Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Ben Sharafian & Stefan Thomas: Coil – A New Business Model for the Web

Episode Date: November 13, 2018

The difficulties of compensating content creators for their work has been a driving force of the web for decades. It gave rise to advertising-driven tech giants like Google and Facebook and contributed to the decline of industries like music and publishing. Coil aims to change this and leverage blockchain and the Interledger Protocol to build a new business model for the web. We were joined by Coil Founder and former Ripple CTO Stefan Thomas and Coil Co-Founder Ben Sharifian to discuss their ambitions to change how content is consumed and paid for. Topics covered in this episode: What web monetization is The difference between web monetization and web payments The negative effects of advertising-driven business models What the Interledger Protocol (ILP) is The current state of ILP Why Stefan and Ben decided to leave Ripple and start Coil The case for web monetization as an initial use case for Coil The idea of users paying a fixed bandwidth per second to content creators Possible user experiences that could be built on top of Coil How to bootstrap Coil and get adoption Episode links: Coil Website Coil: Building a New Business Model for the Web Layer 3 Is for Interoperability Talk about Ripple and Coil at TOA18 - Stefan Thomas E92: Stefan Thomas - Understanding Ripple E131: Evan Schwartz & Stefan Thomas - Building the Internet of Payments with Interledger Thank you to our sponsors for their support: The open, decentralized trading protocol for ERC20 tokens using the Dutch auction mechanism. More at epicenter.tv/dutchx. Deploy enterprise-ready consortium blockchain networks that scale in just a few clicks. More at aka.ms/epicenter. This episode is hosted by Brian Fabian Crain and Sunny Aggarwal. Show notes and listening options: epicenter.tv/261

This is Epicenter, Episode 261 with guests, Stefan Thomas, and Ben Sharafian. This episode of Epicenter is brought you by Dutchex, the fair and secure decentralized exchange platform by Knosis. To learn how you can build DAPS, which leverage DutchX's liquidity pool, visit epicenter.tv slash DutchX. And by Microsoft Azure. Configure and deploy a consortium blockchain network in just a few clicks with pre-built configurations and enterprise-grade infrastructure.

Spend less time on blockchain scaffolding and more time building your application. To learn more, visit aka.ms slash epicenter. Hi, and welcome to Epicenter. My name is Brian Crane. My name is Sonia Agarwal. Today we're going to speak with Stefan Thomas and Ben Sharfian about coil, exciting new project built on the Interleisure Protocol. Yeah, Interleger is something that, you know, Brian and I have been, you know,

pretty familiar with for a while, actually. Stefan has been on Epicenter in the past, twice actually, one time representing Ripple, but the second time actually presenting Interledger Protocol. And like, this is back when Stefan first created ILP along with Evan Schwartz from at Ripple. And since then, Stefan, as well as number of his coworkers at Ripple have left Ripple and have created a new company called Coil in order to kind of, you know, a little bit decentralized the interledger protocol like ecosystem and work on, you know, some cool stuff, which we talk about in today's episode. And so, Sunny, you mentioned you also kind of involved in a company doing something with interleger.

Yeah. So, you know, as many of you obviously know, I'm very involved with like Cosmos, which is like an interoperability project. And so we have our own interoperability protocol of types, which we call, uh, we call, uh, inter-blockchain communication or iBC um and ibc is really used for moving assets between blockchain so you know moving a token from like a bitcoin from the bitcoin blockchain onto another blockchain well iLP is sort of more similar to like atomic swaps and stuff uh you know moving value across block blockchains and so i think there's a really cool interplay of like work between

ilp and i bc that that goes on so i'm actually uh i actually advise a company called kaba who's doing a lot of this like ILP development within the cosmos and other ecosystems like Ethereum. Cool. Then let's get to the interview. Hi, so we're here with Stefan Thomas and Ben Cheroffi and there are two key people at coil. So Stefan has been on the podcast a bunch of times before. Actually, he's third time. I think the first time we spoke about Ripple the last time maybe an interledger.

And so this is kind of a continuation of that work. And Ben is here for the first time. Yeah. So thanks so much for joining us, guys. Thank you for having us. Yeah, thank you. So, you know, probably many people don't remember the previous podcast, so they didn't listen to Ep Center back then.

And Japan, you have like an interesting and long history in the crypto space. Do you just mind giving us a very brief background about, you know, how you became involved and what your journey has been through this world? Yeah, for sure. So I've been a serial entrepreneur for about as long as I can remember. I started my first company when I was 14 years old. And so if you're a small entrepreneur, like you know the pain that there isn't payments. And so what attracted me to Bitcoin when I found out about it was that it was sort of the first time that you could just, as a technical person, you could help write some code.

And suddenly it would change how payments work. And before that, it was just always like the financial industry is this arcane beast and you can't really touch it. And I think then after I joined Bitcoin, it was like 2010, I started to get pretty involved in like making animated video about it, starting to give a lot of talks about it, and then I also wrote a JavaScript implementation of Bitcoin called Bitcoin J.S. And all of that was kind of to try to get Bitcoin more into the mainstream and try to get kind of mainstream adoption. And then in late 2012, I got approached by Jet McKalep of Mount Gog's fame.

And he had just started this new company called OpenCoin, better known now as Ripple. And so I joined them and then after Jed left quickly became CTO. And I've been there for six years until May of this year. And for most of the last like four years, my focus has been Intelliger. And Intelliger is essentially like an interoperability protocol for payments. It's not necessarily exclusive to blockchain. Like you can interoperate any kind of payment system. You could even use something like handing cash to someone and do Intelleger over that.

So it's pretty flexible. And we got to a point where we're like Intelligent is a really big idea. It's like a really important idea. So we should really bring it out to the world somehow. And what happened like in early this year was basically, you know, we got to a point where we would go to conferences. We'd tell people about Intelleger. They'd be super excited. they'd be like, what can I do with it?

Like, can I connect it right now? And we'd be like, well, there aren't really any connectors for it yet. There aren't really any companies that you can like interact with on it. And so the impetus for starting coil is really to be like the first company that's actually doing stuff with Intelliger. And what about you, Ben? I know that, you know, I think me and you actually have a little bit similar stories. I believe we both dropped out to like join a blockchain startup. So can you tell us a little bit more about how your story, how you got involved with Ripple

and how you jumped over to coil, follows Stefan. Yeah, yeah. So I pretty much was, I used to be an intern at Ripple, and that was around the time when Interledger was first being worked on. And I don't know, I found it sort of really interesting. And I kind of, I felt like it was one of these things that's going to become a big deal. And so there's obviously a lot of time pressure on those sorts of things. things. And so I thought it was best to just, you know, leave the school thing and just,

and work on this interledger stuff. And now, yeah, a couple years later, interledger is pretty much around. And so it sort of, I think it falls on us to sort of, I don't know, lead the way as a company building on interleisure. And you, Sonny, you said, you know, follow me. Like, I don't know who's following here. Like, I would say that this was his idea. And that's definitely what I'm going to say if it doesn't go well. Okay, so we mentioned interledger, right? We did a podcast about this before. Of course, we'll link to it in the show note if people want to learn about it more in

depth, but can you give a very high-level description about what is the interleisure protocol? For sure. So as the name implies, it's a protocol to connect different ledgers together. So imagine you have one person who likes Bitcoin, and so they have a Bitcoin account, they have all their money in there. someone else they are not into crypto at all. They have an AliPay account and that's how they want to receive money. Intelligent is intended to solve the problem of like how does the money get from Bitcoin into AliPay. And so in general, like it's largely inspired by internet protocols. So we kind of observed that the internet was this really efficient, like constantly getting faster and cheaper system.

And it seems to somehow be able to bridge the gap. between totally different kinds of networking technology, faster networking technology like fiber, slow networking technology like mobile phones or satellite internet. And it can just make that a totally seamless experience. And we start thinking, like, why doesn't payment works like that? You know, like, why is it so different in terms of trying to cross different payment networks?

And as we started working on it, there are definitely differences, and there are some things you have to do differently technically. But at the end of the day, a lot of the same principles that apply to data also apply to money. So we ended up doing things like sending tiny packets of money around. And so if you're sending like a larger payment, maybe that's split up into lots of small packets. And we do things like routing to kind of find between any source account, any destination account, some path that the money can take where there is actual liquidity available, all these kinds of things. And so Intelligent is basically just an open protocol that defines what some of the data formats are for doing that.

And so how does this like, you know, compare to something like atomic swaps or like cross-chain lightning networks? Yeah, so atomic swaps, I think, are, if you have one sort of large payment, I think you want to get it through between two systems. That's kind of what I think of as atomic swaps. And with Interledger, it's a lot more about sort of having a lightweight network that you can abstract away the actual details of the payment system. So if I'm sending an atomic swap between Bitcoin and Ethereum, then the time it's going to take is at least a transaction on one of those. But with Interleger, you know, if you want to pay several micropayments while you load a web page, then you can't wait very long. And so you need something that sits on top. And I think lightning is something that does do that as well by using payment channels to make it instant.

But it does also rely on some pretty Bitcoin-specific features. And while you could implement payment channels and Lightning-style payment channels in other blockchains, it's not quite as general as saying, like, Interleger Works. over any system where value can be sent. Yeah, I think like my favorite example is this, what I mentioned earlier, which is just if Ben and I want to settle in cash, we can still set up two interledger connectors. We can send interleger packets all day.

And then at the end of the week, you know, Ben hands me a bundle of cash. And that's a totally legitimate way to settle interledger connection. So Evan Schwartz, who was one of the other co-founders or authors, of Interledger. He published a blog post a few weeks ago comparing Interledger to like a Layer 3 solution on top

of like Layer 2 solutions. Do you guys see this in like a similar way? Yeah, I think that's a really good way of thinking about it because Intelleg is very much not focused on solving a lot of the problems involved with, you know, actually moving the money or what the underlying units mean or what the economics are or how things like mining or

consensus work. And so even some of the things that Lightning addresses where it's like about scalability and like how do we make more transactions through the system and so on is not really what Intelleger is designed to solve. What Intellegger is designed to solve is interoperability. It's like how do I get from one tech stack to a totally different tech stack that might have been built with something totally different in mind. And so we actually think that Lightning is a really good protocol to do Intelliger on top of because It actually, like some of the limitations of Lightning, like the limits on the transaction size, don't really come into play with Intellectra because we split payments into smaller packets anyway.

And so let's say you're sending like a $20 transaction over Intelleger, even if that goes through Lightning and maybe like there's a, I don't know, like a 5% failure rate for $20 payments on Lightning for that path. That wouldn't matter because the money would be or the payment would be split up anyway. So I think it kind of fits in nicely with some of the other solutions out there. And so, you know, I've been following along with the ILP roadmap for a while now, actually. And I know it's actually like changed a lot, especially since the last time you were on the episode. What are some of like, you know, can you give a brief rundown of like how the ILP protocol is maybe adapted over time and maybe how the ILP ecosystem has adapted?

Are there like, you know, two years ago, that really the only player in the ILP ecosystem was Ripple, but has that really expanded as well? Yeah, so I think on the ecosystem side, like the biggest thing is we got to a point early in the year where we were going out to conferences, we were telling people at ILP, they thought it was great, but there wasn't anything like real, anything live to tie into.

And when we would tell someone to go start your first, like, Intelleger Connector company or something like that, you know, they'd be faced with this problem of like, well, who's going to be my customer? There's nobody using this yet, you know? And so what's happened since May, which is, you know, only a few months, but what's happened since then is that we now have a company called Strata that is like a professional intelligence service provider and Coil uses them for all of our uplinked traffic. And there are other companies that are built like Ethereum plugins and Lightning plugin.

And, you know, there's a lot of other. tokens that are interested in using it for interoperability. And so I think the community has grown a lot. There's a lot more people now in the community group call. So I think it's taken it from this academic project that people were theoretically interested in to something that now Coyle and others are actually using in production. And that really changes a lot of the conversation. And like, you know, it feels very different.

Like we're now moving like 10 million packets in a day. And so we have to think about scalability. We have to think about, you know, how do you process? that much and keeping track of everything and so on. On the technical side, I think the number one biggest change since I was on the show was around two things. One is how we thought about the system. So I think before we kind of thought of it as you have ledgers as these like payment networks

and interledger connects them together. And if you're drawn an interledger as a picture, you know, what does the interleger network like you've probably you would have drawn the ledgers as the nodes and then they would be connected by what we call connectors that sit in between each network. And since then we've had this what you know the community has termed the interledger enlightenment which is basically flipping it on its head. So rather than having looking at the ledgers out there as the nodes and then interledger connects them together it's actually the participants the users, the connectors, the

they are the nodes, and then they settle their relationships over some ledger. And so it really puts a lot less emphasis on the ledger. And it came from, without going too deep into the weeds, but it came from a realization that the Internet community had, which was basically that the Internet is, by tying together networks, it's duplicating some functionality, because what does a switch do? It routes packets from one place to another.

Well, what does a router do on layer three? It does the same thing. it also sends packets from one place to another. And so you can actually get rid of switches entirely and just have links between different nodes and then some nodes also route packets, right? And so we basically took that same lesson that the internet community has come to eventually

and applied it to Intelligent, which simplified the picture a lot. Again, it gets a little technical, but I guess some of the people listening might get a kick out of this realization. The other thing was this concept of what we call penny switching. So that's basically the idea that if you have a larger payment, you can split it into smaller chunks. And the reason that was significant is because before that we had a lot of

difficulty with the variability of payment size. And I'll explain why. So one example, one issue that people who've been following lightning might be familiar with is the issue of liquidity. So you have some path and you want to send a payment through that path. Now, if that path doesn't have enough liquidity to do that payment all at once, you're kind of out of luck. You have to come up with some really complicated scheme, and we actually went down really deep rat holes trying to come up with a scheme like that to try to split up the payment and then recombine it. But we just think that it makes the whole thing way more complicated.

And so the other problem was when you're talking about exchange rates and you're trying to find the cheapest path in terms of exchange rates, you're also, the exchange rates might be dependent on the amount. So you might have like a different exchange rate for a very large payment and a better or worse exchange rate for a very small payment, which then means that for some pass or for some different sizes, you might have different paths. So like small payments go this way, large payments go this way. So your routing table gets one dimension more complicated. And so what I'm trying to get across is like this variability in the payment size gets really freaking complicated. And so once we started to think about, well,

what if we just have like a pretty consistently small packet size? A lot of these problems go away. You now have one exchange rate. You can just assume it's like a fixed number because all the packets are small and you just have a rate for that. And liquidity becomes much less of an issue because if you exhaust the liquidity on some path, it'll just, the next packet will just take a different path. And also people that see a payment in progress, so you see the money streaming through, you slowly see the liquidity getting exhausted.

You can actually go and provision additional liquidity. in real time to make sure that that link doesn't go down. So it just became this much simpler, much more powerful way of thinking about it. And once again, it's taking a lot of inspiration from the internet, where you similarly don't want to send a big file download as a single packet, because what if that packet gets lost or reports and so on? So those are the two main technical changes. I see.

And so, you know, so you mentioned that these packages are getting very small. So you said that there's currently, ILP is handling about 10 million packets. per day. Roughly how much is that in like, you know, US dollar volume? It's hard to say. Maybe not very many dollars, probably on the order of 10 to 100. And wait, so each packet is like a millionth of a... Yeah, the average packet size is about 40 micro dollars. And so, wow. You're actually sending an interlensure packet for every single second, sometimes more often than that, that you're on a site. And of course, like, you know, the, the rate. at which you send could be tuned for performance, but basically what you're getting it is that, like, in real time, the site is getting paid.

Yeah. It's like, sometimes people ask, like, what happens if you lose a packet or something like that? And when we designed the protocol, we designed in such a way that the sender and receiver are never exposed to any risk, number one. Number two, that there is the right incentive structure, so no one has an incentive to fail. But then number three, that failures are almost like expected and tolerated. And I think that's, again, something that you can learn from the Internet. It's like, don't try to make failure a non-issue at every layer. Just handle it on end-to-end level and say, like, hey, if this pack doesn't go through, we'll rescind it.

And just make it so that the failures don't matter commercially. They're not expensive enough to matter. You know, the Dutch have given us so much. Orange carrots, Bluetooth, artificial hearts, even donuts were invented by Dutch people. But they also gave us Dutch auctions, which, as it turns out, are great for decentralized exchanges. Dutch X is a decentralized trading protocol for ERC20 tokens, and it's invented, designed, and built by Gnosis. Current order-based exchanges, whether centralized or decentralized, have a couple of issues. Minors and exchanges can front run a trade when they step in front of a lot.

large order to gain an economic advantage, not to mention issues with securing funds, high listing fees, lack of liquidity, and pricing efficiencies. The Dutchex exchange platform uses a Dutch auction mechanism to determine the fair value for a token, and participants in a trade are encouraged to reveal their true willingness to pay, which eliminates front running. As a permissionless on-chain protocol, it's useful for bots and other smart contracts needing to exchange tokens, and DutchX also acts as an Oracle for DAPs requiring a price fee. So to learn more, check out the documentation. at epicenter.tv.tv slash dutchex. Smart contracts are live on the Ethereum Mainnet

so you can start building today. We'd like to thank Gnosis and Dutchex for their support of Epicenter. This is very interesting. I'm curious because you made this comparison to lightning as well. Is this something that could also make sense for lightning network

to basically say that there's this, you know, standard, you know, size of like a tiny amount and basically things always send in kind of like packets of that amount. Well, so the way I would say it's like from a technical perspective, that makes a lot of sense, because I think the problems that you're seeing right now with Lightning, and I know that they have their own roadmap and their own solutions for it, but I think they're fairly elegantly, we're very elegantly solved by the Intelliger Protocol Stack, and we have a plugin for Lightning.

So if someone out there is like trying to build an app on top of Lightning, they're running into these issues, they should definitely take a look at Interleger and see if that actually solves the issues that they're having. Whether the lightning community, to the extent there is like an official decision-making body, will officially use Interlegger for those use cases, I think that's more of a political question. I don't know if that's going to happen. But just from a technical perspective, I think it's a really good solution for those problems. Maybe one final question on this, and maybe this is this a dumb question, I'm not sure. But so you mentioned for this amount, payment amounts between, you know, $10 and $100, he's sending 10 million packets.

I mean, is that economically sensible or does that actually make it an expensive network to run because of the, you know, like there's some costs associated with bandwidth as well? Yeah, I mean, at the end of the day, an ILP packet is just a packet of data. and there's no real reason why for a connector, it should be much more expensive than sending an internet packet, for instance. And definitely, you know, it sounds crazy to say when I load this website, I'm sending 100 payments or something. But to say I'm sending 100 internet packets doesn't sound that weird. Okay, cool.

Well, let's speak a bit about web monetization, right? Because that's, I think, sort of a threat that runs through a lot of work that you guys are doing today, and I think Stefan you have done over time. So you mentioned before the episode that you started working on problems of rent monetization, like much before Bitcoin. Can you run us through? What was that early work and what were the main lessons that you learned? Yeah, so back in 2008, I joined a company in Switzerland, which was basically selling e-books.

And so e-books, you can think of it as like these little, you know, four, 14 to 25 page guidebooks on various day-to-day tasks. And they cost around like 1 euro, 1 euro 40, something like that. And obviously it was very difficult to motivate people to actually like take out their credit card and like a lot of people in the German speaking area don't even have credit cards or like their PayPal account and try to go through this whole process just to buy this like one euro 40 cents ebook, right? And we eventually switched to a subscription model which worked a lot better. So a lot of people were actually willing to say instead of paying like one euro 50 for one ebook,

I'll pay 10 euros for a monthly flat rate where I get access to all 5,000 or whatever it was ebooks that are in the catalog. And so I had that sort of experience in the back of my mind for a long time. Like neither solution was like super elegant because even with a flat rate, if you're a smaller provider, it's kind of hard to get people to sign up to your particular platform, your particular flat rate. After that company, we actually built a tool that, so we built like a PDF to HTML5 converter. So being able to look at PDF documents in your browser, and it was just part of making the

e-books easier to read for people. But then we realized that that technology was actually independently useful, and so we started selling it and spinning that company off. to basically sell it to publishers who had these back catalogs of, you know, old magazines, newspapers, et cetera, in PDF format. And so they could convert that into HTML and then put contextual ads on that. And so that gave me a bit more of an insight into how the publishing industry works, especially at that time was a very tough industry. Like there's a, it was kind of an industry in decline, their revenues were shrinking. You would go into an office and there would be like, you know, white sheets over some of the desks and, you know, all the remaining.

people were like, yeah, like a lot of our colleagues just got let go and like it was very, very tough environment. And ever since then, I've been thinking about like, why isn't their native built-in way on the web where you just go to a website and as you make the request, you also send some money and then they send back the data. Like, why isn't money the same as data in terms of like efficiency to transfer it? And it turns out that like when you look at the HTTP stuff, you know, you know, standard, and other people have pointed this out, but if you look at the HTTP standard,

there's actually an error code 402 that's reserved for this particular use case. Like if a website wants you to pay for a given page, there's an error code reserved for that. And in the description it just says reserve for future use. And they just never, after 30 years, never got around to figuring out a protocol for that. And so when we were looking at Intelligent, we were like, hey, we want to take this from a theoretical idea to a practical process. that's really being used, we needed a use case. And this seemed like such a good fit-a- like such a natural fit.

Because we kind of looked into the different criteria and then tried to figure out, you know, what was a good use case for that. Yeah, like the, by having it where you send to, you know, so many different websites in a day, that's something you couldn't do with a manual process for payment. And so if we're talking about like, you know, how can we apply this interluture technology that's basically making it as easy to send payments as it is to send internet packets, then I think that sort of many to many scenarios are sort of the best in the short term while it's still gaining adoption. Right. And also like if you want to solve this problem for the web, it needs to be an open protocol. And so an example I often give us like we could have applied intellectuals. to remittance. The problem with remittance is that what users care about is the cost to them.

Like if I'm sending money back to my family, I care how much gets there. I don't care if the protocol underlying it is like open source, you know. And so with the web, however, if you're trying to get your protocol to be officially adopted by, let's say, browser vendors and like, you know, kind of be baked into the web standards stack, it really needs to be an open protocol. So we thought that Intelliger just checks all of those boxes really well. It's like, It's great at many centers to many receivers. It's really scalable. It's an open protocol.

And it's great at going across borders as well. So it just fit that use case so well. So does web monetization only like apply to this sort of like micropayment kind of thing where you're paying for data? Or is it also meant as a replacement for like, you know, payment APIs themselves? So like Stripe and PayPal and all those guys. Yeah. So we've already done a lot of work over the last. three years with the W3C, where colleague of mine, Adrian Hope Bailey, who's now also here at

Coyle, he's been the chair or the co-chair of the Web Payments Working Group. They've come up with two standards so far. One is the Web Payment Request API. So this would be like a website is asking for payment from the browser. This is what Apple Pay uses, for example, when you go to like check out on Shopify or something like that and like pops up with a nice little native UI. So that's something we've already been involved with with reuse, and we've done some interesting tests with that. So for instance, if you look at the Chrome source code, I don't know if it's

still in there, but they did a test where there was actually Intelleger was one of the whitelisted payment method identifiers, and that was because we've been working with them on experimenting with using Intellegger for kind of retail payments. If you dig it up, there are like demos and blog posts and stuff like that about that topic. I think for COIL, like web monetization, we think is a new thing. It's a different standard. And the main differentiator is that with web payments, you are actively acknowledging each payment.

It's not automated, right? It's like you would like to check out, which address would you like to use for shipping, that kind of thing. And so you go through like a checkout flow. Web monetization, the amounts are so small that it's actually not worth it for the user to think about it at all.

So it should be completely in the background, completely automated. Now, I think the way, that web standards work, it helps a lot if the standards kind of build on each other. So we're actually starting to think about how to make these things more similar and maybe reuse some of the web payment standards for web monetization because that would make it a lot easier to get browser support. But right now, from a use case perspective, they're distinct use cases.

I'm curious if you could speak a little bit about what are or would have been the higher order or the kind of bigger picture effects of this, you know, lack of web monetization. I mean, I guess that probably ties into, you know, advertising being one of the prevalent ways of monetizing the internet. But like, how do you guys look at that? Yeah, I mean, it's just, I think the fact that the web doesn't have any built in sort of business model for a website is kind of what gets us into these situations because, because, yeah, it costs money to run a web. website and you know you kind of have to turn to ads and that then kind of goes back and modifies the nature of the site that you've enabled for ads to make it you know ad friendly

or a focus on collecting your users data that kind of thing and I mean also if you want to switch to a subscription model or have your users buy something with a credit card that also requires quite a big change in in how your platform works or how you your website or blog or anything on the web. Yeah. So I think... Go ahead. Yeah, well, with Interleger, it's sort of...

I think you could have this as just, here's my app, and so long as you're using it, you're paying me automatically. And so it doesn't add friction for the user, but it's still a sustainable business model for the operator of that website. Yeah, I think the non-plus ultra for us, just like, if I'm... I made a useful app, I made a useful tool, I made a piece of content. I shouldn't also have to come up with some business model like, hey, I'm going to sell your data that you put into this app, or hey, I'm going to inundate you with a bunch of ads or whatever. Like, a lot of those are, to me, are workarounds.

It's kind of like the difference between going to a restaurant to have dinner and then you pay or going to a restaurant to have dinner and then you do the dishes for three hours in order to compensate them for the dinner you had. You know, it's like, it's just barter is not a very efficient way to pay for things. And so we think that introducing actual payments is actually healthy. And like, there's no amount of ads you can look at that's going to be worth more than whatever your actual job is and the money do you make with that. It's just going to be more efficient than bartering. Yeah, I think that's a great point. I recently listened to a podcast and somebody was saying, so this was in the Sam Harris podcast, who's done a lot of like experimentation around basically trying to get people to like pay. for listening and donate and actually podcasting I think is a great example where we're kind of the

native ways of podcast distribution through RSS makes it like very hard for people to you know for example pay directly for listening to a podcast but yeah the point he made there was basically that you know all of the bad things on the internet are basically due to advertising and you know there's probably a decent amount of truth to that yeah I think it's a sort of something where like instead of having a one-on-one relationship where the website owner is trying to provide a service to me, I'm trying to reward them. And it's a very simple, straightforward relationship. With advertising, you're bringing in a third party.

And so you get things like on YouTube when they demonetize a lot of content because advertisers weren't sure about types of content that their ads were being placed on. So now you have content creators, they have to modify, maybe they have to use less course language or whatever, which actually like their audience doesn't mind, but it's like some advertisers that doesn't want it associated with their brand. So it's just like an extra complication. And I think that by having that direct reward, you kind of align incentives a lot better. Yeah, Stefan, I think I remember you once telling me about like how,

like the advertisements that are shipped, right, actually make up like a sizable percentage of like mobile data costs for users. Yeah. So there was a statistic where I just took it from the New York Times, where they basically looked at, you know, what is actually the cost to the user, given a certain, like, mobile bandwidth cost to ship all these, like, ads onto your mobile phone. And in some of the cases, like, it actually was more cost to the user to deliver the ads to their mobile, again, depending on their data plan, whatnot, then it was revenue to the website. And it just shows like, okay, well, clearly there's something pretty weird going on. Oh, that is insane. That's super interesting.

Yeah, that sounds like a deeply broken, deeply broken thing. Well, let's move a bit to coil and get a bit more in depth here. I mean, first of all, you were both a ripple. I found you had ripple for a very long time. What was the reason why he decided to start? of in a different company as opposed to maybe continuing to work on interleisure user use cases from within Ripple. Yeah, so I mean, I'm sure that your audience are familiar with Ripple.

I think they're very focused on use cases around the digital asset XRP as well as enterprise use cases. So kind of making payments more efficient for banks, payment service providers, their customers, corporates, and so on. And so what I found with working with some of those kinds of. kinds of customers and this was sort of something that like I think was more of a mutual realization you know among the ripple team and myself a research team was that banks are I mean they're kind of interested in whatever their customers are interested in right and their customers the customers

that matter the most of them are probably like some of the larger corporates and that kind of thing and so if you think about Intelliger as this thing that you know we talked earlier about what are the things that Intel are just best at if you think of it as a thing that enables like a new class of use cases, kind of how the internet enabled like a new class of communication use cases, it's unlikely that like large corporations are going to be necessarily to be the very first to adopt that. They're going to be looking for cost savings on their existing use cases. They're going to be looking for, you know, like ways to maybe scale their existing use cases better, things like that. They're not going to be looking for like,

okay, how can I send like a fraction of a cent to, you know, halfway around the world. And so if you want to go out and you want to build like totally new products, I think everyone felt that it was much better to do that as part of a new company. And so I don't think it would have been possible to build Intelleger as Coil because you kind of need enough funding and momentum to kind of put in all this like research and pay for like a whole team to do that. But as far as like productizing it, you kind of need something like a startup that's just not doing anything else. going after this one opportunity so that's kind of what coil is intended to be if you want to add anything to that yeah i think yeah we just really need to be create the demand because somebody has to do it you know right so i mean one of the things that i like one thing i noticed with interledger ecosystem is that there's still a lot of work to be done on the protocol layer side of

things so like for example right now the only um like kind of finished uh plugin right now is to XRP. And there are some, like, you know, Kavre is building some on like Ethereum and Bitcoin and stuff. But what made you guys decide to focus on like going out to like start building end user applications instead of like still making, like working on the core protocol? Because I don't know. In my opinion, I see that actually has having a lot of work left to do.

Yeah. So I think actually there's a little bit of leapfrogging going on. The last community group call, I've heard that some of the Ethereum, like, are actually starting to look pretty good and we need to go back and maybe update some of the XRP plugins. I haven't looked at it myself, but that's what I heard. So I think those plugins are actually getting close to mature. And I don't know if you haven't. Yeah, and I think on whether we should wait until there's more on the core protocol level,

I think you really can't get the core protocol to be ready or to be very good unless you're actively doing things on top of it, like in production. because now that we're actually kind of, you know, we're accountable to keeping the network up. Like our customers are going to be messaging us if the interlensure network's down. That's a much higher, those are much higher stakes than when it was purely for research. Yeah, exactly. I think the healthiest protocol is when it evolves with actual usage. I think as far as like some of the core data formats, like, for instance, the ILP packet header, which is the most important thing you really need to standardize, I feel pretty strong.

that those are actually done. And so it's more some of the protocols below, like you say, like the ledger integrations, some of the protocols above, like transport layer protocols, where there's still like, especially on the implementation side, not even just on a protocol side, but the implementation side, there's a lot of room for improvement. But there's enough there that you can go out and you can build an app and have it be rock solid and, like, you know, very usable and very performant and so on. I don't know if it's like super scalable yet.

I think it's the amount of throughput that we see per node. But I mean, you kind of heard like the volumes that we're doing. I think certainly by blockchain standards it's pretty good. Yeah. If you've listened to previous episodes with Marley Gray and Matt Kerner, you know that Microsoft is committed to providing enterprise grade tools and infrastructure for blockchain developers. Well, the Azure blockchain workbench is perfect for organizations building consortium networks. Take the Ethereum proof of authority template, for example.

It's ideal for permission networks where consensus participants are known and reputable. Ethereum on Azure has on-chain network governance that leverages Parody's extensible proof of authority client. Each consortium member has the power to govern the network or delegate their consensus participants to a trusted operator. And Parody's WebAssembly support allows developers to write smart contracts in familiar languages like C, C++, and Rust. Azure blockchain workbench was created on the same principles that drive all production

services in Azure so you know you're relying on secure redundant infrastructure that can scale. And with built-in services like authenticated APIs, off-chain databases, and secure key management services, you can scaffold your infrastructure in just a few hours. To learn more about Azure Blockchain Workbench and how Microsoft is advancing blockchain usability and enterprise, check out aka.m.s slash Epicenter and start building today. We'd like to thank Microsoft Azure for their support of Epicenter. So you must have read like the Union Square Bench. blog post from like a last month about like the myth of the infrastructure phase and so that's kind of like

you know you guys I'm so I guess you guys kind of agree with that model and like believe that like you know you need this like curvature path where like the demand and the infrastructure kind of like building off of each other yeah I mean that's exactly what we found with this idea of having a connector like I don't think that strata would be a commercial connector company if it wasn't for coil being their customer. And I think it's, you're kind of mutually creating the demand. You're kind of solving the chicken neck problem by co-evolving together. And you're also kind of leading the way for other companies to get involved. Because I think there's so many other people that I've talked to before starting coil where they kind of look at it like, yeah, it sounds nice in theory, but like,

you've got this cushy job at ripple. Like you can do this all day. You know, I need to actually make money, build my company. And so they don't feel comfortable actually jumping in. But now, like, I'm 100% dependent on it. Like, my personal fortunes are all tied up in coil. So, like, if this doesn't work, you know. And so if I talk to entrepreneurs now, it's like, oh, you know, like you're really going to stand behind this.

You know, like you're really going to make this work no matter what. And so I think it totally, like Ben said, it really totally changes the tone of how you work on it and what people react to. Yeah. Were there other ideas that you guys were thinking about besides, this web monetization and micropayments that you thought like, okay, this could be an interesting company to build, you know, around Interledger? Yeah, we had a board of 49 ideas.

I'll let Ben talk about that. Yeah, I remember there was definitely, there was a day when we were trying to think of, I think it was what to do at the next conference we were attending. And so we just started listing all the ideas we could think of on top of Interledger. And so now we've kind of, you know, now in the context of starting coil, We've zoomed in more on the web monetization one. But even within there, I think we could definitely list another 50 things to do with web monetization. And probably we're going to have to zoom in somewhat there too.

Right. Yeah, I think like once you're in a startup, suddenly like, it's like, okay, well, we got to focus. And then once you focus, you got to focus more. And, you know, I think one of the ideas that was a frontrunner for a long time was Kodias. So that might be a name that some of your viewers recognize. you know Evan and I worked on this project a long time ago at Ripple and we kind of got it to a point where the only thing missing was the payments interoperability protocol because Intelligent didn't exist back then and so when we started a coil we actually went back and and built a prototype of Kodias because it was literally like I think how long did it take it was like three weeks I think that was our first couple weeks yeah yeah two or three weeks and so that actually kind of in and of itself was exciting to me because like

I think before you could go and you could have an idea for a decentralized application. And it would take years to kind of put together like an ICO and like you want to create a token and you need to have a blockchain, you need to have a consensus mechanism, you need all these different components. Whereas like with Intellegger, you can literally just like for Codeus, which was hosting using Intellager. So we basically just took a piece of software that could already do like hosting and it would run like different containers in their own virtual machines. and then we just added an API and we made it like a paid API with

Intelleger and then we released it and then like a couple weeks later we had 400 people running Codius hosts and unfortunately that Codius isn't that core to what we're doing right now so we can't devote too much time to it but it's just one of those ideas it's just like

it's so obviously useful that we just felt like we had to give it at least like you know a bit more the light of day you know So, I don't know. And what I took away from it, it's just like how easy it is to build stuff with Intellecture. It's just like all, it's just like a way to solve incentive problems.

And you can almost like forget about how any of that works. You don't have to worry about token economics and stuff like that. You can just go and say, well, if you want to access my mesh network, this note pays this note. If you want to upload something to the server, you pay. If you want to, you know, whatever you're trying to build, what is an incentive issue, if you don't download from me, you pay. You know, it's just like you just rely on intellectual. It feels a lot more like building things on the internet. I think the cool thing about web monetization as well is that it gives you that interlature capability

just in your browser. And so that means really anybody with a coil subscription could use any of the applications we build on interleisure. Like you can actually, you can upload a smart contract to Codeus from a browser. And pay for it from that's right. Yeah. And so is the plan to like get back at some point down the future road, Matt would get back into like the Codius side of thing because I heard from someone I'm not

sure if this is true that like the name of the company Coil was actually like a amalgamation of Codias and interledger. Yeah that's true it's a yeah it sort of smush those together. It also fits in with some of the other naming schemes that are floating around like for example spring at Ripple which is the that's the funding us basically. Right. And so I think, yeah, those are definitely the two pieces that are very important. Yeah, we had like a lot of names like we have council, which was a service selection protocol, we had something called COG, which is like how to pay for APIs.

And so the CEO kind of meme was around a lot. It came from Codeus mostly. So let's move to coil and dive a bit more in depth there. there maybe one good way of explaining coil to our listeners is if we can briefly run through what does my user experience look like, you know, as somebody who's, you know, going to use coil as a kind of end user? And what about the user experience of using coil as a, as a creator? Right. So, I mean, our goal has been to make it as, easy as humanly possible. That's sort of been the primary goal. The other goal has been,

I've always been after mainstream adoption. So I'm looking at it from perspective of a mainstream user, not somebody who's already way knee-deep into crypto themselves, right? And so for the end user perspective, the way it works is you go to call.com. Right now we're in close beta, so we actually have a waiting list. We have to let people on. slowly onto the platform because we want to make sure that when they get on, they have a decent experience and we can scale fast enough and so on. And so right now there's a waiting list, but eventually you'll be able to just sign up, put in your credit card, you pay $5 a month, and that gives you access to the entire platform. One thing that's, I think, unique is that

we're not necessarily, or we're not taking that $5 and splitting it up in some way and then paying it out. It's a flat rate. It's a true flat rate. So you can use more. more, you can use less, and coil makes up the difference. The reason we think that's so important is because it kind of, the ideas that it gives the user peace of mind, right? Like I used to use this cycle Flatter. And basically what would happen is like Flatter takes your monthly budget and they kind of split it up between all the websites that you go to.

And so what that means is that if you go to some website, they initially get like all your budget. And then as you go to other websites, that gets supported. attracted from the first website you went to. So I remember I would go and think about like, okay, well, if I go to these other sites now, well, then the website I really like the most will get less. And so suddenly I was thinking about it, and that's really not a good way of doing it. So we're trying to get more of an experience like you'd have on like Spotify or Netflix

or something like that where like I have access to all this content, to all these websites, and I can use as much as I want. And so if I'm, you know, if I leave my Spotify running overnight, you know, sure it costs Spotify more in licensing money, but I as a user don't have to think about that. I don't have to worry about it. In fact, I have a strong incentive to kind of use it as much as possible to get the value out. And we think that that's a more engaging way of building an application. Anyway, so just to kind of wrap up that discussion of like what's the experience. As a user, I sign up, I pay $5 a month, and now I can go to different websites. And right now it's mostly

about like supporting creators that I care about. So right now there are a lot of people from the XRP community that are either blogging or making tools and so on that are web monetized. And so if I sign up to coil, I can support those creators if I care about their particular content just by using it, reading it, you know, following them and so on. We think that that same model could apply to other communities as well. So like let's say you'd apply it to the Fortnite community. And so suddenly people that are Fortnite streamers, websites, forums, etc. they can become web monetized, and now users that want to use those websites, they can be web monetized,

and they can get a call subscription and go to those sites. So that's kind of the idea. And then for the creator, it's also a pretty simple experience, although on that site, there's still some crypto involved. So if I'm a creator, I have to sign up for an IOP-enabled wallet. And as of recording this episode, hopefully there'll be more options soon. But as of recording this episode, the only option is X-R-P tip-bot. And so I have to go there. I have to make an account and then I receive XRP.

But what's cool is that the underlying technology is intellectual. So if someone out there has like an Ethereum wallet and they want to integrate, they can make it so that creators can earn their money in Ether, ether, or in some ERC20 token. So it's like the technology allows you to receive in whatever you want, as long as there's a provider that gives access to that particular currency. So just a question briefly on that. Let's say now, you know, we, I add my website.

I want to receive ether, someone else, Sonny wants XRP. He has, is his own creator. The idea is then that you as company coil will, you know, basically buy whatever crypto assets for whatever the credits want and pay them in that token. So we'll actually send it out. on Intellecture. I think, Ben, do you want to explain how that works? Yeah, we have our, and Stefan briefly mentioned Strata earlier, there are interledger service provider. And so essentially we just have an uplink to them where we send ILP packets,

and then later we settle them using XRP. But due to the like multi-hop nature of the interleger network, strata is then passing it on to to the next hop and so on until eventually the creator themselves gets whatever currency they wanted. So coil doesn't need to worry about what payment methods exist in the interluxer network because that's sort of what the routing does for us. But so who then actually does that exchange from, you know, let's say from XRP into Ether? So that would be potentially strata or a peer of strata. Some connector in the interledger network will hold both XRP and Ether.

And so to one of their customers, they'll be sending packages. interlature packets which will be settled in ether and they've got money incoming that's that's being settled in some other asset and there could be like multiple currency exchanges on a path as well like it doesn't have to be direct so you mentioned about like Netflix and Spotify right and so does do Netflix and Spotify pay they are their content producers so whether it's the movie studios or the artists do they pay them based off of like number of views or number of listens or do they, is it like a fixed fee that they pay the producers up, the licensing fees up front?

I think that content licensing is a very deep and complex topic that I don't think I can do justice. But I would say it's fair to say that by and large, there's generally a relationship between like how many times a song is listened to or how many times the video is viewed and how much the content creator receives. There's just a lot of other variables too, like, you know, the negotiating position of like a large major label versus like, you know, a smaller independent artist or something like that. I think what's interesting about Coil is that we're kind of, we have this like fixed amount of money that the user is paying us, right? And sure, somewhere we need to make a profit, I think initially we'll probably operate at a loss just to help get the

network going. But eventually, like, let's say, you know, user pays us $5 and we pay out like $4.95 on average, like across all of our users, right? So now we have some profit that we're making 1% or whatever it is. And our goal has to be to make sure that those 495 are spent as efficiently as humanly possible. And when I say efficiently, I mean like our users probably don't care about how much money does some clickbait website that they accidentally clicked on make. But they might care about getting that HD video that they saw on that web-monetized website. where you can only watch it with a certain amount of bandwidth.

Or then one article that you can only read after you've paid a certain amount of money, they don't want to wait for a long time to read that. Things like that. So I think that we would optimize and we try to get really good at figuring out based on things like user feedback, user voting, user behavior. How do we pay just the right amount to give the user a good experience without overpaying which then gives them like a worse experience on some other side that they go to later. One of the things that I struggle a little bit with this model is that, you know, let's make an example.

Let's say I have a video. I do some live streaming of video and, you know, this is like a high, you know, an activity that, you know, takes a lot of effort. and now I want to offer that, okay, people can get the HD stream and then they should pay more and then they can have a lower resolution thing and they should pay less. So is there some way to kind of differentiate between, you know, maybe high value services and low value services that are being provided? Yeah, I think with with coil, it's slightly different from how you would think of like buying different tiers of content today because with the web monetization standard,

the user is kind of, you can think of it as like the user is almost opening the negotiation on price because they have a certain amount of money that they can send per second. And so it's kind of up to the site then to say, this is good enough and I'll give you the content or to say this is not good enough and you have to watch either like a lower quality version of the stream or something like that. With payment methods right now, the site tells you how much the content costs And then that forces the user to interact with it in order to pay, which means most of the time the user's not going to pay at all. So yeah, the user could, you can still differentiate into tiers,

but the user would need to then basically buy a more expensive web monetization subscription or turn up. Yeah, they'd have to pay more, essentially. So is there like a slider right now on the coil extension where I can like, you know, increase my payment bandwidth? decrease my payment bandwidth? So we thought about a bunch of different models. So right now it's a single fixed fee with a single fixed bandwidth.

But obviously that's like our minimum viable product that could get more sophisticated in the future. I think one of the things that we thought about is allowing the user to, you know, on medium there's like this clap feature where you can kind of say like, hey, I really enjoyed this article. So you could have something like that where the user can kind of signal that this is a creator that I particularly care about or this is a website that I keep going to. And so we might be willing to pay more for a website that the user has previously given us feedback that, you know,

they like. Another thing could be like the opposite of that where it's like, hey, I think this website is clickbait. I don't want you to pay them anymore. You know, and it's like funny because it doesn't cost the user or anything, but there's still websites where we get the feedback that like, no, I actually actively don't want you to pay them, right? Because I don't want to reward that kind of behavior. So If we get a lot of feedback like that about a website, then maybe we'll default to a lower bandwidth or even like no bandwidth at all. If it's literally like an abusive website or whatever it is, you know, like they're just clickbait, you know. Another, I think, differentiator in the future could be that we could have different tiers of subscriptions, right? So we have like an entry level subscription, which gives you access to certain types of content.

And then there's like a premium subscription which has like, you know, if you really never want to worry about. bandwidth ever again, you can get that and then like everything will just be maximum tier, like HD and so on. I think what's going to happen is there's going to be a certain amount of interplay between the publishers who are trying to set their price levels and then the users as well as their providers like coil who are setting their bandwidth levels. And so, you know, we might look out there and say like, okay, publishers have these kinds of features at this bandwidth level and then this kind of features at this bandwidth level.

And so we're going to introduce a new subscription that has that higher bandwidth level or that lower bandwidth level. And so both sides will kind of react to each other. That's how we imagine it could happen. And because there could be, because this is just built on web monetization, which is just a just a JavaScript API, do we define, and interlegious which anybody can join, you also would have the interplay between different web monetization providers where maybe users don't like a tiered system, So maybe they just want to have a different provider where they just pay as they go and they're okay with that, then that web monetization ecosystem could fit that in as well. Now, if coils exceeds, right, and if this works at a large scale, then, I mean, you guys alluded to a bit, right? Then you could expect that I as a website developer, as a creator, I now say I customize my user experience.

and I give like a better use experience, I don't know, some premium content or some other preferential treatment to people who have this activated and are paying me basically for the data I'm providing and, you know, to some others I do less. At the same time, then from user perspective, I may say, oh, I want to now join this web monetization thing and I want to pay my, you know, subscription. not just because I want to, you know, I agree with some of the ideals, or maybe I don't like an advertising business model, but because, you know, I get a better, you know, better use experience, right? My websites work better now. So is that kind of where you see things going? And what are, can you give some examples of things that you hope people will build out

if coil actually sees widespread adoption? Yeah, I think, Ben, you actually built some apps that kind of use web monetization, maybe you can explain what some of those are. Yeah, yeah, so a few of the sort of, I would almost think that it's like the low-hanging fruit of like some pretty useful applications you could build. One of them was file upload, which I think is interesting because the way I did it testing it out was like, what if you upload a file and then the downloader pays to the uploader. And so that actually means you could throw some files up there.

and then embed maybe that content in your website, like a video or something. And then even if you don't have any programming knowledge, you could do that as a way to make premium content that web monetization users can access. Another one was a live streaming site where basically you can tune into a stream, and so long as you're streaming payment, you're also getting streamed video. So that obviously has some obvious uses of like, you know, maybe you have a just a Twitch streamer or something or other kinds of streaming that want to make sure all of their users are paid. One thing I would kind of highlight is that right now there's sort of a set of user experiences that we're sort of used to, right? There's the premium experience where I have to sign up, I have to put in my credit card, I have to, you know, get onboarded and then I can finally enjoy the premium experience.

Then there's the ad-supported experience where it's like, you know, it's free and maybe I don't even have to sign up, but it's kind of like there's ads in my face all the time. I don't really know if their privacy policy is going to be very much in my favor, or if it's more in favor of the advertisers. And that's just kind of like take it or leave it, you know, that's how it is. And this almost creates like a third class of website where it's like, once I am web monetized, once I've set this up once, I can go from it. I can go to a website I've never been to. I don't have to sign up. I don't have to pay even if it's part of my call subscription, right? I don't have to look at ads.

It's just an experience that's designed to be as fractional as possible. So imagine, like, for a file upload website today, they have these really horrible ads with, like, the fake download button that you click and then it installs malware on your computer. Or you can sign up for an easy payment of, like, $7.99. And I'm like, I don't use the site that often. I don't upload files that often. And so we envision that coil subscription would just be something that you kind of get.

And then it supports a bunch of creators that you like. It also gives you a bunch of services like that, like a file upload service. You just go to it, lets you upload infinite size files because the larger the file, the longer you spend on the uploader. So it's kind of paid for. It lets you download at whatever speed you want, because, you know, once again, the larger the file, the longer you're going to spend on the download. And then it doesn't show any ads. It's a clean, simple user interface,

and that's it. And just imagine, like, you just have this, like, less BS web experience. And that's what coil gives you for $5.95. That's my pitch. I think it has some implications for privacy as well, because if you imagine sites right now, if they want to charge payment, they need to pretty much, like you said, you need to sign up first. They need to have an idea of who you are so that they remember that you're a paid user. With web monetization, you're just streaming payments while you're actually on the site. And so they can see, oh, this user who's completely anonymous is sending payment. So give them the premium experience, but then you can forget about them once they leave. Yeah. No, I do think that's a, that is a very desirable thing. One of the things that

stands out to me here is the way we've been speaking about this is right, web monetization as this you know, almost like fundamental new way of, you know, economic relationship on the internet. And at the same time, when we speak about the role of coil, then it very much feels like the role of, you know, traditional startup, right? Like, you made the analogy of Spotify and I as a user, I pay, I give my credit card information to coil, I pay you the monthly amount. you guys have some discretion on

I guess the rate at which you pay out to the different websites so it feels like there's some almost misalignment here in terms of this ambition of this you know big open fundamental revolutionary protocol but then at the same time

also building kind of traditional web startup like how do you look at do you see attention there yeah so we basically I think it's important that along the way we are offering an alternative. So, I mean, obviously I think for people to actually sign up for coil, if they don't understand kind of what the web monetization standard is or if they're not familiar with interledger

and these kind of things, then it's not a huge selling point to them. But I think it's really important for just the evolution of how this sort of part of the web involves that we have a non-coil way to do web monetization. So we actually have some software that you can download on your machine, which basically connects to Interledger and in your browser, you can go to web monetize sites, and this software you're running will pay the site instead of coil. And so that kind of means that you don't need to, it kind of gives you actual credibility that it's not just coil, because it's easy to say like,

Yeah, anybody could come in and do this, but yeah, you can actually do it right now. Good. So this like web monetization stuff is like separate. So the coil product is specifically this like subscription based idea where I pay you $5 and you guys do all of it for me. If I wanted to, I could use you said minute in order to like, you know, load my own wallet or something of some sort and I can do everything by myself. That's kind of where the difference is. Think of it as like the difference between like you know Gmail or G Suite versus like running your own email server And I think one of the reasons that that's significant is not just because you could run your own server

I think a lot of people are not going to do that But someone could start a competitor to coil and we're actually totally okay with that because we think that We can provide a good enough user experience that people will want to use coil And we're totally comfortable competing with someone else on on that and I think also I think also I think there could be a lot of variety in terms of the kinds of models that people could try. So we talked to somebody the other day who is thinking about doing like a token-based model where like you actually have like a dedicated token and then that's what you're spending through

Intellecture to pay for web monetize sites. And so there's like a lot of token economics involved with that. We talked to someone else who wants to incorporate this in their ad network. And so you might look at that network's ads in order to pay for your web monetizing. usage. And so are those competitors in a certain sense, sure, but a lot of their users wouldn't be the right users to pay like a $5 subscription, right? Or you could think of like different kind of content bundles, right? The provider can choose what they want to pay for. So one example I have for that is imagine if you have like a company and they want to provide

web monetization enabled browsers for all of their employees. They probably don't want to pay for their employees to go to like Facebook all day or like watch Twitch stuff. streamers, but they might be okay with paying for things like educational content, news, things that are going to make their staff more productive. And so someone could come along. They could say, like, our web monetization subscription is specifically for, you know, paying, like for a corporate use case, right? And it's like, again, not really competitive with what we're doing.

I mean, some of these things we may not want them to do in the future, but, like, my point is that I think the system is a lot bigger than just one platform. We spoke before a little bit about, you know, in the end, if we have like a success of coil or success of web monetization, right, you'd have like websites that build around it and users that, you know, specifically sign up for it. But of course, in the short term, right, like right now, there are very few coil users, right? So as a website, it doesn't, you know, it's probably not worth to integrate it. And then at the same time as a user, there are no or probably hardly any websites or maybe none at all that provide, you know, like a better user experience if I, if I'm using a coil and web monetization.

So it feels like this is very tricky problem where you need to have like significant scale on both ends until you really have a kind of economics that work. What is your strategy for getting to that point? Well, I mean, I feel like I've gone through this like a bunch. bunch of times now. Like when we started out with Bitcoin in the early days, it was like, you know, I would go to people and people be like, well, what websites can I pay on with this? And like, I'd be like, well, right now you can pay for Alpaca socks at this family farm in the US and people are like, oh, that's cool, you know. And I think what you do is you just like

find the people that are excited by the technology and they're excited by like this vision. And yeah, maybe like the first couple people that embedded, like it doesn't make that much commercial sense. But at the same time, it's like you put a piece of JavaScript on your website. It's not like it takes you, you know, weeks and weeks to do this. And you have pretty much nothing to lose. Like worst case, you don't make any money with it, but you're also not really losing anything. And then as you get like some initial users and we have like about 5,000 people on the wait list right now, that's enough to kind of get some initial feedback and get a better sense. of like, you know, what are people looking for?

I think one of the biggest piece of feedback we're interested in right now is like which websites would people actually want to see web monetization enabled. So we can actually go to those websites and say, look, I'll use this really want your content. Our users are really interested in your website. And then also, like Ben alluded to, we signed a financing deal with Ripple.

So we do have a little bit of XRP that we can use to incentivize websites to, you know, support web monetization and that kind of stuff. So once we get a good idea of what our users would like to see, we can go to those websites and we can make it happen. So I think we have enough. We have all the pieces in place, but it is going to take a while to really take off. I saw on your website that, you know, the coil plugin currently supports YouTube and Twitch. But as far as I'm aware, like YouTube and Twitch haven't enabled web monetization on their platforms yet.

So how do you guys do this? Yeah, so I think that's an interesting one because, like, you, there are certain platforms that are just a, that should dominate position in the market that, A, it's not going to be, they're not going to be able to, or it's not going to be relevant for them for a very long time. I think it's a good way to think about it. But at the same time, they have a lot of creators that are sort of captive on that platform that really would like to use web monetization.

And so I think a lot of, similar systems have done similar types of integrations where we just use a browser extension to say like, okay, well, if somebody goes to a certain YouTube channel and that YouTube creator verifies with coil, we can actually make that transaction happen. I don't like it

as much because it's not an open standard. Like unless YouTube actually goes and becomes web monetization enabled, the open standard users are not going to be able to pay unless they talk to the call server, et cetera. But that's just a limitation of using these closed platforms. Like if it was up to me, I would definitely say, like, people should move off of YouTube onto like a more open platform where they can

actually put like a piece of JavaScript themselves and have control over that. But, you know, you've got to deal with the world that you live in, right? I know YouTube doesn't have like a donate button already, but I believe Twitch does, right? That's right. And so is there any thoughts of like, you know, maybe integrating Twitch donate as an ILP plugin? We actually have already. Because that's actually how the integration to Twitch works, is that basically you can go to any channel and if they're a Twitch partner, then our receiver on Interledger is going to be accumulating these packets, which they then settle out essentially to that Twitch streamer by donating in their channel with however

many bits it's accumulated. Bits is Twitch's currency. Yeah, that's the Twitch. That's really cool. I guess that's a little bit confusing with the bits and Bitcoin, but yeah. And the interesting thing is that because it's done all over the top. So we didn't, it's not actually through Twitch adding anything. We've just basically done this over, over what they exposed to regular users. Yeah. So what happens from the streamer's perspective is like, let's say a bunch of call users go watch their stream. After a while, this bot will join the chat. It'll be called coil underscore Twitch underscore bot and it'll just donate bits and then pop out again. Oh, that's cool.

Yeah, so it's almost like, it's almost acting a little bit as like a marketing tool as well because people are like, what the hell is a coil Twitch butt? And why does it keep donating? We've definitely got a minimum limit to prevent spam as well. We don't want it to be like nuisance. Yeah, you could be dropping in, you know, one cent every couple of seconds, which maybe some people wouldn't appreciate it. Yeah.

Just one point very briefly on this. I did actually activate this on the episode of YouTube channel. So if you go to coil, I mean, I guess there's a wait list at the moment, but if you do the, you know, get the Chrome browser extension and then go to the any of the, our Epicenter videos that you should, you should see it in the extension, how it's donating tiny little bits of money to Epicenter. Yeah, and I know that a lot of some of you viewers might already be on the waitlist, so we actually just started working through the wait list and starting to invite people off of the

wait list actively. So yeah, if you've been on the wait list, you know, just give it a bit more time. We are trying to get through it as quickly as we can. Yeah. So I guess one more question before we start to close up. You know, in the web monetization, like the intersection of web monetization with crypto, I think the other big name that most people are very familiar with is the basic attention token. And they seem to be kind of going for a similar product to you guys and, you know, Brendan Ike and everything, everyone knows these people. And so how do you see your platform comparing with Break the Attention Tocent? Have you ever talked to them about integrating with the web monetization work and ILP work

that you guys have already been working on? Yeah. So obviously I can't talk about the specifics, but I have reached out to them. I think that they also care a lot about the same things that we care about, like privacy, openness and so on. So I have some hope that eventually both will use the same standard. I don't think that's going to happen any time soon. I think they have a lot more traction, at least in terms of like browser users. So I don't know if they are open to working with us on a standard.

I think ultimately long term, I think a standard is going to be more powerful. I think with Intellegger, you're not tied to one particular token. I think that that's going to open it up to, you know, a lot of a lot more communities to get interested in this. If you think of Ether, Ethereum community, Bitcoin community, like our proposal is something that is much more aligned with like, hey, if I just want to use Bitcoin, I can just use Bitcoin, and I can still use all the technology that Coilguides have built.

So I think that's one aspect that's the difference. Another aspect is that we should really try to make it a browser API. so it's a direct communication between the website and the browser. So it doesn't, like with Brave right now at least, you verify with Brave.com. So it's like it's actually talking to that server. And also, of course, it only works in the Brave browser as opposed to any browser.

And so we think that it's a little bit more of a just a neutral standard, a little bit lightweight of a standard. I think it's the best way to say. And I try to be like, you know, nice because I hope that one day we can work together. Cool, great. So maybe very final question. What does a roadmap look like? What do you hope to, you know, at what point do you have to be 12 months or now and maybe two years from now? Yeah, so I think sort of next stop is premium content because that's saying that's obviously a very crucial part of making a coil subscription work. And that's something we haven't actually explored that much yet. And actually just to add to what I was, my previous point is we're actually able to pay out in real time thanks to Intelleger, which I think is another kind of big difference to some of the other solutions out there is that if I'm a website, I don't have to know like who is this provider that the user is using because I'm actually getting money through my provider in real time.

And so I can provide a premium content based on that. And so we want to obviously unlock that. I think that is actually one flaw of the maybe brave. an flatter approach of paying in and then dividing up a subscription is that you don't actually know who gets how much until the end of the month. So in the time that you're actually browsing the site the site can't tell how much money it's getting. Right, because it could be more or less. Yeah. So yeah so premium content is probably next up and we've done I've also been working a lot on like

tools for that and and developer tooling to to make more advanced sites with premium content. But I think that's something pretty important and then also just letting more people off the wait list getting more creators on there release people from a lot of different communities to see who's gonna who's gonna be the most enthusiastic about adopting this because could be maybe it'll happen to be like gaming or music or right or YouTube creators yeah I think that's a big aspect of this like we want to have features on call.com where users can tell us like you know what

vote for websites and suggest websites that should be web monetization enabled because we want to have that feedback of like where people's interests are. And then also I'm going to personally be spending a lot of time trying to talk to different people about this. So like I'm out in LA for the rest of this week. I'm actually taking part of the team with me. And then I'm going to be in New York next week. And I already had like a series of meetings here in SF.

And the goal of all of these is to try to talk to us. different kinds of creators and people in the creative industry and people involved with monetization as possible To really try to get a sense of you know where their pain points what's working what's not working And just trying to understand that that world of better I saw recently a partnership announcement or something with like the Bill and Melinda Gates foundation is that like something that you tell us just briefly about that Sure. I mean that's a little bit of a personal like passion project of mine There was something that started while I was still at Ripple.

We started talking to the Gates Foundation, I would say like three years ago or something like that. And they had to kind of identified a lot of the same things that we identified when we were doing research on Intellegger, basically around the real deep problem in payments is a lack of interoperability. And the way that it manifested for them was they would go into a country and there would be these different payment providers and they could like help the income income. the biggest provider, but then they're kind of enabling a monopolist.

As soon as the project ends, they might crank up their prices, things like that. Or they could work with some of the smaller providers, but now they're just helping to fragment the market. And so now you have merchants that have like three phones in their shops just to like accept different mobile payment methods and things like that. And so they started to identify that like if you want to have a frictionless easy user experience, you want to have low cost and you want to have a high level of competition in terms of payments, you really need interoperability. It's really what's what the reason that data transfer

has gotten orders and orders of magnitude cheaper, while payments have actually gotten more expensive over the last 20 years, is because that lack of competition around interoperability, right? And so we started doing a project with them called Moja Loop, which is basically, again, you know, people's eyes might glaze over it, but it's a national payment switch. It's an open source national payment switch. So it's something that a country would deploy and then basically allow its banks and other payment providers to use it. And so long story short, we've been involved in this project for three years. It's gaining a lot of traction. There's a lot of implementations that are in discussion now. Unfortunately, nothing announced yet, so I won't spoil it yet. But I think that I see a lot of potential in that

project. And so one of the things I wanted to do, even though I have a new company, new startup, I wanted to continue to work on that project. And so thanks to the Gates Foundation, they made that possible. So myself, Adrian, who I mentioned before, and some other people here on the team, Ben, and others are also helping with that project and continuing to drive that forward. And that's just something that we like to do. Cool. Well, thanks so much for joining us today.

Of course, we'll have links. People can learn more about coil and check it out. And yeah, I mean, one of the cool things, it's working already. So, right, I set up to Tip Bot and, you know, I was on a YouTube channel before and now there's a little bit of XRP that was received by the Epic episode of tip bot. So yeah, that's pretty cool that, you know, it's actually working. Yeah, so thanks so much for joining us today. Thanks so much for having us. It was a lot of fun. Yeah. Yeah, so what are your thoughts on you? How did you find this conversation?

Honestly, it was actually pretty interesting. You know, I guess like, you know, my first thing, that I would really say is like, you know, it's kind of pretty brave in a way, I would say that, like, you know, they're kind of like really jumping into like building a product right away. Kind of like, you know, like I mentioned during the episode, the whole like Union Square Ventures blog post about like, you know, the myth of the infrastructure phase where, you know, you don't want to be stuck in a period for years where you're just building infrastructure without building products. And I feel like coil just like, it's kind of like an example of that like idea really taken to heart where they're like, yes, we understand that the ILP ecosystem is kind of like very immature, but like,

you know, we're working on that, but at the same time, we really want to just like jump in and like build a product to show like, oh, look, this thing actually has like a real use case. Yeah. And I mean, the thing that just really stood out to me is that this, you know, actual product, you know, life in a short time. And the use experience was pretty neat and easy. you know that being said I do have sort of you know I wonder I do think there's a little bit of an awkward fit in a way where on the one hand you have this idea of almost like base layer internet protocol and infrastructure right so they they're talking about the web 3 stand not not the W3C standard and in the browser and you know this fundamental fundamental ways of how the internet works and at the same time almost a sort of business model approach, which is more like a Spotify or Netflix type thing. So I do think there's some tension there, and I'm really curious how that's going to play out once coil moves ahead and gains a bit more traction and users.

Yeah, absolutely. I also did think that, like, you know, I think ILP is just like very, very broad protocol that has a variety of use cases. like, you know, you could use it for interoperability. In a way, you could honestly just use ILP as a decks of sorts. You could use it for micropayments. And they really seem to like home in on the micropayments aspect, which honestly to me seems to be like a interesting choice

considering there's a lot of like projects in the space who are already kind of like pushing this micropayment idea, like lightning and Radin and all, like a lot of the layer two networks. And I felt like what really makes ILP unique from most of the layer to networks is its focus on interoperability. And I kind of found it interesting that they chose not to make that the focus of their product. Yeah, that's a great observation. I didn't even think so much about that, but I think you're totally right.

But yeah, in any case, I think it will be exciting to see what comes out of coil. And certainly a very strong team. So I'm looking forward to seeing what they built in the long term. So, you know, we mentioned during the episode that like when we started, we actually, we actually turned on the COIL plugin on our Epicenter YouTube. That was like, I think, two days ago. So, no, you want to give the listeners an update on how that's going? Since hardly anybody uses COIL, I presume not much has happened, right?

Because you need to have a COIL user and, you know, they have all these people on the waitlist that goes on the Epicenter YouTube page and then we would start earning some small amounts of money. But what was interesting was that, you know, when I turned on coil and then I went to the at our epicenter channel and you see like oh there's like tiny tiny amounts of money going to our account and then i kind of leave it open and then you know like two minutes to come back it's like oh we've made like two cents and and it's interesting to like notice you know even instinctively this almost desire to like kind of game the system that then i realize oh i'm like basically kind of is this defrauding coil so i'm you know for a

industry that thinks very much about, you know, having a game theoretic, like, strong incentives and stuff like that. I think that's, you know, isn't such a, could be an issue there down the line. Oh, and I guess another actually, one of the, I think my big, one of my biggest takeaways from this episode that I guess I didn't really, uh, didn't register to me, maybe because I just didn't do enough reading, but was this difference between like web monetization versus web payments? So they talk about like web payments is sort of like a pull where like, the content creator or like the website is requesting money from you and you are saying like, you accept it and say like, okay, fine, I want to pay you.

While the web monetization is almost like a push payment where like the user is the one that has this constant stream of money going. And, you know, I this I was actually kind of super excited about like this like web payment stuff. But I'm actually honestly a little bit skeptical about web monetization just because see, what I see is like, you know, we talked about like, you know, what if like different content creators want different amounts of payment for different types of content, right? So what is the user supposed to do? Is there going to be like a slider in the coil, like, extension that allows you to, like,

change the amount that's being broadcasted. But then if you're having that, then now you're kind of like, I, from what I understood from the episode was like the one of the main benefits of web monetization was this lack of need for user interaction. But it seems that now we're bringing back the user interaction. and maybe it'll be easier if we just stick to like a singular web payment standard rather than like monetization plus payments. Yeah, no, I think that's a good observation.

It is a very interesting and unusual concept, this idea of basically like streaming money to the web and all the website you visit. But yeah. Anyway, let's follow the project and see what happens with it. Cool. Thank you guys all for listening. Thank you for joining us on this week's episode. We release new episodes every week.

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