TFTC: A Bitcoin Podcast - #433: Lightning Network at the Enterprise Level with Jose Lemus

Episode Date: July 14, 2023

Marty sits down with Jose Lemus from Ibex to discuss integrating the lightning network with businesses, barriers to adoption, cross-border payments, and more. Jose on Twitter: https://twitter.com/jllemus Ibex: https://www.poweredbyibex.io/ 5:30 - Bitcoin Park riffing 7:37 - What’s up at Ibex? 22:24 - Impact of instant settlement 26:21 - Lightning Network, AI, Internet of Things 34:07 - What’s taking adoption so long? 36:49 - Bitcoin’s unique combination of properties 45:57 - Burden of compliance 49:45 - Fiat is the money of force 52:44 - KYC is the illicit activity 1:02:38 - Mexico partnership 1:03:44 - The purpose of financial products 1:12:36 - Bitcoin is a tween 1:17:30 - Don’t get distracted by bull markets 1:29:14 - Marty’s excited about energy and AI 1:35:36 - Wrapping up Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠CrowdHealth⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TFTC Merch is Available: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Shop Now⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the TFTC Movement: Main ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Clips ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Website⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Follow Marty Bent: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Podcast⁠⁠⁠⁠

this report was brought to you by good friends at river i want to do mining talking about mining river makes it very easy to mine in a professional way you go to river.com slash tftc set up an account you go to river.com slash mining after that and you can pick an asic they have many asics for sale uh some are already plugged in with hosting contract so you can buy an asic and lock in a hosting contract immediately you purchase it you're already up and hashing and satire streaming to your river account whether you're an individual or a larger institution that wants to mine a lot river is here to help you they have a white glove professional service it'll walk you through the process that'll get you set up if you don't want

them walk you through the process you can just go through the website through the app and do it without having to talk to anybody. Which I shouldn't say. I'm not certain. Maybe you do have to talk to somebody. But the point is, it's a great way to mime. You're doing it the right way. So go check it out. Go to river.com slash tftc.

Set up an account today. ASICs are cheap. Still cheap. Still in the bear market. It's a good time. About 11 months out from the halving. So get all those sats with 6.25 block subsidy

rewards while you can. River.com slash TFTC. This rip was also brought to you by good friends down the hall, Unchained. They're here to help you eliminate single points of failure in your custody model. They're building a Bitcoin financial institution the right way by leveraging Bitcoin's native multi-sig properties. Their vault product is a two or three multi-sig wallet. It allows you to hold two keys in Unchained to hold one. You eliminate single points of failure in this model since you hold two keys you control the bitcoin in the vault at any given point in time but if you're ever in a pinch unchained is there to be the second in the two or three multi-sig quorum beyond that they have their trading desk if you want to buy bitcoin and send it straight to

your vault after you have it set up unchained is the best place to do it you can do it all in one place it's the best place to buy bitcoin in bulk you buy it goes straight to cold storage on top that. They have their lending desk, their IRA, their inheritance protocol, again, all revolving around native multi-sig properties that Bitcoin has that reduces single points of failure. It is the future. Go to unchained.com. Tell them the TFTC sent you. Talk to their concierge team. They'll walk you through everything I just described. This rip is also brought to you by good friends at CrowdHealth. CrowdHealth is here to help you bring sovereignty back to your healthcare and how you pay for it. Incumbent health insurance is notoriously opaque, expensive,

impersonal. CrowdHealth is the complete opposite. It's cheaper, it's transparent, and it's very personal. You get a personal health advocate. Once you get onboarded to CrowdHealth, CrowdHealth is not health insurance, it's crowdfunded healthcare. So the way it works is you become a member and then when you have to go to the doctor, you let CrowdHealth know, hey, I'm going to go to the doctor. They'll either help you find one or connect to your doctor that you're going to. Once you go to the doctor, you get the bill, you bring it back to CrowdHealth. They negotiate the bill lower with the doctor, and then you pay the first $500 of that bill and the rest gets crowdfunded by the CrowdHealth community. Me and my family are on this. We've used this. It works

flawlessly. And again, it's cheaper because you have metrics that you have to meet to get into the crowd health community. It's a relatively healthier community of individuals. And so overall healthcare costs for the crowd health community are lower. So you're paying less than you would with insurance. So if you're on Cobra, any of that stuff, consider crowd health. Go to joincrowdhealth.com slash TFTC sign up today. You can get a deal on your membership fees for the first six months. This report was also brought to you by our good friends at Bitcoin Talent Co. it's a recruiting firm built by bitcoiners for bitcoiners if you're a company in the space looking to hire the best talent in the world go set up go get set up with bitcoin talent co

they'll understand your needs uh what you are looking for what your company does against a recruiting firm by bitcoiners so they understand the difference between multi-sig mining lightning they actually understand bitcoin so you're not just spraying praying with a random recruiter to hope that they can actually understand what you need bitcoin talent co will understand already does understand likewise if you are talent stranded in big tech big banking big finance you're a bitcoiner looking to get in the space set up a profile on bit with bitcoin talent co go to bitcointalent.co to do all this tell them the tftc sent you and enjoy this rip You've had a dynamic where money's become freer than free.

When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. We're rolling. Jose.

We didn't call each other this morning, but I guess we just decided. Green pants, blue shirt. It's time to go. I think it's the look. It is the look. I've been getting a lot of compliments. I'm not sure if you have as well. Yeah.

Because it's humid out here. I've got the terrycloth on to soak up the sweat. That's smart. That's smart. yeah but this is a great event shout out to the uh rod matt harry at bitcoin park putting this event together yeah it's it's been really good yeah really good when'd you get into town this morning or yes no i got in yesterday night yeah yeah how are your travels good you know it's always uh interesting going through customs as a watermelon but no major issues so we're happy

well uh if it makes you feel any better i got molested at the philadelphia airport on my way here yeah yeah i had the uh the alarm go off and they had to pat me down it's not fun yeah i i had a recent one where i was wearing these drawstring pants but they had like same metal stuff and i got felt up that's what happened to me i had the drawstring pants on and got flagged in the uh yeah in the radar or whatever that is that thing that microwaves you yeah hands up ah so what's going on it's been what since i think like a year maybe even more because we were i was in the back porch studio in my house so that had to be like fall of 2021 early 2020 yeah i think you were just get uh getting into austin right yeah it's been almost two years a lot's happened since then yeah

quite a bit quite a bit yeah i mean i think this this whole week here the lightning summit we're in nashville for the lightning summit that's why we're recording at the bitcoin park studio that's one thing over the last couple days and just beyond this event what i've been thinking it feels like lightning is reaching a point of maturation where it's getting possible to build cool things to actually provide utility to individuals and enterprises yeah absolutely i i fully agree with that yeah yeah yeah so what are you guys seeing at ibex well actually very interesting we we've actually started to see like a transformation in our customer profile so to speak so now for anybody that's listening that doesn't know what we do at ibex we we provide

back-end infrastructure to enterprise level clients that are looking to integrate lightning capabilities into their products and services so apps and you know if you have let's say for to give an example of what would be possible right so let's say you're spotify and you want to change your subscription model into a pay-as-you-go model where you can actually charge fractions of a cent per second of song listened uh you could contact ibex and we can help you integrate that payment system into your into your app yeah that's i mean that's been like a big hot theme this week and last week particularly because lnd announcing like l402 and their implementation with lag chain and aperture and again it really seems like we're

getting to the point where the lightning ecosystem is at a point of maturation where it's possible to do this stuff and like what do you think's making it possible is it just liquidity profile the network is it the tooling around the network is it people have been playing around with it long Yeah, I think it's just, you know, playing around with it. So you need to get comfortable with the technology, but then also figuring out the weaknesses of the technology and addressing those weaknesses. So, you know, there's two components to Lightning, right? one is the let's call it the bitcoin technology part where which is how do we interact with this protocol but another huge part of lightning is basically database management so devops right and how do we get to a point where we're scalable enough reliable enough secure enough to you know service commercial customers like real you know big customers because

you know payments is a 500 600 trillion dollar volume per year that's you know almost two trillion dollars per day so and and your technology to move that amount of money has to be bulletproof right now and we got to get our customers you know comfortable with this and so that's kind of our sandbox right because our thesis is that just like you don't necessarily run your own email server or you don't do your own cloud infrastructure for lightning at a certain level you probably don't want to do your own lightning infrastructure you because you know somebody like ibex or we can do it better faster more securely and for less yeah and so what are like the product kpis you pay attention to to make sure that you're building that service is it

mainly revolve around uh successful payments and failure rates is it yeah amount of money that can be moved combination of all combination of a little bit of all but a lot of it is just like i said uh very much kind of like it looks a lot like a database management thing so you know up time transaction transaction success rate um at least on our end the interesting thing about lightning right is that we don't necessarily get notified when a payment fails on our end because the one that knows that the payment failed is the guy that's sending out the payment not the person receiving it we just understand that the invoice has not been fulfilled yes right and if it's because you know whoever is sending it doesn't have you know the required they require

liquidity doesn't have you know the correct channel uh management and this is why i think lightning really is more um geared towards you know this type of email cloud service type of structure is because if you want to have uh guaranteed and reliable payments you basically have to you know dedicate yourself to making sure that your infrastructure is good enough and so i do see you know probably some people that are really interested in it are and are interested in managing you know their lightning infrastructure in-house they're going to do it but but other than that you're probably better off with somebody like ibex yeah and what are the trade-offs that enterprises individuals make by doing this

because i agree like it probably doesn't make sense for everybody to go out spin up their own node create their own channel liquidity yeah what's the uh what's the experience for like an enterprise coming to you and like well the trade-offs for enterprises so so we have to like differentiate here a little bit from the customer profile right so for enterprises they're not much different than any other requirement they would need in adopting any other payments technology so we go into the world of you know compliance kyc all of that stuff but you know these are enterprises that are you know they have to do it anyway right so we're not too worried about that where it gets a little bit trickier is at the individual personal level

right and that's also why we don't like to onboard individuals onto lightning we're more geared towards you know businesses and we really operate kind of like behind the person that you know delivers the service yeah right and so these customers they're used to this there's no big trade-offs if you have to go down you know to it is it's that there's no privacy but again i am for no privacy for corporations yeah they don't need it they don't need it yeah exactly yeah what uh and that's the beauty of lightning too i guess there's like you know who the corporation is and who you're onboarding but the rest of the lightning network really doesn't have to know

that they're receiving payments so like you can't see that they're doing a bunch of flow and yeah well that and and the beauty of lightning is that uh also for me and this is going back to the whole profile of customer changing so let's say when we started off um back in late 21 early 22 offering this service, most of our customers and people we had talks with were either crypto businesses or wallets, exchanges, somebody that wanted to do payments with crypto or digital or whatever, right? Whereas today, most of our customers are more fintechs, settlement players, financial institutions, those type of customers that are looking for a better way to move money globally, to move value globally. which is super interesting to me because it's that realization that okay these guys are really

paying attention to the technology and they're right to do so yeah i mean you mentioned the spotify example of being able to charge customers per minute listen per song listen whatever it may be per second per second like what else does this solve for enterprise companies like that's just pure payment flow like how much does charge back risk come up in the conversations you're having Yeah. It's significant part. So a lot of the reason why we have these huge compliance infrastructure set up, it's not even necessarily about money laundering or KYC or anything like that. A lot of it is just information flow. So SOC2 compliance and that type of stuff. uh soc2 compliance uh by the way is a way of guaranteeing you know the database integrity and that the information that you're exposing is not compromising anybody's privacy yeah that kind of stuff right and so those problems really don't exist in lightning right because you don't

know exactly who you're sending money to or ideally you don't or who you're receiving money from, like your end customer knows, but us as backend infrastructure providers, we don't necessarily know or want to know because it lowers the risk, right? And so the conversations are tricky because it's a lot of changing of the mindset. Like you don't really need all of this stuff that you used to need. Some people think it's almost too good to be true. Well, in a sense, and then the final settlement, right, which is where we started the conversation is, it's really interesting to explain to somebody, listen, the thing is that in Lightning, either it was successful or it failed. And there's no in between.

And being successful also means you paid the exact amount that was required. So I'll give you an example that we run into right now. And this is the difference between on-chain payments and Lightning payments. Because Lightning requires you to generate an invoice, right? And say, pay me X amount. So let's say 10 million Satoshis for a concert ticket. I don't know.

That's an expensive concert. You're going to Taylor Swift concert. Yeah, it's a Taylor Swift concert, exactly. so anyway 10 million satoshis if you don't pay exactly 10 million satoshis the payment just doesn't go through so it fails but if you pay the 10 million satoshis you're guaranteed those 10 million satoshis are in the merchant's account and they can release the product right what happens with on-chain on-chain you can send what whatever amount and so you know for For some customers that we operate, the on-chain payments, especially online, it's a pain because we get like, oh, they underpaid by two Satoshis.

And it's a pain. What is that like? Like a thousandth of a cent? Something like that. It's a ridiculous amount. It's like we just go in, we send two Satoshis from our own back end and it goes through, right? But the customer experience is horrible. That's why we really want to move everybody, at least in payments, onto Lightning, especially at the retail level.

For other type of transactions, there is a use case and an argument to be made for on-chain. But for anything retail, and I mean anything, it doesn't matter really the amount. You kind of want to have it beyond Lightning. Yeah. Because the invoice is like, all right, pay this exact amount. Send the exact amount. Exactly. And so these conversations with enterprise customers that you're having, they're, I would imagine, predominantly wanting to leverage Bitcoin for the final settlement and the quickness of the transaction, relatively low fees. Are any of them holding any Bitcoin, do you think? No. No.

Well, not for anything other than testing purposes. So right now, also for anybody that doesn't know exactly how this works when you go into that enterprise world, the first thing that happens is you get an RFI, right? So that's a request for information. This means that they are starting to kind of like look into the technology. they probably you know bought some bitcoin transacted some bitcoin on chain did uh some of this stuff and after that you know once the rfi you submit it once they they choose a provider then you go into do a poc so a proof of concept of how this could work within their existing technology if the poc you know gets validated then you go into you know either an

rfp or an rfq which is request for a quote or request for a proposal where you do the final like economic proposal to the customer and so it's a it's a fairly involved process uh takes probably 12 months maybe a little bit more depending on how fast people want to move but you know it's uh it's also we're talking about multi-million dollar investments right so you know it that's why they go through this whole thing and when they're going through the rfp or the rfq process are they are they seeing that like interacting with ibex using lightning as a solution and saving them on cost yeah yeah well that actually happens during the poc you can like tell pretty quickly now the tough part for us has been uh you know kind of when we go into

the rfi because everything right now pretty much is at rfi or poc stage very few deals have escalated past that right because technology is just on you right but what happens with lightning is it really changes the paradigm of payments especially global payments technology um at its core lightning how we think of it is it's a hyper efficient settlement network check a hyper efficient global settlement network, right? Which is very unique and it changes payments completely because it turns it on its head. What do I mean by that? So traditionally, and right now, what is most efficient in traditional payment rails is to batch transactions. So what you want to do, let's say we're sending remittances. I want to collect as many remittances as possible,

put them into a huge lump, right, and send that. So, you know, $100 million or $10 million at a time, right? But Lightning, it's really more efficient to send smaller transactions. So what you want to do is real-time processing of, you know, payments and global transactions. and it really has to change the way you look at how your business is structured if you're one of these traditional payment or settlement networks right because it doesn't operate anything like what you're used to but I think it brings great advantages and as we move forward I think we're

going to start seeing a lot of these players kind of come to terms with this and understand it And for me, it's kind of like the switch from batch, you know, instruction processing that we had with computers in the early 80s, late 70s, right? Where it was mainframes and you would like group as much information and then push it in one batch, you know, transaction in the computer into, you know, with the microprocessor, it became better to do real time, you know, transaction processing. Yeah. And that changed the game completely. Like none of this that we're doing right now with technology would be possible without real time processing of transactions. And if we're bringing that to commerce, like I can only imagine the new business opportunities that will be available. Not only the business opportunities, you have to imagine just internally from a process perspective, like what you just described in the company using the incumbent payments and financial system as the batch, all these transactions that probably entails them creating these processes, like you mentioned, where somebody is getting them all in an Excel file or database and spending time to line all that up and then push the transaction, like just having it happen automatically over lightning. like you reduce all that that workload at that operational point of their of their business exactly yeah exactly and so it seems like companies that are doing a lot of international business are getting this quicker than maybe those that aren't yeah like multinationals this

is a huge pain point for them right but even beyond let's say multinationals which are you know one specific type of customer you know really anybody that sends money globally like even remittance operators i can tell you i know for a fact are looking at this today name any names or i'm on there so many ndas marty i can i cannot say one more name i've been advised like have to ask have to try to get that out there yeah no but as you're building this and getting this out to enterprises i mean again the last time we spoke was probably a year and a half almost two years ago how's the like state of the lightning network improved over that period of time is it easier for you guys to build is yeah significantly yeah well some of it is you know

the technology maturings some of it is also us maturing along with it uh you know working and playing around with the technology you also find out a lot of stuff right and so now knowing where where your value at is exactly how it is that you operate where you can like go in and really help uh you know these customers yeah and so where do you see this guy obviously we're in the early stages you know like what do you what do you think's needed to really push the ball over the edge and get the the snowball rolling where it becomes like the point where every business is like oh my gosh we need to integrate this immediately yeah i think honestly this will play out a lot like email at first you know where the companies that first adopted email

gained a significant competitive advantage, and then everybody noticed, like, oh, we need an email. And then it happened again when, you know, websites and e-commerce came along where everybody at first, like, what are you saying, a website, right? Like, no, I have my brick-and-mortar store, and no, and eventually you either adopted this technology.

And to the point that today, I think as a company, You set up your website first, and then you figure out about a commercial space, right, or a physical space. I think it's going to follow more or less the same trajectory. The more visionary companies, probably not the incumbents, are going to be the first to adopt technology. Those that are, let's say, like in second, third, fourth place are going to be really incentivized to look at Lightning and say, oh, we can leapfrog. Yeah. Yeah. And that's, again, like the emergence of AI over the last six to eight months. And now with L4O2, I mean, it's been out there, but having more robust tooling around it, like maybe not even like incumbent multinationals or payment companies specifically get into this, like the emergence and the convergence of Bitcoin and AI together. It seems like that could be a really interesting mix

if these AI companies get it and realize the value it can provide them. Well, this is super interesting, right? What you're talking about, because it actually touches upon something that I've been talking for a while now, right? That the main failure of IoT has been monetization because it's really difficult to monetize, you know, IoT stuff like smart balls and that type of stuff, right? but lightning actually enables that to happen and what's more it enables these uh let's call it machines quote unquote but devices right to actually send value from one to another automatically

between them and do handoffs so you know things like to go to an old tried and true example is your electric car if you have one right pulling up to a parking space and immediately you know you start to stream a payment to the charger right let's say we set up a wireless charger for the car and it can start charging charging and the second you drive away it stops yeah without you having to do anything right so is that like a potential customer for you guys tesla you get into tesla systems and they have wallets in the car yeah you can pull up and definitely that that would be a potential customer and uh but then you can also do it like with municipalities right with street parking anytime you park on the street

you know if you if you can tag the the license plate and you and your car establishes communication with a post then it's uh give me a second here sorry about that it's busy man he's got enterprises going i i i really forgot he just that's all good but anyway coming back to example you know if if we have these you know just like you can have like lamps right that are decorative but also are the device that charges for the space the parking space yeah automatically you just park and go yeah it's gonna be crazy like the thing again i've been talking about this last few weeks yeah i had bellagio actually last like month or two i had bellagio on last month and

he really like got me hooked on this idea of the machine payable web back in 2015 when he did it with 21co and that was like the whole idea is machines paying each other to do tasks yeah um or to do tasks on behalf of humans like ai agents is a great example that you give an ai agent a prompt like hey i need you to book me um a trip to austin texas i need my trip back to austin it needs to be under this price and on this date between these times and then it just goes and if you can give it a wallet with macaroons and a budget and you can go out and do that like just go on a website and talk to the machine on the back end of the airline and just pay like think of the efficiencies that you get in your own life yeah yeah right yeah but you know when we're

talking about these type of payments size matters right in the sense that you sometimes need to go really low and that's what always kind of is our problem today and this is kind of what we're really solving for what we're solving for is that you know as our products and services become digital they decrease in value right because it's easier to make you know produce content it's easier to do this you have a wider audience you know uh and so what happens is we've come up with really inefficient monetization models so add revenue model you're the product prepayment model which nobody likes because you're not going to get the full value of what you're paying exactly and then the subscription model which you know while great for incumbents like netflix

sucks for any newcomer because the wall they have to scale is humongous. You get subscription fatigue, right? And so going low on payments, facilitating nano transactions, so anything below one cent can't be done with traditional payment rails, but we can do it on Lightning. And what's even more incredible is that we have final settlement for sub one cent transactions yeah which is mind-blowing yeah it's if you're in payments you really like well that's the thing why do you think it hasn't caught on as quick because it's obvious to us as bitcoiners and obviously somebody's building yeah a whole company that can cater to these enterprises A lot of it is education and misinformation. So there were a lot of narratives built around this technology that are holding true to this day. That too slow, there's no use case, there's no need, all of this.

But the truth of the matter is that there is great need and technology evolves. It's not static. You know, that is a huge difference. Yeah. So I think as people start to realize that these narratives are not holding true, I think it's when we start to see this. And we're already kind of starting to see it, but there's a significant lag between, you know, when, let's say, big corporations start looking at something and when it actually makes it to market. Yeah. And so what do you think we can do better on the education and marketing side of Lightning, particularly?

because i had a call earlier this week with somebody um just reaching out on behalf of 1031 like hey here's what we're doing like interested in lightning and he was like ah lightning doesn't work like put a wallet in their hands like honestly what works most for me is i don't even call go and tell them anything i demo the product they see it working and then they get interested it and then we can start to have a conversation of oh this is you know what's happening on the back end yeah yeah like oh how is that even possible no i don't trust you and then you show them how you know it really happened it really got executed and then you know their eyes go like saucers yeah and it's really cool to see that by the way no and for everybody who

it seems like to be a lot of impatience in the broader market who are looking at crypto broadly and seeing bitcoin as a slow dumb thing and lightning as something they perceive doesn't work whether it's bitcoin going through its monetization phase with all the volatility people like oh it's too volatile never be a stable uh store of value but it's like all right this is a new monetary asset monetizing in real time there's going to be some volatility and then when it's lightning it's like oh it's like it's not widespread yet it's like yeah well there needs be infrastructure build out dev tools companies like it's not going to happen overnight exactly and you know what's interesting is that i i think wrongly a lot of people conflate two things that

are very different right which is one is you know the store of value part of bitcoin but then the other part which is what we're starting to do with lightning which is the value transfer mechanism of bitcoin and first of all i don't think there's any asset out there that has ever been used as a store of value that is not volatile like real estate but people still use it right gold people still use it as a store of value you know fine art collectibles they're all used as store of value like we don't go out and pay with a Ferrari but you know it is a store of value right now as a value delivery mechanism which is what you know lightning brings to the table is we don't care about the value of Bitcoin because we're in and out of transactions so fast

that you know at the end points it could be like dollars and pounds or or or quetzales and pounds And, you know, we just deliver the value and whenever it leaves one point and gets to the other, it automatically gets converted. And it doesn't matter. You just use Bitcoin as a super efficient, you know, payments network. And it's actually astonishing to see. So I'll give you an example we have. And I can probably send you a video so you can see it or share it if you want. But one of our clients, Osmo, you know, he works in Quetzales, which is the Guatemalan national currency.

And so whenever a payment gets into his wallet, it automatically gets converted or can get converted into Quetzales. Now, the interesting part of this demo is that he's using a wallet denominated in pounds, right? British pounds. And he's requesting $2. He receives the $2, which is equivalent for the guy that's sending it, to £1.69. Receives the transfer immediately. Gets converted into Quetzales. the exchange rate, delivers 15.47 quetzales to his account. The slippage of the guy receiving

is only 0.3%. The slippage of the guy that's sending it turns out to be somewhere around three percent three point four percent but bear in mind this includes fees plus a fx rate and this is between two currencies that don't have a natural pair so if you wanted to send pounds to quetzales you send two dollars and then dollars to quetzales which on average will cost you in fx 14 oh shit yeah so this is a transaction that cannot be done on any other technology no just full stop 20 of what that cost would be yeah this is 80 yeah no and the size right you can't send two dollars from the uk to guatemala any other way no like impossible yeah and it's again it's crazy how people i think people are beginning to wake up too

what's happening due to what you guys are doing companies like strike and others like getting out there and really like hey now that you can use this as a payments network like you don't need to take the volatility risk of the underlying asset and again it's fascinating too like black rocks coming out and launching their etf and you have larry fink doing the rounds on media and even these people are getting in they think they know it he's like no bitcoin's digital gold we're and you have people access to this, that people really don't understand the network side of it. They really just focus on the asset.

Yeah. And when you combine the two, the asset and the network, particularly over the Lightning network, it's insane what can be done. Yeah. But it's kind of like the natural way of how things should progress, right? So any technology likes to scale in layers.

It's the best way to do it. And why is it the best way to do it? It's because, you know, there are compromises whenever you're maximizing for one feature or another. So, for example, you know, for a store of value, you have to make certain design decisions at the technological level that will make it a great store of value, right? And you see this with, let's go back. Let's not talk about Bitcoin. Let's talk about gold. so gold was a great store of value because it had certain properties but those same properties

made it really slow so you know from the mining so obtaining gold right to the transportation because it's super heavy right it was a pain in the ass to to transport right and as you know our economies evolved and technology improved in special you know you know commercial technology like ships and and navies and stuff right gold wasn't fast enough it like it was a great store of value but you couldn't really commerce with it and that's when paper money sprung up right because we needed letters of credit the reason we needed the letters of credit backed by gold was because gold was basically immovable to all effects and purposes like you know it's it's really interesting to me you see these movies like oh we'll you know uh uh take the money from

fort knox like do you have any idea what it takes to move that amount of gold anywhere it's ridiculous yeah right so paper was way more convenient and you know technology demands and so gold scaled in layers the problem with gold was that we got to a layer where it allowed for shenanigans so it allowed for me to you know say i got 10 pounds of gold when i have 10 ounces yeah and that can't happen with bitcoin and the lightning network right no and why for anybody who's listening who may not be aware of why this can happen

on Bitcoin Lightning like how does it work so that you know that you're not rehypothecating sats on the Lightning Network because any

Satoshi that you want to move on the Lightning Network has to be committed in a transaction in the Bitcoin layer so if I want to have

let's say 10 Bitcoin available to move or to transact with on the Lightning Network I have to first commit them on a transaction on-chain. Think of it as an escrow system, right?

So for me to move X, I have to commit X. If I become then, let's say, a bad player, I lose all the money committed. And that keeps me honest. Yep. Loose incentives are a beautiful thing. Yeah. satoshi brought to us with uh on chain bitcoin at the protocol layer and now

using that that concept and bringing it to lightning is beautiful and yeah like anybody in a gold vault uh you just have to trust that vault up there they actually have the gold that they are issuing dollars on top of and we found that they were issuing way more dollars and in bitcoin on lightning you can go verify on chain that yeah the the bitcoin is locked up in this htlc it's there and it you can only actually send it if it is there in the first place exactly yeah and for those that don't know uh htlc is is hash time lock contract which is basically a pre-signed transaction on chain yeah so and if i'm you know what happens with pre-signed transactions is that if i'm a bad actor right anybody that's holding that

contract can then execute it because it it's already pre-signed and take the money yeah from me yeah if you're bad actor in the channel your your counterpart gets the money you don't want to give your money to the counterpart you want to keep your money exactly so as you're uh interacting with these enterprises are they providing any feedback that surprised you any feature requests that um you didn't foresee that you're like oh this is actually pretty cool well honestly what what what has surprised me you know is just how heavy their compliance burden is at every level yeah like you start to understand okay this is why this is so hard to do today like why we cannot get beyond let's say t plus one t plus one means that settlement of any financial transaction

happens plus one day so you make it and one day later it gets settled at best yeah this is at best and you start to you know kind of really dig into this very weird world of payments and that has been super interesting yeah and do you think as lightning scales becomes more integrated with people's business processes that the compliance departments will get smaller because there's not really too many boxes to check because it's again happening instantly and yeah well that's the beautiful thing of of lightning right is that because it is more efficient to do smaller value transactions the whole risk lowers significantly for the transaction not only from let's say the money laundering risk because you know nobody cares about a five dollar transaction right but

But also from the operational risk and the money logistics risk, if you lose five bucks, so to speak, even though I argue in Lightning, you cannot lose it, and this is one of the conversations we have with compliance people, but how do we know that it happened? Well, if I tried to fake it, I lose a couple million, so I'm not going to fake it, right? But it lowers liquidity requirements, capital commitment. And so your whole operation at every level gets de-risked. Yeah. Well, that's the other thing.

Just opening up with the incumbent payment system, a lot of capital gets locked up for a significant amount of time. And now with Lightning, since you have this instant settlement, it opens up a lot of capital that previously you couldn't put to work. And it's like, what does this do? i'm just i don't know if it's a rhetorical question but like what does this do for businesses being able to reinvest in themselves and go do r&d in a certain area or go hire more people because they don't have to lock up this capital in this weird cock and annie payments system yeah no it's

like the efficiencies you gain are going to be significant so imagine this any capital that you have committed not only let's say costs in real time but let's say you can probably a business could generate a yield between depending on if it's private or if it's public anywhere between eight to twenty percent so that's right now your loss how that gets you know really brought down to let's say to earth we don't know yet you know whether they you know are more efficient in hiring expand their operations or what what have you right but the fact of the matter is there's eight to twenty percent on the table that right now is just wasted it's cost of doing business right yeah and it's it's from a capital efficiency standpoint it's going to be

insane what gets unlocked for for companies and individuals globally and especially in times right now like um i know we talked about this the first time you're on like why we're in bitcoin and why we're like passionate about this but it does seem sitting here today july 2023 with everything going on in the world like there is an urgency to move and get these tools into people's hands Absolutely. Absolutely. And I think, you know, the sooner we can get into these more of, let's call it digital distributed, you know, systems, the better off we'll be. and getting into you know digital distributed money can all only you know help uh let's say make us more peaceful yeah because a lot of the violence that's going on in the world today comes down to you know people taking advantage of

yeah what's the money the possibility that you can actually steal money from others by by force yeah by force or printing it debasing it and giving it out to your friends first think of this that that printing money also can get it the only way it can get executed is by force yeah compelling people to use your money allows you to print money if not you know the moment you start printing people stop using yeah yeah there's literally point a gun at you say this is the legal tender you got to use this yeah like no we were we were i went to dinner last night we were talking about this it is insane um because matt and i are obviously public bitcoiners with radical recap with this show the citadel dispatch yeah with

everything we're doing and we do get that that fear every once in a while like oh we're putting ourselves out there bitcoin's a pretty big affront to the government's control of money globally and we just had this conversation last night at dinner like it is insane that we have to like worry about this like we have to worry about that we're like evangelizing a system that just allows people to send money to each other yeah yeah but listen me that's uh probably on the other side right because i you know just by the nature of our business we engage a lot with regulators uh both on the private as well as on the public sector um i would venture to say 95 if not more percent of the people are just you know guys doing their job and they're you know they're not evil people yeah you

know they're they're like just and they have some real concerns that we try to address like okay let's this is what you're worried about so you know criminal whatever well let's let's figure this out let's see how we can like um get around this issue but also what this gives us is a is an opportunity to really educate right and engage in these more philosophical conversations of like listen i i understand what you're trying to do but uh let's not throw you know let's not solve for one people and then basically condemn half of humanity to poverty yeah right let's find another way to solve for for for this yeah that's the way this trade-off makes sense to be overburdened from a regulatory perspective like what is the positive vb on that

compared to just opening it up and bringing people into this yeah and then you also get into situations where you know even regulators are are like they it's it's touchy because uh you know we like to say listen money's going to be digital pretty soon but sooner than a lot of people expect like right now to to me money is already digital because it's you know 95 97 percent digital only three percent of money is printed cash actually out there this is globally right um well what happens when we get rid of that three percent which is not hard to do by the way uh okay are we gonna kyc five-year-olds kid just wants to go to the corner store buy some candy yeah like you want to give your kid

you know you're a parent you you you want to teach your kids about money you give them an allowance, you give them whatever, right? They're five, six, seven, eight year olds. Are we KYC-ing them? Because that's the question. Or are we just excluding them and say, if you're a kid, you cannot touch money? Yeah. Like in the CBDC world, like that's a, like everybody's talking about the rollout of this wallet. So that's actually something I've never thought about. Like, are the kids going to get wallets? And if so. Yeah. Well, how are you going to give money to your kids? yeah how do we solve that yeah that's the beauty of bitcoin and lightning it's like all right just

download this app and top them up well right now but you know if if regulators really like you know put put a gun to you know companies uh like ours or lightning companies or even like You know, somebody that's been, you know, pretty, I don't want to name names because I don't want to put anybody in hot water, but let's say any of the wallets that are out there that right now don't ask you for any documentation. Very easily, their local government could go and say, listen, from now on, if you want to continue to have your wallet out there, you're going to have to ask for a KYC. Do you think that's going to happen? it might i really hope it doesn't i i hope it doesn't as well yeah and you know there's going to be huge workarounds and everything but if we're talking about go you know having bitcoin go mainstream and having this technology go mainstream well the mainstream is going to be

okay with it right there already are because it's what they're used to but now we're involved evolving, you know, populations that really do become an issue, right? So let's take this, for example, the reason, let's say 50 to 70% of the world's population is either, you know, unbanked or underbanked. It's not because, you know, banks don't want to service them, or it's not because, you know, we don't have the technology to service people. it's that right now it's not cost effective and the more we push you know kyc aml policies down the throats of financial institutions the harder it is to bank these people so you know you can't and this is why i say we like to sit down with regulators and say listen

yeah i understand this is what you want to work against but know that the more you you screw down this the more people that you're leaving at the margins of the economy because there's no way to service you know customers if it cost me you know five bucks to onboard you and your ltv is maybe 15 i'm not going to do it yeah i'm going to comply with the regulators and say listen all of you customers i'm not good luck yeah sorry sorry can't serve you here can't serve no no that's why i mean that's why we focus here and let rhr and civil dispatch like really driving home like kyc is the elicit like elicit uh activity because at the end of the day it's not really effective like criminals are going to criminal

and we need to get out of this morass of the last few decades that we've been in or since what was it the secrecy act in the 70s where kyca ml started getting forced on companies and like the cost it adds to to companies the burden it adds to individuals to give up their information um and then that information getting leaked and their identities getting stolen their credit cards being spent by by criminals like there's there's got to be a better way there's i think the authorities that are pushing these compliance regulations via kyc and aml need to look in the mirror and say hey this actually isn't working because i think the stat that was floating around a year or two ago was like i think kyc aml uh policies have stopped something like 0.1 percent

of global money laundering flows like it's completely ineffective yeah if that yeah like uh it's you know uh their their track record is not good they think that by implementing more controls it's gonna get better i don't think that it is that's just my personal opinion and i think honestly like this is how it you know it comes back to me right sometimes there's no good solution sometimes you're just confronted with two bad choices and at that point you have to make a choice of we which is the lesser you know of the evils right and i think right now we know kyc aml is failing and it's not going to get better And we also know that by pushing these policies, we're leaving over 50% of the world's population in serious financial trouble.

And so we got to go back to the drawing board and say, okay, well, we tried it. It didn't work. Let's at least get 50% of the world's population on board. like, come on, it's only going to raise the standard of living for everybody, right? It's going to make the world a better place, right? We want to, you know, start to worry about pollution and carbon emissions and all of this stuff. I'm all for it. Let's have those conversations. But first, let's lift the people, you know, out of poverty. And we don't have to lift them. People will lift themselves. We just have to let them, like, let the guy help himself, right? Yeah. And because that's kind of like the countries I come from, we really see that, like, it's close to the surface. Because like here in the US or in Europe, Western Europe, it's a bit more like disassociated, right? But we see the effects of these policies like up close and personal.

Like, for example, myself, you know, because it's not just about payments. It's about financial inclusion. That means also financial products. I cannot open a brokerage account. unless i'm a multi-millionaire that has a private banking relationship if i'm from guatemala i cannot open a brokerage account to buy and sell stock so you're just cut out cut out and nobody takes my business no and somebody your profile here in the united states has that access immediately

yeah yeah yeah and so i mean going on or pulling on that thread like these services are needed in places like guatemalan elsewhere in the world where many people are unbanked is that where you guys are seeing a lot of activity a lot of traction honestly honestly and this is very encouraging to see, we see this as a global movement. So yes, we're getting a lot of clients and interest from Lanham, but we're also getting a lot of clients and interest from, let's call it the global north. I think things are more challenging for companies in the global north due to restrictions and regulations and whatnot. So they're probably going to be a lot slower to move on this but the interest is there on both sides i think this is a global movement yeah i

really do and we can cut this out if it's not public i'm pretty sure it is that you guys are doing some big things in mexico oh yeah yeah yeah no uh i think we made an announcement uh in the i don't think i know because i did it i was in miami yeah yeah announcing you know our partnership with Grupo Salinas, and, you know, it's very exciting. I think Mexico really is going to be or has the potential to be the first big economy to adopt lightning at a large scale. And, you know, I've been having conversations. I just, well, I actually flew in from Mexico yesterday

Because I was in Mexico just starting to get these conversations rolling on, you know, let's really leverage this technology to see how far we can push it and how many people we can empower financially. So what is the partnership of Grupo Salinas? What are you guys about to roll out in Mexico? Well, they already rolled out the ability for their customers in Total Play, which is an internet cable and phone company to pay their bills with it. I know that they are going to be rolling out throughout pretty much all of their conglomerate. This is going to take a bunch of months. So what I can tell you is expect to have more announcements coming from Mexico in the short term because, you know, we still don't know exactly like timeframes and stuff, but we do know there's a big push around, you know, really leveraging this technology and all of its efficiencies to, at the end of the day, deliver better customer experience. and empower people financially because there's a lot of very interesting things we can do on lightning beyond just payments what what what do you uh what are you getting out there well not not there's this i can say because there's already some people working on this uh i'm talking

about you know leveraging uh lightning as a as a settlement network well beyond payments what else needs settlement well every financial transaction needs settlement so we're talking about digital assets and the like okay so would you love for something like taro for that or right now the two main uh projects are taro which i believe we should stop using they had a cease and desist oh the name taro yes yeah taro labs now it's like yeah now it's like taproot something asset register i don't know but we we gotta figure out that name and then the guys over at rgb as well yeah so rgb is um not talked about as much but no interesting rgb uh it's kind of like the open source version of taproot asset yeah

And so do you think this is, do you think, because it's not a touchy subject, but people have very strong opinions on both sides. Do we need to put these financial assets on Lightning? Yes, we do. You think so? Oh, 100%. Like there's, the people who argue against it don't understand the nature of financial assets or the nature of, you know, Lightning and settlement networks. What are their biggest misconceptions, do you think? Well, the first thing we have to understand is we got to understand why financial assets are important, right? And specifically, sophisticated financial products. The whole reason they exist is to connect, let's call it lazy capital. So capital that's just lying around with good ideas.

that's what wall street was basically built on and it's super important because in the measure that you as an economy are efficient in making these connections the let's say economic ceiling of uh the participants of that economy raises considerably yeah this is why the u.s is the richest country in the world right now, because you guys are the most efficient at connecting lazy capital with good ideas. And this is why you have, you know, like them or not, you know, the Amazons, the Facebooks, and you can say whatever you want about, you know, the evilness of Jeff Bezos or Mark Zuckerberg or Bill Gates or Steve Jobs or whatever. But everybody's life today in the u.s is multiples better than it was before they weren't were around like there's no

argument here and globally and globally i mean we're looking yeah we're using a macbook here yeah here's uh yeah we use these products daily and you know uh they just make your life better they raised the standard of living. And this was feasible because of sophisticated financial products. For example, I like to explain to people, do you know why there could never be, let's say, a Google born in Guatemala? I do not. Because you cannot manage the risk. Because we don't have the sophisticated financial products to do so so google is such a risky endeavor right because back when it started like you didn't even know how is it going to get monetized where's what's the business model what business model

right like they just have users but nobody's paying for search right nobody's paying for this and and it needed a lot of money and it needed multiple billions of dollars to actually get to where it is today. And the people that put up that money were investors. But when you're investing multiple billions of dollars, even billionaires cannot handle that risk. So how do you handle it? The only way you can is by distributing that risk over enough people, enough investors, that it's actually manageable for each one. And the only way to do that, have such a wide investor base is by having sophisticated financial products. It's impossible otherwise.

To give you another example, right now we took in money from VCs. Where are these VCs? They're US, Canada, Europe. Why didn't we raise money in Guatemala? Because we couldn't. Our company today is too risky for Guatemala. now we're a u.s company right yeah it's like so like the financialization on tarot could add like sophisticated products that people can tap into to grow their businesses locally but then

on top of that like you have essentially a stable banking layer via bitcoin and yeah and then the other thing and this is why i say like why it is uh necessary and what it's why it's actually convenient is what happens when it's this everything is running on the same settlement layer what happens is everything gets super efficient so you can have very very interesting you know new types of securities like for example let's say uh or new financial products like for example let's say uh your podcast wants to take in investors But instead of doing whole P&L and stuff, you say, we'll take in money, but what we'll do is we'll give everybody a percentage of the revenue that comes in. And because all of your revenue is going to be collected in Bitcoin over Lightning, it can automatically get split off and delivered to anybody that holds one of your financial products in real time.

And so anybody that buys this or invests in you guys would be able to see revenue streaming in real time immediately into their own wallet at no cost. We could do this right now with Podcasting 2.0. I can just go into the back end of the wallet and change the splits and boom. That's the – I completely agree. That's the future of things that are – I mean, it's possible right now technically. Well, there's a couple of things like, for example, you still don't have the digital assets technology like fully vetted because you need to vet it so that you need to, but it's going to happen quickly enough. Yeah. That's the other thing with Taro or whether it's Taro or RGB, a combination of both. Again, we're still so early. The infrastructure needs to be built out. Wallets need to be able to send and receive the particular assets running over these networks. And so on that note too, how early do you think we are? I think right now, because it's interesting, I think right now, if we were to kind of say, okay, lightning, we're human, right? So which, how old is it? I think right now we're like, just about to enter teenagehood, right? So let's say between 10 and 12 years old, and just

Pre-teens. Yeah, pre-teens, you know, kind of wanting to break out, feeling independent enough to be dangerous to himself as well as others. But, you know, kind of like going into that stage where we're actually going to be growing fast. And by the way, each year in Lightning feels like five years in any other industry. why do you say that because it just moves so fast yeah like every day it's like i was talking with a with a friend the other day that's also in in lightning and bitcoin and we're like oh when did we see each other like oh like two months ago i thought i had seen hadn't seen him for like six seven months like yeah so much has happened yeah i know yeah that's i mean again

like here at the park this week i think it's indicative of that there's so many people here to talk about lightning specifically and all the things going on you have different wallets spinning up like infrastructure providers like you guys like that's that's the other thing too there's like enough niches that people have identified within lightning to dedicate like their energy at like there's lightning service providers um enterprise um well yeah not only that we when you're saying adoption right so i did this kind of thought experiment if let's say every fortune 500 company today decides they need their own lightning solution or strategy right how long would it take us to onboard them not ibex i mean every lightning

company out there helping the fortune 500 people it would take at least five years you think so Oh, yeah. Like, we need a lot more developers, a lot more talent coming into the space. We need not only, you know, the technical people, we need people from legal profession, so for compliance and stuff, because we're gonna get asked that. Again, if we're going mainstream, like it or not, we need to, you know, engage with, you know, these players. We have to have people from design, you know, marketing, all of this. And we need to educate a lot more. And we're very, like, sometimes, you know, I feel like when we're in these events and as cool as they are, you know, once you, like, step outside. You step outside, people are like, what the hell are you talking about? We were all jamming.

It was good. Yeah. No, we were actually, somebody made this analogy, which I thought was perfect. So let's say Michael Saylor goes to a Bitcoin event, and he has to walk around with security and everything, right? And everybody's like, oh. And rightfully so. The guy's brilliant. but if you were to drop michael saylor into any shopping mall in america

you'd be able to walk free yeah just no attention paid absolutely zero yeah i don't i don't know who that is no but i agree we need more talent that's actually been one of the most encouraging things of this bear market particularly i've been around since 2013 so i've seen my fair share of bear markets and And I don't think there's been any that compared to this in terms of people in different industries deciding, you know what, I'm going to take a risk. I'm going to go work in Bitcoin because it makes sense to me and it hasn't died. The amount of talent that has come in from other industries during the bear market has been incredible. And more diverse talent.

We're seeing a shift away from what was predominantly engineering talent into these other, let's call it softer type of professions. So HR, a lot of HR Bitcoin companies coming up online, right? Design, a lot of design people are coming in and reaching out. So to me, it's very encouraging. I also like to say Bitcoin doesn't have bear markets. Bitcoin has bull markets and build markets. And it's actually important because also having gone through a few of this, when Bitcoin price starts to pick up and it's a bull market,

you cannot get a lot of work done. It's very distracting. It's very distracting and you get so many calls and stuff. that it's very difficult to like build yeah well as somebody running a business in the space like how do you prepare your team mentally because that's one thing that i think we do need to get better at as an industry is not getting too distracted in the bear market it's like or the bull market and like setting expectations for people like it's gonna happen yeah at some point prepare mentally and when it does come like you can't get too distracted we have to like batten

down the hatches and really double down here. Yeah. Well, when it's a bull market, it's very hard. It's easier, oddly enough, it's easier in the bear market because the price is so sad that you just don't look at it. But when it's a bull market, it's even distracting because you just get so many calls. You've been through this. When it's a bull market, people that hadn't talked to you in five years start calling you that's why you up that's why this podcast exists i started the newsletter which led to the podcast the newsletter started because i was getting so many texts and emails and calls people hit me up like all right there's too many of you i'm just write this newsletter go read it you'll learn about bitcoin yeah and and that's what happens

in bull markets it's not even it's too hard to get get away from the noise in bull markets so you know you do try to explain this is what's going to happen and uh but honestly only experience so the people that have been in the company through bull markets before they kind of like get a lot better at managing it like newbies it's just like yeah we'll see if caps odell comes back in the next bull market yeah he gets really he matt loves his bull markets yeah stay humble stack sats is his uh his mantra but in the bull market you know he lets loose a little bit yeah we all do i mean it is i mean we're ripping right now we're just for past 31 000 yeah thanks to ripple um yeah well uh somebody was saying wait till the black rock etf comes online yeah do you

think it's going to get approved yeah probably yeah it's it's it's like the third time that People are going for ETFs. I think first ETF idea was floated around like 2015. Yeah, the Winklevii. Really thought they were going to get it. Something like that. Didn't go through. Then in 2017, 16.

Oh, I forget now. Long time ago. Yeah. In Bitcoin terms. Then the GVTC came along, right? Great scale. And I was going to say no to BlackRock. Yeah, I find it hard to believe that they're going to get turned around.

I mean, they're 575 or 576 in terms of filings that have gotten approved. Yeah, this is nuts. For just looking at the stats, they're literally almost batting 1,000. Yeah, so right now, I do think it's going to get approved. And when that comes online, what we don't realize is the amount of capital that somebody like this is able to deploy. it's never been seen in bitcoin no never and we're talking right now what are we a little bit over half a trillion something like that yeah probably and approaching 600 yeah 600 billion yeah and the

other thing is we have to understand how market works that that price is not the price of every bitcoin that's out there right it's just what's being traded yeah it's the float on the exchanges right which is a small percentage of the amount of bitcoin that is out there so it doesn't take a lot of money to move this price and by a lot we're talking multiple millions of dollars people so let's put it in context right yeah uh it's not that it's but you know not a lot of money in the financial industry means 100 million dollars you suddenly dump 100 million dollars into bitcoin that floor strike starts to race and starts to race quick and you start doing that once a day once a week blackrock won't be the only one blackrock comes in gets approved

sends a signal to the market like high net worth individuals family offices pensions the like just start all right i guess we're gonna get exposure yeah well you know and you have these smaller players like like us we actually have a digital wealth management division where we educate uh um you know high net worth and ultra high net worth individuals in central america and latin america and you know we're doing road shows there's very interesting financial products that are coming online uh with regards to bitcoin and this last road show which still is ongoing but has been you know started last week uh the feedback we've gotten has been super positive what uh in what way are people like oh i get it now i'm ready exactly yeah like oh thank you for

explaining bitcoin in a way i could understand it and make sense financially because that's the thing right whenever you're investing you don't invest in what you don't understand and uh previously and i've been you know guilty of this so as bitcoiners we've been too technical in their explanation but um you know like like a friend likes to say you know i you i use the internet i don't know how tcpip works yeah like why are you explaining this yeah and so we go in and we explain the use case and the technology and why it's important and know the good the bad and the ugly and you know they they really respond to this they they really respond and like you know they're for sure are dumb people with money but by and large the people that you

know are self-made self-starters and you know these are not dumb individuals yeah they got there for a reason yeah they got there for a reason and if you go with the thing is that bitcoin is not under radar date today right but if you manage to sit down with them and you know you have an hour-long presentation you explain it to them in terms that are familiar to them so you don't go in and and you know i don't throw words like htlc's and i shy away from any of the what do you know about sha 256 yeah any of the jargon i just explained you know once they get the concept and they want to dig deeper into the nitty-gritty of the technology, then you explain it.

But by and large, they're not that interested in how it works. But they want to know why and the value prop. And that becomes really easy to explain. Yeah. And that's one thing I wonder, because again, we'll be 15 years into the white paper this October. So a decade and a half, it's a lot of time in the digital age. like is this and probably just kind of jinx myself but it feels like especially like the

black rocks of the world entering like is this the cycle where we don't look behind and it's an idea that is undeniable and something that people can't ignore anymore yeah well i was just thinking about that i don't know who has this quote maybe you you remember who said it but nothing is as powerful as an idea whose time has come yeah i do feel that yeah absolutely 100 yeah and you know it's that being said it's like it's not like you know it the time comes and suddenly we're you know at a million for each bitcoin or something like that it's it's not that But it's when it becomes entrenched sufficiently that, you know, it's just never going to go away. And I do think we're dangerously close to that.

Like Bitcoin going to zero, probably after, you know, the black rocks of the world and, you know, financial institutions come in. It doesn't happen. and yeah i i agree with you on that you know the price still will have its ups and downs but you know by and large it'll get adopted um another friend i was talking to was actually making this uh analogy you know back in the 80s encryption was actually uh what was it state uh weapon or secret i think darpa or the nsa like yeah yeah but it was like property weapons grade technology weapons grade technology exactly so encryption was weapons grade technology until pgp pretty good privacy came along right and there was this huge lawsuit and the thing that pgp

did to kind of you know the trump card was they published the code in a book and put it on t-shirts too right yeah and at that point it became a freedom of speech you know subject but even after that and and after you know the department of defense lost the lawsuit because they did lose um even after it wasn't like it was pretty tough to use pgp like uh you were hassled and frowned upon and everything but then the banks realized oh with this we can like have open banking standards because the transmission of information can be secure and we can do this and we can do that and we can make you know our operations more efficient and and they saw this use case right for the encryption technology and then all of that

pushback against encryption so just evaporated went away today nobody even talks about encryption right like we know we have to encrypt stuff and if the lightning technology becomes entrenched in you know financial institutions the narrative will change completely around all of this technology because if they start making money with uh lightning and i know they will this game that's the beauty of bitcoin it weaponizes human greed to create this the system that can't be corrupted yeah no it's it's really awesome yeah well it's awesome what you're building i'm pumped that we got to do this in person it's much better in person than uh you know through the uh the laptop screen yeah absolutely especially when i'm in places with

crappy internet which happens quite often yeah well what else we ended on anything else that we didn't touch on that you think we should wrap up here oh if i can ask you a question yes sir what are you most looking forward to with a bitcoin and then be lightning bitcoin the that's something i've been obsessed with for the last five years in the mining industry that's another thing like you talk about financial industries getting in the financial industry getting in and institutions getting in getting drawn by the asset

Bitcoin is a hard asset that could be a store of value certainly good but I think equally as important as the energy sector getting mining as an additive feature to their operational stack and that's the most exciting thing to me in Bitcoin right now is the convergence of the energy sector with Bitcoin mining working in a symbiotic relationship

to make Bitcoin more secure and make our energy infrastructure more secure, efficient, reliable, and robust. And then Lightning, yeah, I think this AI stuff is going to be big. I think the timing of where Lightning is at its maturation process and the nascency of the AI industry creates an environment where I would imagine the AI industry is more willing to experiment with new things that are additive. It's sort of like a tabula rasa

that people can build new processes and design features into. And I think the convergence of AI and the Lightning Network is just a no-brainer, especially considering that they're extremely capital-intensive businesses for all the GPUs they need to set up. And so like chargeback risk for them is pretty massive. And so it wouldn't make sense out of the gate for them to align with a payments network

like Lightning to prevent that risk because they probably have very thin margins with which they can play with. Yeah. And, you know, I agree with you 100% on that because you can't adopt a payments technology that has chargebacks if you're going to be, you know transact doing transactions less than five cents yeah no can't handle chargeback yeah

and you can create i mean that's the panel i'm about to lead here um at 4 p.m today is ai and the lightning network and like it works both ways like the ai the ai industry is all about building these large language models and what do they need for those models they need a bunch of data one way to get the data is to pay people to feed data into the llm and you can pay global workforce over the lightning network microtransactions for completing tasks that adds data to the llm and then on the front end so that's the back end and then on the front end consumers like myself i use mid journey for the newsletter to create our thumbnails instead of paying a monthly fee using a credit card i would love to go into my account and

generate an image and pay over the lightning network for the exact image that i'm getting yeah and just get um pay per image yeah pay per image like yeah makes sense uh on their end to reduce the chargeback risk to allow themselves to build the llm models and then on my end as a consumer to get the lowest cost possible for the value they're providing me and not only that like it's you know being able to transact value for value okay i'm receiving this product i'm paying for it and that's it yeah we don't need to have anything else happen between us right yeah like i'll pay you as long as i like your product and when i don't yeah when i'm not using it i'm not yeah thank you yeah i mean say i write three to five newsletters a week so that's

12 to 20 a month so i'm using it 20 times a month like i should probably be paying maybe less than five dollars for those images probably paying twenty dollars a month now so yeah no i i agree that's really interesting yeah and i especially like uh the the part about bitcoin with miners and the energy sector i think i've always thought this i think uh that bitcoin enables a nuclear energy future agreed and i think people you know they i i'm scared about what's going to happen with the oppenheimer movie now to be honest uh but uh people need to really understand that nuclear energy is the best source of energy we have by far like it's not even close like in terms of cleanliness in

in terms of efficiency density density all of it is just like miles better than anything else out there but it does come at a significant uh you know there is a significant issue which is a nuclear reactor cannot be stopped yeah so you need somebody that's a captive client of the nuclear plant that is going to consume anything that the nuclear power plant produces and those are bitcoin miners yeah because they will stabilize your demand yeah it's a beautiful thing and it's i think we're going to win that narrative i think it's becoming abundantly clear of that we should yeah like if you know we need to get more engineers in politics that's that's my philosophy we just need to like let the politicians let the engineers do their job

and stop getting in the way well that would be helpful as well yeah uh jose it's been a pleasure sir it's great to see in person yeah no same likewise yeah i'm pumped for what you guys are doing at ipex it's uh really exciting and i think it's a very important part of the industry like really again the niche that you're working in going after the enterprise level and trying to really get them to understand bitcoin and then incorporate into their businesses extremely high leverage for making sure that bitcoin is successful in the long run yeah well thank you thank you for the words marty wow and i know but listen i'm also kind of like we appreciate what you guys do so much as well so you know getting the word out there and you know

getting exposure for all of the bitcoin projects that are available and you know it's it's very interesting times very exciting it's uh i can't wait uh to read the story right yeah the uh old men sitting in leather chairs reading the story like huh that was pretty cool what we did there yeah yeah like i remember that guy what happened we're all in this together that's the beauty of it and that's why i love events like this because it gets everybody building in the space together and it's said often but can't be overstated it's just like the people in this industry are pure and it's really fun seeing everybody work together everybody wants to help each other out and lift each other up

and it's a massive problem that we're all working to solve and the people and their individual efforts and then the collaboration across efforts is something special that I think we'll look back

when we're reading that book and cherish that. We had the opportunity to take part in it. Yeah. Yeah. It's going to be awesome. So we should get up there

and join our... I think we should. Okay. I think we've hidden away long enough. All right, that's all we got today, freaks. Peace and love. Peeky.