On The Brink with Castle Island - Jose Lemus (IBEX Mercado) on Lightning adoption in Emerging Markets (EP.435)

Episode Date: July 3, 2023

Jose Lemus, CEO and cofounder at IBEX Mercado, joins the show to talk Lightning and its growing usage in emerging markets. In this episode: The origins of IBEX How IBEX clients are using LN in emerging markets How Lightning as a settlement layer for cross-border interbank payments Lightning as a bridge currency Why stablecoins make sense on Lightning Why EM firms have an affinity for Lightning IBEX's partnership with Grupo Salinas and how they are introducing Lightning to Mexican households Lightning as an emerging remittance tool Why Mexico is a good fight for Lightning adoption Is Jose satisfied with Lightning's maturity as a protocol How Bitcoin's market cap is the ultimate bandwidth for Lightning Why Lightning reimagines the established batched payments model Jose's answer to the biggest critique of Lightning at present Further reading:  Learn more about IBEX IBEX's partnership with Salinas Group

Hello, welcome back to the show. This is Nick Carter. Today we're sitting down with Jose LaMuse, who is the CEO and co-founder of IBEX-Marcato, a lightning infrastructure startup focused primarily on emerging markets. We talk about IBEX's traction in EM, how they're helping multinationals and financial institutions use the technology. And we take a candid look at the state of lightning and its maturity today. Let's start right in. Hello, welcome back to Onond Brink. This is Nick. Carter. I'm sitting down in-person today with Jose Lemus, co-founder and C of IBEX Mercado. Jose, welcome to the show. Hi, Nick. Thanks for having me on. Yeah, thanks for coming over. This is a rare in-person Miami episode we're doing Ibex base here in Miami. Is that fair to say?

Let's say our base of our U.S. operations is in Miami. Yeah. I think that's fair. So tell us about the origin of the company and how you sort of settle on the idea for the business in the first place. It started with my brother in 2017. We got into buying Bitcoin. I had found about Bitcoin back in 2012, but I never really was able to purchase it. I was dumb enough to not mine it because you could back then. And when I came back to it in 2017, I started buying it. Bought my first Bitcoin.

It fell 50% the next day. I'm like, okay, did I just mess up horribly? or do I need to look into this more? And so just went down a deep rabbit hole with my brother and we decided, you know, we got to work in this space because this is too important a project, especially us coming from Guatemala and the third world countries. We have, you know, slightly different issues

than I would say Europe or the U.S., right? And so we see some things there and we can go into it later that we are concerned about. But, you know, long story short, we said, we want to work in the space. Let's build a company. We started off basically providing on and off ramps back in the company was, you know, incorporated 2018.

We started doing on and off ramps in 2019. And then fast forward to 2021 when the Salvadorian project was announced, we pivoted. into a technology company because we knew the biggest issue with Bitcoin is you cannot use it at least on-chain as payments in a you know brick-and-mortar store right it's impossible and so we wanted and we knew that the lightning space wasn't quite there yet when we when the announcement was made you know 70% of transactions were successful which is not good enough. If you want to...

Unlightening? Yeah. It had a 30% failure rate. And so we're, no, we got to get better at this. We built out the first ever, you know, Brick and mortar payment, lightning payment solution. So merchant payment solution. And how we did it is we basically built like our own set of microservices and built the merchant payment solution on top of it.

And this is also what allows us to, you know, be the company that, you know, brought lightning to Chivo initially. So at one point, we were doing like 90% of Salvadorian lightning transactions or more. And that's kind of put us on the eye of VCs. And, you know, we started to get contacted by them. And we raised funds in 2021. And now we're here, you know, a couple of years later. And we're looking at how these space is blossoming. And we just onboarded the first conglomerate onto lightning, which is really exciting, I think.

So is it fair to say that your focus is lightning and in particular emerging markets, uses of lightning? Yeah. What was it that made you go that direction with the company? Like I said, I thought we were really filling a need because we always knew Bitcoin wasn't good enough to be a transactional currency, right? And even before the El Salvador announcement was made, we had been looking with my brother into lightning and how we could, you know, is there any value at for an OTC desk to have lightning? or for any type of exchange to have lightning and trying to kind of work it in to, you know, make Bitcoin usable for everyday people. And now we know a lot more than we did back then, right?

So a bunch of new use cases have come up that again we can go into. But initially it was just this idea of making Bitcoin more. usable for you know everybody and also as I'm sure you know on chain is it's a pain in the ass it's really difficult to to just handle Bitcoin it's filled with a lot of you know weird jargon it's also you know complex you know the the words people lose more Bitcoin because they don't know how it works than hacking. So when you look at the actual traction and what users are doing with your suite of products, like, you know, there's a lot of different things that people do with lightning, whether it's brick and

mortar or, you know, like tipping or, you know, real-time content monetization or remittances, for instance, like what use cases are you seeing getting the most traction with lightning? I think the biggest use case, and this is the most. The most use of the most. most important use case, I think, to get right now because it's going to enable lightning to really scale and it's also going to enable to do a lot of cool stuff is leveraging the lightning network as a pure settlement layer. So the problem is this, right? And I'm talking about the problem with payments right now, but think of it also as problem. with all types of financial transactions in the world. It's that they're really slow. Why are they

really slow? Because you have to coordinate a lot of databases. And when you have to coordinate a lot of databases, right? The problem is you have to account for error, both the user error, but then also, you know, translation error between databases. This introduces risk. So the time difference that you have right now in settlement, which at best is T plus one, right, for international transactions, is that you can't get away from that database coordination. And the unique opportunity we have with Lightning and Bitcoin is that everybody's just writing to the same database, which is global, and it's unconsorable, right? And what this really allows us to do is to be very, very, efficient we we can get to a level of efficiency that traditional finance can and so

the use case of you know using lightning as a settlement leader where you don't care what asset is at the end points but you'd rather just use it to move that value across borders that I think is the premier use case right now and this is you know the interest we're getting from so you're saying you see lightning as a settlement network for the usage of bitcoin as kind of a bridge currency as a replacement for sort of the corresponding banking system that's that fair to say yeah and is this what are you seeing traction on the remittance side you know where maybe there's fiat currency on one side and another on the other and the intermediate channel would be bitcoin between the between those two yeah and you know

So that's actually the showcase I did at the Miami 23 conference. I went on stage and I sent two dollars from the cash app to a user for Osmo wallet in Guatemala, who's in Katsales. And then he sent it to the UK. And then I got it back from the UK into a wallet of Satoshi. and it all happened in less than three minutes. And the interesting part is that every single transaction that took place had final settlement, which is unprecedented. And then the scale at which we did it, which is $2, that's a transaction that cannot happen

any other way, like impossible. Especially when you take into account that we went from two currencies that don't have natural pair. So gets out of less to pounds, right? We're normally to have to go through the dollar presumably. Yeah. Yeah. So and I think people don't know this, but you know, the correspondent banking system is very hierarchical. So it's not like, it's not easy to send dollars from Mexico city of the Philippines, for instance. Kind of you have to go through New York ultimately. So the further you are, the more sort of emerging or frontier market you are, the more hops it is to get to the central hub and then hops to get to the destination. So the efficiency of the channel is a function

of how few the hops are. And so then, of course, there's more costs the further you are from the Nexus, which is basically the U.S. So in your example, there needs to be a conversion, ultimately, at the end, from Fiat to Bitcoin back to Fiat. So I guess that's sort of the dependency. That's the part where I suppose cost is introduced. Yeah. Right. But so are you saying exchanges are going to fill that role or kind of p-to-pee players? Like how do you see that last mile element being satisfied in this model?

Right now there's two predominant ways that it's getting solved for. One is exchanges or liquidity providers, right? The other one, which is very interesting, you have a significant number of players that see this as a way to acquire Bitcoin, you know, in a very low-cost manner or lower-cost manner, not super low. But you get a little bit of efficiencies there. In terms of using Bitcoin as a bridge currency for reminences, I mean, I also see this use case with stable coins. So I guess in your vision of the world, do you expect that stable coins will ultimately end up on Bitcoin? And people use it that way or do you see them as actually challenging bitcoin for this particular use

case i actually see and this is something that uh is going to be coming online over the next i believe no more than 12 months is stable coins running on top of lightning and it's for the same reason right it's it's just more efficient as a blockchain than any other blockchain And, you know, the first use case, which is what we talked about just now of converting fiat, it's only possible really with Bitcoin because no other blockchain or no other, you know, quote unquote, crypto has the market death and the currency pairs that allows for this to happen, right? Because that's the two things you need. But where it gets really interesting is with things like taproot assets, which they renamed right now.

So tap root assets or RGB, right, is that we're very close to putting stable coins on top of lightning. And the use case of stable coins on top of lightning goes beyond just, you know, dollars to dollars, right? it is very interesting to think about the possibilities that open up when you decouple the value that you're transferring from the value delivery mechanism right because at that point you can basically use just one Satoshi to move a hundred thousand dollars right so and i guess the fact that lightning allows for extremely small granularity payment is also a distinction from, for instance, moving a stable coin on some other L1, because the L1 will be constrained, no matter how big the blocks is,

by virtue of the fact that everybody has to store all of the data forever. Whereas Lightning being an L2 means that you're able to prune the intermediate data, so it's more efficient. So I see the merits of moving a stable coin in a payment channel model as well. Now, in terms, so, you know, you have an emerging markets focus. Are you seeing different types of usages take off in emerging markets from your vantage point versus what we're seeing in the developed world in terms of usage of lightning? Not necessarily more use cases.

I would say more appetite. I think the conversations we're having an emerging market are more, not going to say revolutionary, because that's not exactly yet. It's more like there's greater interest in moving fast with these technologies because we're not that beholden to the currencies that we have, right? There's way less regulation around all technology once you move outside of, you know, U.S. and Europe. And so there's...

very big needs that need to get filled that, you know, are getting explored right now. So I would frame it that way. It's not that we're doing anything revolutionary. If you want to say like, like, for example, here's one of the use cases that I think is going to get a lot of traction faster in Latam than it is in the Western world, which is the digital securities. Right. And the reason is we have no securities market at all, global south, go anywhere, Africa and Latin America. They're very ad hoc. The securities market, they are not efficient. They are basically cartels controlled by their banks to do their own thing. Right. If we manage to effectively bring digital securities, deliver them. overlighting, then we're really talking about financial inclusion. Because what gets missed, I think, in the conversation of financial inclusion is that it's not about banking. Banking is kind of like

the prerequisite, right? True financial inclusion means anybody anywhere can buy any asset. Changing the topic a little bit. So you guys recently announced a partnership with group of Salinas, which is a big Mexican conglom. The chairman being Ricardo Pliego, who's a well-known Bitcoin enthusiast, how did that come to be? And what's the significance of that partnership? So Rupos Alinas actually started looking into solutions in the Bitcoin and crypto space back beginning of 2022. We started conversations because they were looking at a lot of other options. I think for a while they even part-

up with Azteco and they did some things there and so they've been experimenting with this and like I said it's it's this type of more more willingness to explore the space that there is down in Latin America and that's where it really stems from because we're always looking for ways to do things less expensively so anyway the conversation started back then it took a while then they you You know, we went through all the requests for information, requests for offer. So all of that process that you go when you start to sell to big conglomerate type businesses. We set up a sandbox for them.

And actually, the technology part was kind of the easy lift. The harder lift was the regulation and compliance side, which, you know, you have to be, make sure you're operating always within the bounds of what, you know, the laws and the regulations allow for. Because, you know, the difference between being a startup kind of like a wallet that, you know, nobody knows or cares about and being, you know, this big glummer that, you know, is going to be in the eye of the government, you know, is significant. And what you can do and how you have to cover your basis. And so it took us a little bit over 16 months to do it.

They, like I said, talked to a lot of people in the space. They tried some experiments. I think right now we're in a really good spot. The team, the IBEX team and the Salinas team have been working really well together. And we have showcased really all of the, you know, cool things you can do with lightning as a programmable money, right? So everything from, you know, reverse payments to payments splitting to the stable accounts,

we call them for when you want to just remove money, right? And so I think over the next 12 months, what we're gonna be seeing is the rollout of this technology throughout their whole ecosystem, which is going to drive, you know, the use case in Mexico. Not only that, but they have set themselves up to also provide services to any Bitcoin company or lightning company that wants to come do business in Mexico and they need the off and on ramps. So anything from, you know, sending and paying with Bitcoin to also

stable coins. So from your perspective, what use case? for lighting do they seem to be most interested in I mean where because they have so many different branches of the conglomerates and different business interests I think right now so we started off with their cable internet and TV company that now you know all of their customers can pay with lightning and we're starting to see some transactions I think the second part I think they're kind of positioning themselves as Mexico's cash app, right? So they have their own app and they're going to give the ability to Mexicans to buy and sell Bitcoin really, you know, efficiently.

So low fees. But once you have those two things in place, the next logical steps would be remittance. The only issue with remittance is that Normally, if you think about remittances, you think of it like in verticals, right? So, for example, you have Western Union. They handle both ends of the operation. So they have the Western Union branch in the U.S. or California, wherever, and then you send money to Guatemala wherever, right?

Now it's like horizontal, right? You're running just one side of the operation. Yeah, and you're dependent on Vietnam. on and off ramps and either on either end yeah and also education right because you're not driving your customers to your app in let's say the US right unless you go through the whole thing of getting mtLs here and setting up your project here and then doing the same wherever you're landing and then you're just another Western Union doesn't scale it's not good for anybody What's ideal is, you know, cash abscess to their customers.

Guys, now you can send money to Mexico through this because they know, you know, there's a Mexican counterparty that can capture all that flow. And, you know, we're trying to build those types of partnerships, but still very early discussions. So when you look at your users in the emerging markets, what jurisdictions are you seeing having the most of, affinity for lightning usage? Oddly enough, I think Mexico. I think Mexico is going to be, it's going to surprise a lot of people within the next 18 to 24 months. I think it's, well, for one, it's Latin America's second largest economy,

only trailing behind Brazil. But the cool thing about Mexico is that it has 95% smartphone penetration. And the bulk of its population is, young. So it's kind of primed for this, right? If you take that into account that they're already kind of signaling their departure from, you know, the dollar with the whole bricks announcements and stuff, I don't think Mexico is that beholden to the SWIFT system. Right. And we're seeing alternatives to SWIFT being created even by American allies. It appears that people are feeling disenfranchised with America politicizing their financial rails.

And now even close trading partners of the U.S. are not afraid to look to settle on other currencies. Well, the thing is that at the end of the day, you want to do business. Business doesn't really care about your political agenda, right? What they want to do is how do I get from A to B in the business? most efficient way possible. And they solve for that, right? And you can tell that the current payment rails are not good enough because of the amount of fintechs you see in the startup world. Just trying to solve how do I get for me to be faster, cheaper, right? Yeah. Transfer wise, non-wise, Venmo, even cash up. They're all trying to do the same thing, is how do I get money across faster?

right but the problem for fintex is they're still building on top of the legacy banking system so they can only build an interface that ultimately settles with a c h and fed wire and correspondent banks they're not reimagining the infrastructure underneath exactly and so what they do is they they basically have to set up a bunch of liquidity pools in every jurisdiction they want to operate in to make it instant and I'm being you know quotation marks here instant but it's not instant it's just i'm doing my internal database but that's very capital and efficient so they i can see this like they can't compete with us because what advantage do we have we do have instant settlement so when i receive the funds i have the funds and i don't have to have so many liquidity pools or my liquidity

pools can be significantly smaller. So moving to lightning as a infrastructure, you know, we're six years into lightning being effectively deployed on Bitcoin. I mean, 2017 was when it sort of first became theoretically possible and then of course, you know, didn't, it was a while until there was usage. I think I've seen some disenfranchisement in the Bitcoin community over the, you know, pace at which lightning has been adopted and used, I think actually recently I saw that we're at all-time highs in terms of both Bitcoin value in channels and USD value in channels. So I think we are at an all-time high, but still I'm seeing people expressing disappointment over the pace of adoption of lighting. From your perspective, having watched it grow, are we at a point, are we ahead of where you thought we'd be?

Are we behind? Does the pace seem adequate? How do you evaluate it? For me personally, I think we're moving fast. if you really sit down and think about what it is we're trying to solve for. So I think we're moving fast. We also can't move faster than Bitcoin's valuation as well, if you will, because you get into problems of liquidity.

If, you know, us as lightning operators, we need Bitcoin's price to go up if we want to move more value, right? I mean, I guess you could also have larger channels, I suppose. Yeah, but you're going to reach certain limits, right? And then the price becomes an issue. So it's all about scale. And you're thinking, okay, what is global payments? Global payments is somewhere in the neighborhood of $500 trillion a year.

And that's what, let's say, we would have to be able to move. You can't move that on a trillion dollar valuation. And I think we're even less than that right now. And we're less than that. Yeah. So we can move some money, but we can't move money, not real money. So you're saying Bitcoin itself is kind of a bandwidth, like the market cap of Bitcoin. It all is.

And the technology as well. We need to prove it, right? Because it's all about comfort. At the end of the day, when you start moving money, what people want to know is how secure and how viable is it. And they'll test you, you know, with, by amounts. It's kind of like how you do it with any business relationship. Okay, I'll send this supplier $10,000.

Did he deliver? Yeah, he did. Was I happy? Yes, I was. Okay, next order, $20K. Next order, $50. And you build that relationship, and the technology has to mature. So, you know, as I was saying,

in July of of 2021, 70% of transactions were, you know, getting confirmation, 30% were failing. That is horrible for a payment system. Horrible. And so you build it up, okay, now we get to 95. Now we get to 98. We got to get to 99.999, at least five nines, right? to even be considered as an alternative payment system. What does this mean?

Okay, we need to build better infrastructure. We need channels close all the time. So you've got to have backup channels. And this is where, you know, our value proposition, or we see us delivering value is that just like having your own server infrastructure, right, it's not for everybody to build it out. We want to have the lightning infrastructure. that not everybody has to build it out.

If it's not like your core business, you shouldn't really be trying to build a lightning infrastructure because there's complexities, and you're going to run into the same issues you run with a server infrastructure, and you have to have your DevOps team, you have to have the redundancies, you have to have the compliance thing solved for, right?

When you go to service financial industry, okay, what's the SOC2? What are your certifications? How do you know you're going to deliver? And that takes time. And so I think we're on track. We're actually moving pretty quickly, I think. If we go historically, the adoption rate of a new payment system is somewhat slow.

So I believe credit cards took about 50 years to actually be widespread. Yeah. Globally. Hopefully it'll be faster than that. Yeah. So do you view lightning as a. sort of retail, because you mentioned brick and mortar, you know, that was part of the origin story of iBax, is helping individuals make brick and mortar transactions with Bitcoin.

Do you view it as a retail payment technology or ultimately a B2B interfirm large-scale settlement technology? That is a super interesting question. And it's going to lead me to down a little bit of a rabbit hole. So very with me because this is one of the coolest things that I think is coming down the line. And I do not exactly know all the implications of it, but I'm pretty sure this is how we're going to go. So right now when I say we're getting a lot of interest from institutional clients about evaluating lightning as an alternative or a substitution to SWIFT or FedWire or the European settlement, whatever they got going on there, forget the name. But, you know, as an alternative settlement network, what's interesting to me is that we're getting asked questions that just don't apply.

But they're coming from a really interesting point of view, which is, you know, traditionally payments to be made efficient, you wanted to group as much as you could, batch them, right? And then send them out. And this kind of reminds me of computing in the in the 80s, early 80s, where you wanted to batch transactions for the processor, send them all, and then you get your answers, right? Well, the reason why it struck me as funny, and I was like, it's hard for us to answer these questions is that for us, it's easier and more efficient to do smaller transactions.

So for us, it's more convenient to process every transaction to the end point as it comes in. So let's say instead of, you know, for remittances, it's better that we send the transaction, you know, when the customer sends it to his family member to do it immediately, even if it's $2, then wait and group all of those transactions and send them all at once. So it's a change of paradigm in global payments that's going to happen. Because what happens when payment streaming becomes, or real-time payments become more efficient than batch payments, it changes the whole game, right? So I guess your answer is it doesn't matter if it's a smaller retail transaction or a large-scale industrial one. Lightning supports them similarly without any, without any, without.

any difficulty. Yeah, but where it gets really, really interesting, right? Imagine you're a multinational. If you're a multinational, you have a couple of issues, right? You have the issue that you have currency risk, because you're operating in currencies you wouldn't like to. You have jurisdictional risk. You have capital pool requirements and you have effects and transfer costs, which are not insignificant. Well, what happens if, let's say you're Apple and you're in Argentina, but every time you charge, you know, whatever, 10,000 Argentinian pesos or 100,000 Argentinian pesos, you get $100. So you move instantly into your base currency, even though you charged in whatever currency, you don't care. And it goes to the same liquidity pool. Your currency

risk goes down to zero. Your jurisdictional risk diminishes to just, you know, your inventory exposure. Your FX transfer cost goes down to zero. And your liquidity pool requirements, you know, goes down significantly because you're operating out of one centralized liquidity pool to service your whole operation globally. So, Jose, you're kind of on the front lines here in terms of evangelizing lightning to, let's say, traditional finance and multinationals. What's your perceived timeline for how long it'll take these kinds of firms to get comfortable with the technology? I think it's going to take us to really be comfortable.

It's probably going to take us another two years at the earliest, probably three to five. would be more reasonable where we're really, you know, doing most of the transactions on lightning. I think we're going to definitely move to lightning or a, let's say, a lightning-like solution. Because once you see it and once you use it, it's just so much better. It's kind of like, you know, going from telephone lines to internet, ISP. Like, okay, yeah, your telephone, but this is just so much better, right? It wants to migrate there. I like to say that this is not only, we're not going to be successful because, oh, we're so great or we're so smart or anything like that.

It's because this is what technology is demanding. The internet is demanding an instant payment system. And you can see it. You can see it because, you know, what's the biggest problem right now with services and products that are digital? You cannot charge for them. Right. So what do you do? You come up with super inefficient monetization models.

You have ad revenue. Yeah. You're the product. You have prepayment, which nobody likes to use because anything you put in. Subscriptions. Subscriptions. Affiliate models. indirect. They're indirect and the subscription model might be the worst one because right now we're

starting to see this. We run into subscription fatigue. What does this mean? As a user, there's only so many subscriptions you can have and then forget about it, right? But the other part of this is that it's great for the incumbents, but newcomers into the space, they have a massive wall to scale. They can't get over that right and you see the streaming services the new streaming services constantly battling against this and they fail and they're from big corporations and they constantly fail because they can't monetize because nobody wants to another subscription right you get two streaming services at the max three four of one it's not getting considered yeah so in

terms of where we are technologically with lightning I mean, there's been some extremely well-funded companies coming in to try and create lightning infrastructure. Like, of course, you've David Marcus's light spark, which is interesting. I see him going from Libra to Lightning. There's a number of other infrastructure players there. What's your assessment of kind of like the state of maturity of lighting, the technology, the liquidity around it? How, yeah, how close to sort of completion or like maturity is it? If we wanted to like, let's say take the standard of a human life, I would say we're early teens.

Let's say, you know, 17, that was like you're in the womb, right? 18, 19, you're toddler, you know, baby toddler. You know, from the 19 to basically today, we, we. We went from toddlers to early teens. So Lightning is a teenager. Yeah. I think we're not ready for prime time yet. I know we, I love to say, yeah, let's,

but I am very well aware of the challenges that we're going to be facing if we want to move payments at a significant scale. In terms of the fundamental criticisms of Lightning, which ones you think are most compelling. I mean, the one I hear a lot is, well, it's capital and efficient because you need to collateralize channels. You know, you need channels to be open. So that's different from like the Bitcoin value proposition where, of course, your counterparty doesn't have to be online to receive a payment.

What is it that you would say is the most cutting critique of lightning as it currently works? I think the fear of centralization might be the most. but not in the way that it's being presented, right? So lightning is going to be, to a certain degree, centralized, but it doesn't matter. Now, or that's at least my viewpoint, right? It's not going to matter because the barrier to entry, meaning setting up a new lightning operation,

is low enough that it keeps you, keeps you honest, right? So it would be hard for one node to just dominate and be a monopolist, is what you're saying? Yeah, it's not convenient for anybody. And you see it, right? Even people or, you know, companies that they allow for certain things to happen within their own infrastructure, but don't interoperate with the other lightning companies in the same way. Like you can go in and out, but inside you can do special stuff, that doesn't work. You know, it's kind of like, honestly, very good analogy, intranet, internet, right? You know, nobody cares about what you can do in your intranet.

It has to be the internet, but similarly to the internet, the internet is fairly centralized, if you will, meaning you have a couple of big players out there that kind of run stuff. but it doesn't matter because it's flexible enough that if those players become compromised, you find a workaround. And that's what we need to keep everybody honest is to have those workarounds in place and not be compromised. I think right now it has it.

I think Bitcoin's like the base layer design is good enough to continue to promote that down the line. So, but that is the biggest criticism. And, you know, my biggest concern with regards to that is there are ways to, you know, that regulators and financial authorities are going to try to come in and apply their, you know, models of, you know, wall gardens to it. So I do see, like, for example, a regulator could come to IBEX and say, okay you cannot open a channel with anybody you don't know right okay well we are at the end of the day we have investors we we're not public but close enough right we can't compromise that part of it and we will have to shot off every channel we have with unknowns but the lightning sort of network

overall kind of resists that because any Because it's a multi-hop process. Exactly. You can't really enforce KIC globally across the network. At least no single regulator can do that. Exactly. You need a significant joint, you know, and then you're still in the place where, okay, but where is it hosted? Is it even hosted?

And I think the technology is going to keep ahead because, you know, we're even working on this. So lightning is not static, right? So where we're in lightning today, yes, this is a risk, but we know it's a risk. So how do we mitigate it against this? Okay, could we have a setup where we're just providing, you know, the communications infrastructure, you know, let's say IBEX, without having to manage the nodes or get node automation to a good enough space

where you can still use our services, right? right to to route and get the extra functionality you want but you keep your node at home can we make every single user of you know our infrastructure into not ibexs but every lightning user into their own bank and there is a way to do it and i mean yeah just compare that to the correspondent banking system it's just radically different yeah and that's where i say that this is going to change a lot of the of the paradigms that we're used to and the cool thing is when you start going to to lesser payments everything is the risk so it is convenient for everybody wants to do this that's the thing that the second you go to lower value payments your whole operation is the risk not only

from the regulatory standpoint, because nobody's gonna care about, you know, payments for five bucks. Yeah. Nobody. To, you know, the currency risk to also the transactional risk of, you know, payment failing, which it really doesn't happen in Lightning, by the way.

And you don't get charged back, and it's just so, like. There's certain risks that were used to in payments, traditional payments that just don't exist in a push system. Exactly. So this has been very edifying. Where would you direct people to learn more about IBEX Mercado? I would, you know, visit our website at powered by ibex.io.

Honestly, we're more geared towards enterprise clients. I like to come on podcasts and kind of educate people because I want to give them the inside of what we're doing and what we're seeing out there with, you know, our customers. which are more, you know, enterprises and institutions. So it's not really retails. I don't know how valuable that is going to be for most people, but that's where you can find some info about us. Well, Jose, this has been great.

Thank you for joining us today. Thank you, Nick.