BTC Sessions - Exploring the Liquid Network with Blockstream's Samson Mow EP012

Episode Date: January 24, 2020

Today’s guest is Samson Mow, CSO at Blockstream. We dive into Blockstream's Liquid Network, what it is, and who it's for. Samson on Twitter https://twitter.com/Excellion  Read more about Liquid Network https://blockstream.com/liquid/  Read more about Blockstream https://blockstream.com/ Check out my YouTube tutorial for Blockstream Green https://www.youtube.com/watch?v=uO3Zi9D5b0Y SUPPORT THE SHOW! Visit LEDN to check out getting a bitcoin-backed loan https://platform.ledn.io/join/0a00cca3dd61dea5909c95cd41f41685 Get Wasabi wallet and enjoy your privacy https://wasabiwallet.io/ Wasabi Tutorial https://www.youtube.com/watch?v=ECQHAzSckK0 Check out Rise Wallet – the easiest way to onboard your pre-coiner friends to Bitcoin! https://www.risewallet.com/ Rise tutorial https://www.youtube.com/watch?v=X2VUjj6wPM0 Get NORDVPN to protect your online privacy. 75% off a 3 year https://nordvpn.org/btcsessions

Huddled their Bitcoin. What's up, everyone? I'm Ben with the BTC Sessions, and today I sit down with Samson Mao, the CSO at Blockstream, to discuss the ins and outs of the Liquid Network. Now, before we get started, of course, shout out to sponsors of the show,

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As I said, I love it. I gifted it to a bunch of people around Christmas and since them, and they all found it quite easy to use. So if you want to check them, head over to arisewollet.com and click on locations to see where you can pick one up. Now, currently it's only available in Canada, but they are looking at expanding, so keep an eye on them. And with that, we will dive into the interview. This interview actually happened a few months back in October of 2019, but I figured, now that I have a podcast going to compliment the YouTube show,

that it would be a good idea to start to pour over some of these important interviews that I think are worth a good listen. So please do enjoy this interview with Samson Mao CSO at Blockstream. Welcome, everyone. Very excited today to have on a special guest, Samson Mao, CSO, I believe that's the right title, at Blockstream. Thanks, man. Thanks for coming on. Thanks for having on the show. Yeah, yeah.

So we spoke way bad. I can't remember how long ago, but I had you on the show. A couple years. A couple years, yeah, a couple years. So, I mean, we've run into each other. since. I saw you in Riga recently. And were you, you weren't there for Bitcoin 2019, were you? I was. Were you? Okay. So we must have bumped into each other very briefly there, but we didn't get to chat very much. But yeah, good to see again. We're here to talk a little bit about

liquid, and we will get into that. But I was wondering, as a preamble for anybody that's watching, that's maybe unfamiliar with you, can you give just kind of a quick summary of, of, of who you are, what you do, and maybe a little bit about Blockstream as well. Sure. So I've been in the space from, let's say, late 2014. I first worked at BTC China, BTCC. It's crypto exchange and mining pool. And after that, I joined Blockstream.

And I also have a game company that's building on some of Blockstream's tech. The game company is called Pixelmatic, and the game is Infinite Fleet. Oh, sweet. Awesome. I didn't know that, actually. Awesome. So what about Blockstream then? What does what does Blockstream do? So Blockstream, we call it a Bitcoin infrastructure company, a Bitcoin and blockchain infrastructure company. We try not to use blockchain too much because the connotations are not that great.

So we're leaning more towards Bitcoin infrastructure right now. And I guess what that means is we build a lot of foundational aspects of the Bitcoin ecosystem. So we've been invested in Lightning R&D since 2015. We were founded on the sidechains white paper, and that is the foundation for liquid, which is a side chain inter-exchange settlement. We have green address, which was rebranded to Blockstream Green, which is a secure, advanced, multi-sig wallet. And we have Blockstream Satellite, which is a satellite service that broadcast Bitcoin blocks around the world for free. It helps keep the network in sync in the event of network partitions. But you get the idea. We work on a lot of protocol level stuff. We have one full-time developer contributing to Bitcoin Core, Dr. Peter Woolley.

I'm not saying it right, but I can't. Yeah, I don't know either. Yeah, but yeah, we have a lot of guys working on protocol level stuff. We have a lot of mathematicians, cryptographers. Adam Beck is the CEO. He's a, you know, original cypherpunk and hardcore computer scientist cryptographer. Awesome. Awesome. Well, that's great. And one other question about Blockstream, are you CIA or are you lizard people? Lizard people. Okay, I just wanted to confirm. I thought that was the right answer, but I wasn't

100% positive. So awesome. So we're going to, I know there was a lot covered in kind of what Blockstream is doing, but I wanted to kind of zero in a little bit on liquid for this chat. So you kind of briefly summed up. Can you one more time explain from kind of an higher level, what is the liquid network?

All right. I think it's easier to explain first what a side chain is. Okay. So you have Bitcoin and it has a blockchain, which is a chain of blocks that is extended and each block has transactions and is linked to the previous block through a hash. Therefore, you have to rewrite, you know,

everything subsequent to the block you want to rewrite if you want to change history. And liquid is a side chain. And what that is is another block. blockchain, but without its own native currency. So it's kind of like something is anchored on top of Bitcoin. So to get Bitcoin in liquid, we call it LBTC to differentiate it, you have to first lock up Bitcoin on the main chain and you unlock it in liquid. So therefore, you only will have potentially 21 million Bitcoins in liquid because it's based off a Bitcoin. And you get additional properties when you peg in Bitcoin to liquid.

So pegging in is what we call the process of locking up Bitcoin on the main chain and unlocking it in liquid. And there's some parallels to how Lightning works there too. Lightning also, you know, it locks up Bitcoin in channels. And then you can transact it off chain. So Liquid is also the same idea. You're transacting off the Bitcoin main chain in this layer 2 or layer 1.5 solution that sits above the main chain. Cool. So I want to touch on that a little bit.

So you were talking about locking up Bitcoin. So it's essentially unspendable on the main chain when you kind of essentially create, not create, but in essence, I guess, you're kind of creating a pegged token to Bitcoin when it is locked into the side chain that is the liquid network. So a lot of people are super concerned about the ability for this to become fractional reserve. And can you point to how auditable is this? And how would one then audit that indeed there are not more LBTC than Bitcoin? Because that's a source of confusion for many people. Right. So you can run a elements core node, and that is basically how you would audit the liquid blockchain.

So you can actually monitor and check everything. We also have a block explorer at blockstream.info that can explore the Bitcoin blockchain as well as the liquid blockchain. And that's how you would, as an average user, check to make sure. If you really want to get into it, the code is open source. Liquid is a fork of Bitcoin itself. So you can audit the code and see how it works, how it functions. But it is a one-to-one relationship. And you can monitor also the Federation wallet.

So you can see how much Bitcoin has been pegged or locked into this wallet. And that would be the Bitcoin that's available in Liquid, which is right now about 90 Bitcoin or something like that. Okay, cool. All right. So we have this instance where you can audit how much is in the system. You can audit that the Bitcoin itself is actually locked up and you're not having inflation happening here. Now, how does the trust model differ from something like Bitcoin, where it's essentially trustless to something like liquid? Again, source of confusion for a lot of people. Right. So Bitcoin is dynamic membership. So anyone can mine Bitcoin and extend the Bitcoin blockchain. Like you can buy a couple A6 and start mining and so can I. But Liquid is a federated blockchain. So what that means is there are a set number of members of the network that are generating blocks. And that's why we can have faster block time. So Liquid has one minute block times,

which allows for final settlement in two minutes. And the reason for that is because the parties are known and they're defined. So it is centralized in the sense that is federated and the members of the federation are fixed and they're known. And right now the members are largely exchanges. But I think it's an acceptable tradeoff because it is an inter-exchange settlement network. So it's for moving Bitcoin that you would have in custody of one exchange like BitFinex into the custody of another, exchange like bitmax so instead of trusting one you're trusting a federation of them yeah and what we're having what we're building down the road is dynamic federations which is essentially dynamic multi-sig

so we can actually grow the federation the functionaries past the number of 15 which is right now how many there are so you can have you know up to hundreds a few hundred functionaries and the network will get bigger and more robust. So why the current, is it a limit of 15 right now? Well, 15 functionaries is what we launched with. There's like 30 some on members, but 15 are actually running the hardware. And we're planning to do this upgrade sometime early next year where we can expand the network and we'll give additional functionary boxes to the other members that wanted them. Yeah, the functionaries are basically like the miners of the network. They're the ones that are generating the blocks of the blockchain.

Okay. And so I guess to dive into this, thinking adversariously, how, you know, what would it take to compromise the network? Like in a worst case scenario, what would be the factors that would contribute to something no longer being trustworthy

and what assurance is do we have that, something like that wouldn't come to fruition. Right. So just like with Bitcoin, you can have a 51% attack, right? If a large portion of the miners, it can actually be less than 50%, but 51% is like the popularized term, right? But you could have 30% of the network attack too, and they can be successful. But, you know, let's just say 50%.

So 50% of miners can attack the Bitcoin blockchain and you can create double spends that way. for liquid you need two-thirds of the federation to be honest if more than two-thirds are dishonest they can also steal funds or collude so to do that I guess they would have to all agree which is not likely because these are all exchanges or reputable financial institutions we have six is one of the members it's a Swiss Stock Exchange it's the digital group of the Swiss Stock Exchange it's the digital group of the Swiss Stock Exchange exchange. And of course, we have bull Bitcoin, you know. So we try to find good members that would not likely collude to attack the network because they'd be attacking their own customer base, essentially, right? Yeah. The other attack vector, I guess, is for an outsider to compromise the network by stealing the private keys for signing. But to do that, you'd have to have something like Ocean's 11. They need to find the functionary boxes. And those boxes are geo- geographically dispersed.

And we blockstream don't actually know where they are when we send them, we send them to an address for full Bitcoin. And then we say, you put it somewhere in your data center or wherever you choose, but don't tell us where it is. Oh, yeah, it's right here behind me.

Yeah, so we don't know where it is. So we couldn't tell someone, these boxes are here, here, and also the functionary boxes connect to each other over Tor. So even the boxes themselves don't know where all the other boxes are. But, you know, assuming some attacker did know where they were all located,

they would have to breach them all simultaneously and extract the private keys from them pretty much at the same time. Okay. All right. And okay. Yeah, fair enough. So I'm not going to touch too much more on that now. I kind of want to dive into, so we're going from the trust model Bitcoin to a slightly, like,

not trustless, but it's more kind of trust minimized in that you're spreading it out across multiple parties. So there's a level of compromise there to obtain certain qualities of the liquid network that are desirable to some. So I guess, first off, let's get into who is this for? I guess on a base level, who are the main user? And you kind of already alluded to it, but let's touch on that again. Sure. So I think primarily it's going to be for traders. That's why we framed it as an inter-exchange settlement network. So you can move funds from, you know, Bifenex to Bull Bitcoin to the Rock to Bitsi or wherever. It's acceptable for traders to use because they're putting money on exchanges anyways. And there is an added benefit to Bitcoin users of the main chain, which is the traders are not going to be. flooding the network with transactions and spiking fees by overpaying because you don't really need to go back to the trustless base layer if you're moving from one centralized exchange to another centralized exchange. Yeah.

Right. So I think that's the main audience, but liquid also has the benefit of being able to issue assets or issue liquid assets. And these are digital tokens at the same level as, say, Bitcoin. They're native to the chain. So you guys are doing L-CAD, which is tokenized Canadian dollars. We have liquid tether as well. And there's a whole bunch of other assets. But you can also issue assets.

So the user base is potentially massive. Anyone that wants to issue a tokenized asset can use liquid. Okay, cool. So I guess when it comes to exchange to exchange, that can also help with liquidity, right? Like when it comes with, you know, an exchange is trying to get a large amount of, or an OTC broker is trying to get a large amount of Bitcoin potentially, that can help with that problem. Is that correct?

Yes, definitely. So it's faster to move because you don't have to wait for confirmations. You don't have to wait for, you know, an hour or more because Bitcoin blocks are not every 10 minutes. They're roughly 10 minutes, but they can be fast like three and 10 minutes or once an hour, sometimes two, three hours. But you minimize that variance by using liquid. And for OTC trading, it's interesting you mentioned that

because you can do atomic swaps in liquid, which minimizes the need to trust a counterparty for large trades. So for OTC trading right now, there's a lot of big players. And because they're so big, they can kind of dictate the terms. And they basically offload their counterparty risk onto their customers. So if you want to buy from a big OTC broker, they'll say, you send me the dollars first. I'll send you the Bitcoin later, right?

Or vice versa. But with Liquid, you can use LCAD and use Liquid Bitcoin and create a atomic swap, where it only executes when both sides sign. So there's no counterparty risk. Okay, okay. I'm going to get... So let's touch more on the tokenization here. So who can create and issue a token on Liquid?

Who's able to do that? Anybody can do that. You just download the Liquid Client Elements Core, and then you just run a command, issue token. So, you know, a lot of people are tokenizing things on Ethereum, and they're creating smart contracts to do that. But the net effects is they just want a token. And Liquid lets you do that just with running one simple command. Okay. Now, what about who can peg into and out of LBTC?

So technically everyone can peg in, but only the functionaries can peg out. and that's just to help with network security. But we try not to encourage people to peg in because they can't peg out. So an average user can create the transaction if they're technical, but the only way to get out is to go through one of the functionaries like BitFenex, and you can just exchange it with them for Bitcoin. Okay, so yeah, so it makes more sense to trade for LBT

if you have a need for it as opposed to pegging in yourself. Okay. Yes. Now, where do I want to lead with this? So, okay, give me an instance where something like, say, okay, with our instance of L-C-A-D, and I have a lot of people asking about this, and I know I'm going to talk with Francis about what Bill Bitcoin is kind of aiming to do with L-C-A-D, but when somebody issues and asset on liquid and it's paid to a real world asset. There's still a level of trust there,

correct? Yes, correct. So you're trusting that you guys have the CAD or a CAD equivalent, right? That's the same for like Tether. You trust that Tether has, you know, US dollars behind it. Yeah. Yeah. Well, and I guess you could argue it's the same for you, you buy a, a gift card at Tim Hortons and you trust that you'll be able to redeem it for your double, later on. Exactly. Nice Canadian example. Yeah, exactly. And all the U.S. watchers right now are like, I have a what? Yeah, excuse me. Double double? Yeah. But yeah, okay, so, so the one thing that I like about this that you were talking about is that it's very useful for those that are active traders in that if you're already trusting a single entity with your deposit, it makes a little bit more sense

that you spread that risk across multiple parties as opposed to just relying on the one. So that let's say one member of this 15 member federation goes, you know, is trying to be malicious, then they by themselves cannot really kind of screw it in individual customer. customer too much. Yeah. So you can exit the system from any of the members of the network. So if, let's say, I don't know, Bitmex doesn't let you take your withdrawal, you can always go to another exchange and then convert back to Bitcoin.

Okay. Now, I have a question here in regards to tokenization. So you were talking about tokenizing something like Fiat, like with Tether and Elcat. that, you were talking about, you can tokenize other cryptocurrencies, is correct? You could tokenize another cryptocurrency. I gave that face because I'm like, I don't want to do that, nor do I have any desire to hold that, but it's possible, correct? Well, a lot of cryptocurrencies are just speculative.

There's no use for it. It's just traded. and if you're just trading it, then as an exchange, it's better if somebody tokenize it in like the tether model, right? You lock it up in a cold storage and tokenize it and say, I have all this ripple or whatever, and you can trade it now as a liquid asset. Does this become a less, a more, I guess,

a trust-minimized version of what ABRA's trying to do, where you deposit Bitcoin, coin with them and then you can kind of like gain exposure to various assets. But you're you're kind of trusting ABRA only in that instance. Is that similar here? Is that a good analogy or no? I think what they're doing is synthetic. So it's kind of different.

Like anybody can tokenize a cryptocurrency on liquid. There's benefits to it because it's easier and faster. There's confidentiality. So liquid transactions are confidential by default. So there are some benefits. But there are also like cryptocurrency assets that are risky. Like do you really want to run this client created by some fraud or something, right? Yeah, yeah.

Like maybe not. So why not just tell them tokenized on liquid and then we'll list it. Because every liquid, if you run the liquid software, liquid client, you can receive every liquid asset without spinning up additional node software, right? So it's less overhead for an exchange, and it's less security risk and a tax surface than spinning up some shady client that they may not even be open-sourced. So do you anticipate then, like, okay, let's say liquid is super successful. Do you anticipate even less demand for alts, given that you can, you could potentially be exposed to the price fluctuations without ever having to hold the actual? asset? It's a tricky question. It still locks up the asset itself, though, if it's tokenized, I imagine. Yeah, if you're doing it in the tether model and they're just putting cold storage and

tokenizing it, then it still exists, right? It's just added benefits for trading it and moving it around. But I don't think it would eliminate alts, because alts are mostly marketing. So there will always be an alt. Yeah. Yeah. Yeah, it wouldn't necessarily eliminate alts. And I guess if they're locked up in the first place, then it takes liquidity off the market. But do you think that perhaps it drives an instance where on-chain activity for a lot of speculative alts, it disappears? And it becomes more just speculation of the token peg to it versus movement of on-chain assets? Definitely it would reduce the on-chain usage.

But the thing with a lot of alts is they don't really have. have a lot of on-chain usage anyway. So it doesn't matter. Tushay. Okay, fair enough. There's one scammy coin that is just weather data. I've heard of that one. I hear it's going to replace everything. It is. I mean, if there's one thing, one reason that I got into Bitcoin, it was to obtain immutable weather data for all time. Me too. Yeah, I mean, what else is there? Now, I want to touch briefly on actually issuance of securities on liquid, because to me, this brings up a few very fundamental questions about how regulators react to this kind of thing. And I don't know what you can comment on this, but from what I understand, anybody can issue, as you said, anybody can issue an asset on liquid.

obviously there are regulations around who can issue security, right? You have to have licenses to do that kind of thing. But I believe that regulators, by and large, like it when individuals don't hold their own stock certificates and trade freely peer-to-peer with those. So does this potentially Trojan horse its way into allowing people to trade their stocks with no third party? I think it's a step in that direction. Okay. So, I mean, it's hard to say what the regulators really want.

I think what they want is to protect people in some way. And they can try to accomplish that through various means, like various restrictions. But this kind of does open the road for peer-to-peer trading of those stocks in the future. Most people try to follow the U.S. regulatory framework. Under that, you do have to have certain restrictions in place based on what you're filing. So if you're filing a reg D, there's a lot of restrictions in place about trade volume and who can trade it. With reg A filings, those restrictions drop. So there's no limits on trading.

I think it still needs to be with accredited investors, but there's no cap on how much can be traded and with who, as long as they're accredited. But tokenizing a security on liquid is really just giving the security the benefits of being able to trade it on a common standard and with crypto markets, which are 24-7. So it's just really improving the efficiency of the current system. I think. Yeah, it really throws the whole, you know, opening and closing of the stock market idea out the window when somebody can hold, you know, a security in their own privately held digital wallet and trade it peer to peer 24-7 with zero restrictions. So I know that's not the current state of things, but it seems to me, at least, to be an inevitability that this technology will lend itself to and when people can achieve that through.

through traditional markets that other alternative markets will pop up. Definitely. It's a stepping stone, I think. Like, there's no way it's just going to happen overnight where you can just trade a security, you know, with anybody. But at least we can go step by step and tokenize them, trade them in a framework, and then who knows what the future holds. Yeah, yeah.

Now, we've been talking about all this tokenization. And I know there's a lot of bitcoinsers that looked, at the the ICO bubble on Ethereum that happened and just thought it was pretty scummy and bubbleicious and scary and a lot of people just bought everything under the sun and you know

on one side of it you want to say yes there's free markets people should be able to do what they want with their money other people will go from the regular regulatory standpoint and say no, there should be protections. But in general, a lot of the feeling with the ICO bubble was it was kind of garbage and it was kind of a shitstorm of like scams. And so a lot of people got overly excited about it and then that has kind of basically dwindled off. Now, in your eyes, what's the difference with tokenizing stuff on on Bitcoin?

Is the value of the underlying chain that it's pegged to? Does that give it more credence? Are some ideas that happened on ETH still equally terrible on Bitcoin? Like, where do we draw the similarities and what are the differences? Are there some? Or is it like, is it first ICO ever bad, orange coin good? Well, I think we have to talk a bit about ICOs, right? So the fundamental idea of an ICO is not a bad thing, which is raising capital for a project.

The problem is most of the ICOs were just scams. So that's what they're feeding the frenzy and people are losing money because they're investing in projects that have no remote chance or even ambition to ship something or total inability to ship something, right? Or some off-the-wall stupid idea. So that's the biggest problem. But I don't think it's bad that there is an avenue for projects to raise money from the public without heavy hand of regulation overseeing it.

I think it's kind of libertarian in a way, right? Yeah. But the problem is really just the project themselves. And I think that... Well, and also the fact that the tokens often had no bearing on. in some instances had no bearing on the value of the actual underlying project. Like you take, for instance, the KIC messenger ICO, KIN token itself, you know, KIC could have been, I mean, it wasn't likely, but KIC could have been like a multi-billion dollar company,

and KIN could have at the same time been worth absolutely nothing, and those would not in any way be correlated necessarily. And so do you see it more as a, if people are issued? issuing tokens that they should be representative of, like, should they be actual securities, like representative of the success of a venture versus just like a completely uncorrelated garbage token? Well, I think the leaning towards issuing a security token is to kind of counteract the whole stigma of an ICO, that, you know, this is a real project and it is a security.

it's under some regulation and there is a legal recourse if people don't deliver on that project. So I think that's the one avenue that people have these days. You can raise money through a security token offering because it's the same as raising money traditionally through selling equity or debt. There's some legal ground to it. But like I said, I don't think it's a bad thing that you can raise money without how, having to go with that legal framework, right? There could potentially be a lot of interesting projects,

some privacy-focused endeavors or whatever that want to raise money in that way. But like you said, it's being able to deliver. Yeah, it seems to be a lot more nuanced than just token bad or good, right? It seems to be more, should people be allowed to invest in companies, should they be able to do it freely and should there be any recourse

should that company not deliver there's a lot of stuff to it that that goes deeper than just is it a scamy bullshit token and it's also quite different than you know like people already own stocks that if you own stocks in a way where you hold the stock yourself

and they can't re-hypothecate it I see that as a bonus. Right. Well, you can also audit, right? If it's tokenized, you can verify for yourself by seeing the supply and issuance or whatever. And it won't be as easy to force people to succumb to your demands, right? Yeah, yeah, yeah.

I see that. Yeah, I think it's worth exploring a lot more down the line. Now, the other thing that I wanted to point to was, I guess a couple of things that maybe come hand in hand, or maybe not. But you can use lightning in correlation or on top of liquid, I'm not quite sure. Exactly. And then you were alluding to atomic swaps as well. Can we briefly maybe touch on those topics? Right.

So atomic swap is just a transaction that executes if both sides sign off on. it. So there's no counterparty risk. It's not like I sent you something first and I wait for you to pay me, right? So the benefit of that is you can do OTC trades with people you don't know, right? That opens up the whole market for OTC trading where you can trade with people in some country you don't know or don't trust. Because with OTC trades right now, a lot of it is trust base. You know, you have big players that know the other guys and there's reputational risk if they don't deliver and there's financial recourse. So, You know, it's kind of a market for big players. But OTC trades, and atomic swaps can open it up to a lot of smaller players getting involved in the space. And I think it opens up a world of new possibilities. Now, touching on the atomic swaps there, it's, we say it's trustless in that, yeah, each digital asset trades hands simultaneously.

And there's no, you know, moment where you're without your asses. and you're waiting to receive one. Of course, that's a little bit different if the asset that you're receiving is, of course, pegged to a real world asset. That opens up a different can of worms. However, if we have actual digital dollars from issuance, let's say the U.S. or Canada opts to actually issue a fully digital Canadian dollar, for instance. Now, I asked this of Gemini when they launched GUSD. I said in an instance where you have a pegged asset, like a pegged Canadian dollar,

and all of a sudden Canada says, hey, we've got our own digital Canadian dollar. That's the one. And if somebody's running a fractional reserve, let's say Gemini or whoever, Coinbase, with their, whatever type of digital dollar equivalent, if there's a centrally issued now digital currency that is the de facto one that can be transacted freely, does that spur on kind of a like if there's some fractional reserve going on with the pegged U.S. dollars, does that spur on kind of like a crunch where people are like, well, I'll just hold the real thing and they start dumping their peg dollars, does that kind of disincentivize people from running fractional

reserve on that? Is that kind of like a future hedge? Technically, the stable coin should not be fractional, right? They should be fully backed, but technically, yeah. But I mean, it's like a whole rabbit hole in and of itself. So let's say the bank has the money. What does that actually mean? Because they don't actually have physical cash, right? It's all digital in the back end too for the bank itself. So, you know, you can see your bank statement and see, you know, all Bitcoin has $20 million Canadian dollars, but does the bank actually have that? And maybe not, right?

So that would be the benefit of a state-issued cryptocurrency, which is, you know, that's the issuer itself that's issuing this asset. but ultimately what is that backed by? And then the state has to be accountable for what they print, right? So that's out the window. I can see a lot of benefits to having it central bank issued, right? Because then you cut out the intermediary. Unless the intermediary had some added benefits.

Like say the L-CAD is on liquid with confidential transactions, but maybe the Bank of Canada CAD doesn't have confidentiality. So then you would have a leg up on that regard. Yeah. But ultimately what it comes down to is for any stable coin is liquidity. So it doesn't matter so much if it's backed or not. It's just a unit of account to trade with, right? So if a stable coin is not fully backed, but I can just trade it with you and you'll take it, then I can offload mine at any time. So liquidity is really king in this regard, not so much the backing of it. Because Fiat itself is not really backed anymore. Yeah. So dump dollar stacks at, that's what you're saying. Exactly. Now, to the confidentiality part, you were saying that liquid transactions by default are confidential.

Now, of course, you can do non-confidential transact. Why would anybody do that in the first place, a non-confidential liquid transaction? They would be smaller because with CT the transactions are bigger. So that's why we have the same throughput as Bitcoin. But the reason is that we still have the same throughput. We have faster block times because the transactions are bigger. So it kind of nets out. So that could be one reason or the other reason is you just want to allow the users of whatever issue to see everything.

Maybe it's a design choice for how you issue your asset. Okay, all right, fair enough. Now, regular people, day-to-day people can actually experiment with liquid right now in the Blockstream Green wallet, correct? Correct. So as an issue, you would use Elements Core and issue there, but then anybody could receive it, on Blockstream Green wallet. So you can receive LBTC. Can you receive other liquid assets in Blockstream Green wallet right now?

Or is that coming? You can. Yeah, you can. Okay. I wasn't familiar with that. So how do you do that? Because I see the drop down for liquid, but is there like what happens? It's just one address.

So you just give your receiving address, and that receiving address can receive LBT. or any issued asset. And once you get it, you'll see it in the assets tab. Oh, that's really cool. I'm going to have to play around with that then. But there's a caveat. To receive it, it's okay.

But to send it, you'll need some LBT for paying for the transaction fees. Okay, yeah. So it's much like when we were dealing, you know, well, not me, but when people were dealing with sending assets on Ethereum, you have to have ETH as the transaction fee. Correct. Okay. All right, fair enough.

Okay. And then I guess the last thing I kind of want to touch on, so lightning and liquid, how's that work? Right. So you can create right now, you can actually create a lightning network on top of LBT. That's already done. And the next step is to be able to create a lightning network on top of an issued asset in liquid itself. And if a lot of a whole L-CAD, you could basically spin up a lightning network down the road and you'll spend L-CAD at retailers and have zero fees.

Wow. Okay, so there'd be a side chain. So there's now a side chain of Bitcoin. You have an asset issued on the liquid blockchain that can then have a lightning network on top of that issued asset that is on a side chain of Bitcoin. Correct. Jesus Christ.

See, it's like inception almost, right? So we used to say that liquid is a layer two. solution, lightning is layer two. But once we got lightning working on liquid, we kind of said, okay, liquid is more like 1.5 because you can have a layer two on liquid and it's like lightning. It's a layer two thing. We kind of move liquid down. Okay. All right. So there's a lot there. We went through a lot. I'm, you know, I'm starting to get the hang of things. Now I want to play around with getting different assets in Blockstream green. What other kind of like what other kind of assets have you seen issued thus far? Like I'm sure there's experimentation going on. Yeah, there's a whole bunch. There's like a beer token. There's a token from Side Shift called Sci.

I think obviously there's liquid tether. And I think Kim.com has announced that he's issuing a token on liquid as well. It's the K.I.m. token. Okay, fair enough. Awesome. Okay, cool. So I'll be able to play around a little bit and try that out. Cool. Where can people go and find more information on the Liquid Network and what you guys are trying to do with it? Right. So we recently did a whole revamp of our documentation.

So you can find them at docks.blocstream.com or you can navigate there from Blockstream.com. But generally, you can find guides on everything. And for more technical people, you can read Elementsproject.org, which has a lot more of the elements documentation. So liquid is actually built off of elements, which is a fork of Bitcoin. Awesome. Okay, cool. And where can people find you on social media and other places? Right.

So on Twitter, my handle is Excelion, Excel Lion, all one word. And Blockstream is at Blockstream, and we try to respond. If you need help, you can reach out to our Twitter handle, Blockstream help. Cool. And I did make a tutorial on the Blockstream wallet when it first came out. I'll link to that down below as well. So, yeah, Samson, thank you so much for coming on and helping explain something that I honestly was not super, super familiar with,

and I feel like it's clear up another number of things. I'm sure I'll have more questions in the future, but thank you. Right. Thanks, Ben. So what did you think of that? Did you get a better grasp of the Liquid Network? I know I definitely came out of that conversation, understanding a little bit more of the trade-offs and I guess what Liquid is meant for and what kind of users may utilize it.

So I've had a very interesting time learning from Samson and I continue to be intrigued by Liquid and some of the things that it can enable. So let me know in the comments what you thought about the interview and of course be sure to share it around. Now if you want to help out this show in any other way, you can always again check out those. sponsors that I mentioned before, that was Leden and Rise Wallet. Both those are in the show notes, as well as check out Wasabi Wallet, which can help you big time with your Bitcoin transactional privacy. And if you want to help with a show in one other way, you can always check out NordVPN. So this is a VPN that you can run on your computer and or phone. I use it all the time, and what it does is it hides your IP address. It encrypts your browsing data, and it has a bunch

of other added benefits like unlocking geoblocked content. Now, if you want a special deal for NordVPN, you can head to their website, NorvPN.com, and use the code BTC sessions, all one word, and that will get you a deal where it is 70% off plus one month free. It ends up being $3.49 a month, which is pretty damn good, in my opinion. So be sure to check them out, and in doing so, you, of course, help the show. And with that, I am out, you guys. Thank you so much for listening. Be sure to share this on your social media, and I will see you next time for your daily session.