We Study Billionaires - The Investor’s Podcast Network - BTC153: Bitcoin's Taproot Asset Protocol w/ Ryan Gentry (Bitcoin Podcast)

Episode Date: October 25, 2023

Preston Pysh is joined by Lightning Lab’s very own Ryan Gentry to talk about some of the new and exciting software technology that’s going to change the way people interact with the Bitcoin Lightning Network. IN THIS EPISODE, YOU’LL LEARN: 00:00 - Intro 05:54 - What is the Taproot Asset Protocol (TAP)? 12:05 - How can the TAP be used with Bitcoin? 15:41 - What impact will sending Dollars over the Bitcoin Network have for people needing fiat stable coins? 15:41 - What does the competition look like for fees and settlement speeds on this network relative to other protocols? 25:06 - What does it take to run this software on a Bitcoin full node? 30:20 - What are Ryan's thoughts about altcoins potentially being used on Bitcoin? 35:42 - What are Ryan's thoughts on securities being tokenized on the TAP? 52:56 - How could stock certificates be managed on TAP? 52:56 - What are some of his concerns and highlights with the TAP use? BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. The Coinshares Article explain the Taproot Asset Protocol. The Congo Mining Article. The River Lighting Report. The River review of the Taproot Asset Protocol. Ryan Gentry's Twitter. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: River Toyota CI Financial Sun Life AFR The Bitcoin Way Industrious Briggs & Riley Range Rover Meyka iFlex Stretch Studios Vacasa Public Simon & Schuster USPS American Express Shopify Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey everyone, welcome to this week's episode of the Bitcoin Fundamentals podcast. On today's show, I have back Lightning Lab's very own Ryan Gantry to talk to us about some of the new and exciting software technology that's going to change the way people interact with the Bitcoin Lightning Network. With the Taproot Asset Protocol that interacts with Lightning, outside entities can now tokenize dollars or any other stable coin and send them over the Lightning Network via the channels that connect all the nodes. During this discussion, Ryan does an exemplary job,

making this highly technical achievement accessible to the listener, along with the risks and opportunities that it affords. There's a lot happening, and this conversation is one you definitely will not want to miss. So here's my chat with the thoughtful Ryan Gensry. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. I'm here with Ryan. Ryan, it's been too long.

It's been a bear market. You've been building. And welcome back to the show. Super excited to be here. Really, thanks for having me on. Yes. You know, well, I would caveat and say, you know, the very smart engineers on my team that's been building.

I help, but, you know, they've been building. And, yeah, we're really excited to chat about the new developments, you know, tappered assets, our big mainnet lawn. and in general, just an update on Lightning and Bitcoin. We're talking about the Taproot Asset Protocol. You guys have been working on this for how long? Because it's been a few years that I initially heard about the launch, but now it's official, it's out.

How long have you guys been working on this? Yeah, so the first public announcement where we dropped the specification, the Bitcoin approval proposals that describe, you know, again, this is really important to know this is an open source protocol. That was at Bitcoin 2022. So sometime late April or early May of last year. We did our first kind of alpha drop of the code, which was very much pre-product, I believe, in September of last year. And so that was kind of version 0.1.

We had version 0.2 sometime in between, you know, maybe six months or so ago. And then this past Wednesday is when we did the version 0.3 launch, which is the first one that is, you know, main net ready. So this is gives developers the tools to issue, send, receive, and explore assets on the Bitcoin blockchain. Super excited to have it out. Super excited to get the developer hands. Like I can just tell you internal metrics already of what we've seen, the update we've seen over the last 24 hours, have been like really impressive traction on social media. People are really excited about this.

So, you know, the team has been hard at work. We're getting to see, you know, a little bit of early payoff, which is awesome and super validating. but the ultimate goal of lightning integration of, you know, stable coins and financial assets that are integrated with the Lightning Network, you know, that's still yet to come. So this is like a really important milestone. We got the on-chain portion, shift ready, ready for Mainnet. And now we're, you know, back to heads down, getting the Lightning integration built out. Help people understand where this is at in Bitcoin.

So is this layer one, layer two on Lightning? Where is the code kind of manifesting itself? Yeah, it's interesting because it doesn't really fit into the usual, you know, layered paradigm. What I will say is that from a high-level perspective, what we're doing here is, you know, Bitcoin, individual, the smallest unit of a Bitcoin in the database is UTXO, right, an unspent transaction output. So I like to think of these as like the equivalent of a gold bar. You know, UTXOs can be of different sizes, different denominations. You can have UTXO that's 100 Bitcoin, 1,000 Bitcoin.

you can have one that's as small as, you know, a couple hundred is atosys. But they are all objects as these UTXOs, which I can think of as a gold bar. So what we do with Tappered assets is when you mint some new assets on the Bitcoin blockchain, what you do is you take one of those UTXOs and you fill it up with a bunch of new assets. So you have a Bitcoin, a UTXO that was, say, worth one Bitcoin. You make a transaction and all of a sudden you have a UTXO that's one Bitcoin and also has $100 of a stable coin in it. So, like, from a code perspective, what we're doing is we are committing to a bunch of

off-chain metadata that says, you know, this is issued by Preston. It is, there are 100 units and it has, you know, this ticker, et cetera, right? And we are committing that information to UTXO. So on-chain, this is as scalable as a protocol as you can possibly get, right? It's very much like lightning. where all the actual activity happens off-chain, and there's just a really, really small footprint of data on-chain. So, you know, effectively what this could do is, you know, you could mint a million units

of a stable coin and pay a couple cents. You could transact millions of units at a time and only pay, you know, a single on-chain fee. So it's an off-chain protocol that, you know, we think is as incentive-compatible with Bitcoin is you can get very similar to lightning, but it is not. I wouldn't say a layer two because we are actually transacting assets that aren't Bitcoin, right? They are net new assets that are, you know, predominantly in the early days we expect tied to off-chain assets like, you know, how stable coins are referencing, you know, reserves held by some urban entity.

These are similar in that they're off-chain assets that have been realized on chain for the global liquidity and some settlement of lightning, et cetera. So let's just take the example of a dollar stable coin. So you're coming up with this taproot asset protocol. You're saying that there's a hundred tokens of U.S. dollars. And they are not on Bitcoin, but what you do is you inscribe, almost like you're throwing an anchor into layer one Bitcoin. And you're inscribing that this ledger of these hundred U.S. dollar tokens exist in this new taproot asset protocol. And you're throwing that anchor into layer one Bitcoin to say that this is the proof.

this is the inscription proof that this was created at this date and time or in this block. I would say that like the word inscribe now because of the ordinal stuff, like that has a little bit of different connotation. With inscriptions, they're actually writing into the block space itself. Yeah. We are doing something much lighter weight. It's basically just a timestamp, right? It's a, you know, timestamp that's verifiable and provable that says these were issued at this time

by this key and with this information. And everybody who follows the protocol who's running the software can notice that, recognize it, and agree upon it. Got it. So it's a lightweight anchor that through encryption, that's what makes it lightweight. Because when we talk about inscriptions, I think it's important that, like, you could take all the data from a JPEG and inscribe that into layer one, Bitcoin through inscriptions, and point some type of reader or browser to that data.

on the blockchain and you can repopulate that image with a web browser by looking at this is more of, we would take that JPEG, we would compress it through encryption down to just a hash effectively. And then we're populating that hash. And if you have the key to know what that, what compressed it, then you can open up the file and know what it says inside. Am I describing that correctly, Ryan? Yeah, I'm trying to understand. Yeah, no, I know.

It's a lot to wrap your mind around, but effectively, like, and it's important to note for the audience that all of this is going to be abstracted away from users, right? What you're going to see is you're going to have a wallet that says, oh, do you want to generate an address to receive some USD whatever on Bitcoin? And you'll generate an address. It'll look a little bit different from a lightning address and a little bit different from a lightning invoice if you're receiving on chain. But then the person who's sending to you will get the address. They'll press send just like a normal. Bitcoin transaction and it'll just work. And it'll behave kind of exactly the same. But your wallet, what it's doing is a bunch of this complicated cryptography in the background to verify like,

okay, this asset that's being sent to me is one issued by the issuer that I'm expecting, right, is not a counterfeit. I can prove cryptographically that is issued by the person I'm expecting. Two, I can prove that I'm only receiving, you know, the amount of units that I want. Or I can verify that I'm only receiving the amount of units that I want. And, you know, three, I'm verifying. each step in this asset's history back to the actual issuance, right? Making sure that every step along the way it was not double spent, just like we do with Bitcoin. But it's, that's one of the really cool things about the protocol is we inherit, although a lot of this nature of the assets themselves are off-chain for scalability reasons, we inherit

all the same double-spending protection of Bitcoin. We inherit a lot of the integrity and the security of the protocol by, you know, like you're saying, anchoring into the Bitcoin chain and then committing this data. into the chain itself. So for years, having been in this space, and for years I've heard from Ethereum folks, Tron, the people at stacks, every one of them are saying, or at least they have, to date, said that something like this is impossible to do on Bitcoin and you have to have a proof of stake system and not a proof of work system to do this. And it appears that, like, that is not true

and that you guys have kind of cracked the software to enable this. Is that a fair statement, or do you think that there's still some nuance to what I just said? I would actually say that the nuance is not necessarily that we cracks anything because this is, you know, there's a long lineage of people trying to build these protocols on the Bitcoin network. You know, and we reference and credit a lot of prior art in the Bitcoin improvements proposals, right? I know, Peter Todd has done a bunch of work here in particular. There's a lot of old ideas of trying to build asset layers on top of the Bitcoin blockchain.

I think Taproot in particular and then just the timing of the demand of stable coins made it to where we could build a really nice, slim, scalable protocol that natively integrated with the Lightning network to serve a use case that we just know that there's tons of demand for. So on the kind of other chains perspective, you know, that's a little bit of their talking in their own book, which is fine. That's part of the game. But, you know, stable coins started on Bitcoin. They began on the Omn protocol, you know, years ago, a decade ago.

And it was just that they weren't, the protocol was on chain only and didn't scale and, you know, wasn't able to leverage the Lightning Network at all. And then, you know, just general developer friendliness. was not really a huge priority in those super early days. So we've kind of, you know, more kind of taken a more updated view with updated technology of old ideas and made them new again. And so, you know, I think that's really excited having seen, I think the greatest hope for this protocol is that we've seen a lot of developers and a lot of users expand beyond

Bitcoin to other chains to try and, you know, experiment with these new use cases. And we're kind of bringing these use cases that we have admittedly seen succeed elsewhere back to Bitcoin, right, back to the mothership, back to the secure, decentralized infrastructure. And we hope that in this next full cycle, we will bring a lot of those users and developers back and will retain a lot of the new users that show up because we have kind of improved the value in prop, so to speak, of the Bitcoin ecosystem. You had mentioned haven't levered the Lightning Network. Is the Taproot Asset Protocol leveraging the Lightning Network as well as Layer 1?

So that is the ultimate goal. Like there was, there's like a lot of prerequisites that had to be built first before that. And so the two major ones are one, we needed to upgrade the lighting network generally to support TAPR channels. And so for context, for those that are familiar, you know, the TAPRut soft work, I believe, was activated in 2020, 2019 or 2020, one of those two, 2020, I think. And, you know, that gave us, no, sorry, 2020 or 20, 2021. And so that gives us a whole bunch of new capabilities for, you know, more private channels,

you know, more cost-effective channels, et cetera, on the Lightning Network. So we had to build all the tapro channels first. And then we also had to build all of the on-chain components of the TACRid assets protocol first so that you can mint send and receive on-chain. But now with these two prerequisites finished, live, Tapper channels are, you know, live in L&D, the Lightning You know, Damn Lighting Labs is open source software implementation of the Lightning Network as an L&D 17, which we shipped a month ago. And now we have the TapperD Asset Daman live on mainnet for on-chain usage. The next step is combining these two together so that you can transfer Tappered assets over the Lightning Network,

which is where we think, you know, particularly for stable coins, but, you know, for other uses, that's like the real value prop. That's the real killer use case that we're excited to enable. And it was important that, as you noted, none of the kind of previous asset issuance, asset management protocol attempts on Bitcoin were specifically designed to interoperate with the lighting note. Right. And so that's one of those things where, you know, again, the demand here was in 2021 after

the El Salvador Bitcoin legal tender announcement, the Lightning community saw just tons and tons of explosion of usage in emerging markets in particular. Right. I think there are a lot of the El Salvador use case and, you know, give credit to Jack Mahler's for kind spreading the word. really got the cross-border remittance use case of lighting. That was one that really clicked for people, right? And so we started seeing Ibex Mercado in Central America, the Bitcoin Beach wallet in Goloy in El Salvador, of course, you know, New Trump Pay in Southeast Asia, Bitnob in West Africa,

you know, BIPA down in Brazil. Like we have these lightning startups all over the world, but all of a sudden, so there's big surge of usage because people really got, oh, I can do this for instance. It's like sending a text message instead of going to stand in a kiosk for Western Union. People really got it. But then as the year progressed and as this kind of growth wave started to not really subside, but as it started the peak, we kept hearing from all of these emerging markets developers and lightning entrepreneurs like, okay, I've acquired all the Bitcoiners. Like I've gotten. They're using my app. This is great. The next tier of user, the next group that I'm going after to try and onboard onto my business, like they want the dollar.

They love the experience of lightning. They love the global reach. They love the instant settlement. They love the low fees for a variety of reasons. Bitcoin is just as an asset is just a bridge too far for them. And what they really want is the dollar. And so that kind of just a bunch of timing happened to line up there with the tech being ready, with the team being ready, with curing all of this kind of user and customer demand,

we're like, okay, we got to build a protocol to support that. And so that is the ultimate goal. And today, we don't have Tepperdus assets integrated with Lightning yet. But that is priority number one. And we expect to have that soon. So once that combines or basically that rolls out that you can then leverage Lightning for the settlement of these assets, I think you get into a really interesting scenario where Peter McCormick was down.

I think it was in Argentina. And he was trying to get dollar stable coins. and the conversation started off with, hey, do you want me to do this over Ethereum? And the guy laughed at him and says, no, that's like $5 just to conduct that transaction. We use Tron, which is $1 and for the transaction settlement. So on this, what would be the transaction settlement for a dollar? Would it be like what it is for Bitcoin, which is like a Satoshi or two to conduct that fee, basically the fee for the settlement once you guys roll that out?

Yeah, I mean, the really cool thing about the Lightning Network, I think the coolest thing about the Lightning Network actually is that because of the integrity of the market mechanics that surround the fee setting, the permissionless ability to open channels and add liquidity and undercut people whose rates are publicly advertised to route payments, there is constant downward pressure on fees in the network. Right. And we see this, you can, and again, this is a fun thing to watch if you're a Lightning Network nerd like myself, but you can watch kind of the games that routing nodes play where like, so let's see you wanted to receive to your specific node. And you have five channels, five entities who are providing liquidity to you, right? All of their fees to route that final hop to you are publicly gossiped, right? The public information. So if you watch, you can see people kind of play games and undercut each other, right? and make sure that if one entity all of a sudden raises their fees out of equilibrium,

guess what? They're just not going to route any payments. The network integrity is such that payments will go to the lowest fee route and make sure that there is that downward market pressure. So, you know, I can't give a specific number because it depends on where in the network you're sending to, but I can tell you that it's very rare to see total payment costs in double digit bits of the amount being sent. So, you know, for retail size payments, you know, anything under $1,000 or $100 or something like that, I mean, you're looking at a municipal payment, right? And especially if you're sending something like $5, right? I mean, think about 10 bits of that. You know, that's, that's, you know, subsent almost. It is subsent. And so that's kind of what we're looking at and what we're expecting. It depends on the amount. But the fact that there is downward market pressure. And, you know, Ethereum, you're competing with large D5 transactions.

four block space. I don't really know exactly how fees on Tron work, but I think it's just kind of up to Justin Sun to say whatever he wants, right? I think that's accurate. Yeah. And so there is not this free market of liquidity provisioning that keeps fees low. So I think over time, they will, other platforms will not be able to compete. I think just the economics of the Lightning Network will went out to where the cheapest, the lowest cost and fastest way to transfer stable coins will be on later. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every

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you can zap SATs through, a node to somebody else. I'm curious about the fungibility of these sats and how the data of these assets are somehow incorporated into these channels. Yeah. This is a really cool part of the protocol, I think, actually. It's pretty beautiful because in the initial stage, and this is more of just a kind of cork of the protocol, initially when we roll out tabored asset channels,

They will be private only, so you won't announce to the world, my channel exists, right? So that means you won't be able to actually route through Tapperad asset channels. Instead, they will only be the initial hop, so the sending channel and or the final hop, the receiving channel will be the stable coin liquidity. In between will be the existing Bitcoin in the network. So you will have, you know, the first hop node will affect you. be if you're making a US dollar to then route through Bitcoin to then US dollar payment, the initial node will be effectively receiving dollars and paying out Bitcoin.

And the way that they're doing that is using the existing hash time lock contract HTLC construction that all Lightning Network payments leverage. So you're doing a usual HTLC, that initial hop, you know, is receiving dollars, paying out Bitcoin. Bitcoin routes through the network. everybody gets paid in Satoshi's along the way, and then that final hop receives Bitcoin and pays out U.S. dollars. Right. So it is a atomic payment where people on either ends are negotiating rates. They are doing the swap, an FX swap, effectively, and the actual transaction in the middle,

the routing nodes in the core of the network don't even need upgrade. They just know that they're routing Bitcoin payments. They may not even know that it's a tappered asset payment at all. But at the edges, they may not know that they're using Bitcoin, right? They're just using dollars. Is this only available to people that are running the L&D implementation on their node? Or could this be any lightning? The goal, the reason why this is an open protocol, this is an open spec.

We did a lot of work actually in making sure that anybody can write their own implementation in Rust and C or whatever language would be best for their implementation. we want this to be for everybody. Now, we are only building the implementation that works with L&D, but it is an open source protocol and we fully expect as it gains popularity that we will see additional implementations that work for the other implementations. Got it. Because it's like this is not a Lightning Labs thing, right?

This is a Bitcoin thing. This is for everybody because we want. We think this is really good for the network, for both networks, both of Bitcoin and for Lightning. Let's say that you guys finalized this coordination over lightning and you roll out the next update for a person running a node. For all these channels that I already have opened with other nodes, is this something that I'm going to have to toggle to enable or is it just ready to go?

Do I have to update my node with the new L&D software? Walk us through what that's like from the perspective of the node operator that is not technically dialed into everything that's taking place here. We are going to endeavor to make this as easy as possible. And not just us, but if you're running on Umbrol or Start 9, or you have a voltage node, or any one of the distributors that make it easy to run a node, a lot of them actually, with this next software update, you'll be able to access the TapperD assets, Damon, like, out of the box, right?

So that's our bundle of tools that we call LIDD to LIDD. version 0.12 has L&D, it also has TAPD, and then it has our liquidity management tools, loop and pool, and then also has a couple other things. So we have this one nice bundle that a lot of the, again, umbrale, start 9 voltage, BTC pay server, a lot of the like node in a box type operations provide that, use that bundle instead of just pure L&D. So you'll be able to update, you won't have to do anything, and all of a sudden you'll have these new APIs to let you send and receive assets. Now, in order to then open an actual channel with tappard assets with stable coins in it,

you would need to either acquire the stable coins yourself first, just like how you have to acquire Bitcoin first and then open a channel with that Bitcoin in order to use it. Or you would have to get somebody who has the tappered asset in question to open a new channel to you. Right. So it's not like you can necessarily update existing channels that you have to all of a and also have tabred acids in them. It would have to be a new channel, but that's just how about for,

how about if I wasn't really even wanting the stable coin, but I wanted to enable the routing through my note. Great question. So that, very importantly, you don't have to do a thing, right? You just have to keep running. You don't have to ever touch tabred assets if you don't want to, right? All you know, all you know, like I said previously, is that your volume has increased because people are sending a routing more Bitcoin

around it. So this is why in the blog post, and we've been working on kind of the framing of this, we're talking about how enabling this tappered assets, these new stable coins at the edges of the network, and keeping the Bitcoin core, Bitcoin only, that really turns Bitcoin into like a global routing currency, right? It's where we're literally for these FX transactions, people going from, you know, you could go dollars to yen or Euro to GPB if you wanted to. Bitcoin is the other side of all of those trades, which I think is really, really important.

And like that's a, it's a little bit of a different frame on making Bitcoin a medium of exchange than what people think, right? It's not necessarily medium of exchange in terms of using Bitcoin to buy coffee. It's no, you are exchanging currency to currency and the medium through which that exchange happens is Bitcoin in the Lightning Network, right? you are physically routing dollars through Satoshi's, through Bitcoin, and those node operators in the core, to your point, don't have to have any idea that they're routing a tempered assets payment, right? To them, they're just doing their normal job of forwarding Bitcoin around,

and you are actually using Bitcoin as like a medium, like in the traditional sense, like air or water or something, to route value. And we think that's like really, really important in terms of realizing the internet of value where, you know, the internet, what that means is it's a network of networks. It's a way to connect a bunch of disparate networks. And we see lightning similarly, you know, evolving into something that is a payment network of networks, where it is connecting, you know, a bunch of these other existing payment networks, existing fintech operations, you know, sovereign users, et cetera. But it is Bitcoin at the core, just like how at the core of the internet, it's just TCP over IP.

In preparation for this discussion, Ryan was kind enough to send me a couple articles that really kind of did an incredible job, kind of walking a person through the technology and just some of the more interesting points about this. And one of the things that I really, really found a lot of value. And there's a person that the website is called coinshares.com. We're going to have a link to this particular article. It's very in depth. We're going to have a link to this in the show notes.

But about halfway down through the article, there's this figure 11, and it says the evolution of tether transfers on crypto platforms. And what it does is it shows the percentage of tether and it's like what it's been minted on, which protocols it's been minted on. And it shows how as Ethereum came online, how it took away from this Bitcoin USDT, use. And then as Tron came on, how it took all of the, basically the dollar stable coins away from Ethereum. Because we're talking about the fee incentive. It's the incentive of not having to pay a lot to transact. And when I'm looking at what you're describing. It's also, just to be quick,

a quick interjection, it's also the speed of settlement. Right. That's a very, very important aspect, right? Bitcoin block times are 10 minutes. I forget the exact number for Ethereum block times. It's like two minutes. Yeah. It was. Yeah, right. Who knows what it is now. It's much faster. And then, you know, Tron is down the order of like, you know, five or six seconds. So speed of settlement and low fees, that's what people want. Yes. Okay. So when we think about that and we think about what you just described with this now taking place over lightning, which is less than five seconds. It's a median practically milliseconds. Millic seconds. And the fee is so small that you don't. don't even think there's a fee. I'm looking at the incentive of people continuing to use

the Tron network, which by the way, back to your comment, I don't know if people are intimately familiar with Tron, probably not if they're listening to this show, but your comment about Justin Sun basically being able to determine what the fee is because it's a very centralized protocol, like all the others and why we continue to talk about Bitcoin is because it's actually decentralized. I don't know. I would like to think that a lot of this is going to come to this protocol because of those two key characteristics and incentives, which is basically no fees and immediate settlement. What am I missing? Prior to this year, I would have said that the thing that you're missing is that maybe lightning isn't integrated all the places where the users

already are. But this year, we got finance, we got Coinbase coming soon, like all the places that the users are where they're sending UST over Tron, they now have Lightning too. Yeah. And, you know, the people who are using cryptocurrencies for like the utility of it, I guess even, even the people are using it for the speculative value, but, you know, the people who are using it as a tool, they're very smart and they're very pragmatic and they're very capable of figuring out how do I get the best deal and how do I use this new technology most efficiently? And I think that now that we have Lightning distributed in all the places and connected in all the places where these users are, I think it's just a matter of time.

It's just a matter of getting the assets issued. And it's a matter of people realizing and spreading through word of mouth like, oh, man, like you're still paying a dollar for transaction on Tron? Like, I'm only paying five cents on Lightning. You're missing out, man. You're on the old tech. I'm on the new stuff. Because I think you're right. It's purely just the incentives are better.

platform is better. And I think also another thing that you'll, you know, that is underappreciated is Bitcoin infrastructure, Bitcoin software, and I'm not, I'm absolutely talking about Lightning Labs and software, but not just specifically Lightning Labs of software. Bitcoin software is just at such a level above the rest of the industry in terms of security, in terms of integrity, in terms of how battle tested it is. Also in terms of just how much attention is paid to developer friendliness generally. We hear from entrepreneurs all over the world all the time who are Bitcoiners, Bitcoin operating Bitcoin companies, but have had to support tether on these other platforms because it's just, you know, there's user demand for it. And they just continually

notice like, please, please let me spin down my various crypto nodes. Please let me just run Bitcoin infrastructure because I trust this stuff. I know how this stuff works. This isn't going to, you know, screw up my business or screw me over. But I got to have the stable points. Right. So I think there will also be a push from companies who are saying, oh, please use the stable coins over on this platform, on this network, instead of these others, because these ones give us tons of problems. And by the way, if you're paying five cents on the network, at least today, like, you probably overpaid on the fee by like 100x of what it actually costs. Just to kind of get people one idea of like how small. Like we're talking like five SATs, which, you know, I mean, you're talking tenths of of pennies. with the routing fees today. Yeah, I mean, it's not fair.

It's not a fair comparison. No, it's... We are definitely 10x better. Yeah. Yeah, if not more. Okay, I think there's this stigmatism inside of the Bitcoin space for good reason that anything that is tokenized other than Bitcoin is just looked at as a scam or a fraud. And I think that if I was going to quantify why, it's just being.

because when we look at anything beyond stable coin dollars or stable euros, like it's just been a total rug pool. NFTs, all of it, right? So I think for a lot of people in the Bitcoin community, they would see the announcement and they're just saying, oh, boy, now we're going to get rug pulled here. And then because of the scar tissue that so many people have with everything that's happen in this space, in particularly the last cycle, they're just, they just want to shoot

everything that's not Bitcoin. I get it. Yeah. Yeah. What are, what are some of your comments for that person as they're hearing us have this conversation? What would you say to them? Yeah. I mean, I think I would say by no means do you have to use these assets, right? This is all purely opt in. Bitcoin remains the only trustless asset. It remains the most secure, the most So centralized, obviously the most supply capped. It's the only one that you can 100% verify your ownership of yourself. This is by no means a substitute for Bitcoin. And we have taken great pains in our communication and in the design of the protocol to make sure that these assets only augment Bitcoin's existing capabilities. We took great pains to make sure that, you know,

the way to transact on the Lightning Network is actually routing through the existing Bitcoin liquidity, right? I think that's really important to note that these are applications, these channels will plug in at the edges of the network and serve to like, you know, the image that I have in my head of this is if you have like, you know, this spider web network of channels, right? All of a sudden you start pumping in, you know, additional energy, additional juice at the edge and you just kind of see this spider web like, you know, start vibrating and flexing and getting bigger and bigger and bigger, like something from a, you know, horror movie or something like that. I don't know if people follow me with that, but it's really clear in my head.

I'll do some, you know, mid-journey or chat GPT image generation to try and get, you know, get it out there. But this should only be something that exists to augment the existing network to augment the, you know, node operators who just want to earn more Bitcoin by routing these payments without having to upgrade. And I think also we've taken great pains in communicating that, you know, these, with, these assets, you are trusting the issuer, right? You are trusting explicitly the issuer. This is not a trustless protocol. The routing and using H-TLCs and using the same contracts the Lightning Network uses, that is trustless. That still uses, you know, the same cryptography as Bitcoin payments. But if you're using a U.S. dollar-tappered asset, you know, you are trusting the issuer. And so for people who don't want to make those trust assumptions, then you don't have to use it. What we have

scene on the counter, and I think this is important, is Bitcoin Twitter is very loud, but is not necessarily representative of all Bitcoin users. There's $120 billion of stablecoins issued out there. I think the chart has been going around and we had this in the blog post. Stablecoin issuers own more U.S. treasuries than the country of Germany, right, than the country of South Korea. These are geopolitically and globally relevant on a scale that, you know, this is not just your little NFT pump-and-dump. There is real persistent, actual demand for these assets. And I think when we think about, you know, the ultimate goal of the Lightning Network,

what we're shooting for is we're shooting to disrupt all of the analog payment networks, right? All of the payment networks that were set up constructed before the Internet. And this is, you know, Swift facilitates $150 trillion of transactions a year. Lisa and MasterCard, all the payment networks combined, you know, facilitate $40 trillion of transactions in a year, right? Mobile money networks, which are all Walg Gardens, that's another, you know, one and a half trillion dollars per year.

One thing that all of those networks have in common is that they support many currencies and not just Bitcoin. One thing that the Lightning Network does not have yet, but we'll have soon, is support for many currencies, right? And so I think when we think about, you know, making the Lightning Network feature complete and at Future parity as a system. with these analog systems we're looking to disrupt. One of the most glaring, missing things is support for, you know, primarily the dollar, right? With Swift, 46% of with Swift transactions

for the dollar, 23 is the euro, and then it's like, you know, EUR, JPI, R&B downstream of that, right? So I think it's just one of those things where when we look at, when we look forwards, what do the next, again, like just like we've heard from these lightning entrepreneurs, what does the next tier of user want? How do we keep growing this network? how do we get it to the point where it reaches its destiny of disrupting all these legacy infrastructure? We need stable ones. This is kind of the next thing to add to it. And I think, again, like, I just want to underscore this.

When I think about the Lightning Network from an infrastructure perspective, I think about it in the same breath as electrical power grids, as oil pipelines, right, as fiber networks. This is mission critical infrastructure or will be mission critical infrastructure, right, for the world. This is not just for, although the micropamate use case is fantastic, this is not just for tipping your friends and stuff like that. This is for global commerce. And, you know, those numbers that I threw out earlier, right, you know, in the hundreds and tens of trillions of dollars a year, like, that's, that's big boy stuff. And that's where we're headed. Let's take a quick break and hear from today's sponsors.

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that was directed towards all these other science experiments happening on all the other quote unquote blockchains. And I say that because they're not actually decentralized. And it almost seems like a lot of that on this next cycle is going to be pointed directly at Bitcoin for innovations like the one that we're talking about right now. Yeah. I think that's really important. It's super important. And I think that's, I mean, like for the folks that don't know my history, you know, I started my career in crypto. I was a lead analyst at a crypto hedge fund, right? I started, I cut my teeth in the industry reading white papers about ICOs and stuff like that.

And the whole two years, the longer I read these white papers, the more I talk to these founders, and the more I educated myself about first Bitcoin and then second about Lightning, the more mad I got that like, why aren't these people building this stuff on Bitcoin? Like none of this is going to matter. All of this is misdirected energy that's just, you know, going into some black hole that's going to, you know, bump these tokens briefly and then send them down to zero. Like, none of this stuff is going to matter if it's not anchored to the most secure blockchain, which is Bitcoin, right? If it's not taking advantage and leveraging the network effects

of the 21 million cap, right? So this is like kind of personal for me in a way with when I got to Lightning Labs, you know, a big, big priority of mine was how do we get some of this capital from the, you know, crypto VC industry and just all of the capital that's flooding into these crypto projects, how do we redirect that to Bitcoin? How do we get the energy and the attention back where it matters, where it should be, which is, you know, contributing to Bitcoin's network effects, contributing to Bitcoin's destiny as a global reserve currency, right? How do we, how do we get that back? And we've made amazing strides in that direction over the last four years, you know, and that's collectively as a community, you know, not taking any credit for that.

And we've made amazing strides in the right direction. And I think you're exactly right. You know, there's never been a better time to build on Bitcoin. There's never been a better opportunity set for building on Bitcoin, right? There's never been more stuff to do. The tooling has never been better for developers. You know, not only are we talking about just Bitcoin or lightning or tapered assets, talking about Nostr, right? We're talking about, you know, lightning in the AI industry, you know, micro payments there. We're talking about there's just a host of new protocols and new opportunities. And, you know, one of my favorite startups in the Tappert Asset space already is combining the two interesting areas of Nostr and

tempered assets, right, and trying to kind of make something that's greater, the whole is greater than some of the parts, right, which I think is really cool. So I think there's tons of tons and tons of space to experiment. And then, yes, our greatest hope is that in this next bull market, we won't lose so many people to the black hole of, you know, shit coins and all the associated nonsense. One of the things that I think is going to be important for the success of this is just on the wallet side. So when we look at a lot of Bitcoin wallets, they, and a lot of their branding, it's that we don't do anything other than Bitcoin for our wallet. What are they going to have to do in order to enable this so that if I want to receive a dollar, a stable coin dollar onto,

onto my wallet, is it a heavy lift for them to enable a lot of this, the timeline for their ability to implement something like that? What does that look like? Yes, we have It's never going to be, I mean, we've made it about as easy, I think, as we can. If you're already leveraging our existing, again, that LIDD bundle and you're running either a mobile wallet or, you know, a custodial wallet or something like that, all you'll have to do is just upgrade to the latest version of the software and you'll at least have on-chain support for these tappered assets. And, you know, that I think is going to be really important and really big to your point

about wallet support because, you know, users aren't going to be touching the protocol directly. They're going to need some interface in between them and their protocol to make it easy. On the timing front, like I said, there is a very clear light at the end of the tunnel now. predicting dates for software is something that now I've been doing this for long enough, I know, to avoid that trap. It'll get done when it gets done, but it is like absolutely our top priority. And we've gotten a pretty good track record of shipping code on time. And so I think that'll be something that happens sooner rather than later. And what you'll need to do as a walled developers, basically you'll just all of a sudden inherit a bunch of new APIs that allows you to

say, oh, I would like to open a channel, but not just the Bitcoin channel. I would like to open a channel that has, you know, some Bitcoin and also some Tabard Asset USD, right? Oh, I'm going to generate an invoice. But when I receive this payment, I don't just want to receive it in Bitcoin. I actually want to receive it in this other currency. Like, oh, I'm going to go send a payment. And when I send it, I don't want to spend any of my Bitcoin. I want to spend. my Tapper Dess at USD, right? So there's going to be, you know, of course, a little bit of, there's an opportunity here, frankly, for the wallet who was the best, who abstracts it the best for the users. And I think, you know, it's going to be really interesting to see, but we have made

it as easy as possible in our minds. And now that we're ready for main net, like, it's time to start getting feedback from the developer community and hearing, you know, what we did wrong and what we can improve. So, you know, if folks are listening and interested in doing that, like the big ask here is run the software. Let us know. Is it as easy as we think it is? Because that's just, you know, a classic thing with software engineering is you build according to what you think

works and then you go and toss things over to the users. And they say, oh, this doesn't make any sense. That doesn't make any sense. You know, you mess this up, et cetera, et cetera. And so we've done a really good job with engaging with the developer community building up to this point. But, you know, always welcome more feedback. One of the things that has been frustrated.

So, you know, I came out of traditional finance, looking at stocks and equity and all this, right, is being the main thing that I would study and try to value and own. When I look at all the crypto tokens and things that have happened in this space over the last, call it four to five years, my, the reason I was always just so disgusted by it all is because I would always say, so like, what equity or what is this token like actually representing? other than just marketing, really. I mean, it's just like buy this. But like, what if you could own a share of TCPIP? Yeah, that was the narrative, right? That was the narrative. And it got to the point where a lot of the tokens

weren't even trying to convince people of a story of technology that was over, you know, 99% of people's heads. They weren't even trying to do that anymore. It was just buy this picture of this monkey that has, 20 different types of sunglasses on that I used AI to enhance. And there's literally no value or no equity behind any of this digital vaporware. Right. Now, just in July 15th, J.P. Morgan comes out and they are marketing this, the launch of the

tokenized collateral network, the TCN is what they're calling it. And they're saying, blockchain brings collateral mobility to traditional assets. They're going to tokenize equity. When I look at this, what they're effectively doing is they're making stock certificates immediately settling, and they already have the capacity to do this with the ledgers, their centralized ledgers that they already have. There's nothing new other than them basically using blockchain as a marketing scheme to do what they've already done. When I look at what you guys are doing with the Taproot Asset Protocol, you can't get around the SEC and every one of these developed nation states that are working with these banks that handle these equities that actually have things behind them because of KYC requirements. Like if I have, if I own a certificate of Apple stock and I want to send it to you, that certificate has to be KYCed into your name.

And so I see a major disconnect with anything that gets tokenized beyond currencies, like the dollar, like what we've talked about, which I see as the primary use case for this, is the tokenization of currency, right? The tokenizing equities, I think, is going to be a whole lot more difficult. But I say all that in that in this conversation, I came to the realization that, because JP Morgan's running this server, right? They're running this blockchain server. There's an expense to this that, I mean, it's not like you can go out and run this TCN node, right?

Like, people aren't going to go out there and run these nodes. It's completely centralized by JP Morgan. They have an incentive to leverage these rails because the cost to basically run the quote-unquote server or the settlement is nothing. it's completely been diminished down to like tenths of a penny to settle these certificates as opposed to using their centralized network. I'm just, where do you, and a lot of this, I'm sorry, there's, I guess, a question in here. It's me trying to kind of wrap my head around. I mean, a lot of this stuff, when I try and think about how things are going to play out in the future,

Although the analogy is never perfect, truly I think you can look back at the lessons of the internet and how the internet spread. And I think you can learn a lot about how the internet is going to grow. And I would say what JP Morgan is doing is they have built a corporate intranet of money. Right. And that's fine.

Right. It may be good. There's some VP there that got a promotion because they're doing innovative things. Right. But what happened to all the intranets? all of them just got decimated because it was way, way more effective to leverage the network effects of the internet itself, right? All the open source software being able to connect out to all of, you know, you get by connecting

to the broader internet, you get the benefit of everybody else who's contributing to the internet, right? And I think that's the same thing with Bitcoin, with lightning, with chapered assets. You know, another thing that I think in looking back at the internet, one more point before I move on to like specifically how would J.B. Morgan do this is like, like, we're What the internet did more than anything else, like the trade of the 2000s was long, Google, short print media. If you did that, you were, ran out with a bandit, right?

Because what it did was it was just more efficient to initially distribute, instead of taking analog writing and publishing it as in a digital format, it was much, much more efficient to take natively published, natively published, digitally published content and distribute that over the internet to everybody, right? That was just way better. And so you said, you know, sadly saw all of these local newspapers and, you know, all of these different premedia companies just get decimated by the internet, right? I think we'll see the same thing with Lightning where, you know, the trade of the 2020s

is long Bitcoin, long Lightning, short analog payment networks in the same way, because if you have physically analog issued currency and you're trying to, you're trying to move it or other assets, like you mentioned, and you're trying to then move it over digital rails, that's just so much less efficient than natively digitally issued currency that is distributed over these digital rails. Right. So I think the key here is that with currency, like what these, what Tether and these other companies are doing is they have physical reserves, right?

Or, you know, they're probably digital reserves, but off-chain analog reserves that they have been issued as these digital units and they're just people love them, right? Because everybody around the world wants dollars and they just, they can't get enough of it. And there are structural physical impediments to them getting dollars outside of, you know, Bitcoin and lightning soon or at the moment. I think, although I'm not a lawyer, what I would say with, you know, these other assets is I could see a similar model taking place where maybe there is some initial kind of private world garden, one might say like a custodial side chain type thing, that the issuer is running. And for whatever reason, they allow, you know, their holders to take ownership

of these instruments, which then they can transact over, you know, the internet of money, the lighting network frictionlessly and, you know, with the great speed benefits of lightning. And so I think, you know, ownership of this stuff is always really tricky. That's the devil is in that details. The transaction of it, I think we have. that solved. And I think like the gravity of the improved transaction experience, the lower fees, the instant settlement, the global reach, I think that will just continue to pull more and more assets into the digitally native world. To your point, like currencies are very straightforward. That makes perfect sense. I think equities, debt, et cetera, a little bit fuzzier for sure.

But I think what we hope to do is to make, let it be known to smart people who see a better way of doing this, that we have a playground for you to come experiment, right? We have the tools. We may not have it all figured out yet, but we would love to support what you're looking to build and help you build it out, you know, on a foundation and on a platform that's going to last

and that is going to scale. It seems to me, like if I had to guess how I see this kind of evolving, is they're going to continue to come up with these TCN networks between JPM Morgan and BlackRock and whatever, and then what's going to eventually, where I think the equity eventually, gets tokenized is they will use these rails, but they're going to use them for transactions

between themselves, between Black Rock, J.P. Morgan, and anybody who's basically custodying equity on behalf of their K-Y-C customers, they're going to use these types of rails like this Taproot network asset protocol because the cost for them to run it is nothing. It's literally nothing, but then they can immediately settle with each other on these certificates. Because one of issues that I've had is like the business model is the re-hypothecation of these dang certificates, these equity certificates. And as long as they have a stranglehold on that, because the SEC is always going to be behind their back, and the equity has physical property in these, in the United States or Europe or whatever. And that's kind of the vulnerability of like why I think it's so hard to

tokenize equity is because you have that physical contact point, right? But I think that these, these entities call it J.P. Morgan or BlackRock, because they re-hypothicate the stock certificates so that they can collect a yield on lending them out, I just don't see them with regulators giving up that stranglehold, but I think that they would potentially lever this network because it reduces their cost to clear with each other as their. Well, so what I would, I don't disagree with any of that. The one kind of thing I would want to shift your perspective on a little bit is, you know, Like one thing we talk a lot about with lightning is like the U.S. and Europe to a lesser extent is probably like the last place that lightning payments are going to take off on like a daily basis. Right.

Because we have pretty good payments networks. Yeah. They generally work. I mean, I think they generally work pretty well. There's not like a lot of pain that's forcing users to seek alternatives. Right. We have seen great uptake of lightning in emerging markets where they don't necessarily have good payments experience where maybe they. They are predominantly cash only or they can't, you know, really, they can't trust the banks,

not because, you know, they may be underwater on their bond portfolios, but like, because the banks, like, fuel money from their accounts and stuff like that or censor arbitrarily, right? So it's more like, who has the pain point that is willing to take a risk on an early technology to build out first. And so one thing that I think would be really interesting is, like, well, what if you look at places that don't have functioning securities markets? Yeah. What if you look at places like Latin America generally where there isn't, you don't have the same ability to, you don't have the same capital markets as the U.S. And maybe you have net new incumbents or net new capitalists who want to create those markets. Right.

If you're going to create a brand new capital market from scratch today, right? Are you going to go and talk to the New York Stock Exchange and like ask for their software and like a license? probably not. I think it would be a lot easier to get started in your basement, you know, building with tabored assets. And, you know, that's, again, not a lawyer, not a regulator. I know it's a lot more complicated than that. But I do think that that might be an area where we see a lot more early development. And as it gets proven out in kind of these more nascent markets, you know, when the technology advances, that's when we start seeing some of the bigger, you know, Western incumbents who they don't have a problem with capital markets are looking to solve. It works great for them. And I think, and the reason why I'm speaking confidently about this is this is exactly what we've seen with Lightning. This year, we got Binance and Coinbase. Last year, you know, we got, I forget exactly who, but like Hashap and, you know, a few others. Right. Cracken was another big one we got last year. Right. The year before that, we got Paxful and like, you know, big, important institutions that joined, but they were of the smaller variety. Right. The way that these protocols grow is, you know, start from, you know, start from. And like, you know, big, important institutions that joined, but they were of the smaller variety. Right. The way that these protocols grow is, you know, you know, you know, start from the rag tag crazy people who believe, which is tempered assets today, and we love them. And we are similarly crazy and believe. And then you get like a little bit bigger. You get, you know, people who are willing to take not as much risk as the early people.

They want to see the protocol mature a little bit, but they still want to be early, you know, the early adopters from the innovators, early adopters. And then you get kind of your early majority who just want a thing that works, but they are willing to take a risk. And then you try and cross the chasm. And so I think with Lightning, like this year, I think we have definitely successfully crossed the chasm. I've been writing a bunch about it in our newsletter and like a bunch last year about, is this the tipping point? Have we crossed the chasm?

Is it really working? Like I think we definitely have and we're like well into expanding beyond into the early majority and beyond. And with Chappard Assets, I think we'll follow the same pathway. Right. We're like right now, it's the crazies. But, you know, who knows who will be the first person to figure out in their jurisdiction like, oh man, like actually we can raise. capital for this business, we can tokenize the equity on chain. And I can have a meat space legal contract with my local government that says these are valid securities. And if you lose

your private key, tough. Your shares are gone or something like that. Or they're burned from the supply. Right. I think it's tough in the Western world and from a U.S. perspective to, especially if you have a knowledge about how the current system works to think about how it can be disrupted because you're like, well, all they haven't, the regulators are all captured or whatever. There are no avenues for disruption. They have all their bases covered. And I think that that's probably true. But there's a big wide world out there that may want problems, may have problems they want

to solve for themselves. I love that point. And I think you're exactly right. And I think what I was describing was a very Western, U.S.-centric mindset as I was looking at But I think as you look at, I mean, this is a massive opportunity for capital formation in areas that just haven't had the means to organize equity and build that that investor base out because of all the infrastructure, the technology infrastructure that's required to do such a thing. And the way, this really offers a unique change to that. You mentioned one thing that I would love to see. My favorite stories about net new Bitcoin adoption are always about miners going out to rural areas and figuring out stranded energy sources.

I don't know if you saw this. I'm sure you did. But the story of the guy who is running the National Park in the Congo, I think, it came out. It was like a year or so ago. I'll try and find it and send it to you to keep in the show notes to keep me honest. But basically there's this guy who runs this national park, I think, in the Congo, and they have all of these rivers and all this hydro power. And they were like really struggling in COVID because nobody was coming to visit the park. And so he was like, you know what?

Like we can monetize this energy. We can make some money. We just need some Bitcoin miners. So he did the work and figured out how to get some Bitcoin miners. And they all of a sudden started mining in 2020 when Bitcoin was, you know, five or six K or something. And, you know, made enough money to keep the park open. keep the employees and blah, blah, blah, all that sort of stuff, right? Like, how cool would it be, although that's an amazing story and great, and I hope people

replicate it all around the world? How cool would it be if there was a mechanism where instead of him having to front all the capital himself, right, he could, in his jurisdiction, say, look, I'm going to create some stock certificates on the blockchain, on tappered assets. I'm going to sell them to the folks who want to, you know, front the capital and down the road, taking earnings, take a cut of the earnings of the miners once they're live and, you know, maybe even provide some shares to the local populace who is, you know, maintaining the mines or something like that. So he doesn't have to do it and directly. And, you know, I don't know if

there's legal restraints or anything around that that would make that difficult. But how cool would it be if you could get capital formation out there to like actually solve a real problem of, you know, helping monetize some of this energy and hoping to build out, most importantly, helping to build out real energy infrastructure in places that need it. Right. I just think that would be awesome. I love that. I love that.

If you're listening to this and you're, you know, you could make something like that happen. Boy, wouldn't that be awesome. Wouldn't that be just cool, right? I would just love to see that happen. Yeah. You had mentioned real briefly, and I just want to highlight another source for people about lightning kind of passing over its event horizon. you will. River just recently published this incredible report that laid out in tons of detail

why that that might be the case. We'll also have that in the show notes for people to look at. It's a awesome report. Brian, this has been a blast. I learned a ton. This is really exciting stuff that this is all happening on top of Bitcoin. No hard fork required for this to roll out. Yeah. I mean, it really is just. Beyond taproot, I got to say, taproot was required for this to curb it. Yeah, just really exciting time. We'll have links in the show notes for a lot of these sources. Is there any other, anything else you want to highlight or bring to the audience's attention?

One thing that, you know, it's a bummer to end on this, but maybe for the folks they're still listening, I think you'll get a little glimpse into something special, which is we really strongly believe, and I think the River Report highlights this really well. the lightning as a network has a really natural flywheel effect, right? When I say flywheel effect, I mean like growth compounds into growth and compounds into growth and compounds into growth. And like, again, I think I don't want to get overconfident or cocky and say like it's now self-sustaining and it's just going to keep growing to those growing. But like the flywheel is starting to spin pretty fast. And when I say flywheel, what I mean is, you know, we start with developers.

Developers come to this protocol. They build applications that, I'm sure. the details of the protocol for end users. Developers go and acquire users. Users transact on the network and create volume. Volume creates routing fees for node operators. When node operators start making money, that induces them to add more capital, right, to allocate more capital as the network, which improves the capacity for everybody. It also induces no node operators to join the network and start competing in the marketplace. The more node operators that there are joining the network, the more developers there are, tinkering with the software, and then the flywheel starts to spin,

and those developers build new application, right? There's new applications bring new users. Those new users create new volume. That new volume creates more fees. That fees creates more liquidity and more nodes, and then we get more developers and we get more users. And so I think, if you think about it in that framework, and we've been seeing this really start to spin over the last couple years. And, like, Again, when finance joined the network this year, they probably, if finance has 120, 150 million monthly active users or something like that, that's probably more than every application on the Lightning Network prior to them joining combined, right? I mean, Cashout was definitely the biggest previously with like 60 million.

Finance and Coinbase joining, think about the energy that that gives to this flywheel as it spends, right? If collectively we got another 200 million potential users, think about, how much more volume that's going to create, how much more transaction fees that's going to earn for these node operators, how many more businesses are going to join. Think about the network effects that are growing here. And then think about, okay, now what happens when we add dollars into the mix?

And it's not just Bitcoin. Think about how many more users that's going to bring, how much more volume that's going to bring like. This flywheel that's spinning, I think, is really, really important for business people, for investors, for founders, for developers to understand because, you know, if you had a chance to be early to the internet and start building an application and take advantage of just this massive exponential curve of growth that happened over the last 20 years, you would want to take advantage of it. And I think we have a second chance here, right? I think we have the internet

of money, you know, in our grasp. And I think the fundamentals are so strong and the ecosystem is so good and there's just never been a better time to get building on this network that like if you're sitting on the sidelines and you're looking for something to do and you've been interested in crypto generally like I'm telling you this is the opportunity. Like it's happening. It's growing and we're about to really hit an inflection point where we start to grow. I mean, it's been growing fast so far. I think we're about to start growing at a crazy speed. Especially with the macro backdrop. I mean, it literally could not be more perfect. Right? Just like a cron. the board, the timing could not be better for building on Bitcoin right now. It really is just,

I think, a special time and a special period. And so I encourage people to get involved because there's always work to be done. And there's, you know, always new opportunities to be seized. I love it. What a pleasure. I learned a ton. And we'll have some of these articles and the show notes for people to pick through and really kind of dive into. So we'll have links to your Twitter as well in Lightning Labs and if people want to read whatever, we'll have it there for them. So, Ryan, thanks for making time and coming on the show today. Have a blast. Thanks for having me. This is great. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application

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