we do have a pizza shop, Butler’s Pizza. You can order and get your pizza delivered and order and pay with sats. So I will definitely do all of that of course. So I already have got your app on my phone and we’ll go to PicknPay afterwards. And I will also, of course, buy pizza with bitcoin because a lot of people say it’s silly to spend your bitcoin, which of course you can say so if you see the trend going up over the last 15 years. But I’m basically living off the donations and all the… You’re earning it, that is your income. Exactly it’s my income and I have to spend it. I need either to exchange it, because otherwise I can’t get anything without fiat currency. I much rather spend it directly instead of the hassle to exchange it and then also maybe get problems with my bank account because they say, where does this money come from? So, at the conference I’m speaking, I will cover exactly this concept because the traditional sort of view in Bitcoin is hodl. Exactly. To the moon, stay humble, stack sats. That’s good. But when you say those things, you still have a fiat mentality, right? Let me explain that. So, you do some job, you’re probably earning fiat, most likely statistically, then you’re buying some bitcoin and stacking it. And I’m not saying you need to spend the bitcoin that’s in your stack. What I am saying is you need to buy more bitcoin. And instead of spending your dirty fiat, make the effort to rather spend bitcoin, not from your stack. So I’m not saying you don’t spend from your stack, I’m just saying buy more bitcoin. And replenish it. So spend and stack. And the reason that’s important is because the more people do this, the more people go through the effort of converting fiat into bitcoin to spend, the more merchants will accept it. And then suddenly you start building momentum in the circular economy. So that is the only way that will grow the circular economy is if people spend it. And I’m not saying don’t hodl. No, I’m saying buy more bitcoin, hodl your savings, but try to spend it as well. Both are part of adoption. So of course, hodling and having bitcoin as a store of value is adoption driver, because people see, oh, this guy has saved so much now and can afford this and that. And on the other hand, but that’s more, you get only the merchants on and grow too when you spend it. The number go up aspect. That’s why I’m saying it’s fiat mentality because you’re still thinking kind of in dollar terms and rand terms, because your expenses are still thinking in terms of rent and others. And also just by that, we won’t change the core mentality in the financial sector. Money, your know. I don’t want to say the financial sector. I want to say just on the market, in the market. And I think that’s the point, is that ultimately we want to get to a point where it’s possible to earn bitcoin. Right, exactly. Then you’ve completely off boarded yourself from fiat. And the only way we can do that is if there’s a bigger bitcoin based economy. And I want to live in a world where I can exchange bitcoin with you on a basis in between us or if I buy a good from you. Exactly. Business. We can do that. We can do that. So without the KYC stuff, because I want also privacy. I want the options I have with cash. But with bitcoin, it’s much better because I can send it anywhere. It doesn’t rot, and I don’t have national inflation on it. The KYC issue is going to become more and more pressing because what we’re seeing increasingly is leaked databases, leaked stores of data, even from government entities. And people are realizing that KYC actually makes you a target in the long run because that database, it can sit around for a very long time, your details are leaked and then criminal elements have access to not only your personal information, but also your personal financial records. Exactly. These are big problems that will become sort of more mainstream discussions in the near future. I’m sure of that. And just think about AI. What AI is going to do with deep fakes of your video. Like at the video, you on video in a deep fake, you can do KYC identification with that and it’s actually not you. And then they will steal and whatever. Banks and regulatory authorities will have problems. I have a friend, he’s also in the space, also called Carel. His statement has always been, things need to get worse first. Things just need to break before it’ll get fixed. The point is people need to feel pain before we take action. So, sadly, I think things will be getting worse before they get better. I think so, too. Yeah. But speaking about things getting better, how do you think, especially when we have seen the rise of transaction fees on Bitcoin on-chain? I mean, I’m an absolute proponent of self-custody, but with the rising fees, it might be, on the one hand, difficult for many people who might not have the wealth to afford these fees, and on the second hand, we have the problem with scaling Bitcoin on-chain. I mean, it’s technically not possible that everyone in the world can use bitcoin on-chain. What is your view on scaling Bitcoin in the future? So like, self-custody maybe is just an ideal, philosophical ideal. Not everyone, you and me, we will be able to have on-chain bitcoin, hopefully because we were earlier than most other people. But other than that, what’s your thoughts on that? I have a lot of thoughts, and I’ve seen you express your thoughts online as well and have some heated discussions about it. I think stay humble and stack sats. Let’s all just stay humble for a bit and not assume that all the problems are solved. The scaling problem has been there from day zero. It’s always been there and it hasn’t been solved. We don’t have an obvious solution for it today. The question then is, should we be pessimistic about it and throw out the baby with the bathwater? Or should we continue and develop solutions for the problems that we face as they arise? I’m definitely in the second camp. I feel that solutions exist and it might be that there’s trade offs. It might be that we look at how we store and spend our bitcoin is different, so maybe our spending wallets will have lower degrees of trust and self-sovereignty and self-custody while our savings have more. The idea or the problem of increasing chain fees, that was always going to be a problem. If you assume that Bitcoin is something that people need to adopt, the chain fees will always be a problem. And like we’ve seen in the past, people have said, well, let’s increase block size. Then the fees will go down. In terms of sort of the path ahead, I think it’s more clear for us what we should not do rather than what we should do. The should is we should be experimenting. We should be using the technologies and new systems that’s being developed, new ways of thinking. So I’m talking now about things like Fedi, Liquid. Yes, federated-custody, basically. Self-custody is ideal, but an interim step might be federated-custody. And then, of course, there will be extremely strong centralizing forces and pressures driving activity to centralized service providers. You know what? Maybe not so bad again if it’s your daily spending wallet. But I fully agree with you that the whole point of Bitcoin is that it’s money that’s free. My wife said, what does it mean? Can I just get it for free? It’s not free as in pizza or beer. It’s free as in for anyone to use. Speech. Free speech. Free as in speech. Uncensored. And that’s what we should strive for. It’s up for debate. It’s not a solved problem. It’s not a clear cut thing. So not everyone will be able to have on chain peace. But I think the most important thing is, is it possible for you to stay uncensored with your funds, and can you always redeem it or use it as you wish? Yes. And then maybe it is in a federated-custody or a shared-custody, or maybe even in a Bitcoin Bank. We will see them, but not in an ETF. Right. What’s your opinion on ETFs? Well, I don’t have much of an opinion, really. I’m surprised it took this long. I expected it to be around much earlier, but I don’t really have much of an opinion on it. I think maybe there’s this sort of discussion around Bitcoin as a store of value, and the ETFs have a lot of impact on the store of value part of the discussion. I actually spend relatively little time thinking about that use case and think a lot more in terms of the medium of exchange and money aspect, because we’re in South Africa and for us, we live under sort of monetary regime that’s far more restricted and declining. So we kind of think about the money aspect a lot more. I spend my time thinking.. so ETF, I don’t know if it has much of a short or even medium term impact on that. What would you say as a South African? I mean, the voices coming from the African continent are still much smaller than those from the US or Europe or anywhere else. Why is that? Because it’s such a huge continent and the utility of Bitcoin is so big here, so the need is so big, but still the adoption is less than on all the other continents. Why do you think that is? And what can people who live here do to have more voice? So I think, firstly, just Africa, even though it’s a large continent with many, many people living there, the level of connectedness is actually fairly low, especially connectedness to the rest of the world. Maybe in part because we are isolated, we’ve got all these sort of controls and rules that limits our exposure or ability to interact with international peers. Whereas the US and the EU, there’s very high levels of adoption, you know, Internet adoption and then things like social media, and there’s a lot more people with the necessary funding and tools to do podcasts and things like that. So I think it’s just that it’s a more higher level of connectedness, but that’s changing and it’s changing fast. So in terms of what people should be doing, I don’t want to prescribe, but I think you consider your position, your station in life and what’s the cards available to you to play. Play those cards to the best of your ability and try to reach out. Great. Now the interesting thing, because I put that in my keynote for tomorrow, is I think that South Africa is actually very pioneering in the Bitcoin space. You have things that none other countries have, like the PicknPay payment possibility. One can buy electricity with Lightning in your tool. Then we have Bitcoin Ekasi, we have Bitcoin Witsend. What else is there? Craig Raw lives here, the guy who built the Sparrow app, one of the best Bitcoin desktop and privacy oriented apps. We’ve got some prominent developers in the space. Yes, and very private. And he’s doing a lot of education in that terms as well. Then there’s KG with Machankura8333, so many solutions and innovation that you don’t see in the US. But I think a lot of these things that you just mentioned, it’s sort of centers around, again, the money or the medium of exchange use aspect, which is where we feel the need, because that’s where we feel the pain. And that pain isn’t felt in the US, that pain isn’t felt in the EU. But we are sitting here. We’ve been experiencing that pain for a long, long time. It’s not only recently, we’ve been experiencing it for decades. And now this technology becomes available to us and it lets us engage with it, not only as consumers but as builders as well. What are the problems, like the rand devaluation, I assume? We can talk about. Yeah, there’s so many. So maybe just sort of off the bat. If you think in terms of restrictions on our money, moving money across the border is a highly permissioned thing. And there’s threshold, there’s limits. So for example, if I wanted to send money to you in Zimbabwe, wherever. I would need to fill in some special forms, there would need to be some reporting on that. The exact reason that I’m doing this, and again, it’s limited. That limit has been in place. The current limit has been in place since about ten years ago, 2011. And over time that limit erodes. So our thresholds, even though the threshold itself stays the same, the actual value of it is constantly diminishing. So our restrictions are increasing over time. That’s the one thing. And then secondly, the currency itself, due to declining economy, the buying power versus international currencies like the US and the dollar and the euro, it loses its buying power, the exchange rate is declining. And in fact what we even see is governments artificially devaluing currencies. In Malawi in November we’ve seen a 44% devaluing of the currency by the government and they can just do that adhoc. So I think in terms of just the restrictions placed on our money, there’s far more issues that we deal with than the US, that you deal with. Yeah, I think it’s also a lot of these issues people can’t even understand if you don’t live here, you can’t understand it. I think maybe one thing, I don’t know how much time we have. One more thing to mention. Like I said, 90% of people pay with cash South Africa. And why is that? Maybe it’s just because the restrictions and burdens around getting a credit card machine for a shop to get a credit card machine in their hands is so high that it’s practically impossible for the shopkeeper to afford either the money or the time to get a credit card machine. And then even if they have it, nine out of ten customers walking to the shop still will be paying with cash. So the question is if we can reduce those frictions, we’ve got these high levels of friction on our money and payment systems, if we can reduce these levels of frictions, then can we transition into space where there’s fewer reliance, people relying on cash and less cash in transit heists and all that? I think that’s what most people totally underestimate, how also spending bitcoin gives you freedom. Yes, freedom from all this bureaucracy and regulations and KYC also. And how it increases your privacy. So I think also, let’s end this maybe now because we need to go to PicknPay to buy some stuff with Lightning. But that’s what people underestimate. And I, for my feeling, spending bitcoin and holding and saving bitcoin is both, at the same time important for you as a person or as an individual or to care for your family or whatever. And thank you very much, Carel. Thanks, Anita. Thanks for your time. No, of course. Anytime. Let’s go to PicknPay. Yeah, let’s do that. Cool. That’s it. Thanks for joining. If you’ve enjoyed this, please subscribe to my newsletter at anita.link/weekly to get all my updates into your mailbox directly. And please recommend it to your friends. Until next time at The Anita Posch Show.
