The Breakdown - Why Lightning Isn’t Just for Bitcoin Believers, With Graham Krizek

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexus.io, Circle, and Cracken, and produced and distributed by CoinDes. What's going on, guys? It is Wednesday, November 23rd, and we are back with another edition of Grateful for Bitcoin, this time talking about Lightning. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All righty, today we continue our grateful for Bitcoin series with one of the topics

Starting point is 00:00:49 most central to Bitcoin's future, the Lightning Network. Lightning is one of those things that is around Bitcoin discourse all the time, but still relatively under-indexed in most people's understanding relative to all of the interesting things that are being built upon it right now. My guest today, Graham Kreuzik, is the founder and CEO at Voltage. Voltage is a Lightning Network infrastructure company for enterprise-grade applications. In this conversation, Graham brings us up to speed with where Lightning is today, while also painting a picture of what types of businesses are getting interested and why. All right, Graham, welcome to the breakdown, sir. How are you doing?

Starting point is 00:01:23 Great. How are you doing? Good. I'm very excited to have you here. We were talking just a little bit about how lightning is this fascinating thing because even for a lot of Bitcoiners who sort of have a vague, broad kind of ideas about what lightning is or why it's exciting. They're not necessarily kind of clued into what's going on in the moment. And so I thought it'd be really fun to have you on to talk both about what you're doing and also kind of lightning more broadly. But let's start by just introducing you. So how did you get into the Bitcoin space? How did you get into Lightning? And then what is Voltage and what are you working on? Yeah, for sure. Now, that sounds great.

Starting point is 00:01:56 Love to chat about that stuff. So my name's Graham Kreisik. I'm founder and CEO of Voltage. what voltage is is we're a Bitcoin infrastructure provider. So we help companies that want to adopt Bitcoin in their technology or what they're doing. And then we also are very focused on the Lightning Network side of things. So when people trying to incorporate to the Lightning Network into whatever they're building, applications, services, exchanges, whatever it is, we really help them understand the technology, teach them how to use it and then also provide tools and services to make that integration and that adoption, you know, much easier or faster than having to start from scratch over and over again.

Starting point is 00:02:30 And, you know, my Bitcoin journey started about 2012, and I've just worked kind of in the traditional infrastructure space for since then, or, you know, since about the same time. And then one day, I just really realized there's this big gap in infrastructure, you know, robust infrastructure services for Bitcoin and Lightning. You know, I just took it upon myself to kind of create voltage as a project. And then it just kind of evolved from there into, you know, a company and, you know, just that snowball that never stopped. Amazing. I mean, one was voltage founded? We launched in October of 2020. So almost two years ago, or about two years. Cool. It's amazing. It is always astounding, even when you live inside kind of new technology, how much infrastructure needs to be built.

Starting point is 00:03:08 It's a meme, but like, you know, there's a reason that the Gardner life cycle of technologies remains so resonant with people is that, you know, we kind of can't imagine. And then all of a sudden we imagine everything. And we realize that almost everything we've imagined can't be accomplished, you know, with today's tooling and infrastructure. And then some number of people have to sort of get over the fact that that's sort of a long, grindy part of the build process and just do it, you know, it sounds like you've been living in that for a couple years at least. Absolutely. And that's all very true. And I think what's unique about the Bitcoin Space 2 is we're really building things very methodically, building things to last, right?

Starting point is 00:03:45 We could technically probably develop things faster if we wanted to, but be way more risky and build things on tooth picks, so to speak. But, you know, the Bitcoin ethos is to not do those things. So when we're building, things take a little bit longer because we're really building them because we're building tools that are like fundamentally changing the way that people like interact and, you know, transmit money. And that's not something that needs to be built quickly, right? Like we're building for our kids, for our grandkids, for their grandkids. Like we are trying to build an entirely new system. And so, you know, your points are right. And even to take a step further, like, you know, we're not just building some kind of web service to handle like ticket sales for Taylor

Starting point is 00:04:24 or Swift or something, right? We're trying to build something way more robust. So this is one of the most interesting things. If you come from a technology background and get into Bitcoin, and actually, I've spent a lot of time thinking about this, because I spent about a decade in Silicon Valley in sort of traditional tech, Web 2 kind of areas, I was introduced to Bitcoin in that context. And when I was first introduced to Bitcoin in kind of the 2012, 2013, 2014 era, a lot of the popular Silicon Valley version of the narrative was it had nothing. to do with store of value, call it the more like, not political, but just sort of ideological aspects of it. And the ironic thing, given how square and block have evolved, is that it was presented as

Starting point is 00:05:04 kind of a competitor to square. It was like a thing that you used to buy a VC, you know, coffee at Coupa Cafe to look cool and like you understood technology. But I think part of the reason it didn't hit Silicon Valley as hard as you might expect, given it was so primed, right? There's a group of technologists who should. And now this is obviously not entirely the case. There are plenty of people in Silicon Valley who got it and got it fast. But the reason that I think it didn't sort of just immediately hit in the same way that Uber for X did is that there really is an inherent attitude difference as relates to the relationship between new building and sort of core Bitcoin technological infrastructure. It's not something where you assume that the technology

Starting point is 00:05:49 stack is going to be wiped out every few years and everyone just wants to disrupt it. Now, other parts of crypto obviously have taken a different tact where they're like, they're off on use cases that they don't care about that sort of underlying infrastructure and that's sort of a major differentiation or breakpoint with Bitcoiners. But it is really different to build technology for something that has this robust system of rules underneath that are the first principle is do no harm. I don't think there's another technology sector that's quite like that. Yeah. No, I think that's great points. I think that that's exactly right. When you think about Silicon Valley first looking at it, I think that you really need to kind of understand

Starting point is 00:06:24 both realms of it of like, you know, the reason we have all of these rules and like all of like this global system and everything is because of that, you know, censorship resistant quality, that peer to peer aspects, like all those things. And if you don't understand why those things are necessary, the whole system kind of doesn't make sense, right? So I think that there's a lot of people aside of Silicon Valley that are maybe almost too focused on tech where they don't think about the people in like impoverished countries or things like that that really need some kind of system or a way out. And if you look at it from just comparing Bitcoin to Venmo or something, it's like, yeah, that doesn't really line up. If you look at it from pure tech, people might

Starting point is 00:06:59 understand it, at least in the early days. That's one of the great parts of learning and kind of going along that Bitcoin journey is learning, okay, why do we need censorship-resistant money? Why do we need a fixed supply? Why do we need all of these things? And then once you start to understand kind of both angles of it, then it really clicks for most people that, okay, this does make sense. This is truly unmatched to anything else. You know, it's completely different than a Venmo or anything like that. And so I think that that was some of the early days. The struggle was understanding why a new global payment system was even necessary. And there's a lot of facets to that question and just, you know, especially in the early days, really hard to grok all of those different

Starting point is 00:07:41 aspects. Want to keep more profits when trading? Get the best possible prices and trade with 50% lower fees on Nexo Pro. The new spot and futures trading platform uses aggregated liquidity of over 3,000 order books collected from multiple sources. Utilizing the complete Nexo suite allows you to earn interest and borrow funds as you wait for the next trade setup. Visit pro.nexo.io. That's and sign up today. This episode is brought to you by Circle, the sole issuer of USC, and a leader in crypto that's held to a higher standard.

Starting point is 00:08:24 USDC is a fast, safe, and efficient way to send money around the globe. USDC is always redeemable one-to-one for US dollars and has over $45 billion in circulation as of October 13, 2022. Plus, Circle posts weekly reserve reports and monthly attestations of reserve capital, letting users know that USDA is safe, transparent,

Starting point is 00:08:44 and compliant with regulations. Just go to circle.com backslash transparency to see why USDC is a trusted stable coin. As one of the largest, longest-lasting, and most secure exchanges, Krakken continues to set the industry example for transparency and trust. Twice-yearly proof-of-reserves audits verify your assets are backed by real assets. Industry-leading security keeps your funds and information safe. And award-winning client engagement teams are available for support 24-7. Buy crypto instantly with fast.

Starting point is 00:09:18 flexible funding options on Cracken. Download the Cracken app on Google Play or the Apple App Store or visit crackin.com to join. And so you are coming into a technology space where there's sort of these first principles and from what you build on it or what use cases it has or what you're willing to kind of risk, there's a very sort of do no harm first principle. But then you're building on a layer two that's specifically about expanding use cases on top. of that. It sounds to me kind of the way that you described it, though, is that there's still a more careful consideration, even in the context of layer two, of what might break, how you build things, what sort of intentionality is there. Is that accurate? Yes, I definitely think that that is accurate. And ultimately, the layer two's of Bitcoin, so I'll mention Lightning specifically, but the way that people are building inside of those are still kind of the same, in the same

Starting point is 00:10:17 methodology of Bitcoin itself and that we still want to have censorship resistance, peer-to-peer, all of those things. To do that without compromising on any of the qualities, it still takes a lot of care and a lot of hard thought into how those things will be built. And so we're essentially, yes, we're taking those exact same methods and building on the layer twos. But that being said, I think that given that layer twos like Lightning are not consensus-driven, they are strictly like this consensus layer is Bitcoin Layer 1. And so with that, we are still able to operate and move faster than Bitcoin-based layer where, you know, all of the nodes need to, you know, opt into this new soft fork or hard fork or any of those things. And so we are able to operate and move faster.

Starting point is 00:10:59 Absolutely. And that's kind of one of the points of a layer 2. But at the same time, we still need to keep the same ethos to Bitcoin inside of these other layers. And if we compromise on any of them, well, I think that ultimately the layer 2, would become unsuccessful because it's just, it doesn't hold those same values as Bitcoin in the layer one context. It's almost like a discontinuity of values would end up with some sort of technological friction at some point, probably too. Yes, yeah, absolutely. Yeah. And the other thing is, you know, people, it depends on who you talk to on like the state of lighting. Is it like, is it really advanced? Is it still like far behind compared to other things in the network? And,

Starting point is 00:11:36 you know, you can debate all of those things all day long. But when you think about the amount of things that are being worked on inside of lightning today, what has been created. I mean, it's incredibly vast. And it's all things that are going to take this protocol to like really the next level and being able to do things that are unmatched in any other system, like any other like Ethereum or Solana, any of these other things. And so the amount of things that we are working on inside of the Lightning Network is just incredibly vast. And it's really going to open up, you know, Bitcoin opened up Pandora's box, right? Like we're like opening up like a second time. Amazing. Let's actually talk about what some of those things are. And obviously, we don't need to do a kind of exhaustive list or kind of have you represent all of them.

Starting point is 00:12:16 You know, what do you think are some of the key things being worked on that are game changing right now in Lightning? So one of the unique aspects of it is like the liquidity sides of the Lightning network. So I won't get like to text or one of the details, but you need liquidity in payment channels to be able to send and receive in top of Lightning. And that's been, I think, one of the biggest hurdles into using Lightning so far. And I think that there's a lot of work being done. of that space, both from like the application level, people like us doing like LSP services, helping you just provision liquidity easier. Then there's also things like more at the protocol level of like blicing and dual funded channels and swap services and all these different things that help you manage liquidity much easier inside of the light network to go, you know, from layer ones to layer twos. Ultimately, when you think about that problem being solved really, really well,

Starting point is 00:13:02 I think that we will see an additional, like we've seen significant adoption of the light network already. I think that we'll see another second wave of a boom inside of lightning where people will really be coming to it in flocks just like they are today, but 10x that or something. And so being able to solve things with liquidity is going to be a big deal. And then there's also a huge amount of other services working around like routing, so things like async payments or trampoline routing or all these different tech enhancements. Excluding all of these kinds of tech changes and all that stuff, it really enables like a truly easy to use, like essentially equivalent user experience of a Venma or a visa, but being able to still hold your funds at the end of the day, still be able to transact peer to peer without anyone in the middle.

Starting point is 00:13:51 And so if we can actually mimic the qualities like truly of instant payments across the world, all those things, and not compromise on custody or third parties or any of those things, like that is where we're going. and that's where we will get to, you know, very, very soon. So you guys are, Voltage is an infrastructure provider. I guess first, let's just go through the kind of the, what type of products you offer. So what infrastructure are you helping people with? And then I actually think it would be very instructive

Starting point is 00:14:18 to understand how different projects or protocols or whatever companies are using what you guys have to offer, just as a way of understanding who's actually building on Lightning right now. Yeah, that's a great question. The things that we do right now is we have a node hosting service. So if you want to use the Lightning Network, you have to run a node, which is essentially like a server that you just communicate with to facilitate those payment channels, the transactions, all of that stuff. So we help companies host their node and run their node for the Light Network and the Bitcoin Network. Addition to that, we also help with things like observability, developer tools, liquidity.

Starting point is 00:14:52 So holistically, we're creating a platform that helps people use and adopt the Light Network faster and easier. And so when you think about being actually able to adopt these things, you know, quicker, that's going to just increase the amount of people that are coming to it, right? If everyone has to learn the same things over and over again, it's going to block out some people that don't really want to do all of the hard work. And so the more that we can solve, the better. And so the companies that are using us, really, you know, lightning applies across the board to like all industries, which is very exciting.

Starting point is 00:15:22 But some examples are like gaming companies, so people that are like mobile games where they want to pay out the rewards of this race that you just won. They want to pay it out in Bitcoin, and the best way to pay that out is via Lightning. We have people like just exchanges that want to enable like deposits and withdrawals, so it's a better, faster experience for their users. And then another big use case that we've seen recently, sort of around like the global remittances or just global payment providers, we have seen a large amount of people that are not necessarily Bitcoiners.

Starting point is 00:15:53 They aren't the hardcore bitcoins that care about the sound money and all these things. they're coming to us because they understand that Bitcoin and the Lightning Network are the superior payment technology and they understand that they can transact faster, cheaper, better, they can do all of these things way better than their current systems are built around ACH and Swift and all those things. And so that's been the biggest interesting aspect is these kind of traditional payment providers that are international. They are not coming from the Bitcoin angle.

Starting point is 00:16:21 They're coming from the technology, the payment system itself, which I think is just, it's a big testament to where we are in the network and the amount of adoption that we're starting to see and we will continue to see over time. How much do you think that is a factor? I mean, or you hear about this, but how much is it speed? How much is it finality? You know, obviously chargebacks are a huge, huge problem for different payments networks. Or maybe I guess I'll expand the question out. Is it those sort of specific, specific features of this approach to payments versus just sort of, to your point, kind of some adherence to Bitcoin principles? It depends on who you're talking to, but I think that a lot of it is those features, like you mentioned,

Starting point is 00:17:00 the finality of not being able to do chargebacks or the fees. I mean, I think that the fees alone are very attractive. Think about a payment processor that's doing a billion dollars a month in transactions. If they're even paying 1% of that, that's a very significant cost. And if you can get that down to zero or a tenth of a percent or something, that is significant cost savings for that organization. And so I think that when you couple all of these things together and then being able to actually transmit globally. You know, if you're sending an international wire, you're paying way more than 1% probably. And it's going to take days or weeks to get that there. And so I think that the finality, the speed and the fees, they each can hold their own in an argument of why you need to

Starting point is 00:17:41 adopt this technology. But I think when you combine them, it's like a no-brainer. What do you think are the biggest barriers right now that are still kind of outstanding? You know, I mean, obviously this is something you must think about all the time. And what do you think are some of the solutions to those? Yeah, I mean, I think that it's somewhat of a hot topic inside of Bitcoin. Stable coins on top of Bitcoin are a very interesting thing because there are, frankly, people that don't want to be exposed to the volatility risk of Bitcoin or they need to use their local currency in some other country and being able to flop in and out of dollars and send that over the Lightning Network is very interesting to them.

Starting point is 00:18:17 So I think that the volatility risk and the complexities that just come along with understanding Bitcoin are something that we are working to overcome, but I would be lying if I said that that wasn't a hurdle that we kind of encounter with our customers today. And so when you think about solutions that problem, I think that doing stablecoins on top of lightning could be a very interesting use case. And I think that it will enable more people to flock to Bitcoin and they will flock to the system that can still have these same properties of cheap fees, low fees, no fees, and instant settlement and all these things, but still not being exposed to the volatility. risk or being able to still use your local currency or something like that, that is incredibly

Starting point is 00:18:56 interesting. And then I think that that's also somewhat of a Trojan horse to get people into Bitcoin itself of like, okay, you are, you know, transactioning instantly for free. And now you take this next step and learn about Bitcoin. Why is it important? Why does it have this fixed cap? Why are all these things there? And I think that it starts that conversation. So I think that ultimately stablecoins are like a Trojan Horse into Bitcoin, where get people exposed and then they start to understand all of the kind of economic principles that make Bitcoin valuable after the fact. Yeah, this is super interesting. So maybe that's actually a great way to start to kind of wrap this up is, you know, for people who are interested in this, interested in lightning, interested in learning more,

Starting point is 00:19:39 or interested in just starting to experiment, what would your recommendations be for how they get involved or how they learn? Depends on where you are in the stack. I think that what I always like to have as kind of a call to action is the light network is like its own rabbit hole. So everyone talks about like the Bitcoin rabbit hole. You know, you start to learn and then you, you know, there's just this endless amount of information that need to go and dig into. I would kind of say that the light network is similar to that. And so if you haven't interacted with the light network at all yet, do it. You can download like applications like Moon or Phoenix or even just using it on an exchange or something. There's a lot of different services that you can do to

Starting point is 00:20:14 interact with the light network. So I always encourage people. If you haven't just set up a wallet or made a lightning payment yet, even if it's custodial, wallet of Satoshi, any of those, definitely do that, get experience. And then if you want to take that a step further, I mean, our blog, like voltage. Dot cloud is our website. We have a blog on there that we do a lot of content and information on to help you kind of learn and go deeper into the rabbit hole.

Starting point is 00:20:36 And then ultimately, if you're a company or you have a business or anything like that, certainly reach out to us or just look at adopting lightning in general for what you're doing. I'm not one of those people that is like, you know, everyone needs to like jump in and completely convert your life to lightning right now. Everyone has their place in the network and what they are wanting to do. So I just encourage people to take the next step. Whatever the next step is. If it's just downloading a lighting wallet, do that. If it's adding it to your business or something, do that. And so just be evolving in your Bitcoin journey. And I think that that is going to help you tremendously over the coming years. Amazing. Graham, so awesome to have you on the show.

Starting point is 00:21:11 really excited about where you're building. I think you're a great voice for the lightning in the Bitcoin space. And so let's do this again sometime. Yeah, that sounds great, man. Thanks a lot for having me on and have a good holiday. All right, friends, back to NLW here. Listen, I think one of the most interesting parts of that conversation was what Graham said about how much of their customer interest is coming not from Bitcoiners as we would define them, but simply merchants who see business value in the near instant settlement, the no chargebacks and finality of Bitcoin. It feels hugely validating to me to the intrinsic properties of Bitcoin and Lightning. Now, I have a feeling I know what the answer is, but if Lightning is a discussion you want to hear more about, please let me know either on the Discord or on Twitter, and it's something that we can come back to more frequently.

Starting point is 00:21:50 For now, I want to say thanks again to Graham for appearing on the show. Thanks to my sponsors, nexus.io, Circle and Cracken for making it possible. And thanks, of course, to you guys for listening. Until not tomorrow and not Friday, but Saturday, be safe and take care of each other. Peace.

The Breakdown - Why Lightning Isn’t Just for Bitcoin Believers, With Graham Krizek

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.