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El Salvador's Bitcoin adoption is a 'historic moment': BitGo CEO

Mike Belshe, BitGo CEO & Co-Founder, discusses El Salvador's utliization of BitGo-powered digital wallet Chivo as Bitcoin rolls out in the country as legal tender.

Video transcript


ZACK GUZMAN: Welcome back to Yahoo Finance Live. In today's Crypto Corner, we are taking a closer look at the experiment that caught the world's attention when El Salvador announced that they were going to be making the big step to accept Bitcoin as legal tender. In that push, the country rolled out their digital wallet Chivo and actually paid citizens to sign up and gave them Bitcoin in those wallets-- it's very interesting-- and of course, pushed forward with the mandate that merchants accept Bitcoin at point of sale if El Salvador citizens wanted to pay that route.

And all of it's being done through the Chivo wallet. Very interesting to see that rollout take place. There have been some issues maybe around that wallet and as people get caught up to speed with it. But the company helping out in that effort, building the rails behind the offchain between blockchain and Bitcoin and the Chivo wallet is BitGo. And their CEO and co-founder, Mike Belshe, joins us right now to chat a little bit more about how the rollout's gone.

And Mike, I mean, this is big. It's hard for people maybe who are here in the US to understand what really is going on here. But you have a country that had a lot of people who were unbanked. All of a sudden now, more of them using the Chivo wallet. So it's a pretty big undertaking here. But talk to me about what you've seen as you've helped in rolling it all out.

MIKE BELSHE: Sure. Well, you know, we're really honored to have been selected by the Salvadorian government to participate in what they're doing there. It's an historic moment for the world, where, for the first time, a sovereign nation that's taking on digital assets, Bitcoin, in a way that's never been done before. So rolling out a single app to all of your citizens, 6 million people is nothing less than a huge endeavor. They are about 50% penetrated today. About 3 million have signed up. They've got more inflows of additional Bitcoin from their users than outflows.

So things have been going pretty well. I think sometimes you hear that maybe there were some glitches. To be honest, I think given the size of what they have taken on, I think it's gone incredibly smoothly. And I give credit to the El Salvadorian government for having done a superb job on that.

ZACK GUZMAN: Yeah, and I mean, I guess there's an education piece to this, too, right? And it's something that would have happened here in the US, where maybe some people who had never heard of Bitcoin, never knew how cryptocurrencies worked before, to kind of use these things.

I mean, in that rollout, I guess, what have you seen in terms of actual usage? Because I mean, signing up to use the wallet and getting free Bitcoin is something that, you know, I don't think a lot of people might need convincing for. But to use it instead of dollars or not sell it immediately to get dollars, I mean, that's kind of a tougher temptation to resist in El Salvador, I'm sure.

MIKE BELSHE: Well, let's see, a couple of things. You mentioned education, and everybody that comes into the digital asset or Bitcoin space, first thing is, it's like, wow, this is very different from anything I've seen before. How does it work? How do I use it? What does it mean? So those questions have been coming up in droves. And it started out, you know, there were minor protests in El Salvador itself, you know, from some people that weren't sure what that meant. There are questions about what does it mean to accept payment.

And then, of course, there's finally deployment of this app, which is unlike anything that they've seen before. You've got a combination of people that have never used banking apps because they've been unbanked and a combination of-- and people that have used banking apps which just operate very differently.

So, a lot of work to be done there in terms of people coming up to speed. But the net result is all pretty positive. So I think we're going to continue to measure up and to the right types of metrics in terms of users, in terms of transactions. The El Salvadorian government will share those, rather than me. But so far, like, all the signs are positive. And we can confirm that.

AKIKO FUJITA: Yeah, Mike, let me push back on that a bit. I realize we're only a month into this experiment. So it's too short of a period to say, well, this is exactly how it's going to be used. But it's largely still been used for remittances. And even with remittances, it's not a significant part. And then you look at businesses, you know, more than 90% of businesses who said they had zero transactions on Bitcoin. So, what's the benefit?

MIKE BELSHE: Well, let's see, a couple of things. You identified remittances. And as you know, El Salvador receives a tremendous amount of, relative to its GDP, in remittances. It's got a number of citizens that are abroad. And they are sending money back constantly. I wouldn't expect a 30-day window to suddenly open up to the Bitcoin. But we will see it increase.

Just another data point, which is not El Salvador, but it's BitGo itself. We've offered to our clients the ability to pay our bills in either dollars or Bitcoin for quite some time. And for our clients that operate abroad, they largely choose to pay in Bitcoin because it's simply much easier to send those payments than it is to use the banking system. So I'm confident the remittances will start to pick up over time.

The second question about payments is one that's really open-ended for Bitcoin and things. As you know, Bitcoin is a very volatile asset. And frankly, volatile assets usually don't make great payment systems. Now, it's volatile today because it's early. It's volatile today because it's not connected efficiently to the markets around the globe. That's what we're working on at BitGo, you know, trying to institutionalize the space and make the market structure right. As we are successful in that and it's been growing-- you know, pretty much every bank on the planet has a Bitcoin initiative in the works right now.

So as that becomes more successful, the pipes get plumbed around the globe. The volatility will go down, and then we'll start to see payment applications really increase. So El Salvador might be a little bit ahead of their time on payments. But I think we're going to continue to see Bitcoin used in ways that's never been used before because it's the first time that's been rolled out to an entire citizenry.

ZACK GUZMAN: Yeah, and I mean, there is the payments aspect. And then, I suppose, there's also the unbanked aspect there in El Salvador. And you talk particularly about the rural citizens out there, who may not have had access to banks, this opening the door there. I mean, is that kind of-- it's tough to tease out whether or not it was transactions or more so that other piece there that really was the driving factor here. I'm not sure in terms of what the data there would say around Chivo take-up rate.

MIKE BELSHE: Well, for sure. Look, the unbanked have not had access to any banking infrastructure. And the Chivo app gives them a first point there. I think that this is, again, still kind of early. You know, as you point out, there's not a lot of payments going on in it necessarily yet. As that increases more, the economy will move on to it. It won't happen in a 30-day window, but it'll happen over time. And I think as we look back at it kind of year over year, we will see that it will continue to meet its goals.

AKIKO FUJITA: You mentioned the education part of this. And so much of it is just kind of familiarizing people who aren't as familiar with Bitcoin to actually how this can be used. And a lot of that also comes down to trust, I imagine, in terms of adoption. There's been a lot of these reports of people who said, look, they tried to withdraw cash from their Chivo wallet, and they couldn't. I realize it's a large rollout, but how much of those technical issues that were reported early on have already been resolved?

MIKE BELSHE: Well, I guess, I don't know the answer to that question. I don't know how widespread those were. It's difficult to sometimes tease apart anecdotal evidence from actual trends. I think that there's probably been plenty of anecdotes. But on a trend wise, those would be fixed and soon will be ancient history.

Maybe another way to think about this, though, is look at Wechat-based payment adoption in Asia or other electronic payments which are similar, where you can be at a farmer's market and you can now pay electronically. Now, those are backed usually by the actual banking system. But here, you've got the same user interface now showing up in the Chivo app, where it's actually cash that you control. No one can take it away from you. It's your private key.

I think there is education required to get there, but the fact that it's been overcome in Asia at such a large scale indicates the educational happened pretty quickly. And I think we'll see positive news in the short-term.

ZACK GUZMAN: Well, back here stateside and elsewhere, I suppose, as you know, that's going on down there in El Salvador, there's a big push in DeFi and everything else in BitGo, you guys partnering up with MetaMask, the big kind of widely used wallet there to kind of access all these DeFi pieces.

Talk to me about that partnership and kind of, I guess, the growth because I'm always wondering. I mean, MetaMask is a big step up. Maybe you buy Bitcoin on Coinbase. That's one entry point, but then you step up to MetaMask, and you're using Ethereum. You're paying gas fees. You're in the next chapter of your crypto evolution here. So talk to me about that partnership and what you've seen in terms of people using it now.

MIKE BELSHE: Right, well, this is all just part of the fantastic innovation that comes when you start using software across an industry. And the financial services industry is being invaded with this blockchain-based software. So, the use case that we're talking about first with El Salvador is around Bitcoin. It's around store of value payments. But what's happening with DeFi is we're unlocking a whole new set of use cases, where it's about borrowing. It's about lending. It's about generating yield. It's about insurance, a number of things.

Now, DeFi is early stages. It's far less mature than where kind of Bitcoin core is. But it's growing. And I think it's proving that there's clear demand for these types of use cases. And it's going to continue to evolve. So our partnership with MetaMask, very excited about that. Make sure that the BitGo wallets are able to seamlessly interact with those DeFi markets. And it is the next wave of future financial services.

ZACK GUZMAN: It's been fascinating to watch and interesting to see that partnership come together. But Mike Belshe, BitGo CEO and co-founder, thanks again for the time and keeping us posted on all the things happening down there in El Salvador. Be well.