Paolo Ardoino and Mathias Buus are the co-founders of Holepunch, a fully encrypted platform for building peer-to-peer applications. Matthias is the CEO, who has been building P2P products for a decade, and Paolo is CSO, along with being the CTO at Tether.
In our talk, we spoke about what Holepunch is and how it works, how P2P apps can eliminate the costs and risks of relying on cloud data storage, we explored the apps developers could build on top of Holepunch, and the ways they could monetize their apps with Bitcoin or stablecoins on Lightning.
→ Holepunch: https://holepunch.to/
→ Keet: https://keet.io/
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00:00 - Intro
02:25 - Mathias Buus & Paolo Ardoino Intro
13:08 - How Do Holepunch & Keet Work?
21:23 - BitTorrent vs. Holepunch
25:41 - What Happens To Datacenters In A P2P World?
32:19 - Will Web 2 Companies Adapt To P2P Technology?
45:47 - Why Is Holepunch Being Built Today?
52:17 - Holepunch vs. Personal Servers
1:11:46 - What Can Developers Build on Holepunch?
1:18:07 - Will Holepunch and Keet Make Money?
1:25:29 - The Lightning Round
Paolo Ardoino - 00:00:00:
Why limit yourself to file sharing, right?
Mathias Buus - 00:00:04:
For us, as developers were like, what if you just did that everywhere? Like, took that idea and applied to everything. Databases, to communications, to everything. There's no reason why you limit yourself to files.
Paolo Ardoino - 00:00:14:
You're just like robots and IoT and artificial intelligence are growing really rapidly and we will have machine to machine payments, right? Robots will pay for stuff. Cars will pay that are becoming more and more. Robots will pay for stuff. Fridges are already paying for stuff. Light bulbs are buying their own electricity. It doesn't matter if an atomic bomb will wipe out your home. You have 24 words in your house in your mind, and you get all your personal life fully backed up everywhere from this network of peers.
Mathias Buus - 00:00:45:
Having worked in open source and making tons of admin software in the past, that's a huge missing step in software that's just like simple monetization.
Paolo Ardoino - 00:00:55:
We are seeing actually more and more users excited about the Lightning payments.
Kevin Rooke - 00:01:01:
Paolo Ardoino and Mathias Buus are the co-founders of Holepunch, a fully encrypted platform for building peer to peer applications. Mathias is the CEO who has been working on PeerToPeer apps for a decade, and Paolo is the CSO. He is also the CTO at Tether. In our discussion, Paolo, Mathias and I discussed exactly how Holepunch works, what it is built for. We discussed the benefits of using PeerToPeer apps and the costs and risks and tradeoffs of relying on cloud data storage. We also discussed some of the ideas that developers could build using Holepunch and how those developers could monetize their businesses using stablecoins or bitcoin on Lightning. Mathias and Paulo have both asked to have their share of today's show splits sent to the Human Rights Foundation. So if you enjoyed this episode and if you learned something new, the best way you can support this show is by sending in sats over the Lightning Network using your favorite Podcasting 2.0 app. Before we get into today's show, this episode is sponsored by Voltage. Voltage is the industry standard and next generation provider of Lightning Network infrastructure. Today's show is also sponsored by Zebedee. Zebedee is your portal into the world of bitcoin gaming. We'll have more for Voltage and Zebedee later in the show. Paolo and Mathias, welcome to the show. Thank you for joining me today. I'm really excited to discuss the latest project YouTube have been working on called Holepunch and the Heat built on top of Holepunch. But before we get into it, why don't we start with both your backgrounds? If you could introduce yourselves to listeners and tell listeners more about what you've been working on in the past few years and why you're deciding to build peer to peer apps on Lightning now.
Paolo Ardoino - 00:02:50:
Mathias you want to start?
Mathias Buus - 00:02:52:
Kevin Rooke - 00:03:40:
Awesome. Paolo, I know you've got a long history in Bitcoin and Lightning, and why don't you give listeners who aren't familiar with you just a background on your last few years?
Paolo Ardoino - 00:03:51:
Yeah, sure. I'm Paolo Ardoino. I'm CTO at Bitfinex. And CSO at Holepunch, actually. I'm a developer since very early age and I've been focusing my life on scalable applications. So I was involved really early on high performance computing and distributed applications and so on and so forth. And peer to peer is basically the natural progression when you think about these applications. Actually, peer to peer is the most pure natural progression that you can have. Right. So in a way feels like also from a pure ethos point of view, I like to consider myself a little bit an activist in that sense. I like to think that things components should be symmetric in both in life, in society, and in the computer ecosystem. Right. So the way is like symmetry is one of the most important things and usually the client server model is not really symmetric. Right. It's fully asymmetric. So I think that when it comes to Bitfinex and exemptions is completely right. We have been working together now since the last five, six years. I cannot even remember at this point. And we have been always wondering envisioning things together. Right. And we brought a lot of actual peer to peer tech into Bitfinex as well. Right. So Bitfinex back end was built on and still trying to build on top of microservices. But the microservices architecture that we built for Bitfinex, I coded a ton of that part directly, is actually built on more than 500 microservices today. And all those microservices actually are using the DHT to find each other. And this boot hash table, I'm sure that we'll talk later about that. And it's actually one of the reasons why Mathias and I started talking heavily about it because actually I was relying on some stuff that Mathias was contributing to. Right. And one worked after the other, one thought that the other and after many years, it's three years that actually we started seriously to work on or discuss about the Holepunch. It's not something like we wake up a few days ago and said, okay, this would be cool, Web3 is cool, and so on. Right. It's something that has been brewing many years and has been something concrete for the last three years for us.
Kevin Rooke - 00:06:34:
Okay, I want to get into all the technical details of Holepunch in a second. But first I want to start with a different question and that is the Bitfinex and Tether family of companies. You guys have been on the front lines of peer to peer and Lightning for a while now. I mean, Lightning as a peer to peer app, you have recognized this as important before. It has become consensus. Like a lot of people still in the crypto and Bitcoin space don't recognize Lightning. They don't recognize the need for peer to peer apps. You guys have what have you recognized that other people have not clued into? Why are you guys deciding this is the right move when everyone else is focused on other things today?
Paolo Ardoino - 00:07:19:
So I will try to give you the polite answer. So let me explain to you why. Right? So you have two developers in this call. And as developers, if we have to think to a really scalable payment system, you cannot imagine a scalable payment system to share a global state, right? So all these layer ones, Bitcoin of course cannot process billions of transactions per second. We all know that. And it's not even the scope of Bitcoin. Bitcoin scope is to be a store of value, a way to share a global state that is low but is extremely secure, right? And on top of that, you have capabilities to build layer two like Lightning Network. But you see these layer one solutions like the claim that are super scalable, but their solution is to speed up the block time and trying to compress as much transaction as possible in one single block and then have a global consensus across the entire globe. The suggestion is that they can scale to hundreds of thousands of millions of transactions per second. Of course is nonsense, right? So because there is a limit of the speed of light, there is limit. If you send a packet from Switzerland or Italy to Tokyo, it takes 150 milliseconds to 200 milliseconds. Imagine if you have a block time that is 500 milliseconds. And you have to reach a global consensus. You have to reach places like in Africa and in other places that will need to hear about all the transactions, including the block. Also why we are even needing that type of global consensus, right? It's like pretending that Kevin, your fridge is buying groceries for you. Because nowadays the fridges are connected to internet. They come by groceries, right? And I need to know that you are buying milk for your breakfast, right? So the only meaningful and reasonable way to solve this problem is peer to peer. So you establish a channel between two parties. And this is with similar to exactly. Peer to peer is a socket. A channel is basically a socket where two parties are established exchanging information. Simple as that. If I want to make 1 billion transactions with you and only with you because you are Amazon and I'm buying a ton of stuff from you, right, every second. And there are chargebacks, whatever, right? There is a continuous flow of monitoring information that happens on a channel that is dedicated between the two of us and that's it. If you think about it, then you can have a channel with Mathias and then Mathias can have a channel with his friend and so on and so forth, right? So that's the only reasonable way to scale stuff. All the other attempts are like smoking the eye, in my opinion, because unless you beat the speed of light and you completely debunk relativity and you go on like in the hyper space and so on, then the peer to peer solution in order to scale to mass adoption of payments is the only reasonable way. Also because sorry, really quickly, I'm really big of Sci-fi fan and I believe that in the future, apart from crypto, robots and IoT and artificial intelligence are growing really rapidly and we will have machine to machine payments, right? Robots will pay for stuff, cars will pay that are becoming more and more, robots will pay for stuff, fridges are already paying for stuff, light bulbs are buying their own electricity. How the hell we are pretending to process all those billions, probably of transaction fees per second if we don't have a pure peer to peer system?
Mathias Buus - 00:11:15:
That's why I love that.
Kevin Rooke - 00:11:16:
I like it. We're off to a great start here. Now, when we think about in the context of Holepunch, is it fair to look at the structure of the Lightning Network and put it up to the structure of the Holepunch protocol and say these are roughly similar with the idea of you're directly connected to other parties, there's not some central hub that you're all going through? Is that a fair comparison to make?
Mathias Buus - 00:11:42:
There's definitely some idea overlap. I would say it's always a little bit dangerous comparison because in the end, in the Lightning Network we always work into more settling on a global change. Like we're just all about local data just swimming between us, like me and Paolo or Ukraine could have just data swimming between us and nobody else needs to know about it. In fact, that's a feature and so we don't need to have it tied back to global consensus. But in the way of thinking about Lightning as two people talking to each other, that's definitely peer to peer, right? So there's definitely some mobile app. That's also why both me and Paulo are big fans of Lightning in general compared to a lot of other stuff.
Kevin Rooke - 00:12:18:
I see. So.
Mathias Buus - 00:12:19:
Kevin Rooke - 00:12:19:
You strip out the bitcoin component of Lightning where it settles on chain and then you can kind of start to reason about this as a network for transmitting information rather than transmitting sats and maybe sats along with information and then.
Mathias Buus - 00:12:35:
You just add a ton of data structures to it instead and say. What if we could take all our databases. Everything we do on computers. File sharing and all those things. Make protocols. They actually work in this context where they're just like swimming between us right into a central place. So we can actually make really powerful applications like we used to without any trade offs. Really, that's our efforts. Just do everything you can do with existing systems for peer to peer and better and more scalable, right?
Paolo Ardoino - 00:13:05:
Kevin Rooke - 00:13:06:
So now people who haven't seen the press release you guys put out yesterday, you had a big gathering of people on Bitcoin. Twitter excited about this yesterday. But for anyone who has not listened to that, what is the high level pitch for Holepunch and keep? And how do those two interact with each other?
Paolo Ardoino - 00:13:26:
So I think that let's start from the simple terms, I would say, and then we can go deeper and deeper in the complexity of the protocols and so on, right? And this is also the good difference between Lightning and Whole bunch. In general, Lightning is about transfer value and they are using the same protocols. In part, Lightning is using some of the protocols that are also used in Holepunch because anyway, it's networking protocols and also when you have to transfer value is still represented by data. And in a way, Lightning is using similar protocols. The difference is that Lightning is focusing more on the monetary transfer that is not like terabytes of data, while whole bunch is actually optimized for transferring any amount of money, right? So that data, any amount of data because it's focused on high throughput delivery. Because when you are doing fires sharing or video calls, that is really key. So if I have to put it in a really simple term, what is Holepunch? I think that many of your viewers and almost everyone is familiar with the concept of BitTorrent, the most unstoppable file sharing system, right? So we have seen in the decade before bitcoin many attempts that they all got shut down, right, for different reasons. The problem is that there was always a place for centralization. Centralization is always the problem, right? So that's why when you think of how to solve the problem, the peer to peer word, you have always to remember that the solution should be still peer to peer, right? You should never fall back in the whole gambits of using essential piece because otherwise that will be becoming the weakest link of your chain. Anyway, we know BitTorrent as a way to share static files between people and it is beautifully built. It's like a BiTorrent is like if you think about it, it's like Bitcoin uses bitcoin took existing technologies and put them all together to build the best monetary system we know. And Bittoriented similarly, right? So it took like different technologies like Holepunching and forming and so on. And they shaped in a way that made to build the most sophisticated, scalable file sharing system, but while limiting to so this is, I believe, the brilliant part around Holepunching, the Holepunch platform. So why limit yourself to file sharing, right? Because files are static files. It's something you have your hard drive. That's it. But what if instead of sharing a file, you do that for you create a sort of torrent but for data streams. Data streams are live data streams, ever changing data, right? So it means that our video chat now is generating live data streams for video. And then you have the audio, the text, if you are texting, all the interactions that we have between each other are generic and data flow, those are live data streams. So imagine BitTorrent for data streams and with I believe, more in depth research for the networking part because then it's extremely highly optimized to connect peers also in even more complex networks. Because with BitTorrent you were at home, right? You have to run it on a desktop computer so you didn't have to worry about, hey, I'm in the middle of nowhere, right, and I still want to connect with someone else, right? You still on your phone or whatever. Instead, Holmes and Mathias especially focused for so many years on getting the networking part right in order to make sure that this could be brought all these concepts could be brought to the next level. So with live data streams, if you receive a file on BitTorrents a little bit later, it's not a big deal, but if you do a video call, that is more problematic, right? So the concept is the evolution of torrent, but with more research on the stability network, high availability throughput and so on and so forth, and especially focus on live data streams. And Kit is the first. So Holepunch is this protocol, is this framework and is also the name of the company that is building all this. The software development kit is still called Holepunch. And the software development Kit is the thing that will allow developers to build applications on top of it. And we'll provide these primitives that will allow simple distributed, decentralized secure file storage, distributed meeting points for people that want to create rooms and share files and share video chat together. And all the magic basically happens in whole bunch. Keith is just a proof that what we have been building over the years and this vision works. We have been proving that this vision works and the quality of the result is higher and superior than zoom already with just two months in the market.
Mathias Buus - 00:19:02:
And it's super exciting for us because we love them. When we release, keep this very polished and super cool looking at that just works. And it's just like a really good app, even if you don't know it's future. It's like a really solid communications app with chatbot sharing all these features that users love, but like, no limits because it all peer to peer, like unlimited file sharing. You can have as much chat as you want. The video quality is really high because there's no servers. You're just connecting directly to people. All that is possible from peak to peer. And what excites me a lot, I'm sure it excites power also, is that we know that all that work that's being done for that is actually just being delivered by our Holepunch platform so that any other app we'll make in the future can utilize all of that in a very simple way. So you can keep making these really powerful apps because all the hard work is there. We usually say it's probably like 10% of Keith is actually keyed. 90% of it is just the Holepunch platform just doing its thing and delivering this cool experience. In fact, the ad itself is mainly developed by one guy in our company, like a normal front end developer that's just using the APIs available to just deliver this experience. This is a guy that would normally just be making websites. All of a sudden, by giving all these primitives to somebody in this very easy to use package, they can start making these ads that compete like 100 million, if not billion dollar industries online, because they can just do it all from the comfort of their computer, not having to worry about scale DevOps. Like, they don't have to spin up things on Amazon. They don't have to print credit cards everywhere to get anything going because they can just have the entire experience on their computer. But it's already powerful enough to do all this stuff already. I always get a little bit frustrated because we're always getting tricked into thinking we need all this stuff when we have the most powerful computers in the world. Know how all those jokes about the computering power that needed to land on the moon is like less than whatever we have in times that yet we're like in some weird tech dystopia where we can almost do less than right because we just been thinking into becoming consumers of this big cloud apparatus. So it's super exciting to just turn it around and give the power back to developers and users.
Kevin Rooke - 00:21:23:
Yes, and I really like that analogy, the one about BitTorrent. I want to make sure I have that right, though. So BitTorrent, you can basically only do static files here. You can do static files and data streams, and it's a platform that you can build apps on top of. Has anyone used BitTorrent? Is that a common thing for people to build apps on BitTorrent? Or is this a new thing that is enabled by Holepunch?
Mathias Buus - 00:21:47:
Well, BitTorrent was only used for sharing files and file systems, and I think it's still being used, but it was very much use, like ten years ago. But I've worked a lot with the terms and we're heavily inspired by the simplicity and beauty of the system. But the focus there was just like being really good at sharing and for us as developers were like what if you just did that everywhere? Like took that idea and applied to everything, databases, to communications, to everything. There's no reason why you limit yourself to files. You're just like boxing yourself in and it's actually only when you do that and then obviously add a top R and D on top to actually make things work, like database and stuff. Which is like why we've been working on this for the last three to five years, right? Because it's no easy task that you can start to unlock these simple things that developers can just take. And without having a PhD and Peter peer science, they'll relapse with them.
Paolo Ardoino - 00:22:44:
But if I can build on one thing that said, now we are in Riverside, right? And how many people, how many developers do you think that it took to build the Riverside as an app or Zoom? Right? So the comparison is probably 100 to one, right? So that is an insane comparison and this is basically just something that you can do using actual modern technology like what we are providing, right? So it feels like the rest is still stuck to we are seeing the web, too, still selling us technology that was built in 2003, right? And yet that is the thing that they know and the things that they know that they control. So that's the huge difference. And giving this power to all the developers will take one step at a time away the power from the big tech corporations.
Kevin Rooke - 00:23:44:
So even the building cost for a developer is going to be lower on peer to peer apps.
Mathias Buus - 00:23:49:
It's going to be free. They already own the device, right? Like most developers on a computer already, that computers insanely powerful. They already have a big enough disk to build any app they want.
Paolo Ardoino - 00:24:03:
Let me give you the example of Riverside, right? So you choose Riverside because basically it will allow you to make sure that my video quality gets recorded on my laptop much better than on Zoom or Google Meet. Because then on Google Meet the client will compress the data and if you for example is a glitch in the bandwidth, right, then you might receive rotten information and with the key actually you can easily do that in the very same way. And you can do that because you record your own video on your local computer and you can store it and you can leisurely upload it and you can make a clone of Riverside in probably 20 days, extending heat. So even less, basically everyone can do it. So every time you need to record something, I'm not sure and I don't want to know if you are paying Riverside but every time with simple changes of upgrades or plugins, whatever you want to call that. You can build, rebuild existing experiences, but developers can offer these experiences for free or a crumble of the cost of the service. Because there is no infrastructure, because I'm already recording myself on my laptop. You are recording yourself on your laptop? Mathias is recording himself on laptop and suddenly you have to use a centralized infrastructure. Why is that? I mean, we can connect with each other and share information that any way we are sharing with a centralized party. So there is no need anymore of centralized parties anyway.
Kevin Rooke - 00:25:41:
Yeah, okay, that makes a lot of sense. So if we eliminate the central servers and we look at the data centers that like Facebook and Amazon and Google are running, what happens to all that? It can all that be stripped away? I guess another way to frame this is like if you succeed with this vision, what cannot be peer to peer.
Mathias Buus - 00:26:05:
Just like to add to that. Like think about those data centers and think about when you see pictures of them, these big things. But then think about all the computer just in your room. You're probably sitting on a laptop, you probably have a phone in your car that maybe you have a smart watch like your TV probably has a processor. Also like Powell said, your fridge. If you add up the world's compute. Those data centers, they're nothing of a sudden, they're just like the old school thinking. And there are still use cases for having computers to run for a long time and stuff like that, but no need for centralizing all of that all of a sudden in the middle of the building. So it's all about unlocking. We're actually not even saying like we need more, we're just saying unlock everything we have and we have like a massive explosion of computer, which is pretty crazy.
Paolo Ardoino - 00:26:53:
So I think these supercomputers or big data centers can still be used to if you have to do like really complex calculations, right? So if you need to run for example, huge rendering for Pixar, right, you use insane amount of energy to do really complex calculations. That requires probably 1000 CPUs all working together. And of course if they are in the same location in the same data center, the latency of communication across all these nodes for rendering or for artificial intelligence will make a difference, right? Compared to peer to peer there is a little bit of network latency, but when it comes to data sharing and collaboration and all this part that is anyway 99% of the use cases of everyone on this earth, you don't need the placenters. So that is the point. You can still have the placenta for all the mouth parts predicting hurricanes, whatever, right, you can do that, but still you can really the majority of the use cases in people's lives don't need that type of data center.
Kevin Rooke - 00:28:11:
I see. So I want to highlight something that Mathias you said in the press release when announcing Holepunch. You said, I'm a big believer in open source and the role that it will play in liberating communication channels for billions of people around the world. What kinds of applications are you most excited about? When you think about all the different things that these peer to peer channels can now do, what do you think is going to be most impactful to the world?
Mathias Buus - 00:28:38:
Well, I mean, it's like we can also draw some really cool parallels to bitcoin here in terms of what it unlocks, like economic freedom and stuff for that. The simplest of things to think about is like think about all the countries in the world that have oppressive regimes or things like that where people can say what they want. Big part of that way that's enforced the food, centralized systems, these places where you're afraid to say anything because it's going to get monitored, maybe a knock on your door and the big consequences will happen for you. That's all because like monitoring and centralization, right? And we're lucky enough to live in countries where there's less so, but also the tendencies worldwide going towards monitoring and one more like peer to peer just unlocks that immediately. Like all of a sudden you can have direct channels with people, you can say what you want without fearing things like that's one of the simplest, easiest to understand unlocks that are just so insanely good, right? We can have private conversations with each other, just three people without thinking about big impacts. Obviously as you scale up conversations, there is still more concerns about what you say and blah, blah, blah, blah. Like as fundamental things. Twitter, peer, just unlocks that and that's super exciting. That's a big part of why I'm very into it, right?
Kevin Rooke - 00:29:56:
So censorship, resistance and being able to just communicate in private is going to.
Mathias Buus - 00:30:01:
Be like, yeah, that's the thing that we don't have to say, oh, that's a feature as a default, right, is not like this everything we do, privacy is still on the lines. Obviously things should just be private and controllable. Also like I don't know how you feel, but if I talked to my wife in the past we use the Facebook messenger, right? And then all of a sudden you see all the ads coming in where you're like, oh, we talked about that and you're like, that's really creepy. That's just the other side of it. And that's because everything is monetizable online. Because they have to make money, because it costs them money to drive things. As soon as you start taking that incentive away, things just become much clearer. And it's not like that. We're like inherently good people promising. We won't promise it. It's just because promising. We can't commercialize this. We're just saying we can't because it's peer to peer. We're not in the middle of the traffic, right? So that's like just an inherent feature which is very helpful.
Kevin Rooke - 00:30:58:
And it sounds like a parallel to life before the internet, where if you want to have a public conversation, you can and you can blast stuff out to everyone. But if you don't, if you want to have a conversation in your home, it's a conversation you're having on your own and no one else is involved. And this may just be like reintroducing that idea on the internet where we spent the last ten years thinking that everything that we post is going to be everywhere at all times. And now we have this alternate avenue where if we want, we can have these close conversations and we can just live how we've always lived for thousands of years.
Mathias Buus - 00:31:32:
And I'm like there's also all these weird there's this weird tendencies in modern society. I don't know how it is in your country, but if you're politician and you want to post things, they tend to post it on Facebook. And to read it, you have to go for this cookie wall where you basically have to accept that facebook will mine all your cookies wherever to read something about public life like what's going on. And that's an American company. We don't even live in America, so it's even harder to understand the consequences of that. That's just because we lost the battle for battle for privacy and figuring out the stuff from the get go. And that's why we're so drawn to it and kind of like rebooting and saying fundamentals have to solve this, which is like a whole bunch of platform. And then the things we build on top just work with this constraint or future always. We cannot turn it off.
Kevin Rooke - 00:32:19:
Okay, so I have an interesting question for you guys. If you too were in charge of Facebook and Google today, knowing what you know about PeerToPeer app and your vision here for what Holepunch can accomplish, what actions would you take to avoid your business being disrupted?
Paolo Ardoino - 00:32:40:
Well, I think that you wish that heads of these companies would have this long term vision and understanding because most of the time we have seen that with Bitcoin, right? So in Bitcoin in 2009, and ten and eleven and twelve, all the banks and everyone in the traditional financial sector was making fun of Bitcoin, right, saying, if we cannot ever do anything, cannot ever take the financial system and this and that. And it kept growing and growing and growing because in a way. The fact that the possibilities of Bitcoin and as I'm sure the possibilities of all punch in terms of undertaking the communication space. These possibilities will be undermined and laughed at by the big tech sector. Only to find out that in maybe ten years. 15 years. Things will be 50% of the web is actually peer to peer and it's back to be peer to peer. Right? And definitely there will be pushback, but you know what, in the end also governments in Europe at least, there is some interest in making sure that big tech is not eating all your data and then profiting from all your data. So in a way, if we don't do something now, we will end up in a fully dystopian or valiant world where actually corporation will be more powerful. In a certain way they are already but the corporation could be even more powerful than governments. And so this is, I believe, like one of the last bells that we can ring in order to make a change. Because otherwise things with Web3 keep in mind that things will not change. We are seeing and that's why you are seeing all Google and all the others are actually excited by Web3. Why is that? I mean, ideally, Web3 should be a movement that is born from crypto with the same ethos that should say let's take back our data, let's not have big tech monetizing our data. And hence you have all these venture funds from run by the very same people that are heavily invested or involved with the big tech companies that are pouring money into Web3. Because actually Web3 is just web two with a different hat and with just another way to monetize the content. It's just creating a token, right? So you are adding layer of complexity on top of what should be extremely simple. You are a person, you are producing data, data should be yours and you should decide where to share with whom share that data. So I think that what will happen is that, to summarize, they will just make laugh. They will laugh at what we are doing until it will be too late for them to change. In a way, I'm not sure if you ever read that book, but there is a book that I really do love. I read that when I was 16 years old. The first time was cathedral and bazaar from Eric S. Raymond. It talks about two styles of building stuff, right? You have the cathedral. They are beautiful, really complex. It takes the one in Milan, 2300 hundred, two years, 300 years to be built, right? And a lot of people, a lot of lots of money. And then you have the Bazaar, right? The bazaar's are like this random organization, people that are selling data, selling stuff, buying stuff super messed from the outside. Seems like extremely Celtic, but it works. It has been working for thousands of years. It's like everywhere. It's like the markets, the real markets, not the supermarkets we are used to. But that is the bizarre, right? And the thing with the cathedral, we can make the comparison of the cathedral and the big tech corporations to change something for them. It takes a lot of time to change something in a cathedral to restructure. The cathedral is truly complex. It was built a long time ago. So you are fearful that it might all fall down, right if you don't don't take the right precautions. And with the Bazaar, things are always moving, the shape keeps changing and hurricane came and another bizarre starts somewhere else or nearby, in a nearby city. It's unstoppable the bazaar because it's just people interaction. It doesn't matter, it's not strongly built, it can change shape in a moment. So that is Holepunch is basically a bizarre for information, for data compared to cathedrals that are extremely complex to change. And eventually we'll just something that we will look at as a reminder of the past.
Kevin Rooke - 00:37:50:
I hope you're enjoying the show so far. I just want to give a quick shout out to our sponsor, Voltage. Voltage is the industry standard for Lightning Network infrastructure, creating layer two applications and services on top of bitcoin starts with Voltage, where you can spin up nodes, get access to liquidity, optimize your node and much more. Voltage is leading the way as the next generation provider of Lightning Network infrastructure. And if you want to get a free trial and start using Voltage today, you can do so at Voltage dock Cloud. I really like that analogy. It's a very fluid system and it can kind of like adapt over time rather than something that was built with one sole purpose and spent so much effort and time to construct that now it's not adaptable, it's fragile. I want to get into the concept of Holepunching a little bit because I believe that was the inspiration for the name Holepunch. In your press release you highlighted, you said Holepunch is powered by an innovative stack of distributed technology, including DH, distributed databases where users can find and connect to each other to form a swarm on real world home and office networks. So can we touch on how does this swarm work? How users exactly find each other on distributed network?
Mathias Buus - 00:39:13:
Yeah, totally. I think me and Paula can talk about that for a very long time. So basically if I get too technical or something, just let me know. But you know how in the old Internet everything is an IP? Like you have an IP address and maybe you use a VPN to hide it and stuff like that because you actually leak metadata with them. But basically there's these four numbers that identify where you are in the system. That's great and all, but it's kind of like what if instead of having just those phone numbers, you can have a cryptographic identity. That's something that is inherently yours. Not something you get from your Internet provider, but like a graphic key pair like you use if you use blockchain transactions and stuff like that. And the public key of that was just your address, something you could take with you and people could just dial that address and connect to you. So that's basically the fundamental thing we think about when we think about Http networking is like that. We have to have that. So what we build out is the system where users just have these public key identities and then they're using our distributed hash table, which Powder talked about a little bit before. But that's heavily inspired by the work we did on the tournament Fast and by the technology because it proved like a super scalable solution for finding people that are announcing a little bit of data like that. Using that, peers can kind of find each other. So now here's the problem, because the world is built on these things called IP that I talked about and in fact it's built in this thing called IP before, which is this very old version of IP. And the problem was when that was designed back way back, they didn't make that many of them. So the world ran out of it. That's why in every home we have this thing called a router. You probably got that from your Internet provider. Of course there's only 4 million addresses in the world. It's very little. So the world ran out of it and everybody got a router because then they can just give the router and IP. So now this connectivity stuff, if I knew your IP and I wanted to connect you a little bit harder because your device doesn't have an IP anymore, only your router did it. That was kind of how they scaled that system. So the problem was even more things came online and it turns out the routers you had at home were not enough anymore either. So now if you go to your internet provider, they have routers also. So it's just all like it's a layer of layer of routers because they kept running out of addresses and every time they added one like that. It meant that connecting to people actually got much harder because we didn't have an address or so we use all these techniques which goes under the umbrella of Holepunching. Which basically just means like unwrap this entire mess and find each other and then actually connect to each other using some tricks where you trick the routers and connecting to servers but actually connecting to to each other. Check in a good way and do that as privately as possible. So you don't need any information about as little information as possible about who's connecting to who and stuff like that. And that allows you to actually run just on your laptop on your home network, which is normally really locked down, like server infrastructure if you wanted to, which is like essential for kicking network. Because if we can't connect each other, it's kind of like a very boring network, right? And we invested a ton of R and D into making network. And then if you're at an office, you probably have a very locked down network. It turns out you can also still connect through those with a bunch of techniques that are also in the Holepunching umbrella with a bunch of math and statistics. But that's essential. The cool thing about all this stuff is that it all just boils down to you have a public key, you have an API you can just call connect to the public key and then the platform takes care of it and hides all this complexity for you and everything just works and you don't have to worry about IPS and they're hitting as much as possible. So it's just kind of like a virtual network that is just very scalable and super powerful.
Kevin Rooke - 00:43:17:
And so you're connecting to devices that have a public key on that device, right, rather than a router.
Mathias Buus - 00:43:23:
Yeah. So you're connecting directly to like you can obviously connected through your infrastructure, but at the end of the day, you don't just connected well. You're still going through the routers, but you're not going through like a cloud. So it's not free, but you're already paying for it. But you pay for your internet subscription every month. That's basically what you're paying for.
Paolo Ardoino - 00:43:42:
So imagine that you have two computers, two devices, right? So they are in two home networks in the past. And this is one actually the things that BitTorrent got it right. Imagine if you recall, like with the previous file sharing systems, you have to configure your router to open a port to the public and then forward the traffic to your desktop computer where you were running some file share application that from a usability perspective was really complex. Right. So it was taking a lot of time and energy and not everyone could do that. Right? Not everyone. Right. So it ended up that with Victoria. But I think with Holepunch as a networking library as well, it's much more sophisticated if you have two devices, right? One of the fundamental aspects of networking and firewalls and routers is that they are configured to block all the incoming traffic from the outside, but always allowing the outgoing traffic from the inside. Right. So you can connect wherever you want, of course, but if someone wants to connect and start getting inside your network, usually the default is block everything that is coming from the inside. It's from the outside. So basically one of the most interesting ideas and concepts is that it's the trick that Mathias was describing. You can trick the two routers of the two people that want to talk to establish a direct connection with each other. So you can have like a third party sending like a simple packet to the both routers that tells that actually these two devices were willing the first instance of both of them to establish a connection from the inside. So since the connections from the inside are by default and inertially allowed, then you can establish this connection. So it really simplified terms, but it's like that.
Kevin Rooke - 00:45:47:
I see now this idea of Holepunching, the concept itself is not a new idea, right? It's been around for I believe I saw Skype used it in early 2000s. It's been around for a long time by today. What's the constraint that has been unlocked that enables us to now create hole, punch the product today when the concept has been around for a couple of decades?
Mathias Buus - 00:46:14:
Well, yeah, first of all, a lot of really good things have also been around for a while. A lot of the underlying taken stuff like blockchains in the 70s. But I think it's like with many good ideas, first of all, it takes a little bit of time for people to click. Like this is actually really good. But also like in the last 1015 years, people have just been incentive has been aligned against it. People have been wanting to make these big silos to monetize tons of data. It's kind of like been the norm that the more data we can collect, the more we can monetize. That's a success. And there's been this almost lolling of users to kind of just go along with it because we didn't really fully understand the consequences of that. Also as research and as far as only now when we're almost in the almost Tex Dystopian world where we kind of realized. Well. Maybe that wasn't the best idea and there's a lot of pushback and now a lot of these ideas are coming back and I'm sure it's also frustrating for Paolo because I've been in this world the entire time and I've been like this is obviously what's going to happen. We need to start doing this without going back to it too much. But Toront really showed this is something you could do at scale. Also with also very few resources in a completely unstoppable way. So there's definitely going to be a big shift towards that now. And with all this more data awareness and also like we talked about tons of regulation coming in properly around, like they have to stay local and stuff like that because all of a sudden we're realizing we're already way too far into the other world. Sorry, no, I was just going to say and also, obviously infrastructure has also caught up with like we're all sitting at home now and these really powerful connections. Most of us are like there's been a ton of money put into building actual internet infrastructure. It's almost so good now, it's almost a scam. We're probably all paying for internet connections that we don't really use. When you buy a gigabit fiber from your provider, it's because they probably know that you're using ten megabits in practice on average every day, so they can charge you for it. But actually the infrastructure is there to drive all this traffic. So that's also super exciting for future peers because we actually have high quality networks and even on low quality networks you can participate. Maybe you don't share as much as other people do in your small network and that's the power of PGP. Also, it's not like everybody has to do the same thing as long as we all have a shared good experience.
Paolo Ardoino - 00:48:46:
If I can offer a different point of view, I completely agree with Makaius It's here. Think about from the monetary point of view, right? So you have all these good tech, this peer to peer technology that is has been around for a while. But as we are saying with Holepunch, it's not easy to monetize that. I mean, it's free for everyone, right? We don't have the control of the network. The BitTorrent clients or BitTorrent client developers didn't have control of the network. They didn't have just control over the user experience that they were providing. But that's it. So there has never been an economical incentive for big tech corporates focusing on actually making peer to peer technology successful. The more peer to peer technology is successful, the less control they have over the products and the networks and the less revenues that they have, right? So there is an incentive for them actually to not make it work. And it's kind of sad, but it's exactly what we are doing here with Holepunch, right? So we have big shoulders, but with the different companies that are involved with this project, right? So we have all the funding that we need. And we believe that there is the concept of individual sovereignty that has been around all the Bitcoin industry for a while. But it's really hard to reach the individual sovereignty if you have only freedom, financial freedom, you need also freedom of speech, right? So freedom of sharing whatever you want or storing whatever you want without having to store. Imagine how many photos, how many parents are storing tons of photos of their children on a high cloud or Google photos, right? So if you stop for a second and think about it is insanely worse. So that's something that has to change, right? It's not even scalable. It's not something that I believe that the Source Intelligence data center will not scale well in the future, right? Especially with the changes in the geopolitical conditions and worse going around. And also when I talk to my developers, when I develop things myself and in this part of why I really love peer to peer is that you should build something that is resisting to the breath of God. It's not not like something that will fall down at the first peak and that is the thing that peer to peer does well, right? So imagine even God forbid, but still imagine that the world has been full of wars for the last thousands of years, right? So what happens to all these data in a case of a war? If this data is in a country, maybe this country will decide and these data centers will be in a specific country. Maybe this country could decide to seize all the data harvested to weaponize it right? So you never know what will happen with your own data. So it's not scalable, it's not future proof. And you should always think to the worst case scenario when you are building a long term applications. And that is what is Bitcoin for me on a financial monetary basis. Right, but then you need something that is completely complementary to Bitcoin on the data side, right?
Kevin Rooke - 00:52:14:
That makes a lot of sense. This reminds me a little bit of the missions here with projects like Umbrel and Start Nine, building personal servers for storing data, storing passwords, running Bitcoin nodes, things like that. How do you compare those two? So the project of Holepunch and something like an umbrella or a Start Nine, where now they're pushing more, they're outside of the just bitcoin sphere, and now they're saying, look, you can run this as a personal server and hold all your data there. I guess the trade off would be either you're doing it on your Raspberry Pi or you're doing it on your home computer. Is that a correct comparison to make?
Paolo Ardoino - 00:52:59:
Well I must admit that I didn't dig super deep in Umbrel. But my feeling is that the tech used usually by the other solutions that we are aware of are still trying to replicate and mimic the solutions that are the classic client service solutions. Yes, you can have your Raspberry, you can have multiple Raspberries, they sink together a little bit. Right? But the insane part of whole bunch and the things that make it completely different is that it's kind of a recardion. The entire technology is basically kind of fractal in a way, right? The data is stored and can be shared across your own release, your own multiple devices, your peers in the very same way. So there's no difference between yourself and multiple versions of yourself or different parties. It's just what you want to share. And with the concept of public keys and private keys that Matte was saying before, in terms of pairing, establishing the connection and also signing the date and so on and so forth, the big difference here is that at least this is what we feel is that Holepunch is a protocol that can enable you to create a storage, a store of all your personal life. Right? Let me give you an example. With a Whole Bunch, we can create an app, write a simple application where that you can keep throwing data, like a Dropbox or like a Google Photos, whatever, icloud, you can throw data to it and file and it will keep storing them, you can store them and you can add a nice data structure that also indexed by date. Right? So now you can have a visual application where you can with the slider, you can go back in history, you can rewind your own life, but then given it's similar to BitTorrent, right? You can have another peer that just syncs your data and it's encrypted so it doesn't see anything, right? You cannot access your data, but it can still keep a copy of your data and then another peer and other peer, right? If you remember BitTorrent. You have this swarming technology or idea where you are sharing a file and the multiple peers could of course find the file and load it from yourself so you can reapply the same logic still and it's fully encrypted and you can make it in a way that if the other peers cannot access to the content. It will just help you to back up and distribute backups of your own personal life across the globe. Because one of the most interesting aspects you can envision this app right now you have this nice app that is like this pod where you keep putting your own data, but then it's running this crazy network of peers in this mesh of peers and then you wipe out your computer and you cross the border. And we can make a system that will allow you to actually generate your master key that you used before from 24 words. So suddenly you can access to your it doesn't matter if an atomic bomb will wipe out your home, you have 24 words in your mind and you'll get all your personal life fully backed up everywhere from these network peers. So yes, you can run a Raspberry Pi, you can do whatever, but still we can make something that is definitely more catastrophic proof.
Mathias Buus - 00:56:43:
One thing I just want to add to what Paul is saying is also like we're also super focused on being something that's very low resource, resource intensive. That means that if you have your life backed up and you just wanted to access a little bit of it, we do all this work to making sure you can very quickly sync something, just the thing you're looking for. And so that if you're running on an old phone or if you're running on an old computer, if you're just like in very limited connectivity, which you might be, you don't have to sit there and wait for like 12 hours for all your data to come through. We do a lot of indexing techniques all locally, so you can just get just the part you want. And if you try something like heat, it's actually very mind pending sometimes. But if you go in there and you drop like a five gigabyte file and the file sharing, you'll notice it appears everywhere at the same time and you're like, oh, did I just transfer 5GB in like a millisecond? You can't do it because you're just transferring the fact you have it. And then peers are just thinking the parts they want. So if you watch a movie and you just watch a little bit of it, just that part you're thinking. And so we had that philosophy at the core of everything we do. Saying like, this is for real. People. This is not for people who have server, this is for people who have real devices, low power. They want to get on with their life. They don't want to sit there looking at a loading screen for like 2 hours for all the just want to look at the stuff they're looking for. They want to do what they normally do, but they also want to do it peer to peer so they don't have all the problems of centralized systems.
Paolo Ardoino - 00:58:07:
It's like BitTorrent. You remember when you were seeing the preview or you can skim through the file before having fully downloaded it, right? So because you start downloading chunks imagine a movie, right? So the example that Mathias made is like you drop a five gigabyte movie, right, and you can skim through it and you can move the slider and you can move to any point in time. The system behind the scenes will just fetch the data blocks that are corresponding to what you actually need. And if you apply that to your personal life, it's really meaning that you get just the index. You first fetch the index of your own personal life that is really tiny. It's a really tiny data structure and then you select what you want to see. You don't need to download it all. So it's not like dropbox or whatever. It's like you get only the few things you need in that specific moment in time. And can I add something? You can put the bitcoin blockchain on top of it, right? These data structures are perfect to index. Actually, we did test in the past, you can actually put the bitcoin blockchain data structure. So you can actually make like you can even resync your own node from home or access mount to the file system. You can actually create a file system out of it that actually distribute the data to appears. I have that at home. Right? So you have a disk that is like a remote disk or like a local disk operating system. See that as a local disk. But it's actually peers that are just storing the data for yourself in an encrypted way so they cannot access the data. And it's like really the quality, the speed and so on is insane. And you can actually access the data much faster because then you can download multiple chunks of data from multiple peers.
Kevin Rooke - 00:59:52:
This is very cool. Was it also an unlock? When you talk about the fact that you could take 24 words, seed phrase and access all your data if it's been wiped off your computer or something? Was that an unlock enabled by bitcoin? Is that another reason why this couldn't have existed like 15 years ago where people weren't very familiar with the concepts of seed phrases and now it's more of a mainstream concept now. Was that important in unlocking what Holepunch can do?
Paolo Ardoino - 01:00:26:
User experience in general is critical, right? So because one. Of the limitations also of peer to peer in the past in a way was that in part was never developed that much and in part people or the actual applications, peer to peer application were poor in quality, right? So you had always the feeling that you were getting a more private solution, but the quality was actually lower. So you had to make compromises. And I believe that is what Mathias described before with Keith. With Keith, it's clear that these compromises are not realistic anymore, right? So you don't have to compromise anything actually. You have a better experience. You can drop files, you can skim through files much faster. You can do better quality video calls because you don't have a central server compressing your own data and so on and so forth. Right? So right now we are at a stage where we can provide a much better user experience in peer to peer applications. That what centralized applications can do because the centralized applications can just reach a certain scale. Then they choke under pressure sometimes, right? Or they cannot easily keep adding data centers because then eventually it will add up and can reach to cascade like a castle card. Now, when it comes to the 24 words, it's definitely something that we learn from Bitcoin. It's actually a cool thing. But even more so. We're working on a ledger app so that I can actually start you can authenticate and start signing the messages, the data you are sending through that ledger app. How cool is that, right? So you can actually bring your ledger with you and basically you don't even have to worry that someone is cloning your drive to copy your master key. The master key is derived by your ledger. That is, I believe, one of the Holy Grails that we can make happen here.
Kevin Rooke - 01:02:26:
So you can access your bitcoin and your data from your ledger exactly space your entire life. All right, I want to talk a bit about your Lightning integration as well because I believe Lightning support is being built into Holepunch along with Tether support for microtransactions. So maybe we can start off is this at all related to the work that Synonym is doing, bringing tether to Lightning? I know there's an OmniBolt thing going on. How do all these different concepts work together here?
Mathias Buus - 01:02:59:
First of all, I just want to touch on the payment a little bit. Like both me and probably big believers that haven't worked in open source and making tons of admin software in the past. That's a huge missing step in software that's just like simple monetization. It's way too hard right now to build actual apps that make money without being tied into all kinds of online things where you actually all of a sudden have to make a lot of money for it to pay off because all you're just losing money. And that's a big driver for us because peer to peer really unlocks the thing where you can have it all on your laptop. So you also need to be able to monetize and make money from your laptop if you wanted to sell something. So like let's say you wanted to sell stars, let's say you wanted to sell video services. It could be that you're sitting there doing captions and video and that's a service, it doesn't matter, but you need to be able to get paid for it. So building a platform like this where we have this very ambitious goal of unlocking developers to build apps, if you can't commercialize, it's kind of like the point because they were just back in the same exploitative structures that we've always been in. So like from the get go we need strong fundamentals there and both Lightning and Tether are really good at that. And I'll talk about the synonyms talk a little bit.
Paolo Ardoino - 01:04:16:
Yeah, I think that it's important to see the difference between Holepunch and usually the other approaches. Right? So Holepunch is a data protocol. A protocol to create scalable applications that can share any amount of data really quickly. Right? So as we said before, the Holy Grail is data and then for a whole bunch and not transfer wealth. So Blockchains and Bitcoin and Lightning are providing the transfer of wealth. That's one of the reasons why Hot Punch there are solutions that are doing something similar potentially. But their approach is trying to use like network network. And for us it's not really scalable that approach, because that network is built with the first use case of delivering wealth. Wealth usually requires less bandwidth, less different data structures and even possibly than what we need to transfer data. Right? The Holepunch focuses on data and then of course, as Mattias said, developers should be paid for their work, right? That is really important. So payments are optional and they are part of the SDK so developers can quickly build and add payment system. The cool thing about the SDK allows you to actually get paid. For example, you are streaming imagine that you are streaming trading signals through whole bunch, right? So you are good mathematicians, you are good in stats, right? And you built an algorithm but you don't want to sell the algorithm, you want to just stream trading signals and you want to be paid per minute, right? You can do that, you can sell it through Holepunch network or you can stream it through Holepunch network but you are going to encrypt it only with the key of the people, the public key of the people that are actually paying them for you, right? So you are basically advertising yourself saying look, I have this cool trading signal feed and I want to be paid like 10,000 satoshi per minute or like two tatters per minute, I don't know. Right, random numbers, but still. And if someone stops to pay you, you just remove his pubkey from the encryption and so he will not receive your payments anymore. But both with Tele and with Lightning, you can do like micro payments at scale. You can actually provide that's just one example, but you can imagine like someone like Jordan could make a podcast and get paid for the entire for the podcast, for the full podcast or for by Minute, I don't know, right? But it could be you can actually create all these experiences and no, all developers, they just need primitives to get paid, right? Software primitives to accept or offer payments. Simple as that. And CNN actually is quite complementary, right? They're working on a bitcoin Lightning wallet that will support also tether on Lightning, right? Tether and Lightning, of course, for all the reasons we said before in terms of scalability and the fact that eventually share state blockchains are not going to scale really well in the future, it's important to have a solution that is channel based, like a sort of socket based for payments where that is one to one. And Cinnamon is doing amazing research on that part and also on the user experience of that, right? So we want to make sure that we don't fall back in having complex wallets also for users. Because if we are really willing to go to mass adoption and by the way, I believe that Heat and similar applications that we can build on Holepunch have the chance to reach mass adoption. So if you see how they're presented on a website, it's not like, okay, this is new crypto cool project, right? It's not like that. This is a video chat use. It is private, you can share files, you can do whatever in a video chat, right? Simple as that, right? So in this way, offering this application, focusing on the user experience without having to worry on complex architectures and back end infrastructures and data centers, you can actually allow both Bitcoin Lightning Network and other payment systems to actually increment their install monetary ways by ten folds easily. Because then you give a simple way to poor people to do the two things that they do care about, talking with the people they do care about, or the law with friends and so on, and also share wealth. That's it. And you have one in that way, right? As long as it's simple. It's for the bus driver, driver, for the cook, for the chef, for the teacher. If you get it right, you make it simple. You remove all that complex cocky user experience that we have in crypto where we pretend that everyone understands what we are saying. Then you can really deliver products that can be replacing what people are used to in their normal lives and still behind the scenes, giving them better preconditions in terms of privacy, in terms of security and so on and so forth, right? They will become a more private, more secure, probably even without knowing but we shouldn't pretend that everyone cares. We should just build applications that will push these features behind the scenes to the rest of the world, right?
Kevin Rooke - 01:10:17:
Something that just works and you almost forget about all the details because it works so well and you just want to use it for that purpose.
Mathias Buus - 01:10:25:
Also one thing I just want to add to what Paul said. Think about that use Case Palace in the beginning, like the person making and analyzing data sets, selling that. Think about what it means in a peer to peer network. It doesn't mean that you're streaming and maybe getting a CSV file. It could be, but it could also be that you're putting up another peer to peer app that's directly consuming that data for you and presenting it in a cool way. Now what if somebody has a better way of doing that? Then you just use a new piece of your app because there's no silos and you should do in that your data stays with you, is not being locked into some platform somewhere. You're in control, right? So basically through market economics, you always end up with the best sat possible because this kind everybody can compete against everybody. That's not like anybody who just said, well, I'm just going to log it all up and then you can just do what you want and I'm not going to innovate anymore. Then they just die out and you can move your data elsewhere. So it's almost by definition it's going to create better apps because of that, right?
Kevin Rooke - 01:11:25:
It forces everyone to compete on user experience and making sure the apps are like smooth as can be because there's no lock in the idea of being able to seamlessly transfer both information and money in this ecosystem. Seems like it's very broad, right? It covers it so much that it's almost hard to grasp. Are there any particular use cases or things that you think, man, developers going to build that and it's going to absolutely take off. This is going to be a really exciting first few use cases. I know you guys have been thinking about what developers might build. What are some of your favorite ideas so far for aspiring developers? Anyone listening to this conversation to build using Holepunch?
Mathias Buus - 01:12:09:
So many. But we're very excited about just all kinds of apps. But especially apps that take advantage of the fact that you can move a lot of data on peer to peer network. Even simple things like peer to peer VPN. Why does not a thing that just exists where everybody can access inputs and you can just fill traffic if you want to do that way or you can do it for free if that's what you're into. But like simple ways like that where instead of being logged into these online providers that we don't know what to do with our data, but then we can use an open network of it that's super exciting to me. Also things like if you look at things like search, right, search might be one of the most unethical things online because it's just these big companies ingesting all our data into selling our products. But the idea of search is really good, right? It's like finding things is very nice, that's why we all use it. Anyway, if you take that stuff and you made that peer to peer and you do the indexing locally then all of a sudden the unlocks you get from that are insane. That's like you can make killer products all of a sudden doesn't have to mind the data of the world but you can also still make things where you just can sell data to ingest because you have the payments and stuff. Instead of having one big mega monopoly of search engines, we can have tons of them in the peak to peer ecosystem, all solving problems and we can move the indexes locally which means that we don't have these big sets of data that everybody can be in mine and stuff. That's super exciting for me. So just like the explosion of monopolies into all these kinds of apps.
Paolo Ardoino - 01:13:43:
On my side, I would suggest that I agree that the search engine is one of the coolest ones because knowledge shouldn't be used against yourself and one of the main reasons of having search engines is like access to knowledge. If you don't have a fair democratic access to knowledge then it can create a really future in a way, right? Because the way the searches, the results are sorted is quite impactful on what people think. So it could be interesting to change that. But if I have to say another one, for example, it's mapping to me, right? I do quite a lot of work in the past also the university in mapping and when you go on Google maps but also if you use something like OpenStreetMap your computer, like you have like a nice UI that will fetch tiles, right? They are like these small square boxes of the world, right? So it's like a puzzle composed, right? Imagine that is first of all one of the easy wins of Holepunch, right? You can store all those tiles on a peer to peer network, right? So suddenly you can download them from local peers. In Italy you don't want to download tiles from a Japanese peer, you'll download them locally. But also even more so, one of the interesting ways on how big tech giants are monetizing mapping is now on the map. You search of course for restaurants, for schools or for this and that, for grocery stores and that is tone data indexed. When you are going there, you are checking in or you are nearby. That right. So that is information by itself when you are driving your car, that is information that will be using to understand if there is traffic and so on and so forth. So I think that if I would trust more like someone living in a small town imagine someone living in a small town in Italy to provide contextual and precise information about the different facilities in the territory and putting them on a peer to peer network rather than relying entirely on the sorting of the priority that maybe Google Maps is giving me when I'm going around. So I think that mapping with the amount of data that there is available, I feel like eventually search will be even more localized on two maps, right? So we are not seeing that yet. But maps are insanely powerful if you want to actually show information, right. Ton of information in this world is localized in specific location and coordinates. So you can actually build the best map and social map that you can ever do. And you can make that contribution based and based on location and data can be actually stored by the peers.
Mathias Buus - 01:16:54:
And like, imagine if you combine those things also, right? It's kind of like you go on the peer to peer search engine, you find the local provider that has high ranks based on the peers in the area saying this is the person that makes the best list of restaurants. That's like how we do it in real life. You would love to talk to a local thing to go here, right? You pay them for, but you pay a reasonable amount. It's not like a monthly subscription based on what they want there just between you and then you get them, you see the local map. Boom. That's what I love about peers-to-peers, all complementary. Instead of building silos and then every silo having to do everything, we just build small things and they all work together and then all of a sudden we're like, whoa, what happened? It's just like the insanity of it.
Kevin Rooke - 01:17:36:
And you can make that payment on Lightning or on Tether, and then you aggregate all these little tiny payments and all of a sudden you have this big network of global payments slinging money and information back and forth. I know we're running out of time, but I want to touch on one more final point on Holepunch, the business model for Holepunch and Pink. And what is the relationship between the different companies in this Tether family of companies? I just want to highlight that for listeners. So will Holepunch make money? Will keep make money? And how do the Holepunch, keat, tether and Bitfinex and synonym all relate to each other?
Paolo Ardoino - 01:18:21:
So maybe, Mathias, if you want to start otherwise I can just give it a quick overview.
Mathias Buus - 01:18:27:
Well, I can start on the whole point side of it at least. So basically, we made Keith. It's close right now. It's going to be open source later in the year when we open it up. Open source? If I didn't say that we're giving it away. It's very exciting. There's no secret agenda. All of a sudden we pull the rock and like now because it's all peer to peer, it cost us nothing to run. We're just very excited to get it out there and showcase exactly what you can do, which is obviously also a tremendous value for us. Obviously Op Punch is a company and we're working on various things on the network, services and stuff like that to monetize on in the future. But we're still also iterating exactly what we'll build. But the cool thing for me about PGP again is like it's this explosion of the market so there'll be lots of opportunities to make money for everybody, including us. There's going to be tons of services needing to be built, there's tons of infrastructure needing to be built. The main thing that's very important for us is we don't like build in like some weird token that has pay to play all of a sudden. Because infrastructure at the end of the day needs to be free and open because otherwise what's the point? And monetization has to happen like through things that actually create value and make the experience better and there's no shortage of that stuff, right either. And there's tons of ways we're kind of like navigating and like I said, we're going to release more in the future about that. And how can you talk about yeah.
Paolo Ardoino - 01:19:57:
I think that Holepunch, the entire initiative started with one thing in mind, right? It should be realistic and real peer to peer rather than fake peer to peer, where somehow, some way we retain the control of the network, right? So in a way it will be fully open source. So if people don't like what we are doing, they can fork it away, right? So that is always it. But one of the interesting things about whole bunch is that it will create an even playing field for everyone, even for us, right? So again, we don't have the control. So we are providing the tools to all the developers to create applications and we are developers ourselves, right? So we have tons of ideas where we are of course creating capital, creating ventures that will maybe imagine like peer to peer VPN or like, I don't know, an indexing service, call indexing service or whatever you can think about, right? So it's not like usually when it comes to companies and the classic thing is okay, I want to make 99% of the money, the rest can make 1% of the money. But we started a Whole Bunch with a different vision. In a way it's also giving back to the community and if no one is willing to do that, nothing will ever happen, right? So here's the dilemma. If you are not building actual peer to peer check, then the only results you can ever get in your life is that big tech companies will make even more money. So we already tried that. So it's better to try something else, right? And there is a ton of money to be made for everyone because you can recreate all the apps. Imagine also the Shazam or whatever application you have there. In its going back to what Mathias was saying, you can build algorithms that recognize songs better than others, right? You can sell that algorithm, you can provide, you can listen to music through this peer to peer Shazam and you can identify the music, right? So everything that has been built today can be built on top of peer to peer with much less cost. Any developer can compete with big corporations. So there is a ton of money to be made for everyone. We are not definitely not greedy. Otherwise we wouldn't have contributed for so many years in open source stuff ourselves. And when it becomes to tether ambit Phoenix for us, we have two successful companies, arguably centralized. But we do what should be done in our opinion. So first of all, the main meme is we are all in for the tech where people laugh at it, right? So for us it's actually real. I hope that your listeners can see it, right? It's not all about making money. Of course. We are running two companies and the Holepunch is a company. So companies need to generate profit to be sustainable. But it's even better that it's an extremely profitable company never took one single dividend out of their revenues ever, right? So for us, ensuring that we can do what we are doing for the longest time possible and subsidizing great ideas and funding great projects is the only thing that matters. In the end, we are all simple people. Like I don't have any lambos, don't plan to have and so on. And this is true for everyone. At least in our inquiry system. The mission is much more important than your personal status. You want to create a cool thing and at the end of the day you want to be proud of what you have built. And there is a huge space, right? There is a huge space that we are creating to make more money. But we want to be exactly as in Bitcoin. Nothing is pre mined. In the case of Holepunch, the pre mining would be like a token, right? So creating the tokens around the network and like keeping 70% of the supply, that is something that we are completely against. And that's why we wanted to start with something that is talking agnostic fully free and so on and so forth. So for us, it's really giving back to the community and have some fun and be excited what we do at the end of the day. And the same thing applies to.
Mathias Buus - 01:24:33:
And I just want to add like we only know each other for a long time and this is like from the beginning we're both kind of uncompromising people in terms of like the only thing that matters. So the main thing that matters to us is like just building really good apps and software. That's why we do open source, that's why we do anything. And in my future career, I've been in here for a while, I met many people, they're always like, well, you should do a token, you should do this. Paolo was like the first person to just be like, just keep building good software. And that's what we've been doing the last entire time we know each other. So I don't see why we're not going to do that the next five years. Also, it's kind of like in our blog.
Paolo Ardoino - 01:25:11:
Kevin Rooke - 01:25:12:
I really enjoyed this conversation. This was a ton of fun. I actually have a couple of extra questions, rapid fire ones, if you guys have a couple of extra minutes. Sure. I do a segment called the Lightning Round. So, are you ready for the Lightning Round?
Mathias Buus - 01:25:28:
Kevin Rooke - 01:25:28:
Welcome to the Lightning Round, presented by Zebedee, your portal into the world of bitcoin gaming. The Zebedee app offers a full featured Lightning wallet, seamlessly integrated with your own personal gamer tag so that you can earn Bitcoin on all of Zebedee's games on mobile and desktop. It's never been more fun to earn Bitcoin and Zebedee is your key to it all, to claim your personal gamer tag and start earning some bitcoin of your own. Download the Zebedee app today. Paulo, in February you announced on Twitter that Bitfinex had processed 10,000 Lightning transactions in the last 30 days for about 100 bitcoin of volume. Have you noticed any meaningful changes in Lightning activity through BitFenix?
Paolo Ardoino - 01:26:17:
I can easily say that they are more than doubled as of today. The size of the network, the amount of Bitcoin locked as going higher over the last few months. And we are seeing actually more and more users excited about Lightning payments. We also have that to the Bitfinex app. We have Fast Pay, that is a Lightning first approach to send the payments from our Lightning note from your Bitfinex account. And people are usually using that to pay for an El Salvador or paying for groceries in the shops that are using it. So it's super exciting.
Kevin Rooke - 01:26:52:
Very cool. Is Bitfinex earning from the routing node right now? And if so, do you suspect that routing fees or channel liquidity, like buying and selling liquidity will be a bigger source of revenue for BitFenix?
Paolo Ardoino - 01:27:09:
Okay, this is a tricky one. I don't want to give an unpleasant answer, but I don't think routing will be money driver for network. I think that it will be always negligible. I think that liquidity is always there. We are a good provider of liquidity in the Lightning word. We have two nodes averaging 350 bitcoin each. So we are a good example of not interesting to make fees in routing. I believe that the amount of fees that you can make in routing will remain negligible for the foreseeable future, and especially number of hubs will be as limited as possible. There will be some sort of centralization also enlightening hubs, so that will reduce the necessity of doing routing. So I don't know, it feels to me that making money on routing is a little bit far fetched at this point.
Kevin Rooke - 01:28:05:
Do you think that selling channel liquidity will also be a low source of revenue, or do you think that could complement routing fees?
Paolo Ardoino - 01:28:13:
I think that that could complement routing fees. It's definitely a more interesting business model to me. I know that John is really looking too deep and actually is betting heavily on that, and I believe that is the right path.
Kevin Rooke - 01:28:28:
Got it. Okay. How much stablecoin payment volume will be happening on Lightning in a decade?
Paolo Ardoino - 01:28:37:
That's tricky. I believe that we're going to see around 100 million transactions per second in a decade, because for all the IoT stuff, that will happen again next. If you have seen the video from Boston Dynamics where the guy, the robot that was doing like back flips and so on, you can imagine that in ten years this thing will teach at universities and will pay for the bus the bus ticket in order to get back home right. Somewhere in some pod. So I think that machines are much faster than us, much smarter than us, will be much smarter than us, and so on and so forth. So I feel like it's going to be an enormous amount of transaction per second. I think that in order. So just to be clear, Tatter is not better than bitcoin. Absolutely. Bitcoin is better than anything else. It's just that tether offer short term low volatility compared to bitcoin. And that is, in a way, if you are like a computer would probably like the predictability, or you are an AI, you would like to see the predictability of the payments that you are doing, and hence you might prefer for the short term to use a stablecoin. And again, I'm not enjoying that. I believe that the long term should be bitcoin first, but this is my two cent on this specific matter.
Kevin Rooke - 01:30:12:
So that's my follow up question. In a decade, if you have 100 million transactions a second, we have a ton of volume going through. What percentage of that volume is dollars versus bitcoin? In a decade?
Paolo Ardoino - 01:30:27:
I would hope that it's 70% bitcoin.
Kevin Rooke - 01:30:31:
Okay, I like it. If you could change one thing about bitcoin, what would you change?
Paolo Ardoino - 01:30:42:
Let's you want to go first on this one?
Mathias Buus - 01:30:46:
I was just more like stop putting everything on blockchains in general and use the data structures that matter. Blockchain is great for financial stuff. Bitcoin is a great example of that. But especially all the blockchains, there's too much stuff happening centralized. The rest are decentralized, the rest I.
Paolo Ardoino - 01:31:06:
Think that's the thing that for me, the things that in general, not that I personally don't like, but the things for. Which bitcoin is most criticized are the things that are making it stronger. So in a way, all the last bit of problems that are raised against bitcoin are the things that are making it inherently stronger. As a monetary system, bitcoin is not made it's fun. Like you have the other favorites of bitcoin, like SB, that pretend that they want to do a Holepunch just with big blocks. Right? You have like the Terabyte block on bitcoin. SV. I'm sure that I didn't ever met Satoshi, but I'm sure that Satoshi didn't have in mind to have 1 TB blocks. Right. So that is from any computer science scientist is like pure craziness.
Kevin Rooke - 01:32:05:
Right? Okay, I want to finish off with a book recommendation. Can you each share a book that has meaningfully changed your view of the world?
Paolo Ardoino - 01:32:18:
I think I mentioned it like the cathedral in Bazaar from Eric S. Raymond.
Kevin Rooke - 01:32:23:
I haven't heard that one. I'll give that one a read.
Mathias Buus - 01:32:26:
I mean, I really enjoyed there's this amazing book on the pandony locks about how the Kafka system works and that kind of changed my perspective on decentralized system that's more on the techie side. I'm sorry, I'm a big nerd and it's very thin, which I like.
Kevin Rooke - 01:32:41:
What was the name of it?
Mathias Buus - 01:32:43:
It's called Append only logs and it's about the capcas system, which is a decentralized system but very educational and to the point book, but Powers is more inspirational. You should definitely read that one. I read that one all from school.
Paolo Ardoino - 01:32:58:
It was basically related to, if I'm not wrong, like the worst, the kernel worst. Right? So you have like Linux that was actually the monolithic system, right? So then you have Linux or you have like new board built by stolen and others that was all about micro services. Even at the kernel level, that is basically peer to peer at the kernel level. It's pretty cool in an over purchase, actually.
Mathias Buus - 01:33:27:
It was a requirement when I went to university that we read that books on the cathedral. We got created in it. But also, I just want to say, if you ever look at great Peter peer systems, there's a heavy distribution of them in the Nordics where I'm from, because people love Peter Peer up here because we're small countries and we get locked off from the world a lot. So we're all about small networks. But I'm sure that's part of it also through the system.
Paolo Ardoino - 01:33:50:
But you have been historically traders, right? In the Northern, yeah. So traders are bazaars. You send ships around the world and you buy stuff. You buy stuff you can sell like silk, you can cotton. It's how you should be.
Kevin Rooke - 01:34:11:
I like it. One final thing before we go. Where can work in listeners go to learn more about the work you guys are doing?
Mathias Buus - 01:34:19:
So we have a website, q IO go there, get the app. We link to our discord there where we are very active and the rest of the team also, we're very active talking about the stuff on Twitter until we get our decentralized alternatives, hopefully in the future, but I think that's the best way to catch up.
Kevin Rooke - 01:34:39:
Awesome. Thank you so much for taking the time, both of you. I really enjoyed this conversation and I'm sure listeners will too. Hope we can do it again soon.
Paolo Ardoino - 01:34:47:
Thank you very much. Kevin.