LIVING THE FUTURE
An Interview with Stephan Livera
Stephan Livera needs no introduction due to his well known, self-titled Stephan Livera Podcast, focusing on Bitcoin and Austrian Economics. But next to that he’s also co-founder of Ministry of Nodes and partner with Bitcoiner Ventures.
Stephan explains how he’s onboarding people onto Bitcoin and how he’s using it himself as a savings technology and for day-to-day payments. Further we look ahead when a true Bitcoin Circular Economy might be a reality.
Poly: Hi Stephan, welcome to Polylunar – great to have you!
The focus of this interview series is to find out how it is to live in the Bitcoin Circular Economy today and what we can do to make it an even more feasible way of living in the future. I’m very much looking forward to hearing your experiences and insights on the topic.
So Stephan, although most readers will be familiar with you, tell us a bit about yourself and what got you into Bitcoin.
Stephan: I’m most known for my Bitcoin podcast, which is one of the leading shows for Bitcoiners. I’ve been a long time Austrian Economics enthusiast, and so I first came to Bitcoin because I’m opposed to fiat money and central banking. Once I had Bitcoin explained to me the right way, I was hooked because of the incredible potential of a hard capped, totally free market money and the world it would enable.
Poly: Nice, thanks for that. Now, I know you’re not all-in on Bitcoin as some of my other interviewees but are holding a significant portion of your net worth in it. While I understand diversification of investments, what are the main reasons to still hold AUD over BTC?
Stephan: Mainly because I keep a fiat cash buffer to avoid spending down bitcoin during bear markets, should they occur, and also because my income and expenses are mostly in fiat.
Poly: Very reasonable, I think most Bitcoiners follow that approach as of today. I’m trying to understand how the Bitcoin Circular Economy can be brought upon. Do you think it can be established if Bitcoiners continue to hold fiat or should we gradually rotate out of it?
“We can’t get too far ahead of ourselves as we’re still extremely early.”
Stephan: I see this as a gradual process and if anything, I’d say we can’t get too far ahead of ourselves as we’re still extremely early. So for many people, it simply won’t make sense for them to spend their bitcoin until enough other people also hold bitcoin. For many of these people, they will preferentially spend their fiat, or their fiat income rather than directly spending bitcoin.
Of course, for people who are all in bitcoin, or who only earn bitcoin, or those who need it for privacy or censorship resistance will have sufficient reason to spend bitcoin today. But we have to be realistic and understand that this is only a small proportion of bitcoin holders today. During the bull part of the cycle, all numbers go up and you will see more people willing to spend some sats then.
Gradually though, it will shift until we hit a point where there are far more bitcoin-native people. The ‘circular economy’ will be relatively small until then. This will require patience.
Poly: I always wonder what the inflection point will be, the moment where “all of a sudden” everyone will want to earn in Bitcoin instead of fiat, but we’ll come to that later. How are you personally using Bitcoin? Mainly as a store of value or are you aiming to use it as a medium of exchange as well?
Stephan: I mostly use it as a store of value and ‘savings technology’ as my friend Pierre Rochard would say. I do occasionally spend small amounts for demonstration purposes, or while I’m at bitcoin focused events and conferences.
Poly: Can you share any experiences where using Bitcoin was advantageous to using fiat?
Stephan: For me, I’ve treated it as a ‘savings technology’ or speculation, to be more objective. Though if you want to make a more private purchase that isn’t tied to your identity, then it also makes sense in these situations too, e.g. paying for VPN service.
Poly: Indeed, I think VPN and ProtonMail purchases are the main reasons over the years for people to spend their first Sats. So then, how do you encourage clients, friends or family to use Bitcoin to support merchants and producers accepting it?
Stephan: I first see what the newcoiner is interested in and determine based on that. If they’re more interested in the investment/speculation side of it, then I’ll usually teach them about hardware wallets. If they’re interested in convenient day to day spends and commerce, then lightning. If they’re interested in privacy, then I’ll show them coinjoin and Samourai Wallet etc.
Poly: I know from your Podcast and company Ministry of Nodes that you’re familiar with all kinds of Bitcoin storage options. What setup (hot/cold storage, full node etc.) would you advise for someone who wants to be Living on Bitcoin? Meaning he/she invests in Bitcoin but also wants to use it regularly as a payment method and to receive income in.
Stephan: I’d typically be showing them how to use a hardware wallet with their own node. E.g. Coldcard with Electrum, connected to their own electrum rust server on a packaged node such as myNode or similar. Specter-Desktop is a promising option also.
If the person has enough to justify it, then holding their bitcoins using multi-signature with a provider is a good idea. It’s also good to consider if the level of security would be enough if we were to hit another bull run.
If they want to be fully living on Bitcoin and taking payment with it, then usually BTCPay Server is a good option here to be able to take payments or donations from customers. For day to day spends, I’d usually show them a lightning wallet. Perhaps Zeus for Android paired with their BTCPay Server lightning node, or perhaps Zap paired with their home node. If they’re just doing small amounts back and forth on their phone and they’re less savvy, then it’ll be Phoenix or Breez.
Poly: Those are some great options depending on the amounts involved and technical capabilities of the user. Related, privacy is important to me and hopefully becomes default for more people in the future, what advice would you give regarding KYC, CoinJoins etc.?
“If you’re interested in Bitcoin for privacy reasons then try and acquire some coins without KYC.”
Stephan: I’d say if you’re interested in bitcoin for privacy reasons then try and acquire some coins without KYC. I think Samourai Wallet has the best overall suite of privacy tools, so I would suggest running your own Dojo (e.g. nodl, Ronin Dojo, myNode or vanilla Dojo) and pairing your phone app so it uses your own backing server.
If you want to be private in how you spend bitcoin, then use Samourai Whirlpool coinjoin, get a few remixes, and then once you want to spend, use the post-mix tools (e.g. STONEWALL or x2). It does take some work to learn though, so I would recommend listening to some of the Samourai Wallet and privacy podcasts I’ve done to give you ideas on what to learn or think about.
Poly: I’ll link some of your pods at the end so readers can check them out. Would the Lightning Network then also be part of your setup or do you consider it still too experimental? Could it be the future payment rail of Bitcoin?
Stephan: Yes, I really like using Lightning Network for convenient day to day spend/receive if my counter party also has it. I think wallets like Phoenix or Breez are great for a beginner to get started with lightning, and they’re very slick in terms of ease of use and overall user experience. I think it’s pretty much ready and easy enough for the ‘tech savvy’ type of user, but not quite ready for the masses yet (as I write this in September 2020).
In terms of being the future payment rail, I’m bullish overall on Lightning, however I think the main driver to spur lightning use will be high on-chain fees. So it may have to wait until the next bull run and high chain fees to properly spur companies and people to adopt Lightning.
Poly: The real breakthroughs always come from needs not wants, indeed. Let’s assume the future of day-to-day payments will be settled on Layer 2, how about the other end of the spectrum? Assuming you have your liquid assets in Bitcoin and want to buy a car or a house, how would you go about financing that outside the legacy finance system?
Stephan: The ideal scenario would be if the counterparty is willing to take Bitcoin directly! I’ve heard of people buying houses and cars with Bitcoin so it is definitely possible. Also there is the possibility of using Bitcoin collateralised loans to ‘unlock’ the value of the HODLer’s bitcoin in a more tax efficient way – with some risk involved though, and the requirement of having income to repay the loan with. Otherwise, the HODLer can sell some bitcoin on an exchange for fiat to pay for the purchase.
Longer term, it will get easier as bitcoin becomes more normalised into society.
Poly: I wonder, with all your experience in Bitcoin, do you consider it your unit of account or are you thinking in AUD?
“I consider my net worth in both Bitcoin and AUD terms. Obviously the longer term one is Bitcoin.”
Stephan: I consider my net worth in both Bitcoin and AUD terms. Obviously the longer term one I care more about is Bitcoin.
Poly: And if you’re open to it, would you tell us whether you demand to be paid in Bitcoin by your clients?
Stephan: I ask for Bitcoin payment as first choice, but will take fiat payment if it’s not feasible. I don’t believe in ‘checkout activism’ and trying to force it on them. Let the switchover naturally occur.
Poly: Interesting, in my interview with Brian Harrington he took the other side of that argument, saying that we need more entrepreneurs demanding Bitcoin only as apps like Strike would still allow clients to spend their fiat.
I think for many aiming to build the Bitcoin Circular Economy getting paid in Bitcoin is the goal, do you have any tips on how to convince a client or employer to pay you in Bitcoin?
Stephan: Well the typical thing you can do is offer a discount if they pay you in bitcoin. But at the end of the day, it’s not feasible for everyone.
Poly: I’ve seen that happen, yes. With your many years in the industry, what do we need to build to make life in the future Bitcoin economy easier than it is now? What have you discovered that’s not working well, that needs optimising? What services do you feel are missing?
Stephan: Maybe just making some of the current tools easier to use e.g. BTCPay Server, or running your own node and multi-sig. These all can be done now but they’re a bit harder in terms of technical ability required. Over time they’ll get easier and more accessible.
Poly: Funny you mentioned BTCPay here as I talked to Nicolas Dorier and he was excited about working on Pull payments for Bitcoin and LN – interesting stuff.
Looking ahead, what’s your guess when we’ll be able to say we’ve established a successful Bitcoin Circular Economy and what metrics would constitute that for you?
“My guess is in the late 2020’s for it [Bitcoin Circular Economy] to be relatively common. Maybe in the next 4-5 years it becomes a ‘well known niche’ thing”
Stephan: My guess is in the late 2020’s for it to be relatively common. Maybe in the next 4-5 years it becomes a ‘well known niche’ thing. We’re still extremely early.
I can’t think of any good metrics, but maybe if we see much higher levels of bitcoin acceptance for services, we could proxy off that.
Poly: Late 2020’s would be great, maybe I should have my interviewees agree on some metrics and bet on a date that, would raise the stakes.
Ok, jokes aside, under what circumstances would you recommend others to fully embrace Bitcoin and start “Living the Future” now?
Stephan: It takes work and continual learning, but it’s also very rewarding. Dip your toe in the water and see if it works for you. Doing your first coinjoin spend or lightning payment feels magical. Let’s recapture some of that fun.
Poly: Oh yeah, the magic is real indeed. Stephan, this was great, tell us how readers can find you.
Poly: Nice, thanks again for your insights, Stephan! Appreciate it and who knows, maybe some readers will heed some of your advice and soon join us in the Bitcoin Circular Economy.
For further reading/listening, check out these two of Stephan’s podcast episodes with the Samourai team:
- SLP150 – SAMOURAI WALLET – MAKE EVERY BITCOIN SPEND A COINJOIN
- SLP209 – SAMOURAI WALLET – BITCOIN CULTURE & NEW PRIVACY FEATURES
- SLP215 – MICHAEL FLAXMAN – 10X YOUR BITCOIN SECURITY WITH MULTISIG