TFTC: A Bitcoin Podcast - #628: Save Our Wallets with Matt Corallo

Episode Date: June 14, 2025

Marty sits down with Matt Corallo to discuss the Save Our Wallets initiative, the critical importance of getting non-custodial wallet protections into the market structure bill currently moving through Congress, and why this represents the most important legislative battle for Bitcoin's future. Matt Corallo on Twitter: https://x.com/TheBlueMatt Save Our Wallets: https://saveourwallets.org/ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all 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 And that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. I like that hat. I wish I had one. I have three more.

That's it? I thought you only had 25. I had 25. I gave them all away. Except for three. Except for three. It seems like it came out of nowhere. I wasn't aware of saverwallets.org until you put a hat on the news desk in front of me two weeks ago. yeah we were trying not to launch during the conference when there was so much going on and we figured we wouldn't really get a lot of news traction but also we kind of needed to

launch during the conference because important things going on and the timeline lined up so we kind of haphazardly launched during the conference who is we and what are you doing yeah um so there's just a few of us basically we we sat down and i i was like well this this blockchain regulatory certainty x thing is really important because uh the i mean everyone's familiar with the samurai case and the tornado cash cases where the biden doj was coming after open source developers uh and open source wallets and non-custodial wallets specifically and you know we recognize this is a major problem it's a major problem for lightning especially i've been working on lightning for however long and and for many years it's been well you know

we need to get good lsps and we can get some lsps but a lot of the great people are maybe skittish about the regulatory questions around it so when the opportunity came up this this Blockchain Regulatory Certainty Act bill was re proposed in this Congress. We said, you know, we need to we need to really push hard for this. We have an opportunity right now. Congress and the White House are all aligned, are all saying, you know, we across both parties, not just Republicans, but some Democrats as well are saying, you know, we have to do good things for crypto.

Of course, they don't know the difference between crypto and Bitcoin, but that's all right. And so our view is like we need to make sure that they know that this defending open source while non-custodial wallets and open source software is our number one priority and so i reached out to a few people and and we got a website put together we slapped something i made some hats and here we are what what would you say is the the danger if this act doesn't pass like how imminent is it obviously last week i believe it was thursday morning he had the secret service which is an enforcement agency doesn't write law or legislation but they had that

infographic conflating centralized mixers and coin joins which are non-custodial ways to do collaborative transactions and i thought we were in the clear with the trump administration saying we're not going to do prosecution or excuse me uh regulation via prosecution and then you have the secret service drop something like that and obviously you mentioned samurai tornado cash devs in jail right now and i matt and i matt odell and i talked about it on rabbit hole recap last week like this has to be a red line in the industry that nobody passes and everybody's focused on Bitcoin treasury companies and number go up. We're back at 108,000. It feels great. It's all good. But number go up. Bitcoin is digital capital. It's a new reserve asset

of the future. It does not have that value if it's peer-to-peer. Properties aren't protected and people are able to use it without fear of getting thrown in jail and build on top of it without fears of being thrown in jail yeah totally um no it's it's really important especially you know we look at well okay you know maybe the trump administration's gonna have our back maybe to your point secret service who knows uh and it's not like even all of the charges against samurai were dropped right a few of the charges and a few of the money transmission charges were dropped but none of the money laundering charges were dropped and one of the money transmission charges wasn't dropped so the idea that the we can just rely on the administration and i mean

who knows you president aoc next or something like who knows what's going to come next right uh and the next administration might want to hate want to kill crypto again and again they don't distinguish between bitcoin and crypto but hey so we need to get the law changed we need to get it made clear because no one wants to take the risk given where we are uh it's one thing to say well we we should defend open source devs or whatever but the reality is every technology to scale bitcoin every idea we have to scale any cryptocurrency relies on what i call ancillary services uh and so for lightning that would be like your lsp or you know just your counterparty nodes uh for roll-ups is going to be a sequencer for arc you've got asps for you know you go down

the list of every scaling technology that exists for cryptocurrencies and there's some service provider other nodes whatever involved in enabling that scaling technology and you know sometimes it's decentralized sometimes it's a decentralized network sometimes it's a single entity whatever it is. There's always these ancillary services there. It's not just putting things on the blockchain because it's an L2, right? We have something else going on. And the risk is if we can't protect these ancillary service operator, these people running nodes for Lightning, running LSPs for Lightning, running roll-up sequencers, whatever, then we cannot have decent user experience with non-custodial Bitcoin. We cannot have a scalable Bitcoin. We cannot have scalable cryptocurrency,

period. So it's really important that we fix that. And then also it needs to be clear. We can't just say like, oh, well, the Trump administration probably won't charge you. We don't know for sure, but the next administration could. We need the law to be super clear so that big players who have lots of capital, who have lots of technical expertise, who can operate these ancillary services or join these networks and provide really high quality service can do so without fear of, in this case, criminal prosecution. So the law needs to be clear in order for us to have decent wallets, in my view. Well, let's get to brass tacks too. We mentioned CoinJoin, Samurai, Tornado Cash, not CoinJoin, but something similar,

privacy preserving smart contract on ethereum when it comes to money transmission laws i mean obviously with samurai the doj went to finsen six months before letting these charges against the samurai team and finsen said no we don't think they're a money transmitter and i think it's important too because i think we have the truth on our side about how these technologies actually work and what the ancillary ancillary service providers actually do in terms of facilitating or not facilitating the transfer of money or essentially, as you mentioned, participants in a network that has certain rules and they're providing an ancillary service that individual users are leveraging?

Yeah. I mean, you know, I think the law is not 100% clear, obviously. The DOJ wouldn't have brought the charges if the law were 100% clear that it was not a money transmitter. Obviously, FinCEN has their view on the law. And I think FinCEN's view is, I think it's right. It's certainly been held for a long time as the view, and they are ultimately the regulator who's responsible for interpreting this law from the perspective of people registering. But the law is not 100 clear you know the law was not written to consider decentralized networks and non-custodial i mean all of the law was written around the concept that the only way anyone could possibly transact is either with cash or with a fully trusted centralized custodial intermediary

the law doesn't contemplate these things and so you know the law you know i think we had a shot and i think tornado has a shot uh and samurai have a shot demonstrating that they were not in fact money transmitters but again we don't want to rely on that you know we want to make the law clear because large providers just aren't going to join right we're not going to get super high quality lsps from large companies who have lots of capital and deep capital servicing americans and providing these things when the law is only probably you won't go to prison but oh by the way you might get arrested and thrown in jail for multiple years while you're awaiting trial uh people just aren't willing to take that risk that risk is absurd

yeah what um what's the state as it stands out because we were talking about it before we hit record and i'm looking at the save our wallets x account tweet out last night this is huge in reference to uh the ans which is the amendment in the nature of the substitute uh for the clarity act so there to make it clear for everybody the bitcoin regulatory certainty act is what save our wallets is uh really pushing but it seems like the market structure bill that has been a big focus on capitol hill since trump got into office uh seems to have worked in some language from the brca so that it can get sort of like grandfathered in but included in that having to do the process yeah so the brca is really the you know the thing we want we want

this text into law uh we don't care how it gets there the blockchain regulatory certainty act is one vehicle to get that text into law uh it is pretty hard to get a small specific bill into law because floor time on the House and the Senate is very valuable. There's only so much time they have to debate and vote on individual bills. Debates take a long time, and so they only have so many bills they can really get through in a year. And that's why you see ultimately all of these large omnibus bills where there's a whole theme and they say, OK, we're going to stuff

all the stuff we want to do related to this theme into this bill and then we're going to pass it all in one go. There's a good reason for that. In this case, the administration, there were two big bills that the administration and this Congress wanted to get through related to crypto, this Congress. And that's the stablecoin bill, which is already well on its way. It's too late to change it, too late to add stuff to it. And the market structure bill, it's primarily about regulations of token issuance, securities, commodities, all that kind of stuff, stuff that does not impact Bitcoin. And we don't care about, you know, the Hogan people care a lot about it.

And that's great for them. But we don't really care. It doesn't impact us. But importantly, it is moving. It's a large vehicle that is, I mean, not necessarily likely, but quite possibly going to pass. The Trump administration cares about it. Congress cares about it.

There's a lot of work being put into it. And so getting this language that we care about that protects open source developers, that protects ancillary services for scaling that ultimately protects our wallets that protects our right to have decent cryptocurrency and bitcoin wallets into this the clarity act is what they're calling it the market structure bill on the house side um we now have that language in the current draft it's going up for markup uh there's a chance that that language might get cut that language might get amended uh who knows what's gonna happen who knows what's gonna happen on the senate side So it's even more important now for us to make our voice heard, for us to call Congress and let them know that we care and that this is really important to us, that specifically this section is what matters to us.

There's a bunch of other stuff there, whatever they do, what they want. But this section is what is make or break for our industry and for for us and for whether we're going to vote for them in the next election. um and so yeah i mean we're we're we're really happy that this language got included in a bill that is moving and what does the language define so the language is pretty clear right now um the language in the current market structure bill is not quite what was in the blockchain regulatory certainty act but it's still pretty great uh it says very clearly if you are a uh i could pull it But if you are a wallet developer or if you're just a developer, you're not a or an infrastructure provider. So if you're a developer or an infrastructure provider and the only things you do are write software or operate infrastructure, basically paraphrasing, then you are not a money transmitter.

So you have to be just just writing software, already infrastructure. You can't be doing some other thing. But as long as you're just running infrastructure for some network that is allowing people to transact in blockchain network tokens, basically any token that's defined on a blockchain. So if you're just building a system where people can transact in Bitcoin and it's non-custodial and you're just providing infrastructure for it or just providing software for it, then you are not regulated as a money transmitter. and you're not you don't have any of these aml kyc licensing yearly exam all this kind of nonsense requirements that you can't practically comply with anyway yeah it seems pretty common sense yeah it's super straightforward you know the the language is pretty good we're super happy with it uh and we need to get it passed and we need to make sure

that that language stays the way it is you know it's in the course of getting a bill passed it's very common that things get watered down that different parties agree or disagree on different pieces um and so it's even more important now than it was two weeks ago that people literally pick up the phone call their congressperson and say hey don't change this you know keep this as it is it's very important it's very important to your constituents and if you want to win an an election in two, four, or six years, you got to keep it. Sup freaks. This rip of TFTC was brought to you by our good friends at CoinKite. They make the cold card queue, my favorite hardware wallet, the most secure hardware

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was at an event up in dallas meeting with a representative from wisconsin talking about the priorities on capital hill as it pertains to bitcoin and broader crypto and i was pretty pissed off coming out of that meeting because the focus was on stable coin bill market structure and then explicitly bitcoin strategic reserve was a distant third and at the time during the discussion i was like i really don't care about stable coins they found product market fit the markets handling them well i think you can only mess this up market structure i was like i don't really care about the ability to dump tokens on retail um and then the fact that the strategic reserve out of those three at the time i was uh perturbed because i thought the strategic

bitcoin reserve bill would be the most impactful but actually now with this language included in the market structure bill i think this becomes the number one priority in my mind because again you can't cross and strategic bitcoin reserve my mind isn't nice to have but not a necessity this is a necessity certainly yeah absolutely no and that's really why we started the safer wallets initiative is that you know in our view and especially in my view having worked on lightning for for many years now we need good quality ancillary services we need good quality lsps in order for lightning to be compelling and competitive we need nodes to be very clearly exempted in the law from requirements that they can't possibly comply with that don't make any

sense applied to nodes uh and if we we finally have a chance to get it and we have to push hard for it right now and so yeah the fact that it's now in the market structure build makes that by far in my view the most important thing happening this year in bitcoin uh let alone just on capital kill but the most important thing happening in bitcoin yeah because last time we spoke at bitcoin plus plus last month you were you were saying this is the year of non-custodial bitcoin this is non-custodial lightning specifically um yeah you're very bullish on this particular segment of the market and so it makes sense to me that you'd be as vehement as you are now to make sure that we're saving our wallets because we're it seems

like in your mind at least we're on the cusp of some some breakthroughs that could really unleash non-custodial bitcoin to the masses yeah totally i think non-custodial bitcoin this year looks really really great uh and and you know really the the making bitcoin the best possible money making bitcoin a great transaction platform even a lot of people don't want to necessarily transact in bitcoin and that's fine but a lot of people do and having a lot of people transacting in bitcoin makes bitcoin stronger and we are really at a point where we can start to deliver over the next i would say six months to a year really really really high quality user experiences around transacting in bitcoin non-custodially where you're not trusting anyone

else and it's just your money no one's between you and the merchant it's just you just your own private transactions and we just have to make sure the law allows us to do that at least in the united states you know maybe maybe these things can happen outside the u.s but the sad part is that most of the developers who are capable of building this stuff live in the u.s and they're just not going to risk prison time to build these things. And I think it's important to belabor this point, but that is a true fear that many developers have, right? Certainly for operating these things, yeah.

I mean, depending on which developers you ask, there are many developers who are worried about going to prison for just writing software, especially writing privacy software. You know, the First Amendment protections for writing software, I think, are compelling. but again just because you have a good argument in court doesn't mean you can't be arrested and thrown in prison for six months or a year while you're waiting on trial and so you don't want to just have a good argument in court you want it to be so damn clear that prosecutor is

not even going to try to charge you um so yeah especially around writing privacy software i think a lot of people are worried about that but then yeah on top of that you look at people who want to run lsps people who want to run i mean you start to look at more custodial or partially partially custodial options like fediment like e-cash you know no one wants to run that uh but even arc service providers and lsps you know are they going to serve americans are they going to serve are they going to block the u.s you know is the blocked list going to be north korea iran russia crimea and the united states or is it just going to be the top four um and i think that's that's a real risk rerun if we don't make sure this is clear you know we

saw phoenix leave in under the biden administration when they charged the samurai devs the arguments they made in court were so broad that phoenix said look it's not worth us being in the united states it's not worth us taking that risk servicing americans we can have our wonderful wallet with good user experience and service the rest of the world and americans can go themselves and they can use custodial platforms or get rugged or not have access to lightning and that's on them uh and i think you know if there's there is a real risk that we end up back in that situation under the next administration yeah i mean on that to that point how urgent is this like do you think this needs this language needs to be included in the market structure bill if it's not included in

the market structure bill we need to go the hard path of getting the blockchain regulatory clarity act enacted or like how many how many swings at the at the plate do we have now i mean not many Certainly trying to go standalone on the BRCA is a very high bar and is not super likely to happen. It's possible, but it's not super likely. So I think by far our best shot is keeping the language in the clarity or the market structure bill and getting that passed as is. Certainly to the extent that Congress feels like this is a priority for their constituents. Again, when people actually pick up the phone, Congress does listen. It's proof of work. You took the time out of your day to call them to let them know about something. Not many people do that. And that proof of work does go a long ways. It does tell Congress quite a lot. and so we need people doing that now because this is the key time right the bills and markup this is

the time when the bill is going to get changed if it's going to get changed on the house side we'll get another round of markup on the senate side uh but this is this is the moment right now and so we need to as an industry and as a community we need to make our voices heard we need to scream as loud as we can at congress and we need to say hey look don't fuck with this this is the important piece leave this piece in do whatever the hell you want to token issuance and sec requirements and registration and whatever not our problem but section 110 non-controlling developers don't touch that language leave it the way it is yeah get on the phone freaks guess what save our wallets.org makes it very easy for you

they tell you exactly what you need to do we've got the we've got the right yeah the website needs updated it does still say brca but but if you say the blockchain regulatory certainty act on the phone they'll figure it out uh it's section 110 of the new clarity act um but yeah you go to save our wallace.org you type in your zip code it'll give you you know you've got two senators and a house rep right now the house reps the most important but the two senators will be real important soon too so just go ahead and call all three it'll give you all the phone numbers for all their local offices, their DC office. Just pick one for each of your house, for each of your Senate members and your house rep. Just pick one phone number, pick up the phone, call them,

say, hi, this is, you know, I'm a constituent. I might vote for you in the next election. I might not, but here's something that matters a lot to me. Yeah. And it doesn't take that long. It takes like five minutes. No, it's five minutes. Is Bitcoin's next parabolic move already starting? Two of the strongest historical indicators, global m2 liquidity and the copper to gold ratio are flashing green again unchained and tech dev break it all down in the new report bitcoin's next parabolic move could liquidity lead the way if you care about the macro forces shaping bitcoin's trajectory now's the time to pay attention visit unchained.com slash tftc to read the full report that's unchained.com slash tftc

back to non-custodial lightning what why are you so bullish on that are you willing to disclose you're a little close to the chest in austin last month yeah i mean i think we're finally closing a lot of gaps that we've had for a long time uh it's been way too long but a lot of features that we've been working on lightning for a long time are finally finally happening so for example uh the so zero fee commitments so if you're familiar with Lightning has these commitment transactions, which are, you know, you fund your channel, but then you have these transactions that get replaced and replaced and replaced and replaced, but don't hit the blockchain until you go to close the channel. So at some point you close the channel, this transaction might hit the blockchain, but while the channel is still open, this transaction gets replaced over and over again. lightning has always had this weird awkward problem with these transactions where the

transaction needs to have a fee that can get included in the blockchain at some indeterminate time in the future but you know if you follow if you ever load up mempool.space or if you've ever in fact used bitcoin you know that the fees can fluctuate sometimes fees are low sometimes fees go up sometimes fees spike really high sometimes very suddenly they spike very high um and so if we don't so so we have these transactions we have to be able to confirm them some point in the future but we don't know what fee is going to be required at that point in the future but we have to create the transaction now and pick a fee for it now this is hard in fact this is an impossible problem um so due to a lot of work over the course of the

last many years two three four years finally we are now able to as of the last really of the last bitcoin core release we're able to actually set zero fee on that transaction that transaction has zero fee and then we can pay for the fee later when we go to broadcast when we go to broadcast it we can add another transaction that pays for the fee this sounds simple ish like okay you have some transaction you have another transaction one pays for the other one and bitcoin core should look at that and consider that but this is a huge change in bitcoin core bitcoin core forever when it's relaying transactions around the network when it when it's looking at transactions to put in its mempool you know some peer gave it a transaction it has a transaction let's see like should i put

this in my mempool or not it looks at individual transactions right it was given a single transaction it looks at just that transaction and it decides for just that transaction should i add it to the mempool or not does it have enough fee but now we're asking it no no no no all of your logic around transaction relay all of your logic around transaction exceptions look at pairs of transactions in the future look at many transactions at once but for now just look at pairs of transactions and say okay this pair of transactions does this one pay for that one and do they together have enough fee to go into the mempool that is a very substantial change that touches the peer-to-peer logic it touches the mempool logic you have to reason about the incentive

compatibility of these transactions and so that took years of smart people in bitcoin core working super hard to address to rethink how the mempool accepts transactions that work is in fact still go ongoing but the the very first pieces of it shipped in the last over the last two releases and we now have enough for us to use it in lightning so all this to say like okay well we solved this impossible problem. What does that actually mean for Lightning user experience? Well, it means big things. So Lightning historically has had issues with just protocol details leaking into the user experience in ways that break the abstraction. So you want the wallet to just work, always work, never have to think about it. You hit send, transaction goes through,

you receive a transaction, you have money, whatever. You don't have to think about it, Right. If all of a sudden you're negotiating a transaction with your counterparty and, well, they think the fee should be high, but you think the fee should be low. What do you do? Well, today, that means either the other counterparty has to just blindly trust you, which isn't very good, or they have to force close the channel, which suddenly bleeds into the user experience. Suddenly, oh, sorry, your money has been locked for a month. you can't access it why is some technical gibberish that you're not going to understand because there's commitment transactions and fee rates and it's complicated and don't worry about it but your money is locked for a month and oh sorry your payment failed too by the way that's a terrible user experience it's awful and so you know when you're when your wallet doesn't

work 99.99 of the time nobody wants to use it it's just a bad experience and people are move on and they say that lightning is dead and they're totally fair it's totally fair i can't i can't argue with that but finally after years of work we can replace this whole scheme that we had with something that doesn't randomly break all the time and so there's a few there's a few cases where okay over the last multiple years we've been working on stuff and finally we're shipping features where we can make the user experience 99.99% reliable. On top of that, payment reliability has gone up a lot over the last few years. On top of that, we have splicing, which has been in Phoenix for a minute, but it's now being standardized and CoreLightning and LDK and

others are all going to be interoperable and have splicing. So those, I think, are a big part of it, just finally kind of hammering away at all of the lightning user experience issues and lightning protocol issues that we've known about for a long time, but have just been a lot of work to fix. And then the other reason I'm bullish about non-custodial wallet user experiences this year is that we at Spiral have done a lot of soul searching on this. And we've concluded, And I mean, look, there is a limit of if you have under some threshold of Bitcoin, you cannot be non-custodial, period, right? If you have, let's say, 50 sats, well, creating a transaction on chain is over 100 sats minimum, over 1,000 sats usually. And okay, so you could have it in Lightning, but not really because no LSP is going to open a channel to you.

And even if they did, you can't force close the channel and take your money. You can't have it on ARK because you can't unilaterally exit. There is no way to have Bitcoin under a threshold that's non-custodial in any meaningful sense of the word. Basically, that threshold is, can you take whatever system you were using and force close your channel a do unilateral exit whatever it is put your money on chain uh and still have enough of it left over that that it was worth it if you have a thousand sats you'll have zero left over it's not even possible if you have ten thousand sats it might be possible but you won't have very

much left over so it's still not really worth it so there's some threshold and it starts to get to the, you know, 10,000, 50,000, 100,000 sat threshold where suddenly, okay, now you can talk about a meaningful non-custodial behavior. The problem is lots of users today want to have a wallet with 21 sats in it and have it be a great user experience. Lots of users, you know, create their first wallet, create a Nostra account, link them, get a 21 sat zap, and now they have a wallet. They will expect to have the wallet show, okay, you have 21 sats and you can send out 21 sats if you want, minus some small fee for routing fees or whatever.

They expect exactly that behavior, but we can't have that in a non-custodial wallet. It's just not possible. It is not technically possible under some threshold. So what do we do? you know we have to provide users the user experience they want otherwise they'll use some custodial thing and they'll get rugged but they expect this thing that's impossible non-custodially so we need to accept this and we need to say okay we need a wallet that is both non-custodial and custodial depending on what the user's balance is so if they receive 21

sets well okay that wallet's going to store your money in a custodial platform you're going to be fine with it. It's 21 sats. It doesn't really matter. Maybe you get rugged, but again, it's 21 sats. But okay, then you receive 100,000 sats, 200,000 sats, 300,000 sats in payments. And suddenly that starts to look like a real amount of money. And now the wallet should automatically rebalance, move your money into a non-custodial segment and actually improve your trust model that way and we think that with the improvements in lightning to make lightning super reliable you know 100 always works uh we can do that and then also on the not on the custodial end we needed a better custodial system you know there's there's not there weren't really good

options there was uh e-cash but sadly the mint story is not yet really figured out you know having reliable mints where you can just spin up a wallet trust that the mint is going to be there in six months or a year and can store money in it it's not really a thing yet hopefully it will be a thing eventually but it's not today uh liquid is the only other real option but it's also not great uh it has fairly high fees fairly high minimums for swaps uh blockstream could reduce those fees but they haven't so for now it just isn't really competitive um but there are a lot of liquid wallets because it's the best answer if you want to have that user experience of receiving 21 sats but now there's light spark has launched the spark product which is a fully trusted it's

not really custodial in the sense that they don't have a key that they can use to take the money but you're 100% trusting them to be running the software that they claim they're running correctly. If they're not, they can steal your money. It's fully trusted. But it has fairly low fees. They haven't actually announced what the fees are going to be, but they should be very competitive. And we're confident, and it actually exists, unlike, sadly, eCashments. So we're confident that this is actually going to be a compelling option to build that kind of user experience of just being able to receive your first sats not think about it totally seamless and then we can integrate that with lightning and make it totally seamless the user will never

notice anything just the wallet will be non-custodial whatever it is possible to be non-custodial and when it's not it'll be custodial but you'll still have your money and then it'll be super seamless it'll work 100 of the time because both the custodial segment and the non-custodial segment will just be super 100 reliable and so i'm super super bullish on what that user experience is going to look like over the next 6 to 12 months and sparks using state chains right it's a modified version of state chains um so state chains have this classic problem of uh you can only transact in whole state coins so like let's say i create a state coin for a whole bitcoin

well now i can only send you a whole bitcoin i can't send you a half a bitcoin um there were old ideas of how to improve that mercury never shipped mercury was the the kind of classic example of a state chain uh they never shipped anything to fix that issue um Um, so light spark has this fairly convoluted tree structure underneath the state coins. It, it makes it, uh, more complicated. It increases the cost of unilateral exit it, uh, in practice because they have to do, uh, like defragmentation.

Basically it increases the trust that you have in the operator, which in this case is light spark. Um, but you know, we're, we're only interested in using it in a case where we can't be custodial anyway. We're we're explicitly opting into a fully trusted system in that case. And so we're very happy to to have it be fully trusted. That's OK. Yeah, that makes sense.

I've been bullish on the the cashew mints to agree that the mint landscape is lacking in terms of reliability, reputation, track record. But I could see that materializing, but any in all options to provide the market with this graduated wallet model which is what i think zeus is running with is the term for this start out custodially and then graduate to non-custodial i agree very bullish in this segment of the market too yeah the graduated wallet model is is is definitely the place to be and and cashew would be great for it um you know we we aren't tied to spark

in any way we don't really care too much if it's spark or not at the end of the day on the custodial or at least trusted segment um to the extent that cashew or fediment starts really having you know fixes the addresses the the question about mints can provide that ecosystem can provide high quality mints that that we can really use reliably i will certainly make that an option and i'm sure a lot of wallets will want to do that but in the short term i i think spark is spark is really the answer Yeah. Speaking more generally, is this the year of lightning? I mean, I was in Vegas with you after Miles gave his presentation for Block. And I think one of the sort of shocking slides of that presentation was the amount of revenue they're generating by operating their C equals node, I believe, annualized. It was a 9.7% yield on the Bitcoin they had locked in the channels on that node. Many people have been highly skeptical of that being a monetizable part of the market.

But it seems like CEquals has figured it out. And obviously, they have some advantages being connected to Cash App, which is, I think Miles said, doing 9% of daily transactions on the network. so uh cash up does about 10 of the total block space for on-chain transactions and then cash up does 25 of that again in lightning transaction volume every day yeah it's pretty massive is this it's huge yeah i mean i think people are sleeping on lightning to a large extent i mean you know people kind of wrote lightning off especially on the non-custodial land and you know we just spent a while chatting about why i think non-custodial lightning is going to be really interesting this year but a lot of people just kind of said ah lightning's fine whatever we're not super

interested in it it's not great for non-custodial and the custodians they'll use lightning but whatever meanwhile no one's been paying attention to the wild growth rates of lightning uh yes okay a lot of it is used custodially phoenix is pretty good you know there are non-custodial options i I think non-custodial options are going to look really, really good in, again, 6 to 12 months. Now that everyone wrote Lightning off, it's finally time for Lightning to get good. But yeah, people have been sleeping on the growth rates. The reality is people want to transact in Bitcoin. It's not like Square decided to include Bitcoin payments as an option in Square terminals just because Jack felt like it.

I mean, the numbers look pretty good. The growth numbers certainly look pretty good. The number of people withdrawing Bitcoin from Cash App and Lightning, again, it's whatever, about 2.5% of the block space equivalent in transactions on Lightning. People like paying with Lightning. It's a thing. Yeah.

I use it every day. And it works. And the reliability has only gotten better. The user experience has gotten better. and i think non-custodial options i mean i've been using zoos for years and that product alone has gotten significantly better um and now with the graduated model that they're they've introduced with via cash like it's only only going to get better and i think square unlocking payments in the terminals is going to just be a massive signal to the broader market is not really

paying attention like oh bitcoin is a thing and not only that it seems to be money i can pay with it here at this coffee shop brooklyn yeah i mean you know four years ago or whatever maybe five years ago people were super hyped on lightning lightning was going to be the future and then it deployed and it would just it wasn't reliable and when something is 95 percent reliable let alone worse sometimes people write it off they're like wow this is trash i cannot possibly use this this is this is unusable and that's totally fair the reality is we the engineers building lightning then went and spent a ton of energy making things reliable the payment reliability on cash app is really really really good because we spent a lot of energy and a lot of time and a

lot of effort figuring out how to make payments on lightning super reliable especially you know c equals it was a big part of that i'm not super involved in c equals but but they spent a lot of time figuring that out as well um so yeah i mean payments just work now with lightning and in the very near future non-custodial is going to just work and it's already basically there if you have a high enough balance non-custodial lightning is actually pretty good you know you can go use something like albie hub and you have to host it yourself for it to be non-custodial truly non-custodial but um you can take that kind of you can see how compelling these kinds of things can be when you actually go put it on a phone now mobile lightning still has its challenges you

know you have phoenix zeus whatever still occasionally miss payments uh mobile lightning there's still more work to be done there we're hoping that the async payments protocol uh ships this year as well although sadly the adoption of it will take a little longer um but yeah i mean like it is good now it does just work and non-custodial lightning still needs some work i mean i i love zeus but it is not a grandma friendly 99.9 percent reliable product quite yet uh it's it's great but it still has a little work to be done there um but i think yeah again over the next six to twelve months these things are going to go from today where they're pretty good to just 100 and it would be i would be remiss if i didn't bring it up but in terms of increasing

the usability, reliability, and user experience of Lightning, James O'Byrne, and a list of many other developers in the space, working at companies and working on different protocols, wrote a letter to the Bitcoin technical community pushing for OpCheck Template Verify and OpCheck SIG from Stack, making the case that it would bring a number of benefits to the protocol, both on-chain and for Lightning. What are your thoughts on this? Yeah, I mean, I don't think there's really material wins to Lightning from these. There are other protocols that have larger wins.

You look at things like Arc, Timeout Trees. They're possible today, and people are implementing these things today. um they have a lot of user experience challenges in their versions today they would still have a lot of user experience challenges with ctv but slightly less user experience challenges they'd be just a little bit better um and so you know we'll see as those develop what that looks like um on the the broader bitcoin scale you know there are a number of ideas people have for using these things i think we'll see exactly what that looks like i think there's still a lot of work to be done on the technical side about making sure this is exactly

the right next step um but i'm very happy you know over the last over the last five seven years I think a lot of people from the outside have looked at the lack of momentum on some of these product, some of these potential changes to Bitcoin, some of these proposed soft forks, have looked at the lack of soft forks generally as an indication that we're, you know, seeing ossification, we're not going to be able to do more changes and whatever. And I don't think that's a fair conclusion. I think ultimately the conclusion, the right conclusion is that advocates for these changes have proposed ideas for how to use it, but not necessarily ones that are super compelling. And I think over the last two to three years, that's shifted substantially, especially with the advent of more practical ARK systems. Obviously, ARK, as originally proposed, was totally unusable. um but the more practical versions that people have proposed now with state chain or with sorry with timeout trees and with basically taking arc and layering payment channels on top or layering lightning on top are way more practical and way more interesting and like okay this is actually

an idea that i can see why people would want to deploy it i can see why people might want to use it i can see why a lot of people might want to use it um and so i think that does change the discussion a lot and so it's now you know instead of being well there's the these ideas but it's not clear how really useful they are or whatever suddenly the state of things now is well there's these ideas and people have concrete uses for them and there's kind of tangible visible benefits from them and so now i think it is much more uh you know now now it's much more on the technical community to sit down and say like okay now that we have concrete things to use here what is it what does the next step actually look like how do we enable these different uh things and maybe

that's ctv and check stick from stack i i don't happen to think that that's the exact right next step but i think the right next step is probably not too far from that um but yeah now now it's time for for those kinds of conversations to really happen what do you think next right step is uh i i think that ctv is a is a weird specific uh subset of tx hash and probably it makes more sense to be looking in that direction um and and i don't really buy the argument that that that will kind of unnecessarily delay things but but we'll see i mean these are these are still early conversations we'll see what where things go um i i it is still too early for people to have have a have a horse to bet on here um yeah but but yeah i mean i'm excited it seems like there's

there's a little bit of real momentum now towards enabling these kinds of features in bitcoin where there really wasn't even six months ago yeah no people were even worried with this op return stuff that's bubbled up in recent months that it would make people uh apprehensive in terms of approaching any changes to bitcoin especially softworks but i think a lot of people have been very have talked to themselves into a frenzy about ossification and i don't see any real evidence that we're at that point um yeah yeah well we can talk about this all we want in terms of prospective soft forks and whether or not we'll ossify but it's all for not if uh the developers that actually make these things happen

don't feel comfortable writing the code so make sure you get to save our wallets.org call your reps and get ready to call your senators um and you're gonna be in dc in a couple weeks right yep the bitcoin policy institute's summit uh i don't remember what they call i think it's just the summit i think it's a bpi summit um at the end of the month like 20 something 24th i think maybe um so hopefully more opportunities to go talk to lobbyists congressional staffers people and really explain why this this is the most important and all the other all these other things that people are throwing around are cool and useful and good public policy but but nowhere near as important yeah and have you had conversations with policymakers or

their staff yeah i mean quite a few obviously the various lobbying groups have a much better have good connections with a lot of congressional staffers they they do have a lot of conversations so you know coin center uh the crypto currency crypto coin institute or whatever they're called the blockchain policy blockchain something the salon of the defy education fund you know there's all kinds of uh advocacy groups now sadly most of them are funded by crypto not bitcoin uh you know bitcoin policy institute is kind of the one one exception there and so a lot of them are more focused or have historically been more focused on the stable coin and market structure side of things but i think now with the the brca we've made

we've started making enough noise to really lean on them and then to also lean on congress to say this is this is the one this is the most important piece uh and more noise is welcome i think you know the more noise we make here the clearer it'll be to everyone involved in dc that this is the thing that they need to push for that that we need out of them um and that you know their job you know if they're a crypto policy advocate uh their job is to get this passed and not anything else yeah completely agree so if you're out there listening you're sitting on your ass go to save our waltz.org plug in your zip code spend five minutes to pick up the phone hey you just listened to a almost hour podcast you can totally spend five minutes call your

congressperson yeah well matt it's been a pleasure as always you're running up the uh the numbers in terms of most tenured guests i think you're at eight now so yeah you're running away and i i think we can include the uh bitcoin plus plus live stream so maybe nine now we'll have to hit digits uh we have to do like a big thing for the for the 10th one maybe we'll have to go back to the bar drink drink some beers go to pubkey yeah well um i've got a birthday party to attend to and i'm sure you've got a lot of work too but thank you for what you're doing for making some noise about this is extremely important and i'll see you in dc in two weeks yeah yeah see you in dc thanks for having me peace and love freaks freaks thank you for listening to

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