The Pomp Podcast - #795 The Lightning Network Continues To Grow w/ Graham Krizek

Episode Date: January 24, 2022

Graham Krizek is the Founder & CEO of Voltage, an enterprise-grade infrastructure services for Bitcoin that recently raised $6M. In this conversation, we talk a lot about the Bitcoin Lightning Network, Infrastructure as a service, and how he feels about the growth of Bitcoin & The Lightning Network. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

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Big fan of Circle and I think you will be as well. All right, let's get in this episode. I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Let's start maybe with Voltage itself in terms of when you talk about enterprise infrastructure and bringing that to customers, what exactly does that mean? And kind of what are customers doing with the Voltage service right now?

Yeah, for sure. So for anyone that's not familiar with the Lightning Network, it's a layer two scaling solution for Bitcoin. So it's the thing that is going to enable us to bring Bitcoin to everyone in the world and make Bitcoin way easier to use, faster, cheaper, all of those things. And so what Voltage does is we provide infrastructure solutions for people that want to leverage the Lightning Network. So we host nodes for our customers. We host some e-commerce solutions. We host some liquidity management solutions. Essentially, people that want to leverage the Lightning Network in their applications and their businesses, we give them products and services that make it happen. So a good example is, you know, like some gaming companies like Thunder Games use us to they process Bitcoin payouts for their users that are playing their games and they run their infrastructure with us and we help them accomplish that. Got it. And so when you start thinking about some of the customers today, a lot of them are lightning only or are these folks building applications and software products, et cetera, that are more like a crypto exchange that's integrating lightning, but that might not be their whole business. Like, how do you think about how your customers break down in terms of exclusive to Bitcoin and Lightning versus it's one of many things they do? Yeah, I mean, it's a pretty good, it's a pretty good split between, you know, those both of those types of customers.

We have people that are, yeah, like exchanges that maybe do, you know, do things for all different kinds of cryptocurrencies. And they just want to add Lightning as a part of their products and services. Then we have also people that eat liver just that are exclusively Lightning Network based. um you know like like the thunder games you know example they're they're exclusively used bitcoin and lightning um and then we also have people that uh kind of come from a more traditional sense so like adam curry with his uh he has a new initiative called the podcasting 2.0 that enables um uh listeners to stream money to podcast hosts you know directly through the lightning network that is and that's kind of a you know the old school web to whatever you want to call it version

of something that is a standard application today that is bringing on the Lightning Network to enable new features or new experiences inside of those apps. And so when you start to think about setting this infrastructure up, like how big is the Lightning Network right now, right? Obviously there's the public and private side of this.

Talk to me about the Lightning Network itself and like where we are in terms of the growth. Cause it appears every chart I've seen, it's just like parabolic growth for the entire Lightning Network. Yeah, I mean, it definitely has been. And it's been 2021 is like a pretty monstrous year for the Lightning Network in terms of growth. And I mean, we have like, we're approaching like 20,000 nodes on the network. I can't remember how much Bitcoin is locked into it. But I mean, it's hundreds of millions of dollars, you know, in USD standards. So I mean, it's and that's all at least at least 2x more than 2x over the last year. So we've been seeing a huge, huge increase in the adoption of the Lightning Network. And that's really because I think just, you know, in the start of 2021, we really finally hit this point where it kind of broke out of the just development stage where it was just being built out into now you can actually use it for real world things and build a lot of applications on top of it. So I think that that's really the fuel that has been the fuel for a massive amount of growth that's happened in the Light Network is that we're just at this inflection point where all this technology is like really usable in an everyday sense.

And so I think that it's been a great year the last 12 months, but I think that looking forward, the next 12 months is going to be even bigger. I think that there's even more things that are going to be built onto it. And the parabolic growth that we've been seeing is just going to continue. When you think about what's been happening in the last year, you know, we have people like El Salvador adopting Bitcoin. A lot of that is through the Lightning Network and the way that people are using it on the ground there. But a lot of it is also custodial Bitcoin. So that's an example of, you know, maybe a thousand people are using a single node, a single provider to use the Lightning Network. And I think that that's going to disperse over time.

And when you think about those thousand people, OK, instead of using this one node, they each get their own node or they have some form of interacting with it in their own way. And that is just going to increase the, you know, this parabolic growth curve of the Lightning Network that we've already seen. So you guys just announced that you raised $6 million, pretty much from every major, you know, investor that's focused on Bitcoin, and also some that are just, you know, kind of very well respected technology investors as well. Talk a little bit about the fundraise, what are you gonna do with the money? Why these investors over others, etc? Yeah, for sure. No, we've been we've been we're super excited about the investors that we were able to bring on in this round. They're all just incredible, you know, funds or individuals. So, you know, the round was led by Trammell Venture Partners.

So Christopher and Dustin and the team over there at TVP have been just amazing to work with. And they're they're a Bitcoin only fund. So they're a fund that is focused exclusively on Bitcoin and no other cryptocurrency. And I think that that gives them a leg up in terms of, you know, the services like we provide because we're intentionally very niche and we want to focus only on Bitcoin and enabling Bitcoin to be the technology that it's envisioned to be. And so working with people like that has been absolutely amazing. And then some people that joined around as well are Stillmark. So

Elise is a very, she's a force to be reckoned with. She's one of the best advocates for Bitcoin out there, I would say. And then we also have Kraft Ventures. Brian Murray with Kraft has been a big influencer in the Lightning Network space. And then also we have, like you said, people that are maybe outside of the Bitcoin-only space like Google Ventures. They're just a powerhouse for tech. I think it's a good example that I think there's a lot of people that are waking up to this technology and waking up to Bitcoin and realizing that, hey, we better get on board now where we're going to be left behind. And so we're seeing a lot of interest

from people like that that are just maybe more generalist tech funds that really want to get their hand in the Bitcoin space and figure out what this thing's all about. When you think about the conversation with those kind of legacy tech investors, how much education around Bitcoin did you have to do versus they're already convinced

and ready to deploy capital? And then also, were they actually investing because of Bitcoin or were they just looking for great technology companies that don't care about the underlying technology you're using? I think that, you know, when you think about the generalist tech funds, there may be a little there may be a little bit more taken like abstracted away from Bitcoin specifically. They're just kind of looking for more of the pure tech play of, you know, if we think that Bitcoin is going to be increased to the growth that it has already been going on, that, you know, there needs to be these good technology solutions for it. So I think that they're still focused on a general tech perspective of it.

But when it comes to education, I think that a lot of them do understand the value proposition of Bitcoin, why it's important, why is it important now as well. So I think that they get it from a lot of those standpoints. And it's really just looking for who is building this technology that is really needed to bring this ecosystem to life and in even a more real way than it already has been. And who is doing it in the best way, you know, in terms of like, you know, product and growth and the strategy behind the company. So I think that the Bitcoin only companies, I mean, definitely get it. The more generous tech funds are really just looking for that. What's the best tech for this new and emerging technology? Joe, John, what questions you guys got? Hey, Graham, thanks for coming on. My question would just be around like kind of adoption, right? So what is, where do you see Voltage in your role in kind of the global adoption of Bitcoin specifically? Yeah. So really where we stand is we want to be the platform that people build on when they're

creating applications on top of Lightning. So when you think about just the end user retail, that's like using a mobile app or something on the phone, you might be interacting with us, but we're probably behind the scenes. Think like an AWS or something like that, where you go to a website, you don't know where it's hosted at. You just know that the website's working. And so that we kind of fit into the same general sense of it, where we want to create a platform that enables people to build and host, you know, really a robust, resilient infrastructure for lightning. And we want to give them all the best tools that we can to enable them to build these great experiences that are then user facing. So it's really coming down to a platform that enables

the builders of this next version of the web on top of Bitcoin. Gotcha. Graham, what do you got? What has been the biggest challenge for you over the last year, right? So we've seen exponential growth or is it clients incoming? Just what has been the biggest challenge for you? Yeah, I mean, it's just really like the network is still growing. Like we're kind of, it's so much more mature now than it was even 12 months ago, 24 months ago, whatever it is. But it's still growing. There's still a lot of these things that we're building out as we go. And I think that a lot of the naysayers like to point out like, oh, you can't do X, Y, and Z on top of it. Well, you know, we haven't got to it yet, right? We're still building it. There's still things to be developed. And so I think that that's been one of the biggest challenges is just figuring out, OK, where do we fit in in this ecosystem right now? And then also 10 years down the road, you know, we're very long term thinkers as well. And so it's really been a difficult balance to figure out, you know, where where do we add value now?

And then also this technology is being developed as we're trying to create a company on top of a top of it. So it's a balancing act that we got to do. Balancing act for sure. Graham, when you think about the Bitcoin Lightning Network, if you had to put where we are now, B plus progress, A minus, A plus, like how do you think about so far so good? And then also, what is the promise? If you had to zoom all the way out 50 years from now, the Lightning Network ends up becoming what I think you and I think it can become. What does that world look like? Yeah. I mean, like I think progress so far, I mean, I would give it an A for sure. I think that given the time and the resources that have been dedicated to, you know, development of the Lightning Network and the services around it, I think that we've done a great job. And I think that we have like built out a lot of very interesting use cases and is being used in, you know, very real world applications today. So think of like, you know, like the El Salvador thing or podcasting. All these things are using the Lightning Network today and it's working. It's like it is solving exactly what it was made to solve. So I think progress so far, I would definitely rate it an A.

And then thinking forward, I mean, I think that there's still, you know, a million things that we sought to build out. So there's still, you know, challenges about developing on Lightning, getting up and running liquidity management. There's a handful of things that still need to be solved and they're going to be solved just over time. And so when you think 50 years down the road, I think that this technology can be ingrained into just about everything, whether it's just, you know, your checkout experiences at stores, whether it's your, you know, applications that you use for chat or your social media in general, music streaming, anything that really this. What's amazing about the Lightning Network is it's almost like reinventing TCP IP on top of Bitcoin. And so it enables when you think about taking a Satoshi and putting it on the Lightning Network, that's essentially just like a packet on the internet that you can send anywhere instantly. And so it really just enables anything to be built on top of it. So I think that over

time, it's just going to be more and more ingrained into both our existing technology that we use now. When you think about Reddit or something, there's a stacker news that is essentially a very similar product that incorporates the lightning network um but then also new use cases that we haven't even thought of yet that are you know we haven't even unlocked the possibilities of doing a more lightning native products on top of it too it's interesting to think also about um country adoption and also twitter adoption etc right like as we're moving forward i don't think many people would have thought that this early we would have a nation state that adopted it we would have one of the, I don't know, top four or five largest kind of social networks in Twitter

having adopted it. Like, does that accelerate us? Or is this just kind of the milestones you would have expected on the march towards global adoption? I think both like so when you think about El Salvador adopting Bitcoin, I think if we didn't have the lightning network, that wouldn't have happened, like in the legal tender sense, because realistically, for people to use it in El Salvador, like kind of boots on the ground, without the lightning network, it would have probably been a little bit of a painful process. Um, and I think that they would have been way more adverse to, uh, creating, maybe they would have still done legal tender, but the adoption wouldn't have been the same. Um, so I think that it really was an important piece of adopting it

in El Salvador. And then I think, you know, going forward, I think that just what I commend El Salvador for being kind of the first movers, because I think that it opens up the eyes of a lot of other countries that, Hey, they did it. Like, let's maybe learn what they did, figure out what was best, what didn't work, and then do it ourselves. And so I think that it has been a great accelerant to more people looking at, you know, taking Bitcoin more seriously. And then additionally, I think that given that the Lightning Network has existed, and it was in the state that it is through this last year, that was also an enabler to allow El Salvador to do what they did. Do you think that there will eventually be other technology companies or other products,

things like micro payments to pay for, uh, articles or, um, streaming payments, you know, in terms of, uh, paychecks for folks happening on a hourly basis, like all these things that I think are the furthest out on the, on the vision of what this could become. Like, do you think that we're still on a path towards that stuff? Yeah. I mean, I do. I think that, like I said, I think that there's a lot of things that can be built on this, that even some of them haven't even been developed yet. There's things that we don't even know about in our heads that will be created on top of this. So yes, I think that we are still definitely on the path to those things. And that's what's, you know, that's, what's great about the lightning network and comparing it to, you know,

some of the other like blockchains that, you know, talk about TPS or all of those other things is they still aren't very efficient, you know, as far as like fees go or things like that for doing the micro payments of, Hey, I want to pay one cent or half a cent to view this article or something like that. They still don't really work for that use case. I think that there's still a use case over time when you think about people interacting with the internet, instead of having to pay for a $5 monthly subscription to the New York Times or something like that. I just want to read this one article real quick. So I think that there's a lot of use case for those things. And I think that those are being developed now, but I think that the adoption of those types of unique

new offerings will continue to grow. Graham, when you think about the future, who's going to benefit the most from Voltage Services and then how do they access it? Yeah, for sure. I mean, like I kind of mentioned, we're very focused on the developer and on-up services. So, you know, creating an easy platform to come and build on Lightning and then also, you know, host in a very robust and resilient way. We obviously are very focused on Lightning. That's kind of our core competency. So we know all the ins and outs, the nasty parts and the good parts, and we know how to do this in a really good way. So that's really where we, I think, add value to these companies that are looking to adopt it. And then, you know, we have a platform that you can just go sign up on for free and create like a free trial node just to test out the platform. Our website is Voltage.Cloud for anyone that wants to check it out. And you can just start playing with it from there. And then, you know, we're always here to help people adopt Lightning, whether you're using our services or you're just curious or you want to explore what's possible on the Lightning Network.

You know, our doors are always open. And we have, you know, a public chat and all those things to enable people to come explore Lightning. Graham, if you had to say over the period of time you've built this business, what's the most surprising thing? What's the most fun thing? I think the most fun thing is just watching this like work, like for real. I think that, you know, when I talked about all these kind of very real use cases of how the Lightning Network is, you know, working today and is being adopted in a very real sense. So I think that's been one of the most fun things is, you know, I got into this when the Lightning Network was still kind of an idea that wasn't necessarily like for sure going to work or not. We're just kind of building it and we think it's going to be OK.

And so seeing that it's actually worked has been very, very fun. I think, you know, challenging wise, I know I mentioned already how it's been a kind of building, building the plane as it's flying, so to speak. So that has always been been a challenge. And then I think just figuring out, I think that we've learned an insane amount over the last 12 months about, you know, what is working in our platform and what's not, and then also what our customers want and what they don't want. And so I think that that's what, you know, looking forward with this new funding and all of our hiring plans that we got going on, we're really looking to hone in on the

specific pieces that we see people are needing now and what we think are going to enable this, you know, this massive growth in the Lightning Network, you know, in the next 12 to 24 months. I am, uh, I'm bullish, very bullish. I'm betting money on it. I think you guys are onto something. Where, where can we send people? Voltage.cloud is the best place to, uh, to send folks if they want to learn more about it or, uh, or sign up. Yep. Yep. Our website is voltage.cloud. Yeah. You can come sign up, uh, super easy to get started. Um, we, uh, you can find all of our resources on our side of, you know, Telegram groups, Twitter, all those things. So I think that's the best uh place to point people at and i'll also mention that we're hiring a bunch so

come uh check out our careers page as well we got tons of roles in engineering operations sales so come come work and build bitcoin with us i i love that uh uh when you have a company that is this powerful could be this valuable and you can simply explain it in four let uh four words on your home page bitcoin infrastructure made easy like you might be onto something with that that seems like a pretty good bet to make right kudos to me uh no but like in all seriousness right like the ability to clearly articulate exactly what you guys are doing here i think is very powerful so um i'm obviously a big fan i love what uh what you guys are doing uh congratulations on the new fundraise and uh now you got six million dollars to go figure out how to uh drive you know only

250 million dollars in revenue or so yeah yep yep exactly all right man listen thank you so much for coming on. Anyone who's interested in Bitcoin infrastructure in general, Lightning Nodes, if you're building applications, if you're a developer, highly suggest going to check out Voltage. As you heard, there's lots of advantages, not only from

a user experience standpoint, a cost standpoint, but also these guys just know what they're doing, right? In terms of they've been doing it for a while now that they're experts, if you will, in the infrastructure side. So they can be very helpful also in terms of some of the technical complexities that that people face. So, uh, if, uh,

that fits into something you're looking for, go, uh, go check them out. Voltage.cloud. Graham, I appreciate you coming on and we'll have to do this again as you guys continue to grow. Yep. Sounds great, man. Thanks for having me on guys. All right. See you later, buddy. See ya.