SPEECH TITLE: Real talk on building a circular economy in bitcoin
SPEAKER: Sergej Kotliar
CONFERENCE: Pizza Day Prague 2022


Hi everyone, I’m Sergej Kotliar from Bitrefill and my talk is building a circular economy in bitcoin. First, I just want to say I’m incredibly happy to be here and finally made it to Parallel Polis and to celebrate “Pizza Day” with all of you. Celebrating is a key word here. It’s an important aspect of our community that we celebrate it! Even though one can make a very decent argument that as a financial investment paying 10 000 BTC for two pizzas maybe not the smartest but everybody here knows and feels that Laszlo is okay. We don’t need to run a Gofundme for him. It wasn’t his last bitcoin. That event in history embodies the unity, the Yin-Yang of it all. He did use bitcoin as a medium of exchange, which was part of establishing bitcoin as a storeholder value, which in turn makes it useful as a medium of exchange. These things go together. You can’t have one without the other. It’s completely unthinkable and discussing it doesn’t make sense because you need both. Everything that we still discuss in the community was already discussed in Satoshi’s email announcement post or in the early bitcoin talk post. There’s not that much new under the sun and by the way, if you’ve read books about Bitcoin but you haven’t read all of the writings from Satoshi, you have homework to do.


You know this classic quote:

“As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:- boring grey in colour- not a good conductor of electricity- not particularly strong, but not ductile or easily malleable either- not useful for any practical or ornamental purpose and one special, magical property:- can be transported over a communications channel. If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.”

Satoshi Nakamoto

This was written in 2010. He sets up speculation. Maybe it might just make sense to get some in case it catches on, right? Everything that we see today we already saw then. This duality is important because at the end of the day whatever vision you have for Bitcoin or for crypto, none of it works unless bitcoin is freedom money and for bitcoin to be freedom money, it needs to circulate freely. This is why I do what I do.

Purpose of this talk

In this talk I’m going to open our metaphorical kimino and share some stats and learnings that we haven’t shared before. The purpose of this is talking to the people in the space that are building things because it’ll be better if you can learn and understand these things faster than us. No matter what the truth is, it’s always better to know the reality. My commitment to this talk is lots of transparency, openness, not being misleading with stats (which is easy to do). My ask for the audience is that you listen to me as a friend and that you listen to the main messages. I’m sure there’s going to be a word or two that you can cut out of context and flame me on Twitter but let’s discuss the main messages.

Who the hell am I? I run Bitrefill. Bitrefill is on a quest to make bitcoin freedom money, to build a circular economy and for that you need to be able to buy stuff because honest to god, what kind of internet money is that we’re building here, if you can’t buy shit with it. So, Bitrefill lets you pay your bills, refill your prepaid phones. The bread and butter of it is that we sell gift cards for e-commerce and actual commerce. We do this all over the world. Now, we have a couple of products in Czech Republic. We have mao.cz and alza.cz. We’ve been doing this for seven years. To my knowledge, we are the number one largest service that people use to buy things in the real world with crypto.

Bitrefill stats

First stat is that in the last month, Bitrefill processed 186’000 cryptocurrency purchases. This is a typical month. It’s not misleading. It’s a high number. To give you a reference Bitpay has a network of 200’000 merchants. They have Twitch, Microsoft, Shopify and that entire network does 70’000 transactions per month. We’re ahead of some. Let’s talk about some real stats because that’s where interesting things will happen.

Top 7 payment methods on Bitrefill by EUR

Payment methods
On-chain Bitcoin31%
USDT on Tron11%
Binance Pay9%
USDT on Ethereum6%

Do people play with bitcoin or with other crypto? Here’s the breakdown by payment methods on Bitrefill. You see that on-chain bitcoin is still going strong at number one but now down at 31%, followed by Ethereum 23%, Tether on Tron (11%), Binance pay (9%), Tether on Ethereum (6%), Litecoin (5%) and lightning (5%).

Top 7 payment methods on Bitrefill by unique users

Payment methods
On-chain Bitcoin40% (+9%)
Ethereum15% (-8%)
Binance Pay12% (+3%)
USDT on Tron10% (-1%)
Lightning9% (+4%)
Litecoin7% (+2%)
USDT on Ethereum2% (-3%)

Some people say, I should count by transactions but that would also be misleading because one user can go in with lightning and make a one-dollar purchase for a free fire game and then another and then another. Whereas, another guy will go in and make one purchase for $20 in free fire tokens and is the former really worth 20 times more? I don’t know. I think it’s misleading but we can also count by unique users. If you want to count heads and not Euros it looks like this: on-chain bitcoin is now up at 40%, Ethereum’s down at 15%, understanding if you’re paying $20-$50 for a transaction you’re going to make bigger transactions. And you see that Tether on Ethereum goes all the way down (2%) and lightning goes up a little bit (9%) and actually passes like Litecoin (7%) in this model.

Transactional Bitcoin’s marketing problem

The question here is “why not more lightning?” Bitrefill has been a big believer in lightning from the start. We were the first to roll out Mainnet support for paying with lightning, we had the first real world purchase with lightning, we’ve always tried to do all of the latest stuff and if you’d asked me four years ago where we’d be with lightning in four years, I would have said well in four years it’s going to be 90% lightning. But if the observations of the world don’t match your internal expectations that you kind of have to evaluate and assess to say what’s what. There’s been a lot of thinking and digging about this stuff and I’m going to walk you through them.

Lightning has a marketing problem. In fact, it’s not lightning specific, it’s transactional bitcoin as a whole. I mean, lightning has a problem, Liquid has it even worse, there’s a lot of these things in the transactional bitcoin space that are not taking off as big as they deserve to. The key word here is “marketing problem”. A lot of us here are techies and nerds. We see things from that perspective, we always expect there to be a technical problem that we can solve by building with code. Those of us who were around in 2017 with all of the block size wars and discussions you know how lightning came to be from that political environment. At that time, there was a scaling problem, it was a technical problem but now, there isn’t. The blocks are empty on bitcoin, this many people use lightning, even fewer use Bitcoin Cash and so on.

There is a marketing problem here and this is what I want to address because again, none of this shit works unless the coins circulate freely.

Bitcoin the movement vs bitcoin the tool

I’d like to introduce a model to understand the world and that is to split up Bitcoin “the movement” (the community) and then Bitcoin “the tool” (the thing that you use). Let’s say Bittorrent, I might use Bittorrent to download Linux distro or something that’s legal but I don’t belong to the Bittorrent community, I don’t hang out on Bittorrent Twitter, I would not dream of going to a conference to talk about Bittorrent. If I need to install Bittorrent, I will type in “Bittorrent client mac” on Google and get one of the top ones that looks legit enough and I wouldn’t care if it is the best one, I wouldn’t care what the technical discussions in the Bittorrent community are, the politics, (which I’m sure there is but that’s irrelevant to me) because I’m pretty sure that number one is going to be good enough to get the job done and that’s all I need. It’s a tool. Whereas, “the movement” is what makes us all spend our lives, energy, going to conferences, discussing, flaming people and so on. You can be a member of one or two or both and I’m not value judging here. Bitcoin is for freedom, you can do whatever the fuck you want with it. We shouldn’t moralize or kill people into doing anything else. It’s very important. But if you look at Bitcoin, “the tool”, we’re at Parallel Polis, the home of the European cypherpunk movement (maybe even global), “the tool” is where you have all cypherpunky stuff do the transactions that they don’t want you to do. I mean, the dissidents don’t care about Bitcoin the same way that we do. They use Bitcoin to raise money. They care about their dissident business for the societal change. That is their movement. Bitcoin is just a tool for them. That’s also where privacy belongs because if you don’t make transactions with Bitcoin you don’t particularly care about privacy aspects. There’s hodl moon both sides. There’s people that hodl because it’s a community value to hodl but there’s also a lot of people that just bought some bitcoin, they think it’s going to go up, they don’t particularly care about it. It’s a speculative vehicle and a tool for them.

“The tool” side is where we see the use of wallets and the emergence of the circular economy. At the same time, if we look at the movement, at the community we’re in a phase where it’s very like “this is how you should live life”, you should have low time preference, you should not eat carbs and seed oil and there’s a long list of things that you should and should not do. You should stack Sats, you should custody your own keys, ideally offline, ideally in the multi-sig on several offline wallets, you should run a full node and you should not worry so much because one day, if we just drive the price up, the magical hyper bitcoinization will happen, which is an apocalyptic scenario, where everything will be bad for everybody except for us and we’re going to be in the citadels and it’s very messianic, its armageddon. Anyway, that’s not where I’m going with this but also an important message from the communities that you shouldn’t shitcoins (don’t, in any way, there’re good reasons for this). Historically, shitcoins have been fraudulent and scammy and people have lost money. We know this stuff. But one thing that we notice is absent in large parts of the movement side is actually making transactions and that’s not really surprising because it’s very consistent to be a bitcoiner, to believe in Bitcoin and the vision of Bitcoin, the values to the community, not necessarily have a need for the tool itself. There’s a lot of people in the Bitcoin movement that do all of these things and they’re in compliance with all of the values but they’re just not using it and that’s fine, again, everyone who’s here, is here for the movement. People don’t travel to a conference about a tool.

In the end, that leads to things like this when last year, some guy announced a bitcoin pizza service which you couldn’t buy with bitcoin. This was in compliance with the values of the community because there were no shitcoins on that site, only fiat and fiat is currently not really seen as a shitcoin. This is a part of the community but it doesn’t use the tool. You can be a member of the community and the movement without using the tool and vice versa.

Bitcoin the movement vs bitcoin the tool

If you look at the slide it’s a little bit like a Venn diagram. There’re people that use bitcoin as a tool, people that “use and love” and people in the movement. Again, all of us here are here because of the movement. It’s very important to be mindful of this. There are a bunch of people who are in the movement that actually don’t have a need for the tool and that’s fine. They’re great people. They’re our friends. I am in that category myself. There’s also a bunch of people that use bitcoin as a tool and don’t give a fuck about our movement. We’re building a useful tool for the world and there’s going to be a lot of people that use it and don’t particularly care about any of the stuff that we’re discussing here. But again, you need to be mindful of selection bias here because if you look around, you’re not going to see anyone from just the tool camp because they don’t come to conferences. They also don’t hang out on bitcoin twitter for obvious reasons. There is an unknown group and the majority of people that use bitcoin as a tool do not care about the movement, they just use it as a tool and a large part of the bitcoin movement does not necessarily need and care about using it as a tool. Just keep in mind this distinction and be aware of observation bias that’s same as with the world war II planes that came back. If you only look at where the planes got shot you get the wrong impression because you only see the planes that actually made it back. You don’t see the planes that actually didn’t make it back.

Let’s go for some more stats. It’s going to get a little bit interesting. In Bitrefil, we built the wallet selector in the checkout experience. It’s an optional feature. Around 40% of our users use it. You select from a list of brand wallets you use and then we adapt the payment experience. If your wallet has certain bugs we adjust. We use PCI addresses for those who can support those, but we use old style addresses for those who don’t. It allows us to roll out the most recent and cool stuff but also be supportive of the people that still work with the old stuff. It’s not mandatory and most people don’t use it but around 40% do and we track what they choose. Knowing which wallet somebody uses tells you quite a lot about this person and how they use this stuff. It doesn’t tell you their age or gender but it tells you much more interesting things.

Unique Bitcoin wallet users (including Lightning)

Let’s look at some stats from Bitrefill’s wallet selector and let’s look at bitcoin users, lightning and on-chain together. The biggest one is Chivo wallet. Chivo wallet is the government wallet in El Salvador. We’re doing a big effort in El Salvador, so, there’s a lot of users, it has a bit of bugs. Wallets that have many bugs are more likely to be selected in the wallet selector so Bitrefill can adjust for the bugs.

Now, I want us to play a game, you shout if you have an idea of the biggest wallets. [Public shouts: bitcoin.de, Blue wallet, Blockchain.com, Phoenix, Coinbase, Shildbach wallet, Trust wallet, Binance, Wallet of Satoshi, Bread wallet] Nobody even guessed. The largest bitcoin wallet outside of El Salvador is Exodus. It recently passed blockchain.com, for the biggest one and here you can see the other top 10-20, then you see the Blue wallet, Moon, bitcoin.de, Trust wallet, etc. Actually, I’m very surprised that Electrum is chugging away, is a solid 10% and it’s been like that since forever and still is like that. Try it and test it. Shout out to Thomas in the Electrum squad.

Who uses on-chain Bitcoin?

What if we remove lightning from this? The question is who the fuck uses on-chain bitcoin these days? Half of the guests here work for lightning wallets. Well, let’s look at on-chain bitcoin, you see Exodus, Blockchain, Trust wallet, Coinbase, Electrum, Bitpay wallet, Bitcoin Core, Ledger, Trezor and so on.

I want us to do another interactive exercise. Bring out your phone and open the App Store or the Google Play and search for the phrase “bitcoin wallet”. You’re going to have different results, you are from different countries, situations, AI, etc… Scroll around there because if you remember, we talked about bitcoin, “the tool” and the way I would install BitTorrent would be to just google BitTorrent to get one of the top ones. This is what people get. It’s not like “the evil AIs of Apple and Google are misleading customers”. No, they run data on which ones people install and they give out the most used ones. Based on that, we need to add another point to bitcoin, “the tool”, and that is shitcoins, because all of the top bitcoin wallets are shitcoin wallets. It does make sense, the speculation has been there since 2010 and people will use bitcoin wallets, shitcoins and stable coins.

Ethereum the movement vs the tool

Speaking of shitcoins, I just wanted to do a very quick detour to look at our friends at the different conference and look at what this stuff looks like in the Ethereum world. I’m not going to go deep into this. If you look at Ethereum “the tool” and “the movement” they’re actually closer together. In the tool they have security. It’s not the same definition of security and they accept a lesser level of security but there is some security. Ethereans are upset about Solana because it has too little security and so on. It does have certain privacy. It’s not an on-chain privacy because it reuses addresses but you can use different DEXes and DeFi things to actually cover your tracks pretty well. There’s also a lot of DEXes that don’t require you to use KYC. There’s a large use of KYC free things. The main activity is to do DeFi things: smart contracts and yield and that requires you to use a wallet. So Ethereum users use wallets more than in the Bitcoin world and they also have “the number go up” or “we’re all gonna make it” (WAGMI). They also have in a different way from bitcoin anti-scam idea. They have a different definition of what a scam is and a different threshold but there is definitely some of that in that community as well.

Wallets by % of unique bitrefill users

The previous tasks I showed were for Bitcoin. Now, let’s look at crypto as a whole for the wallet selector in Bitrefill and suddenly, a new winner emerges. The largest crypto wallet in the world is Metamask. It doesn’t even support bitcoin and this is by users. If you count by Euros it’s going to be even bigger because they make bigger transactions because it’s expensive. It’s important to be aware of this dynamic. At Bitrefill, we’re very Bitcoin biased, we speak at Bitcoin conferences mainly, this is an unexpected outcome.

The conclusion that I draw is that we live in a galaxy that circles around the black hole. I call that the casino. It’s a collective name for everything speculation related. Frankly, even just plain buy and hold bitcoin is a speculative activity. The way that Satoshi described, it might make sense to get some in case it catches on. We’re speculating on the fact that bitcoin will become the money of the future and because of that it was going to go up in value. That’s also speculative. So we’re all in this universe that circles around the casino but there’s also other things that are even more casino.

How do people talk about Bitcoin Lightning?

Let’s go back to lightning and see from the movement and the tool how people actually talk about lighting. People that use bitcoin as a tool they’ll be like “lighting is great, it’s fast and cheap” and then they’re gonna be like “okay how do I get my salary on lightning” and then the next question is “how can I lock my value into USD because it’s my salary and I actually don’t want to speculate with it, I want to pay my bills next month as well” and then “but how do I buy shitcoins with it?” An interesting thing is that if you look at bitcoin “the movement”, in the community people are super excited about lightning. We have lightning emojis in our twitter handles, lighting is the future, it’s going to make shitcoins obsolete and there’s certain things that you should do to express your support of lightning: you should run a node and support the network (I still don’t really know what that means) and you should you know “I earn yield on my bitcoin with lightning because I do routing of transactions and I’m very concerned about liquidity”. But there’s not much talk about actually buying shit. Because lighting is a political and a technical invention. There’s a lot of people that love lightning that don’t necessarily use it. There is a certain teenage sex type of thing, where everybody is talking about lightning and everybody thinks that everybody else is using it all the time. I’m not but I’m going to keep it down low on that.

The problem with Bitcoin Only™

That brings us to the marketing problem and also what the problem is with this whole bitcoin only movement and it has been growing lately which comes from a place of good values but it ends up limiting marketing to the people that are in the intersection of the movement.

So, we have this galaxy that spins around the casino and then there’s this little lightning only, bitcoin only circular economy that is trying to build its own little galaxy outside of that and doesn’t interact with the big one. I’m not saying what should be done, that is up to everyone to assess and make choices. There’s a very good argument for building the parallel galaxy.

Strenghts of the casino

The casino has a lot of strengths and I think we need to be honest about it. It has access to almost infinite capital from trading revenues and venture. As a result, the casinos become the on-ramps. They build the on-ramps. The best example was the Navalny campaign in Russia. They had a donate with crypto and they had two options the first one was “donate with bitcoin” and the second one was “donate with Binance Smart Chain”. They had a ref link to Binance because that’s the best on-ramp for Russians. Again they use it as a tool, they’re not here for the movement. They don’t care about any of our stuff, they just want to get money and that actually ended badly because the Binance is KYC’d and they ended up giving out the KYC information. They ended up giving away the information to the Russian government and people got in trouble but that’s more of a problem with Binance the exchange, not as much with Binance Smart Chain. The casino also brings us an important thing which is stable coins. It’s in high demand for people who live on bitcoin. They want their value not to go up and down. We see the growth of Tether but also stable value things like Strike and other custodial stable value services. Then the casino has “number go up”, it has a much better number graph and the yield stuff else has, but enough about this.

Know your customer persona

It’s important to know your customer persona. For Bitrefill, we see the world like this: our customers are those who use bitcoin as a tool and people who are in the movement are our friends. You buy your friends beers and you show Google ads to the customers so that they can find out that your thing exists because they don’t come to conferences. It’s important to be mindful of what is your friends and what is your customers and they can be different, in our case it’s very different. It always amazed me how on Bitrefill I can post “hey, we’re looking for a translator for Georgian language” and within 10 minutes we get five strong leads but if I’d be like “hey, we have some gift cards you can buy in Georgia” and silence there. We’re part of the movement and so our friends are in the movement but a lot of them are not interested in buying stuff and that’s fine we shouldn’t guilt them.

Job to be done – make it exciting

So, what is the real job to be done? What is the customer trying to achieve really? You need to interview them a lot, ask follow-up questions and maybe even get them drunk so they actually expose what a real job to be done is. I’m talking here for people who are building in the space. If you’re building a tool, a company or a service, it’s very important to know what the real job to be done is. You can build things for “the movement” by the way. There’s a lot of companies where the customers are members of the movement and they build things for them and it actually helps in a lot of ways because you get a nice push, twitter gets behind you and you quickly manage to convert a large part of the movement into your customers. The biggest thing is, it needs to be exciting. We can’t moralize. In the end, if we’re going to get billions of people using the stuff, we don’t need to get them to care so much that they would travel to conferences. A lot of people have other options. There are some people that are here either by choice or because they have no other option but there’s also a lot of people that can use bitcoin but can also use other things. For those people, I actually don’t believe in moralizing, I think that we need to make it exciting. I don’t know if you’ve watched Bitrefill on the internet lately we’ve been doing a lot of stunts and new brand. We want to make it into a lifestyle brand, into a statement like “hey I’m the kind of person that lives on bitcoin and this is something that I do and that’s pretty cool and exciting, it’s not something that I do because I feel like I should support the community. No. I did this for me because it’s fucking cool!”


You remember, I bragged about less than 200’000 transactions per month? Coinbase alone has almost 100 million verified with identity customers (they’re public company and can’t lie about this). All of our metrics is still two transactions per month per thousand of Coinbase verified customers. There’s a pretty big opportunity and maybe we should look at people that have tried a little bit of bitcoin and crypto and see how do we get them into the circular economy? How do we get them into using the tools that we are building? How do we build tools that are useful for them? If we grow those kinds of metrics, if all of those become part of the circular economy, we’re in a good track for the cypherpunk dream. But it’s not an easy task and the reason why I’m sharing all of this is because we can’t do this alone, we need other people to also build these things. The dream is a world where we see Bitcoin companies doing big billboard ads on the streets in a world where it actually makes sense and that’s the world that I want us to get to. I’m gonna end there and in the mandatory glory to Ukraine and to all of the bitcoiners that are literally fighting for the literal freedom right now.

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Also read: Conquering time and space

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