Michael Saylor & David Marcus: The Future of The Lightning Network | Bitcoin for Corporations

please welcome back your host Natalie [Music] Brunell all right this is the fireside chat

we've all been waiting for how are we going to connect hundreds and thousands of companies on

the lightning Network well we're going to hear all about that so I'd like to welcome back Michael

sailor executive chairman and founder of micro strategy and one of the leading advocates for

Bitcoin in the world and David Marcus who is the CEO and co-founder founder of Light spark

light spark is building core infrastructure on the lightning Network most recently David

LED all payments and crypto efforts at meta in 2018 David started DM which was formerly known

as Libra you might know it he joined meta then called Facebook in 2014 to lead messenger which

he took from under 200 million monthly users to over 1.5 billion users he was also previously

PayPal's president lifelong entrepreneur David Marcus launched two companies in Europe then

founded mobile payments company zong in Silicon Valley which was acquired by PayPal his story is

fascinating I've had the chance to interview him but this is probably going to be a better

interview so welcome to the [Applause] stage so uh I've been excited about this interview

all week um for those of you who are uh are not in the Bitcoin Community uh David is legendary

in the community and he's one of the most inspirational Bitcoin maximalists in the world

and uh he's leading the charge with uh regard to scaling the Bitcoin Network and connecting

corporations everywhere and uh this is my chance to ask you all these questions I've been wanting

to ask and uh never had an opportunity so I guess David I'd like to start with I mean you've had

an amazing career you know across all aspects of ftech money payments you know how has your career

experience shaped your view of of Bitcoin today and and what have you learned in the course of

your career of course and thank you for having me here it's uh such a a great event with uh

with so many so many amazing participants um so look I I started my career trying to remove fre

from payments uh and you know one of the first companies that I started uh was zong uh I mean

the company that led to zong which was a mobile payments company uh and what we tried to do is

remove a lot of friction uh that company was acquired by PayPal we did a bunch of different

things at PayPal to remove reduce friction acquired venmo Incorporated all these things

uh and in 2011 uh 2012 uh really got deep into Bitcoin and uh it was a fascinating moment like

the this idea that I could send and receive money and at the time it was the blockchain.info wallet

with uh you know noncustodial everything uh it was really magical this idea that you can send

and receive money without any intermediary without any centralized party uh and then really things

um got clear to me when I was leading PayPal and in Argentina they asked us to remove the ability

for people to move money out of the country and suddenly the price of bit coin shut up the day

we did that and it was really clear that people uh went to local markets bought Bitcoin so they could

actually uh get their hard-earned wages out of the country or where they wanted it to be uh which

should be a basic human right and so that really uh really inspired me um and uh and then I went

on to Facebook to do some non-payment related things for a while in messenger uh and uh and

realized in late 2017 that basically the networks the underlying payment networks where the majority

of transactions were still happening uh hadn't uh evolved in any shape or form uh since basically

1974 when Swift was invented and that all of fintech was basically a little bit of lipstick

on a pig like it's better user experience on the front end but still dependent on very archaic old

rails that don't allow you to move money cross border Friday after 5:00 p.m. uh and is still

very costly uh and so that's when we started a Libra Journey uh and at the time we looked at

Bitcoin and lightening because that would have been my preferred way but the technology wasn't

mature enough and so we did something that was more centralized a stable coin and a proprietary

Network that we tried to decentralize as much as possible but we quickly realized that it was

too centralized and probably had the wrong sponsor at the time so it was shut down by

the US government and other governments that for once agreed on everything uh and uh and

it made us realize that actually the only asset that's neutral enough and decentralized enough to

truly be the neutral settlement layer between all of the domestic real-time payment systems

that have since then proliferated everywhere is Bitcoin and nothing else and so that's what

we've been doing at light spark since almost two years now so so you started focusing on bitcoin

and the humanitarian aspect in Argentina what was the year when that when that Argentinian event

took place I think it was 2013 so that so probably like the peso was like 10 pesos to the dollar mhm

or 20 yeah no 10 probably 10 to the dollar is a thousand to the dollar now right correct yeah

so I I don't know the lesson for everybody is just as the peso was crashing it's still had 99% of its

value to lose in the next few years but getting off of uh currency debasement uh I get the I get

Bitcoin is the neutral settlement layer so where does lightning come into all of this what what's

your view of of lightning what's the role of layer twos how do you define a layer two and help the

audience because you know more than anybody about that well so once you build the conviction that

Bitcoin is the neutral settlement Network for all payments in the world uh you know that it's secure

you know that it's decentralized IED you know that its value can't be messed with uh you have to make

it fast and cheap and so Bitcoin is very secure on layer one but it's slow it takes 10 minutes

for a new block to be added about 10 minutes um and the fees especially now that there are more

things that are being published on the Bitcoin blockchain the fees are quite high and so here

comes the lightning Network which is basically a payment Layer Two on top of Bitcoin uh that

enables really fast like near real time and really cheap movement of Bitcoin uh and when we started

that Journey almost two years ago we realized that lightning was actually great at a theoretical

level but really hard to operate for mainstream companies and so what we did at lightspark is we

built an Enterprise grade platform that enables companies to connect to the lightning Network

without any of the complexities of running a node uh deploying liquidity opening channels finding

routes splitting payments into smaller payments and reassembling them on the other side to make

sure that they arrive at the right destination all Concepts that are quite foreign for companies that

are just looking to connect to an endpoint and send and receive transactions reliably uh and so

that's what we've been doing and we're very happy that uh actually this week coinbase started uh

launching uh support for lightning on our stack so that's a major milestone for the network and

also for our company uh bringing uh uh one of the largest exchanges in the world with a 100

countries and hundreds about 100 million customers onto the network which is a big milestone for us

thanks so so how long do you think lightning has been mature enough that you could start to uh to

do the things that you're doing at scale when did we cross that that Chasm or cross that that

barrier when lightning was kind of ready for so I think that you know for exchanges or Neo Banks or

institutions that touch both Fiat and Bitcoin uh the time is now the time is now to connect them

to the network to enable fast cheap realtime movement of Bitcoin and other assets uh the

next slew of companies are actually companies that uh you know don't want to touch Bitcoin directly

but they still want Global 24/7 settlement of payments and money uh and uh and so we announced

this Uma standard that stands for Universal money address last November uh that enables consumers

or companies to have things that look exactly like an email address but for money and uses

lightning and Bitcoin but you can let's say send US dollars to someone in Mexico receiving Mexican

pesos uh it settles in real time into end but the consumers don't even know that you're using

Bitcoin and lightning or businesses don't even know that either uh and we think it's a little

bit like email where most people if you're not a geek you don't care about SMTP uh and tcpip when

you send an email and you know in this case the same is true for Bitcoin and lightning when you

send a payment we're trying to abstract it all to uh give people what they want but leverage

the neutrality and the global liquidity depth of Bitcoin against all the Fiat currencies to make it

really efficient and real time for people to move money around the world yeah so I mean this was

people weren't even talking about it in 2017 or 2018 so so tell us about tell me a little bit more

about light spark um you're uh you're primarily offering uh services to corporations tell me

about your customers what kind of customers do you have and what kind of challenges are they trying

to overcome so um we have customers that are large exchanges like coinbase in the us uh or coins.ph

in the Philippines uh or you know wallets and exchanges like ripio that are you know very large

in in Latin America uh uh or you know uh banks in Europe like zapo uh and others uh and you know

we're adding uh a tremendous amount of exchanges wallets and Neo banks that can move Bitcoin that's

kind of the first category of of Partners uh and what we do for them is actually give them a

easy reliable Enterprise grade non-custodial access to lightning so they run their own

node on our stack uh and they're able to send and receive transactions and they Outsource everything

but the security so in the case of the coinbase implementation they have their keys on their side

they sign everything so you know from a security standpoint uh they don't Outsource that part uh

they still have this uh inhouse uh and then we manage all the complexity of lightning so you can

send and receive transactions to an endpoint to another endpoint on the network reliably knowing

it's going to happen even for larger transactions you don't have to worry about liquidity we provide

all of the the liquidity uh on the inbound side um so it's basically like you know it's maybe the

the the wrong analogy but it's like you know you want payments traditional payments you connect an

API to stripe in this case you want to move uh Bitcoin fast in real time we provide that same

level of API and SDK uh that you would expect from a traditional PSP and payments basically

um are there different classes of customers with different opportunities or challenges yeah so you

know the F the first set of customers are really the exchanges you're buying or selling Bitcoin in

an exchange you want to move Bitcoin or bring Bitcoin to an exchange to sell it for another

asset uh and making all of these exchanges more fluid more real time uh that's a a really key

component of moving Bitcoin liquidity exchanges and wallets uh so that's kind of at at the

basement layer or foundational layer of what we do um and then Uma is more retail facing despite

the fact that we never touch consumers but we Empower Banks and wallets and fintech companies

to actually really build experiences that enable 24/7 money movement in any currency on top of

Bitcoin and lightning and so that's kind of the combination of Uma uh and our stack that you know

it's called lightspark connect that connects uh on top of on top of lightning so it's addressing it's

compliance uh it's a messaging protocol that enables uh sending and receiving institutions

to quote exchange rates between Bitcoin and fiat currency so you can only display the fiat currency

um and uh and the entire underlying stack on lightning is it different for companies in

Europe or South America than companies in the US the are the requirements the same or are they they

vary regionally no it's actually it's a really good question because um uh when you look at the

average Bitcoin purchase on a lot of the exchanges or wallets in the US or in Western Europe those

are fairly large purchases and then if you want to move that balance uh onto a wallet on layer one uh

the fee is still high but like may be acceptable uh in a lot of cases when you know we work with

bnob in Africa and ripio and Latin America and and many others um or in the Philippines the

average purchase of Bitcoin is maybe $330 $25 and people are just stacking SATs you know and

buying with whatever they can and if you want to move $20 of Bitcoin right now out of a wallet or

an exchange to another wallet on layer one the transaction will cost you more than your Bitcoin

purchase and so there lightning is indispensable basically uh whereas here it's just a matter of

you know more convenience faster movement of money over there it's kind of a must have okay

so um tell tell me about uh some of the other challenges U they're facing your customers

have compliance issues and you talked about Fiat conversion issues as well you solve those does

lightning support those things natively have you built software on top and how

important is it so it's really important because uh our clients for the most part

uh are regulated institutions and so if you don't make things compliant for regulated institutions

uh you know um in most cases you can't sell it to them and if you do uh then they get in trouble and

so you can't really build a business so we had to do a lot of things to make lightning compliance

a thing which uh it you know really lacked a lot of capabilities there um and so we enable

a fully compliant solution for lightning that enable them to abide by travel rule that enables

them to uh check the you know the the other endpoint or the institution that are sending

to or receiving from uh and that's all embedded in the Uma protocol as well and so we really enable

regulated institutions uh to be fully compliant in sending and receiving transactions on top

of the lightning if you didn't do it they'd have to do it and if they have to do it they probably

you'd have a thousand companies all trying to do the same thing over and over again right yeah

and and we provide a package to solution that enables people using our stack to actually meet

their compliance requirements and what about the currency conversions so that's actually a really

cool experience right because like you know you can be um let's say in the Philippines and you

can claim a newad address in the Philippines and you can be you know dollar sign Michaels

Michael coins.ph uh and I can be in say Europe uh and I have a a a bank account with uh with ex

I have dollar sign David xapo.com you want to receive filipin peso I'm using Euros uh

so I can use my balance in Euros send you uh money the value that I want to send that can

be denominated in the user experience in philipin peso or Euro you choose and then you hit the send

button and 1 second later 247 at a very low cost you get filipin peso on the other side which is

currently almost a magical experience if you're trying to move money cross border across like an

open network that developers can build on uh and we're we're very bullish about this it's going to

take a long time for us to actually get a maximal reach of the network uh but we're already starting

uh early signs of uh of you know huge promise for us and that that also is really interesting like

you know I know there are many different types of companies in the audience right now needing

to move money in all kinds of different shapes or form um and I think it's really important to

pay attention to this because I think it can be a massive competitive Advantage if you can actually

either receive or disburse money globally faster and better than your competitors you can actually

build a pretty significant competitive advantage and you know one one use case that we've been

thinking about um is like let's say that you're you're a platform that has a lot of creators

and creators if they're not in the US and most of those platforms are in the US the long tail gets

paid every 6 months and so that holds GDP back like the global GDP of like you know the world and

and and people in in different countries buy a lot and what if you could stream money in real time as

people are actually getting views uh or our gig economy workers Uber drivers or whatever they

they would just get the money at the time they performed a task or they get views uh and that

would unlock a lot of value for the world so are we are we moving toward an era where I could send

$20 to anybody's email address or U Uma address in 1 second yeah for Penny or something that's

the goal you think more money will be you think more money will be sent in fiat currency over

these lightning rails than Satoshi are sent or like what what do you think will happen how will

people actually use this capability in reality so the way the way that I think about this is that in

this case uh Bitcoins are like packets like if I make an internet analogy Bitcoin are like packets

on top of lightning which is kind of tcpip and so uh you convert currency into a of the most neutral

form of Digital internet money that has ever been created for the time of 1 second so that that

value can actually be transported natively on the internet to where it needs to go so it's it's cash

final realtime settlement which is magical because right now if you think about the correspondent

Banking and Swift and all these things the money doesn't actually move at the time the

transaction happens uh it's just database changes at the edges but then you know people have to net

settle later and it's all kinds of complications that are unneeded in this case money moves on the

internet natively which is our goal is you know to try to make money move natively on the internet

like every other piece of data uh and then it gets converted at the edges to whatever you want and

I think that's the way that you know most people are going to use it for a while except if you're

in a country where you know of course people mismanage their currency and in which case you

might want to receive those payments in Bitcoin which is of course natively supported by the

protocol so is lightning the internet of money I certainly hope so if if we're moving down

the internet of money time line uh I'm I'm thinking back to the be like 1994 and some

random entrepreneurs and in uh Arlington Virginia came to my office and they were pitching me on

the internet thing and they told us we need our company needed a website and uh I don't know some

sometime sometime thereafter the big idea was I thought maybe I should buy up uh strategy.com or

michael.com or mike.com or hope.com because it'd be really cool to have an email address

like me at Michael and then I thought about the I thought about these other addressing implications

and now 30 years has gone by so the question now is if the internet money is just breaking is it

where are we and maybe more importantly how many companies are going to start working with this

technology over the next four years and then the four years thereafter and if you had to look out

over the next 10 to 12 years or something how do you think this uh this is going to develop so my

bet is Let's Take 10 years my bet is in 10 years every company in the world that needs to send uh

payments cross border will use lightning to do that either knowingly or not knowingly but the

underlying technology that will transport value cross border for the world will be lightning for

any consumer and any company uh and when you think about the opportunity the opportunity is

enormous like right now Swift SLC correspondent banking processes still about $5 trillion a day

um and that's with all of the constraints right you can't do it after 5:00 p.m. you can't do it

Friday uh night or on over the weekends uh it's costly to send an international wire so maybe

it's not five it's maybe it's $50 trillion a day of value that really wants to travel but

is constrained by the current limitations of the system and so all of that will actually Transit

onto lightning and use Bitcoin as a neutral almost tcpip packet or neutral value digital

form of value on the internet uh and that's an enormous opportunity for all of us uh and and

certainly for us if you know we succeed in helping making that happen on on an open network like

lightning um you know so people talk about one month settlement or one day or two day settlement

and you're describing a possible world where it's like 1 second yes settlement right so we're going

from a day to a second or yes I don't I don't know what the order of magnitude difference is how many

seconds in the day or in the month but and then I guess we're going yeah in theory we're going from

a $10 fee or a 2% fee to what are the fees going to be what do you what do you think is the what's

the cost difference in the conventional credit networks like visa and MasterCard versus the

systems you're rolling out like how do the how do the cost and the friction well I think compare you

know if we compare apples to apples which is like not in in in time to settle uh but cost-wise like

if you look at wires International wires or Swift or um you know average cost between $40 and $50

for consumers or even businesses to initiate and complete wire um uh and so you know right right

now that also prevents you from sending small amounts uh on Lightning you could send 10 cents

and make it very cost effective and you know pay very small fee uh and so payments could actually

really stream and flow on the internet natively 247 where value will acre to uh where it needs to

go uh we're also moving to a world where AI agents are going to become more prevent transactional

agents on our behalves and on behalfs of our company where we're going to give the authority

uh through AI agents to accomplish a task and net settle with one another so what currency are they

going to use to net settle value natively in real time at a low cost on the internet I can't think

of any other than Bitcoin that's neutral enough for everyone to accept it as a standard that's

also a big opportunity on top of lightning as we change our modalities of moving Val

around the world yeah I always thought of it as like achieving superc conductance or you

know low impedance friction free high or high frequency you can't I mean there are certain

applications you can't even think about in the old world like how how would you swap money back and

forth a 100 times an hour or 100 times a minute you wouldn't yeah which sounds too fast but if

you're a musician uhhuh it you know that vibration doesn't seem that that bad at all but it takes me

to the next question which is so um what kind of companies do you think would benefit from this

and what are the killer what kind of killer apps or what kind of applications are going to drive

corporate adoption so what we're doing right now is really getting all of the end points that are

compatible with the existing payment rails and that have the ability to onboard the liquidity

from existing endpoints that contain regular money onto this digital transactional network uh and so

those are the exchanges those are the banks that you know can touch Bitcoin those are you

know different institutions that do that um but in a world where you'll have hundreds of millions

if not billions of people that have an address for money that can be settled in real time and

the currency of they're choosing you can imagine all kinds of new applications streaming money to

endpoints is one of them uh new forms of payments for merchants that would reach new audiences or

new clients bases that they can't reach uh the ability to create brand new business models to

enable people to actually contribute to anything that you're building from anywhere around the

world uh it will do to the world I believe it will do to the world and have an impact to the

world that you know is going to be as important as the internet itself was in its own time uh for

communication and for how much faster we're moving now for better or worse but like we're you know we

went from the fact era uh to the internet era of email and instant messaging uh but many people

when they were faxing back and forth um you know and you told them like there's an internet now

that's coming and you'll be able to do email and all kinds of things it's like I don't need this

I'm it's fine right and now like who's sending a fact right uh so uh you know I think that that's

going to happen to payments and the way money moves around the world and it's going to happen

in this coming decade and so I think that for for everyone here it's important to pay attention to

this to stay close to this to get ahead of your competition to especially if you know parts of

what you do depend on moving money faster around the world uh and and building a better experience

for your your stakeholders when do you think the big Tech plan ERS like Apple or Google or your

former employer Microsoft start to take notice and and integrate or or play in this kind of ecosystem

I think we're not far um I think you know we we we're just getting to the stage where we've made

lightning really usable by people who are in the business of moving Bitcoin uh around the world uh

if you were to do that like two years ago that's why many even large exchanges weren't on Lightning

until recently it's just like the the amount of complexity that comes with lightning if you're

trying to do it yourself with no software or help is just you know very high uh especially if you

want compliance and and and high reliability and uh and and the ability to have like very

high performance um and so that's just now that's the now uh and so now that all of these companies

that are are actually bringing the the bridges to the traditional Financial system onto the network

are connecting to the network at a higher clip uh now we can build applications so Uma is one

of such applications like and it's an open source standard everyone can build on it they don't need

to become a client of lightspark to do that some people are actually doing it like some companies

are implementing Uma without like us being part of it um but that is kind of the the the moment

where this network becomes usable by consumers in a way that's like understandable without any

of the complexity of Bitcoin or crypto or payments that are you know that needing a new modality and

I think that once you have enough consumers that are using that which is happening right now uh

then um other larger Tech platforms will pay more attention because then they can actually you know

take huge advant like they they can benefit from that and uh and offer better Services uh in in

in businesses that are are very Global by Nature so could anybody spin up a company in Africa or

South America or Asia and start to work with these protocols yeah absolutely 100% just it how do you

balance in your R&D effort how do you balance the um the work that you do that you make proprietary

with intent to sell to your Enterprise customers versus the work that you put into the layer two

open protocol yeah that's something we give a lot of thought to uh when we build something and

to the extent possible we try to make things more open source and you know give it to the community

so they can build their own Solutions uh and I think that's really important uh for instance

like you know having very very high quality uh self- custody lightning wallets I think is very

important for the network and something that we want to contribute to and help companies building

uh because the openness of the network over the long run is what's going to make this payment

Network different than closed uh networks that are the ones dominating right now um and so having

open networks having many participants building having the entire Bitcoin Community advancing uh

the the state of the art of the capabilities that we can build on top of lightning and

across Bitcoin is really vital and so we want to contribute to that as much as possible what do you

when you think about corporate adoption of digital payments and and lightning is do you do you see a

world where it's thousands of companies tens of thousands hundreds of thousands millions like

definitely Millions it's like everyone any company and companies uh you know I think you know during

the river presentation earlier uh Alex showed like you know how how how big the the global trade or

the global movement of money is for companies versus consumers uh and so companies in nature

are more multinational than consumers and they need to move money around for themselves for their

partners for their stakeholders and so having the ability to do that in a more efficient way in real

time not having to have a lot of liquidity sitting in foreign bank accounts exposed to FX risk uh you

know just being able to repatriate all of that money and and send payments to where they need

to be when they need to get there uh that's going to be transformational for many many companies

okay so now I'm going to ask you a hard question question you got what you've got dozens and dozens

of customers all around the world um we're talking about the digital transformation of payments and

digital transactions and pure digital you know money moving the speed of light do you think you

know and and that's against the backdrop of uh you know Elon says he wants to make X Twitter

a payments platform and then you've got Google and Apple pay and then you've got uh innovators

like cash app that are very aggressive and river and you got the Bitcoin players and then you've

got the US ecosystem the European ecosystem South America I was just in Brazil they seem to be very

enthus almost more enthusiastic than the US so if you had to handicap who's going to drive the

digital transformation or who gets it or who will be most aggressive will it be traditional banks in

the US or Europe or South America will it be the the megax will it be midsize fentex you know you

know PayPal thinks you know you see cash app will it be pure Bitcoin companies will it be

some crypto entrepreneurs or crypto exchanges you know at some point someone's going to push get a

massive success and Stampede everybody else here but if you had to guess who's going to

be the torch bear here H How would you handicap that or assess the situation I think it's going

to be companies that uh in the payment space build the best consumer experience tapping

into domestic payment rails and building the best possible experience domestically so think of like

in the US venmo Cash app Etc but that then do an a similar excellent job at connecting on top

of something like lightning with something like Uma or an addressing scheme that enables them to

have maximum Network reach of moving money in the currency that people want to the endp point they

want in a second at a very low cost and I think the combination by the way that combination and

the way that it comes across to Consumers needs to be completely transparent so you're using a

payment app and at some point you're going to use like if you're in Brazil you're going to

use P for a domestic payment in Brazil but now you're sending money to the us now I'm using you

know lightning but as a consumer I don't know I'm just sending Reis to someone who wants to

receive dollars in the US and I don't need to know it's lightning but the the companies that

are going to build the best hybrid experience of bringing the best of domestic fast real-time

payment systems and Global interoperability onto lightning in in a in a super consumer friendly way

are the ones that are going to break through I'm absolutely convinced of that okay so I guess uh

we're agreed uh we're agreed that this is coming and it's going to be a big deal um we've got a

lot of corporate Executives and it professionals and and other Business Leaders in the audience

what kind of advice would you give them as they proceed in their digital transformation Journey

if they want to put pure digital payments and and that your technology into their product

or services so I think you know first of all you know pay attention because like it it's it's

changing very slowly and then all suddenly and you want to be part of the the first batch when

it happens suddenly and not be left behind and I think that's really critical uh and so the way

to do that is really try to figure out like what are the use cases in your companies that need to

be revolutionized or that need to evolve when it's comes to moving money between uh end points where

you need money to move uh and ask yourself the question can I actually use these new technologies

to move money uh to where it needs to be faster than my competition cheaper than my competition

can I have a Competitive Edge by doing that and if so uh there are lots of solutions out there and

you know certainly we can help but uh but there are lots of solutions out there to actually plug

into it even if you don't touch Bitcoin you you can connect to the lightning Network and move

dollars to another endpoint that needs to receive another currency on Lightning so pay attention try

to figure out whether there are good use cases where you can start small experiment with it and

then you know use it uh full scale once you're uh confident that it's built the the right way but

it's coming and it's coming sooner than you think how long would it take from the point that someone

picks up the phone and calls you to the point when they could deploy a solution like coinbase just

did so it depends on the the type of integration uh on the backhand side uh and you know without

getting in too much into the details but we have a simple version of uh the implementation in that

version um you know within a few days you can be up and running sending and receiving Bitcoin

to the other side of the world in real time at a very low cost um Uma if you have a consumer facing

implementation that you need to do takes a little bit more time because you need to integrate with

your front there's a bunch of front end work um and so I say if it's just backend it's probably

you know a couple of weeks of work with testing Etc that will enable you to do that and then we

have Partners like you know we have Partners like you know one of them is called zero has can enable

you to actually connect to our stack without touching Bitcoin and they will basically take care

of the conversion for you to have access to the lightning Network there's a number of different

ways that we can help you get onto the network without like getting deep into Bitcoin rails so

that that means that pretty much there's no reason why every crypto custodian or Bitcoin custodian

in the world shouldn't be integrating lightning into their into their service stack correct there

there were lots of good reasons for them not to do this or not to prioritize this work until recently

now there's absolutely no reason left yeah so everybody that's a customer of some Bitcoin

company that doesn't support lightning you might want to go Lobby because now now it could be done

quickly totally effectively and then like and then the cost of managing that Network to make it like

super high performance and reliable is completely gone it used to be you know quite intensive okay

so there are there are trolls and haters on on the internet that complain that lightning is is not as

reliable as they'd like it to be what do you have to say to them tell us about your experience with

with lightning reliability robustness and how would you how would you assess the fa tolerance

of the network I mean my best answer is just you know now if you have a coinbase account like you

know I don't think it's rolled out to 100% yet but it'll be soon uh many people around the world

have coin basic and just try it for yourself like put it to the test and see if it works or doesn't

work uh and you'll find out it works really really well and it's really magical when you can press a

send button and send money around the world and it arrives a second later uh with uh with huge

reliability uh I think you know it's a magical experience and so you can try it for yourself

so I I I don't like to talk about these things I like for people to actually do it and and try for

themselves and find out for themselves but I think you know the critics were critical of lightning

for a reason if you're spinning up your node and you're trying to find out who you're going to

connect and and open Channels with uh other nodes to move uh value around the lightning Network and

then you're trying to have the liquidity in the right place so that you can receive payments you

have to have enough inbound liquidity uh and then you know the minute you receive a payment your

channel is all inbalanced you need to rebalance that channel and then you have to figure out how

you spread split payments into multi-part payments Etc like all of these things are like the haters

are right that if if you have to go do all of these things you know it's just it doesn't compute

it's too complicated the same way that like no one is racking servers and configuring routers

like the physical router anymore because now you use AWS and all these things and it's easy and now

you know a lot of people can focus on what matters to their business rather than racking servers same

is true for lightning and that wasn't true before but now it's really as easy as as it can be so

you're providing an Enterprise grade uh lightning platform that allows corporations to plug in and a

high performance fall tolerant compliant fashion correct and that's been available for how long

well I mean I think you know the level at which we're now is just you know probably being you know

9 months I would say so it's still pretty recent so so you he here right this is year one of uh of

an explosive opportunity um is it reasonable to say at this point that you know given the

fact that uh that lightning on top of Bitcoin allows instant final settlement not just of

Bitcoin but of other Fiat currencies doesn't it mean that that we've now got a solution which is

faster cheaper more reliable than any other crypto rails for moving stuff around the world so I think

on the efficiency side it's it's at at par with other solutions that are out there but there's a

distinction and I'm glad you asked the question um other competitive Solutions or different

Alternatives uh could be you know you use you know stable coins on you know roll up or stable

coins on top of compare to stable tether on Tron yeah so that for instance um and and I think for

a bunch of different use cases this might be good uh but the problem is in this case when you think

about decentralization you're actually trusting one centralized company uh to not mess this up

uh and the one thing I learned through the Libra journey is that doesn't really work longterm right

it can work for specific use cases where it's just a an optimization uh but I think that the

the the centralization of trust uh is a problem if you want a truly neutral settlement Network

that enables people to really trust that no one's going to mess up with the network that moves money

for everyone around the world and certainly not like you know a centralized Corporation

managing the entire thing uh because then you're back to the point of um uh at the starting point

and it's not a truly open thing like the internet right and so that's that's that's the the thing I

learned the really hard way on the Libra journey is that if you build any point any single point

of failure uh then eventually you have a problem yeah and and and lightning is is the decentralized

Fault tolerant non-custodial solution to all those crypto token networks that are collapsing

um we've got a little bit of time left would you want to take some questions from the audience I'd

love that okay so hi David what is your feelings about tap assets uh so the question I don't know

whether people can hear so I'm going to you repeat the question uh so the question was

about tap rot assets uh so I actually think that you know bringing stable coin coins other assets

other tokens on top of Bitcoin and lightning is now an inevitable thing and uh so there's

tap rot assets there's a bunch of others that are also trying you know similar protocols to bring

assets on top of lightning um and and one part of me is super excited about that the this idea that

you can bring stable coins and optimize specific transactions that are in the same currency from

the center and receiver without having to do the conversion uh which I think is going to be net

positive and one side of me is terrified uh about this idea that something huge could be built upon

a centralized thing uh on top of Bitcoin which has the the beautiful nature of being like truly

decentralized and truly neutral so I'm equally excited and terrified about this thing okay

next hi so if we think about uh sending value internationally and uh say for example example

if I want to remit some money to India uh using lightning uh how does it work from

legal perspective and capital controls and how do you get around that from different jurisdictions

which have different controls so how how does it work um so we don't typically go around these

things we just abide by them uh but so the the way it works is that you know if you're using

the the Uma standard the universal money address standard uh the sender and receivers can like know

you know which institution is in which jurisdiction and it's a pre-transaction

messaging uh protocol and so you can exchange the information that is required by your domestic

regulatory regime uh so for instance now in Europe travel rule is becoming a big deal and

they need to validate that so you can do that natively within Uma and the same is true in

this case like you know if you're authorized as a regulated institution in India to receive

International payments or send International payments then you'll be able to do that uh

and you'll be able to uh have the the right data exchange with the other institution to

meet your compliance requirements and that's all built into the protocol and because it's a

pre-transaction messaging uh product or or rather standard um that actually enables you to not get

in trouble for accepting transactions that you shouldn't be accepting in the first place yes

I have a question about sending Bitcoin through coinbase uh internationally to

let's say employees in India or the Philippines if you buy it as property but then you send it

can you expense it but you're you're sending property so it's how is that handled IRS wise

okay so tax law question uh who wants to answer that I'm not the right guy for that uh yeah I

don't I I mean look if you're online so let me answer the question on the be handled by

the platform you would think yeah on on like if you're sending and receiving let's say you know

dollars to someone let's say in Brazil who's receiving Brazilian R right you're sending

dollars it gets transmitted with Bitcoin that gets repurposed right you know it's uh it's a

little bit like you know if you're like if you think think about the the the small Bitcoin that

is moving around like an Uber car on the Uber Network it's going to transport that

passenger to the endpoint and then it's going to make the trip back and so basically you're

you're settling from a tax perspective like an international effects transaction and not like

you're moving your own Bitcoin to another person and I would say if you're just moving your Bitcoin

one Bitcoin from one custodian to another it's it's a just a transfer of your own property from

yeah oh well if you're actually selling it in order to convert it

to a currency then there's going to be a taxable event one way the other but that

would be handled by the platform that sold it I you would handle it there

okay hey David quick question here so in 2019 you testified in front of Congress my finest

moment it was awesome so now 5 years later how would you view the Regulators or Congress do

they understand it or they don't what what's your sentiment of view of of how they look at it these

transactions um they they understand it better than when I testified uh I think uh

I think that the there's there are more and more people on the hill uh who really understand it

and especially Bitcoin I think you know Bitcoin has a very special status uh in the the land of

like you know if you think of crypto as a whole I think Bitcoin has a very special status in in

the sense that it's truly neutral and I think many many people on the hill really understand

that um and I think you know you're seeing now all of the you know very large Bitcoin

ETFs that have come to the market from Black Rock and Fidelity and others uh

and so I think that at this stage uh even if uh the the image of you know the the hill or

Regulators it can seem to be more hostile to the industry in general I think that when it

comes to bitcoin uh the the status of of play is is really clear uh and that's that's why very

large regulated institutions feel comfortable enough to actually move forward and issue brand

new products that have a lot of reach uh with the confidence that they there in in in within

the rails of the current regulation and laws so I think we're in a much better place I feel like

you know when when when we tried to do what we tried to do with Libra and DM it was a very novel

concept uh the the the sponsor of the project you know it was it was a terrible time at the

time for for the image of the company it's so much better now but it was it was a difficult

time where you know there was a trust issue there was a centralization issue because stable coin uh

stable coin was part of it uh there was a brand new blockchain that you have to explain and the

beauty with Bitcoin is that like you know it's not something that we've built it's not that

something controls it's something that's truly neutral it's like a protocol that's running in a

very decentralized way uh and I think that that's a lot clearer for for a lot of the regulators and

lawmakers I think someone has a question here that they've been wanting to ask for

a while as well we'll make it work thank you uh it seems like there's going to be a race to the

bottom what what is your Revenue model I think that I mean look it's it's kind of an interesting

question because I feel like the the competition when the competition is like a thousand times more

expensive because like it it relies on technology that's like really archaic um you don't spend a

lot of time thinking about that right because the improvements of a brand new set of uh rails

brand new network that is open that enables full interoperability that enables developers to build

on top of it and that enables anyone to build a competitive solution and and settle on it in real

time at a very low cost at the network level um is uh is just you know going to create so

much value uh that you know there there's just going to be way more than enough for people who

bring real value and solve real problems for real customers and real use cases to have a a

fair cut of the value that they generate for their clients I'm very very confident about

that hey David it's rayong with consolation research uh question for you is do you see

the payment gateways and the payment companies like a MasterCard Visa as your friend or as a

partner or do they see you as the enemy because you're basically coming in at less than a bip and

they're coming in at like 150 bips per transaction yeah so that's actually a really good question um

and I I'm not like you know Michael you called me a Bitcoin maximalist I'm certainly you know

a Bitcoin pragmatist as well uh and I think that the the reality is that the the payment networks

have a huge Mo with especially with in inore payments because they have terminals everywhere

they're proprietary closed uh and they provide a user experience which is amazing right it's like

you know no one actually complains that their payment experience like when they're buying a

coffee somewhere sucks um and I think that you know many people in our industry have always

fantasized and use this example of I'm going to go buy a cup of coffee with Bitcoin and then you have

all these videos on Twitter of people or an ex um you know scanning a QR code and it takes like

50 times more time to actually actually get the payment going um and so I think the reality and

the the Practical aspects of all of this is those networks will combine and uh they will be used

for the purpose where they're the best at uh and certainly there's just going to be price pressure

on a bunch of different things notably online payments and Merchant payments um that are digital

exclusively I think that's going to definitely bring a lot of price pressure and competition uh

I think the physical world is going to be hard for a while still uh and so I'm more of the mindset of

trying to make lightning compatible with all the payments Network out there to extend its utility

and reach uh and that's what we're doing right now the reason I brought that was because the

margin compression coming from India being able to deliver first world capabilities at third world is

happening especially when you think of UPI you're going to be the other piece that's going to float

the rest of the market at those transaction cost it's kind of like when we have a $100 drone going

after a million dollar missile right that's the level margin compression we're seeing in

that market yeah yeah thank you hey David uh we've been talking a lot about International

remittances uh about a month ago you tweeted ai's native currency will be Bitcoin can you elaborate

more on that are we going to see new use cases disruptive business models what do you see yeah I

mean look think about this this way like you know I don't know maybe Satoshi is an AI it's like you

know Bitcoin is so smart uh and clever that it's hard to imagine that only one person invented it

but um but think about it this way if you're trying to move and net settle an exchange of

value between a network of AI agents performing tasks uh for us humans what is the currency that

you're going to use it has to be digital native right it can't be something that requires the

friction of converting non-digital money into digital money so it has to be digitally native uh

and no one in the world will accept any uh form of native digital value that's not maximally neutral

right because it's like not like the Europeans are not going to accept an American version of

a digital asset uh or vice versa um and so like what is the most neutral form of digital native

internet money it's Bitcoin and so if you make it super efficient super fast real time at the speed

of AI transactions that's basically going to be the native currency of AI and and then you know

it's kind of this interesting thing where you know a few few years ago there was this article that

blew my mind that you know Google translate uh built AIS to uh do the translation service which

is like you know really a mind-boggling service when you think about it you know 20 years ago like

a thing that you can talk to and speaks another language it's pretty remarkable what they did with

it with this level of fidelity but they figured out that this a a uh that was actually uh using

uh uh unassisted learning uned learning uh came up with its own language uh and it was kind of

its own neutral language to basically translate one language to another using its own thing and

so what is it going to be for value between AI agents definitely Bitcoin because that's the

neutral language of value on the internet native and so I think it's like the the the most likely

candidate here here so uh what does the world look like when all nation states accept Bitcoin

as legal tender I don't know about that I think that's a that's a hard question I feel that you

know I mean you you certainly see what happened in El Salvador and in number of other countries

where they do um but I still think that for the vast majority of nation states uh that run uh a

home currency that's a decent home currency uh and I'm pretty sure that you know Michael will

have a point of view on on you know why uh it's not a good idea to save to keep a lot of your

savings in in you know in those currencies but I think for day-to-day payments those currencies

are good enough uh I think those governments will want their own currency to be that unit of

account for day-to-day transactions they'll want to be able to continue to manage their monetary

policy that's either terrible or bad or good uh but I think that's the reality of the world the

inescapable reality of the world um but I think some countries will want to do that some countries

that need to get out of Decades of mismanagement of currency controls and devaluations and massive

inflation might want to look into that and it might benefit them uh like it already did uh for

El Salvador and others like in terms of influx of foreign capital and all kinds of different

things but um but yeah I think you know for for the foreseeable future at least I think that you

know nation states will continue to have their own currencies as the main thing uh and uh and

take advantage of of lightning to net settle with other countries and enable their their

their economy to thrive by enabling more Capital Freedom uh for uh for their constituents I think

we have time for one one last question hi David Dax Hansen you talk about Native and also neutral

can you talk a little bit about um Uma and the uh end currency when you're when you're moving from

Bitcoin into the end currency pesos Euro dollars are those also going to be um Native tokenized

balances Commercial Bank balances stable coins what does that look like so today the way that

Uma works is you know you're you're sending let's say from an exchange or a neobank uh that can

handle both your home currency and Bitcoin so at the time of the transaction you're communicating

with the recipient uh institution that's on the network the recipient institution let's say you're

receiving filipin peso you know you're basically going to say okay my quote uh for every you know

Satoshi or for every amount to convert to philipin peso is that much the sending institution you know

will charge a spread if they want uh and then the transaction basically gets converted from

dollars to SATs pushed on the network converted to philipin peso at the end and so in this cases

the balances are real Fiat balances they're not like you know a digital representation of

the currency there's actual real balances sitting in your account the same way that

you would for a domestic uh payment on those app well thank you David thank much it's been

very enlightening thank you to the everybody in the audience they've been a great audience today