Episode 180 - Johnathan Chester - Bitwage

the absolute best guests, some of the smartest minds and real innovators in this space. And today I'm so happy to be speaking with Mr. Jonathan Chester of Bitwage. Jonathan, how are you, sir? I am doing good. Happy to be here and listening to the soothing sound of your voice. Thank you, my friend. I am happy that you accepted my invitation and I'm glad that we're able

to talk because you guys are real pioneers in this space. And you've been around for a long time. There are a lot of folks who are new to Bitcoin and crypto. And because you know crypto years are like dog years. They've been around for a while. But you guys have been making headway for a very long time. So before we start to discuss Bitwage, let's talk

about you. Jonathan, how did you get into crypto? Yeah, so I got in in 2013. I was working at Oracle at the time. And when you work at a place like Oracle, it's hard to not feel like a clog in the machine. So, I'm going to talk about it. So as I was clocking away, I wanted to enrich myself to learn about what was happening in

the world of technology. And so I, every day, made sure to learn something new. And one thing that I learned came across on a TED Talk called the future of money, tied sweat and Bitcoin. And it seemed interesting. And I watched through it. And at the end of it, it was talking about how Bitcoin could be the future of money, how it could enable people to

be financially sovereign, to bank the unbanked, to provide efficiencies across board of payments. And I became intrigued. I spent about a month after that going way down the rabbit hole. And I came out this obsessed Bitcoin. Bitcoin geek, going around, telling everyone at Oracle, you got to buy Bitcoin. You got to buy Bitcoin. And at the time, there was this huge price search where Bitcoin was

having multiples as it searched past $1,000. And I was feeling pretty happy about what I was telling people. And of course, because I was this crazy Bitcoin guy, everyone kind of joked about it. But they actually introduced me to another person at Oracle who was a crazy Bitcoin guy, who was mining Bitcoin. This is John Lindsay, my co-founder at Bitlage. And that's how we kind of

got together and thought, look, Bitcoin is going to be the future of money. If it's going to be the future of money, then people are going to need to be able to get their salaries in it. And if no one is currently addressing that, let's be the first ones to do it. And so we quit our jobs in June of 2014. And a month later, we

launched our MVP with Bitlage. You always hear about right place at the right time. And you always hear about synergy and energy. And for you to meet someone just as geeky, Bitcoin geeky as you at your previous employer, and to start something that created the first of many successes for you guys is amazing. What drove you specifically towards wages? Because a lot of the people that

I talk to, when they got into the space, and when I say into the space, I mean, I'm referring to building in crypto, they always start like wallets or coins or tokens or exchanges. What was it about the wage kind of piece that really resonated with you and John? Yeah, so we looked at what existed in the market. Right, there were wallets, there were exchanges, there

were merchant processors. And if you thought about the financial loop, you know, a consumer goes in to an exchange, they buy the Bitcoin. Bitcoin goes to their wallet, they spend the Bitcoin merchant process is it. And then at that point, there was no way for the merchant to rely on bravely and scalability, then use that Bitcoin to pay the pay their employees. And as a result,

there was no financial loop. Bitcoin could not exist within its own financial ecosystem. So we said, well, that needs to be closed, someone is going to close that loop. So let's have it be us. And that's how we, that's how we really got started. Of course, 2014 was extremely, extremely early, way too early. for Bitcoin and cryptocurrency payroll services. Employers, when they heard this, they didn't

didn't even give it a thought. And so what we had to do is we had to see where the market was. And we found out that employees wanted this. So actually in the end of 2014, beginning of 2015, we launched the first Bitcoin direct deposit product, which meant that you could sign up to our service, get a direct deposit bank account connected to any payroll service,

get paid into that and have Bitcoin deposited directly into whatever wallet that you had. And that was really when we started to catch on was through was through that service, which was enabling the end user to get paid in it because the companies were too afraid of the lives of the company. And that was the ability to afraid of this new concept. I mean, I don't

know what you were thinking about Bitcoin 2014, but it wasn't on anyone's radar back then. Like it is today. Of course, you fast forward to today. And now it's sort of it's this obvious use case. Coinbase just launched a direct deposit functionality, which deposits into Coinbase. We have that functionality that deposits into any wallet in the world. And we also have the functionality to make it

scalable for companies to offer it as a benefit. And that's that's where we are today. And you know, what will be enabling in the future is essentially the ability to do Bitcoin and cryptocurrency payroll on a mass scale from every company. Right. That's awesome. I totally agree with you. 2014. For me, because I got it in 2014, 2014 for me, Bitcoin was a way to pay

for flights. It was a way that I could make an investment in something that I plugged into the wall. This was my basic understanding at that point. I plugged this machine into the wall. I connected to the internet. I joined a mining pool. And every six months, I'll have enough money to fly somewhere. I never for saw. I never saw this come. Never saw this come.

I never saw this level of mass adoption. I never saw as a matter of fact, I never saw Bitcoin and crypto will Bitcoin specifically as a store of value. Because when I got into the space, Bitcoin was money. And you were trying to find places to spend it. You know, to me, like providers like new egg and. Overstock. Oh, thank you. Overstock. Cheap air, Expedia. You

know, I was purposely seeking places like that out. I was trying to red pill food trucks. And in a mirror mesa and at the beach in San Diego into taking Bitcoin and name coin and like when I told myself for the name coin, but. You know, drift. You know what I mean? I was trying to red pill. But it was just a bit of a problem.

And I was trying to call it a, the real thing. I was trying to find people. And it just, it wasn't as big as, as, then, as it is now. And I totally agree with you guys were way ahead of the curve and the ability to be. Both flexible and nimble. To identify that. One boarding users would not happen through the employer, but through the employees

was absolute genius because you've positioned yourself as a market leader in this space. So. Tell me about Bitwitch. I've told you, you've told me about you, your co founder, the idea behind it. How you read, but tell me about the company itself. How many are there? Is it just you and your partner? Is it what services what other services do you offer? Yeah, yeah, happy. Yes.

So Bitwitch, a bit which we've performed. We have over 120 million dollars in peer transactions today. We have over 50,000 registered users and 2000 registered companies on the platform. And our team has grown spectacularly since the beginning of COVID. Our business has grown almost 150% and our team has grown from 10 people to 25. So really, it's it's been, it's been extremely strong. And we've been

able to make sure that we've got a lot of people to be able to make sure that we can make sure that we have a lot of people. And we've grown an extreme strong couple of years for us. This is we have two main products, a B2B product and a B2C product. The way it works, I'll go into the B2C because that's what was quite popular

before 2020. Then we also have B2B product. Which enables the company to offer this as a benefit to their employees. And the main differentiation here is that there can often be some overhead for finance and HR to actually change employee direct deposits. Whereas if they use our system, we're able to sync directly into their payroll system and automatically do it. So there's no overhead for finance

and HR. We also enable the employer to use it as a benefit to acquire and retain new talent, especially as it pertains to this current working environment where Gen Z and Millennials are looking to get paid in Bitcoin cryptocurrency. And yet it's hard for companies to actually hire people in these age groups. And so we make it seamless. We make it easy to do. The employer

is able to, as well, next year provide matching services. So if you wanted to add the benefit of, say, allowing your employees to get a match of up to $50 each paycheck, if they get $50 of their paycheck into Bitcoin, they can do things like this. So that's kind of where our product is going to be. So we have a lot of services that are in

where we land. We enable employers, payroll companies, HR systems to pay to any wallet in the world, which I think is one of our main differentiators. And an important thing because wallets are going to become a commodity. You were mentioning wallets. People are thinking about wallets. Wallets are going to become a commodity. Every bank, every FinTech company, every technology company is going to have the wallet.

Right. Google will have a wallet. Paypal. Paypal already has a wallet. And so everyone's going to know and have the place where they want their money. And they're going to need systems that allow them to get paid where they need it. And that's what we're enabling. Okay. So I want a portion or all of my wages in Bitcoin. I work for a company that is not

going to be able to get paid. I'm not offered this service. I can go to the BitWage website. I'm assuming there's KWIC involved. I'll do this KWIC. And I am going to deposit funds where. Yeah. So you want. So when you sign up, you'll get a direct deposit banking details and account and routing number. And then you go to your employer and you say, I want

to get paid. 80% in my normal checking account and 20% into this set of banking details. And on payday, the funds will hit the account. Be converted into Bitcoin and then sent out to you. And you can change the percentage on the BitWage side and on the payable provider side. And what we've seen is that oftentimes people are able to actually get access to the bank

account. So if you're going to get access to their Bitcoin before their dollars have finished processing their bank just last week. I was talking with the customer said, wow, I've got my Bitcoin. And it still says pending for the dollars in my bank account. How's that for technology. So this is amazing, man. I'm listening to this. And. I'm going to sign up. Nice. So this, you

know, full disclosure, I'm not shilling, but yes, I am shilling. I'm going to do it. What types of fees are involved for me, the employee, if I decide to sign up for this product? Yeah. So our lowest, our lowest fee schedule, which is what you're going to run into is going to be. One percent of the dollar conversion into Bitcoin. And that one percent is translated

into a rate. So what you end up seeing is just an exchange rate at the end of the day. And we're making money on the difference between what we can buy and the rate that you're going to get, which is one percent. Now that, my friend, sounds awesome. That's better than Coinbase. If you're going to get a coin, you're going to get a coin. If I'm

not mistaken, it's also better than cash app. Yeah. That's better than most places where you buy, in the choir, Bitcoin or cryptocurrencies. Now, I want to be specific here. It's not just Bitcoin. We can get other cryptos also. Is that correct? So today, you can get Bitcoin, Ethereum and stablecoins. Okay. Yes. So perhaps you want a stablecoin direct deposit into a yield account. You can do

that. You can get direct deposit of Ether or Bitcoin. We don't offer too many cryptocurrencies because in general, people are not dollar-cost averaging into smaller market caps. And we take a pretty conservative approach. But if you have access to Bitcoin, Ethereum, and stablecoins, you then have access to, you know, buying on any sort of exchange or decentralized exchange. Afterwards, on your bulk purchases, on, you know,

whatever microcap, it is that you that you want to speculate on. I like that idea because I may want to buy the dip. And if I have an allocation in both Bitcoin and in Ethereum and or in a stablecoin, specifically a stablecoin, that I'm positioned to buy it by the dip, if and or when one should occur. You know what I mean? Yeah. So I like

that setup. And, you know, my personal position is that I look at Bitcoin, cryptocurrency and stablecoins as three, three different areas, right? Where Bitcoin is really trying to be, you know, a monetary store of value. And cryptocurrency is a much more speculative world, right? You have Ethereum, which, I think, is a very important thing. I see Ethereum as an AWS competitor, that it is the decentralized

version of AWS. And, you know, there's all sorts of speculation that can be done in that world as well. And then you have stablecoins, which is just, you know, a way to interact with that world. While, you know, well hedging against vaulting, you know, the whole world is going to be, you know, a little bit of a problem. And I, you know, well, you know, you

know, you have a lot ofiality for short periods of time. As you said, so that you can buy the dip. I agree. Agreed. This is this is quite insightful. I, uh, again, I like talking to people that are smarter than me, because every time I do one of these episodes, I learn something new. And most importantly, my listeners learn something new. So for the. Ladies and

gentlemen that are in the cigar lounge right now, you probably got, uh, Davidoff or Opus or Attabay or Byron in the air. You maybe got some bourbon. If you like me, you like weird pairings like sake, you're smoking you're listening. Um, this is the cheat code. An easy and inexpensive way to have exposure to Bitcoin cryptocurrencies and stable coins. And a manner that is familiar to

you because nine out of, you know, nine out of 10 of us have direct deposit anyway. Right. This is a very easy way to get started. So, um, I appreciate you sharing that Jonathan. So what else does Bitway to have coming in the pack right anything new, anything we should be mindful of. Yeah, I appreciate you. You mentioning that or asking that just last Monday. We

announced that we did the first payroll on the Bitcoin Lightning Network. So for those that don't know what the Bitcoin Lightning Network is, it is a second layer solution that allows people to transact with Bitcoin in a decentralized manner. Instantly, uh, costing, you know, less than a cent to do a transaction. So that just went through, we just announced that it actually happened. Uh, the transactions

actually happened at the end of November. And what this, what this means is we've, you know, enabled the world for world's first ability to do decentralized, decentralized instant nearly cost free payments on the Bitcoin blockchain, which is a major thing. Because as I said before, Bitcoin, Bitcoin's money, and this is the fastest and cheapest way to get paid in money. And I think it's, it's, it's

quite a revolutionary thing. If I do say so myself, um, this was a, a POC for us. So we'll be launching a full fledged product of that later on next year. Proof of concept that is earth shattering. If you think about layer two solutions for Bitcoin and what the Lightning Network means to the future of payments. Um, thank you for sharing that, man. Yeah. Yeah. And

it's also really interesting. The people who got paid, we had, uh, a professional sports player, um, from the United Soccer League, USL, which is the second largest soccer league in the United States, Alex, um, terrible pronouncing his last name. So I'm not going to, I'm not going to try. And then, uh, and then, uh, we also have, uh, the CEO of BitNob who, which is, uh,

Bitcoin exchange in Nigeria. Got his salary in Bitcoin. And I think that Bitcoin has a really interesting story. Um, for Bitcoin as well. Because, uh, they have such terrible inflation in Nigeria that when you get paid in Bitcoin, you're, you're, you're making, you know, 10, 20% more of your salary. So doing it on the lightning network means that you're, you're able to do that much faster

and without any of the fees that come on the, the base layer of Bitcoin, which people know can be $10, $20, $30, not a size of Ethereum, but still expensive. Yeah. I remember the pre-segued wars when in 2017, it will cost like $80 to $100 to move $50 in Bitcoin. I remember those days. So you guys are really doing great things, man. Great things. So one

last question for you, Jonathan. Where do you see the future of Bitcoin, cryptocurrency and blockchain technology in the next three to five years? Yeah. So obviously I have a, uh, a view in terms of payroll. And right now, we're starting to, to, to see the movement towards Bitcoin payroll, uh, cryptocurrency payroll athletes are getting paid, but not just athletes on Bitways. We see architects. We see

architects, retail workers, healthcare workers, software developers, government employees, the whole gambit. So if, if you can think of a demographic, that demographic is already represented in the people who are already today getting paid in Bitcoin. And in, in five years, I'm expecting that the average person is going to get at least 5% of their salary in Bitcoin. If you look at the personal income numbers in

the United States, how they're growing, what that's going to mean is there's going to be a trillion dollars being processed in cryptocurrency direct deposits. So that's going to be a, a huge thing. And it's going to contribute obviously to the buying pressure of the market. Because that's a, that's just constant, reliable buying pressure, which I think is going to not only contribute to rising prices, but

also contributes to stabilizing prices. And when we get to this kind of mainstream movement, when every bank, every fintech, every technology company has their own wallet, and every employee is getting 5% of their salary in Bitcoin or crypto directly deposited to where they need it. Sounds like a beautiful, bright and profitable future for a lot of people. People who are looking for sound money, people who

are looking to reduce friction between the pay year and the pay year. People who are looking for stability in their currency. And people who are just going to get paid. So Jonathan, I want to take a moment, my friend, to thank you so much for joining me here once regards and crypto. Tell me and tell my listeners where we can find you and Bitwage online. Yeah,

so you can find me at John Chess on Twitter. I think finding Bitwage at Bitwage on Twitter. We host Twitter spaces every week, maybe multiple times. And of course, our website, www.wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Thank you so much for spending time with me today, educating me and my listeners. I really do appreciate it.