James Andrew is the CEO & Technical Director of Global Liquidity, the company building a product called Lightning Bridge to connect apps like Cash App and Strike with crypto over the Lightning Network.
In our discussion, James explained exactly how Lightning Bridge works, why the Lightning Network is the perfect payment rail for currency swaps and transfers, and we discussed Web3, Taro, and more.
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00:00 - Intro
02:19 - James Andrew Intro
06:24 - How Lightning Bridge Works
11:02 - Lightning Bridge vs. Strike
15:21 - The Different Types of Lightning Node Operators
23:38 - Why Do Institutions Care About Lightning?
29:22 - Will Wrapped Assets on Taro Disrupt Lightning Bridge?
37:24 - Is The Lightning Network Necessary for Digital Payments?
40:48 - Lightning Bridge Competitors
54:08 - James Andrew on Taro
1:00:50 - How Will The Lightning Network Change The World?
1:06:52 - The Lightning Round
James Andrew - 00:00:00:
We were heavily inspired by Strike and how Strike is essentially using Lightning as rails to bridge from fiat to fiat, one type of fiat to another. And in a way, as a business. I've come almost to look at these other tokens as just other new Fiat 2.0. For instance, you go to any wallet like Metamask or Phantom, they always have a section there for add funds. And what we're going to be is the first funding source that supports Cash App, and Lightning. We're learning how especially that you can offset the cost of rebalancing. You can actually earn yields on your node while processing payments from customers. Wow. So you can have an actual return on your payment processing rails. What I'm really excited about here is a future in which Lightning node operators are actually able to offer what you might call cloud computing services to actually compete with Microsoft and Amazon.
Kevin Rooke - 00:00:59:
James Andrew is the CEO of Global Liquidity Company, building a product called Lightning Bridge, which connects apps like Cash App, and Strike to crypto using the Lightning Network as a payment bridge. In our discussion, James explained exactly how Lightning Bridge works. We even got some product demos for anyone who is watching this interview on YouTube. We talked about why the Lightning Network is the perfect payment rail for facilitating currency swaps and transfers, and we even discussed Web3 and Taro. I've also added James to today's show splits. So if you enjoy 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. There are dozens of Podcasting 2.0 apps you can use to do this, but my favorite to use is Phantom. Quick shout out 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 Stakwork. Stakwork is a Lightning powered transcription tool that combines the best of AIs and humans to create better, faster, and less expensive transcripts. We'll have more from Voltage and Stakwork later in the show. James, welcome to the show. I am thrilled to discuss this topic. Today. You're building a cool project called Lightning Bridge, and I want to learn all about it. But before we jump into it, let's give listeners a bit of a background on you, how you got into Bitcoin, why you're deciding to build on the Lightning network.
James Andrew - 00:02:40:
Oh, wow. Hi, Kevin. There's a long story there. I would say I really got into Bitcoin and crypto very seriously in 2017 when I saw all the trading happening around it. And I had formerly been deeply involved in algorithmic trading on Wall Street. I used to run trading floors. One time I ran a firm that had 27 offices, and all the trading was going through my monitors, and I had to keep it running. And around that time, I also did some of the first cross exchange arbitrage trading with like high frequency bots before it was called high frequency trading. And so when I saw crypto and I saw those early exchanges like poloniacs and GDAX, etc. and I saw these order books, it kind of reminded me of the excitement of what I felt thought of as the old days when day trading was a hot thing. And I said, oh, there's something hot going on here. And then of course, I learned about bitcoin and learned how what in a wonderful invention it is, and even got into understanding the intrinsic value of a bitcoin and really understanding why it's important. I think it's one of the more important technologies ever, possibly the most important technology on earth right now in a lot of ways. And then in Lightning the way that we got to Lightning is I started this company in late 2018. We've been trying our best to find product market fit in an extremely volatile world, starting as a company that was working on doing a new kind of presentation of markets in three dimensions, showing like the order books flowing at you and using sights and sounds to create a new type of a next generation trading terminal. We found friction on that. And then we ended up pivoting to a game that was a game based around this, which we still have and still want to market later. But along the way for the game, we decided to monetize it with Lightning. And so we made a system that allowed users to scan the QR code with their phone and receive gems that they would sort of bet on these rounds of high speed trading. And it was so cool, but the game was too hard to get out there to the world because we couldn't push it, we didn't have the budget. But we realized this Lightning thing, there's something really awesome about this, about the immediacy of the experience and how much better it was than anything else out there in payments. And so we first pivoted to try to turn that game into a trading terminal on mango markets, on Solana, which is a Dex, right? And so we said, here's where we'll bring it in. And we added to it the ability to fund our trading account with Lightning. And we showed that down in Miami at the joint bitcoin 2022 conference. And it was also a Solana week. And I was over at the Solana house building this thing, and we demoed it. And people liked the trading interface. But when we showed them that we could scan the QR code and all of a sudden the money was in the account, the crowd went wild. And I said, whoa. Over the next few days, this is what is hot here. It was like this process of discovering what's the real hot thing. And so we realized if we generalize this and allow people not just to fund a mango markets trading account. But use Lightning to bridge to these other chains that have demand right now, especially for stablecoins USDC. On all these other chains. There's a whole world of merchants and online interests that want to work with these stablecoins. And we can bridge bitcoin to it generally through a product. That's what set us out to make this thing that is called Lightning Bridge.
Kevin Rooke - 00:06:24:
Very cool. I love that. Backstory on your website, on Lightning Bridge’s website, you describe it as your personal Web3 ATM. Can you give listeners a little more background into like exactly what that means and how it might work?
James Andrew - 00:06:39:
Yeah, well, actually what I could do right here is I could just show it. This is Lightning Bridge. This is Lightning bridge ATM and it's current form. Now we're currently working on revising the way that this is delivered. I'll get to that in a minute. But let's see. We're starting up here and let's see. There we go. So we've just logged in. Now what's important here is that to get here, I won't go back and show it. But I just logged in with a regular Google login because we are partnered with Web3 off, which is a company that does some year secret sharing to custody the key. But we created a decentralized, a real self custodial wallet for the user. And then if we want to deposit into it. I'm sorry, it seems like it's flickering on my end, but hopefully it's not too bad. So what I'm going to do is I'm going to hit deposit and I say, what do I want? Let's say I want USDC. And in this case I'm connected to Solana and I want just $5 of it. And I'm going to use bitcoin Lightning. I'm going to hit confirm. We have this little terminal here that generates the QR code. Now I'm going to pull up particularly of Cash App. When I saw that Cash App integrated payments for Lightning, I said this is what really made me decide to push in this direction. And of course, I know Danny from Cash App. You had him on your show, really smart guy, doing a lot of cool stuff with Lightning. And he helped them get set up. He was the one that said, hey, let's do Lightning there and a really cool story there. And what we do is just scan the QR code. Now I'm going to hit my pin. I hit my pin and we detect the payment, done. Just like using an ATM, the tokens are in your wallet. That's it. And we can withdraw the same way. I won't show it right now, but we can withdraw and it will actually pop up an approval and we will receive. Well, actually I forget to show it. Why not do that? Let's do that. If let's say we want to take the money out, I'm going to withdraw $5, bitcoin Lightning confirm and we show just an approved pop up. Because remember, these are our funds. This is what I call like vending machine custodial. We're just putting the funds into your self custodial wallet so you have to approve to send them back out to us. We don't have them. It's not a custodial solution. It's not a custodial sort of a hybrid. We hit confirm. Now what we're doing is we are sending that whatever token it is, in this case, it's Soul on Solana to us when we've received it. We just scan that QR code and I use wallet of Satoshi. That time, our balance is down, the stats are in our wallet.
Kevin Rooke - 00:09:25:
James Andrew - 00:09:26:
So that's it. What's going on behind the scenes? There's a lot going on behind the scenes that's very interesting because what we're really doing there remember I said we were working on a trading platform and we were doing like automated semiautomated trading algorithms even. We're still doing it, but we're doing it behind the scenes on behalf of the user. So every time that you hit deposit and you confirm there, what we're actually doing is we are triggering what's called an Azure serverless workflow. It's like a state of the art microservice architecture, like you would run in AWS Lambda DevOps. People would know what I mean. It's a scalable architecture that's very performant, that does a number of things. It actually processes the payment, it does the whole generation of the QR code. And for that, we're actually generating that on our own Lightning node. We're using Ln bits to generate it. And we actually have Lightning channels set up to the nodes that we need to get to so that we get our payments directly from wallet of Satoshi or from Cash App or any of these other wallets. And what we do is we then trigger this workflow that detects the payment. It actually goes out and sources the liquidity and does a trade in under 400 milliseconds. Then we actually automate and ensure the reliability of the delivery of the tokens into the user's wallet. And then once we know they're there, we turn this all into a hopefully pleasant user experience of receiving that money into your wallet or getting it out of your wallet. And so that's generally what we're doing.
Kevin Rooke - 00:11:03:
Very cool. I have a lot of questions. Let's maybe start with comparison that just popped into my mind. Is it fair to say that what you're trying to build here is comparable to what Strike is doing in the Fiat markets? You're doing this in the crypto market, strike is doing in the Fiat remittance markets. Is that roughly correct?
James Andrew - 00:11:25:
You hold on to get myself in the middle there, yes. I would say that we were heavily inspired by Strike and how Strike is essentially using Lightning as rails to bridge from Fiat to Fiat, one type of Fiat to another. And in a way as a business, I've come almost to look at these other tokens as just other new fiat 2.0. It's I know what they are. You know, I'm a bitcoiner when it comes to understanding where the real store of value is. I understand the value of bitcoin, but I also understand that the world is finding utility in these other things. I just got back from the converge conference. I went to two conferences. First, I went to mainnet in Masari, mainnet in New York two weeks ago. Web3, a lot of infrastructure stuff, all these competing layer ones, all these names I hadn't heard of in awhile, like stellar was there, like, names from years ago, and they're still cranking along, doing something, but the energy wasn't that great. It was like bear market, not that great. But then I went over to San Francisco last week, and it was the converge conference. And the converge conference was put on by circle, the one that does USDC, and now they're doing USDC on many chains. So wherever you go, it's USDC. And this conference this conference, Kevin, was one of the most energetic conferences I've been to. I've been to probably like, many dozens since 2017. And you feel the energy in the room. That room was filled with people that were more excited about the whole stablecoin thing than the people over in Maine that were right now about what's happening in Web3. So I really paid attention to that. And so, yes, if we can be a bridge, we're working to be the definitive bridge. Particularly, we're working with our first target and chief target with Cash App. We want to make Cash App users be able to transact in all these Web3 chains. Because if you look at it, there's actually more Cash App users than there are in all of Web3 right now. So these are the kind of doors I'm looking to open, and Lightning helps us open it, but in a way where many times, in an ideal case, the user doesn't even know that it's Lightning. Doesn't even tell you about Lightning. They're just a user of this app. But what's happening is Lightning is finding a really strong use case in the background in terms of relationships between institutions, even, because we can now transact with Cash App users via our Lightning infrastructure for nearly free. I mean, relative to the 3% that you have to pay to clear a credit card transaction. We're learning how especially that you can offset the cost of rebalancing. You can actually earn yield on your node while processing payments from customers. Wow. So you can have an actual return on your payment processing rails. And this use case, I think, is only starting to be discovered, and it's starting to be discovered by the you look at the list of top nodes, who has them? Kraken has a node, Okcoin has a node. And you've got more and more nodes out there, yet Danny has a node that's really taken off daisy, right. And he's doing these rebalancing, right. It's this whole world happening. It's like a club that you're in it by nature of the connections of your channels. And when you're in it, you have the ability in that club, in that network, to be able to transact at a just much less friction and much less cost conditions than in the regular old world. And it's very exciting, very cool.
Kevin Rooke - 00:15:21:
So, in a way, anyone participating on the Lightning Network running a node can benefit from all these transactions happening between Cash App and, say, some Web3 project. Right? Yes.
James Andrew - 00:15:36:
There's two ways that I see that you could benefit right now from the Lightning Network as someone that wants to get into using it and deploying capital into a node. One, and this is what Danny is really pioneering a lot. He's been working on interesting ways to add value to his node and to the network. And in so doing, he's doing things like he's actually got an API where he'll pay you to send him sats because it makes sense for him because he's earning yield through certain techniques that he uses on his node. Right. So for him, the operation of the node in terms of its routing of payments and his yield, in which all these routines also are helping the network at the same time, that's like a very base case for using Lightning. But what we discovered, what I discovered is that there's a very different use of Lightning, which is when you're a business that wants to process payments from a payment provider like Cash App, you have a different way that you're going to set up your node. Because what you're wanting to do is you're not so much concerned about earning yield on your node. But what you are concerned is you want those 44 million people to have cash up on their phone, wherever they are, to be able to scan a QR code, and you never want to see it fail, because if it fails, they're not going to use it. So how do you set up your own node to be able to do that? A lot of people would use a service like OpenNode, and we've made use of OpenNode. It's a great service. If you are in the business of actually doing what we're doing as a company, it might be worth it as a business just to pay them the 1% to do it, and they do it. But what we've figured out, I'll show right here. Here's our node on Lightning Network plus plus. I didn't have a node at all a few weeks ago, and now we've got a gold rank node. How do we do that? And I did it in two days, two to three days through a technique, a process. And what I did is actually first emailed Danny, I said, because I know he worked at Cash App. And I said, Danny, how do I get connected to the Lightning Network to make sure I can process payments. And he said it was like a mystery novel, it was on a hunt. And he's like, okay, you've got to be able to open up channels to open node to River Financial and Okcoin, because they're directly downstream from us. So, okay, now I know what to do. I start opening channels. So if you look at my channels here, look at my channels, I've got OpenNode, OpenNode, OpenNode. And look, 10 million sats in each of them. And then I got I've got them to Kraken because we actually use Kraken. I've got them to wallet of Satoshi. And I've got all these different channels. In fact, even show it right here, just the graph of it. So you've got all these channels here, right? And all that green. That's the ability to receive payments from Cash App users because those channels are loaded up in the right peers. So that it's the shortest hop from Cash App to my node. And so what that means is by doing this, by opening these channels in a strategic way to the strategic partners, the strategic payment partners, you all sudden are able to open yourself to be able to process payments from this whole world of people. And I think this is a very exciting new way to use, doing a sort of think about Lightning new perspective. And I've even done an experiment of relaying this liquidity to another node that I set up over a single channel, and. It totally works. So I see there's a role here for being something like a Lightning service provider to other companies that want this benefit. So that's what we've been doing with setting up Lightning for our payment processing.
Kevin Rooke - 00:19:28:
Very cool. So now what are people using Lightning Bridge for at the moment? Do you have a sense of why users are using it today?
James Andrew - 00:19:38:
Well, here's the thing. We don't have many users using Lightning Bridge right now. We have a few, but not a lot. And it's because we realized that, first off, we only just released it, and we have not marketed it yet. We are contracted with a really great firm that's helping us greatly to do that first marketing push. But along the way, what we're doing right now I have my Dev team working is we realize it's a big ask to have people come to a site and have them adopt this new wallet that's created for them. We've learned that they really just want to deposit into their own wallets. And so what we're doing is we are repackaging exactly what we have with slight differences so that it will appear as a payment source on wallets. For instance, you go to any wallet like MetaMask or Phantom, they always have a section, therefore add funds. And what we're going to be is the first funding source that supports cash App and Lightning because none of them do. So we're repackaging it that way. And we already have interest from some of the I've been talking to some of the executives at some of the wallets, letting them know we're in the process of doing this. And I expect that we're going to be able to be integrated without much friction because why would they not want a nice new funding source? And so that's what we're doing right now. It's here. Anyone can use it. But we haven't really gotten that traction on this yet. So we're turning it into the payment widget now.
Kevin Rooke - 00:21:03:
So I want to make sure I understand that correctly. If you are connecting with, let's say, MetaMask and you're a funding source, it'll say something like add funds with Cash App and it will be using Lightning Bridge on the back end. Is that the idea?
James Andrew - 00:21:17:
Well, it'll be add funds with Lightning Bridge and it will say supports Cash App Lightning. And there's several other payment providers, but we're focusing on Lightning. But we're also working to support we're integrating it right now. Just direct Cash App. It's funny, there's these little pieces of friction like currently on Cash App, if you want to scan a QR code on Lightning, you have to first buy Bitcoin. Unlike strike with strike, you don't. And so I'm really hoping that they will add this feature. I've actually been talking to several of the people at CashApp about this topic and they're expressing interest in working with us already. And we've begun just discussing this. All they really need to do a Cash App, if you're listening, all you really need to do is make it so that any Cash App user can scan a QR code and automatically do the buy on the back end. And then we won't even need to integrate their regular API. But what we're doing is we're integrating the regular cache app API so even non bitcoin users can use it. But then we're going to tell them on the interface, hey, just buy some bitcoin and you can do this for much less cost.
Kevin Rooke - 00:22:22:
Right? So on Strike right now, you don't have to buy bitcoin to scan this QR code. Do you think that this is going to be a bigger use case, this idea of being able to move funds right into a Web3 wall? Is this going to be more important for people with Bitcoin or people with just Fiat?
James Andrew - 00:22:41:
I'm going for people with Fiat if Cash App will just add that feature. And even so, it's already Strike, for instance, Strike, Jack, if you're watching this, your perfect partner for us, because Strike works with us right now with Fiat. So in the Strike use case, all you got to do is use Strike and you're using Fiat today. Anyone can try this. Lightningbridge.com is up. We're just working it into this new form. But the ATM is there if anyone wants to play with it. And yeah, you can use it with fiat. I really think that Lightning is more and more going to recede into the background and that there's going to be more and more on ramps that just essentially link people's fiat in various ways. And then the institutions are using Lightning as rails, much the way that that strike has already realized that that's a very good thing to do. Why don't we all do that for intrainstitution messaging of money, let's use Lightning.
Kevin Rooke - 00:23:38:
That makes a lot of sense. Do you think the institutions are more interested in the speed of Lightning, the low fees, the reliability? Is that a big concern? Like, what is the vector by which institutions are going to be migrating to lightning?
James Andrew - 00:23:57:
I think it's going to be when they realize that they can cut middlemen out in terms of transaction processing costs to the tune of almost 3%. Like, if you look at an industry standard of around 3%, sometimes it's two point something for various forms of moving money that have to do with the ACH or credit card system. Anywhere you go, you'll find the fees are similar, including for us when we're processing these transactions. But when we process a Lightning transaction using our own node, how much does it cost us? It costs us the use of the capital, which is relatively minimal, actually. To be able to keep these channels open enough to serve our customers and the rebalancing of the channels, you have to be able to rebalance in some way. And all that costs some facts, but when you add it up, it's not 3%. It's much, much less than 3%. But it requires, at this point, some expertise of someone that understands Lightning, channel rebalancing, et cetera. Which is why it's not something that is yet adopted at large by institutions, but those of us that are in institutions or companies just in general that are seeing and the benefits of this, it's very easy to extrapolate and say, why wouldn't everyone want this? This is going to inspire a market. Well, there's one thing that's holding it back right now, and that is that the only thing you're transacting is bitcoin. That is one thing, but consider what was just released the other day. The first binary of what? Taro. Right? Most people on this podcast probably have been tracking Taro. I think it is a very exciting, exciting thing. I was really excited for Ryan Gentry was telling me about it last year. He was so excited about it and immediately I was because he's really good at explaining things from Lightning labs. And then I've been hearing him, he was saying, well, we're going to have a binary. You know what, they do have a binary, right? It's not vapourware, it's actually there. What does it do? It allows you, for the first time to issue an asset that is not bitcoin on the bitcoin network. So I think what you're going to see very soon. A very logical first step. I actually have been approached circle about doing this, being one of the first to do this. We may do it at the conference is you can take, for instance, USDC, the stablecoin, and you can wrap it in a Taro asset. So all of a sudden now you can flip the whole narrative. Basically, the utility of these other networks for transacting these tokens is inferior to the utility of Lightning. Lightning is a superior way, faster, more scalable, less centralized. There's many things about it that are better, I believe. And money tends to gravitate almost certainly to the fastest means of transport as technology moves forward. If there's a new way to move money, guess what? The money is going to go that way. Because being able to move money quick is super important. And so I think that what we can see. I have a vision for the Lightning Network. That the Lightning Network's. One of its major uses could be that it becomes a sort of swift network, like the swift messaging network with banks across all these other chains. And especially when you consider Lightning is not even technically a bitcoin protocol. It's implemented on bitcoin. But if you read the Lightning white paper, the actual in the Lightning white paper in the last page, it talks about use cases. The last section. And one of the use cases is interchain swaps. Interchain. I forget exactly how it's phrased there, it's interchain swaps. And they write about Taj, I forgot the other guys who wrote it wrote about the submarine swaps and how it is possible to implement one half of a Lightning contract on a chain that is not bitcoin. Because a Lightning contract is called HTLC, right, a hash time lock contract. And it's possible to implement one end of the contract on another chain. It's actually been done and published at least twice. It was done in 2018 with Litecoin, and recently it was done by someone else. I think it's still up Lnswap.org with stacks. And he's doing trustless noncustodial swaps. Now, we're not using that technology right now because they're slow. Right now, the way he's doing it, it has to confirm on the main chain. But there is this ability for Lightning to essentially be implemented, possibly even actually implemented like the full thing of other nodes. But even without that, even just being able to do trust the swaps, and even the kind of swaps that I'm doing, which are the sort of vending machine custodial swaps, lightning all of a sudden can become a very good way for moving all of these assets around, particularly these stablecoins.
Kevin Rooke - 00:29:22:
Yeah. Now, on the topic of Taro and wrapping stablecoins, does this disrupt the Lightning Bridge business that you're building? Right? Like, if you have now the ability to swap on the Lightning Network, what is the need for the Lightning Bridge product? I guess I'm.
James Andrew - 00:29:41:
I’m glad you asked, Kevin. Kevin, my plan with the company is to stake out this territory progressively, which is why I intend to be the company that is pursuing these things. I've already been working with Taro. Right. But still there are things that need to happen because these swaps don't solve everything because you still need to agree on a price.
Right? And a lot of times that receives into the background and discussions of this. But it's critically important. The swaps do not provide price discovery. They do not provide what you might call an order book and the agreement of the price or the liquidity provide. Somebody has to be essentially the liquidity provider. I have a vision for the way this will go and intend to be building out technology that will eventually go in that direction. But right now there's this very easy way to do things that actually has superiority to any form of these trustless swaps in terms of actually how it works. Right now it's just better. It turns out that a hybrid approach for right now, I think, is the way to go. But we're certainly going to be pursuing these things as tomorrow becomes available.
Kevin Rooke - 00:30:58:
Right. Now when you say a hybrid approach, can you break that down and talk about what that means? You mentioned earlier this was noncustodial. Can you explain how this hybrid approach varies from centralized exchanges, what you might find on other wallets, what's the spectrum like?
James Andrew - 00:31:18:
Yes, let's see if I can pull up a graph. Here a diagram of this. I think I can. So what I mean by that is that here I'll show right here if I can show my screen again. See this right here is a diagram of our Azure serverless workflow. These are not on chain things, right? This is off chain. There is stuff running at Amazon, but what it's doing is essentially automating operations that generally result in interacting with a user's self custodial wallet. So we're not custodial, but we're using this. You got to have code running somewhere. So we have this code running on Amazon I'm sorry, on Azure, microsoft Azure as almost a traditional SaaS platform that does this sort of advanced workflow automation that orchestrates these operations. But the net result is that when you're done, you have tokens in your own wallet and not a wallet that we control.
Kevin Rooke - 00:32:31:
I see. Now I want to double click on the enthusiasm around stable coins that you saw last week.
James Andrew - 00:32:40:
Can you talk to me about what.
Kevin Rooke - 00:32:41:
People are excited about specifically when it comes to stable coins and what you think they might use Lightning Bridge for if they're bridging into stablecoins?
James Andrew - 00:32:49:
Yeah, I think people are really realizing as people that want to be provide some sort of a service, whether it's NFT related, whether it's even like charging for some game or whether they have some form of actual good or a service, which is another thing that people are starting to explore receiving, quote, unquote crypto payments. It turns out they generally don't want bitcoin because bitcoin is very volatile. And anyone that wanted bitcoin a bunch of months ago and got it last year when everyone was really excited about all the people in down in El Salvador that are using bitcoin, all the locals, well, that bitcoin is worth a lot less now. It just is that's a part of bitcoin's progress. And as a merchant, that is practically difficult and an untenable situation if you're starting a startup to have the currency that you're receiving and possibly go down 60% or more over the year. So people have been feeling, wow, it's better if we can receive some stable form of value. And it turns out that large masses of people don't mind that it is USDC, that it is essentially Fiat backed stable token because it actually provides utility. For instance, these payments can be made borderlessly if you're paying for a contractor somewhere, you can pay in USDC, right, all over the world, because then there's more and more ramps for going to your local Fiat. So it kind of much like the Lightning Network is a really good means of moving, of moving bitcoin around. USDC is a good construct for moving this sort of virtual fiat around and people are seeing that. And there's a whole ecosystem arising around this business. I mean, Visa had a big booth there. So this is like the border of the border of what you might call Web3 and fintech. And there's energy there. There is. And it's a very interesting thing that I wasn't expecting to see, but I was very surprised by it.
Kevin Rooke - 00:35:04:
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 away 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.cloud. I imagine there's a big community in the stablecoin community. There's a big group of people that believe that stablecoins are an innovation that's going to allow anyone to take payments over the internet. And I think in the bitcoin community, people go, well, why don't we just go straight to bitcoin? That's the money, that's the store value. It's eventually going to be the medium of exchange everywhere. And so I'm trying to think about how to bridge this gap. And I think the Lightning Bridge product is one way to do that. But I wonder if there's a do you get the feeling that there's a group that just thinks that they can do it with USDC and without Lightning?
James Andrew - 00:36:16:
Yeah, they're not thinking about Lightning now because they are using the existing chains to do it, including just sending it on ETH. Sending it on or just purchasing it with a credit card. Right. And then it just appears on chain. But it takes a while. It takes like, usually minutes. And it's a clunky process. Or I'd say the fastest experience of it is with Solana Pay. Solana has a thing called Solana Pay that's like a mobile. I think it's actually an app that you could hold USDC in it, and then you could just scan a QR code and you can pay for something much like with Cash App if the vendor takes it. So they're trying to get into the whole payment processing, merchant processing, like Square. You know, vendors, they want to take payments. Maybe vendors want to take payments in USDC. They're approaching it without Lightning. But I believe that Lightning is superior to Solana in many ways for this purpose. Although I admire their innovation in the area, I think that Lightning has some real advantages. Not to say that that will succeed in its own right, but Lightning has unique advantages.
Kevin Rooke - 00:37:23:
Yeah, I agree. But I want to play devil's advocate here. I want to test the idea that, you know, I think I've had a few guests on in the past who have described how it's basically impossible to be faster than Lightning. I think Pierre Rochard's episode was a great intro to that. So I recommend listeners check that one out if they haven't. But even if it's not possible to be faster than Lightning, is enough to use something like Solana pay? Like, if that is widely integrated, is it enough of a cost reduction? Is it fast enough, even if it's not as fast as Lightning?
James Andrew - 00:37:59:
Well, Solana has got to get its act together more with, like, the heat going down. Right. I mean, I admire the work they're doing, but it is beta right now. It is beta software. And I mean, I was building on Solana that trading software. And part of the reason we pivoted off so quickly is that we were having so many problems even actually executing any of the trades because it was on Solana and it was getting bogged down. So Solana has some really great technology. I think there's really great work being done there in terms of parallel computation on a blockchain, it's very interesting. But there's still things about it that I feel like I don't want to trust the money of the world to it. Right? Let's let it run apps. Let's let it like issue NFTs fine, but the money of the world, let's put that on bitcoin on Lightning. It just seems to me the superior technology for many reasons.
Kevin Rooke - 00:38:53:
I agree. Let's jump into the business model of Lightning Bridge. Can you talk to me a bit about how you plan to make money, how you defend the business, how you build a moat? We'd love to dive in.
James Andrew - 00:39:08:
It's very simple. We're just taking a fee on top of our transactions. But we are going to be able, especially for the case of stable coins, to get that fee way down and the speed way up and the experience, hopefully one that is attractive to people. I hope that it will prove out that even our sights and our sounds and little dings and the experience of seeing it happen will provide an experience that people want to come back to. Versus if you ever actually go and use one of these existing solutions, they're so bad in general, they drive you crazy. You don't know what's happening, you don't know where your money is. It can take many minutes. And so if we can provide a superior experience at a significantly lower cost, I think that will we're just charging a mark. We're just charging a markup on clearing these transactions and we're integrating right now. We just signed up with Circle directly. So we're going to be able to issue Stable, issue USDC directly from Circle for zero cost. And we're the first sure people are going to attack this space for sure. But we're ahead here in this particular connection of all these technologies together that I think we can get a real lead and sort of establish a brand that people like for ourselves. And it's really exciting. These are moving very fast in terms of the possibilities all the time. For instance, just by not being charged 3% from the credit card companies, we're able to lower our costs significantly so that our overall fees are less, especially for delivering stable points, a lot less.
Kevin Rooke - 00:40:48:
Right. This is fascinating. I'm still trying to wrap my head around the whole business, but I like where your head's at and you're thinking differently. I think this is a unique approach to Lightning that I haven't seen many people building. So I appreciate that. I want to ask about who you think your competitors are today and then in the future.
James Andrew - 00:41:09:
Oh, it's easier. Our competitors are companies like Moon Pay. These on ramps, there's Moon Pay, Transact, there's a whole number of them. There's a lot of these. Basically when you go to MetaMask or you go to any of the wallets and you say add funds, the company is listed there. And those are some of the biggest ones that I mentioned.
Kevin Rooke - 00:41:31:
Basically anyone taking cash into crypto?
James Andrew - 00:41:34:
Well, yes, and almost always in every case, they are doing it with debit and credit cards. That's almost always. And so there's actually no one right now serving that market of Cash App and starting with Cash App. And Cash App has 45 million monthly users and so we're one of the first to open it up to them.
Kevin Rooke - 00:41:59:
I see. Okay, this is a bit of a light bulb moment going off my head here. Cash to Crypto for 3%. You're coming in and saying, hey, we can do cash to crypto for.
James Andrew - 00:42:10:
Yeah, we'll see what the market bears as we go, but it will be lower. A lot of these, when you look at what you're actually paying, when it factors in the charge that they give you, but then a lot of times the rate that you get your all in fee is actually quite high sometimes. I've seen it push eight or 9% at times and it's easily 5%. It's going to be good.
Kevin Rooke - 00:42:36:
Right, so we talked a bit about Lightning as a rail for moving money between other fiat currencies in the case of Strike or Crypto in the case of Lightning Bridge. Do you see what about the other use cases, some of the more popular ones today, some of the apps building on Lightning, some of the value for value stuff, the earning bitcoin. What is your take? I'd love to hear your take on the value of that because it's.
James Andrew - 00:43:04:
The value of what? Could you say that again?
Kevin Rooke - 00:43:06:
Value for value, like sending podcasters tips and things like that, I'd love to hear because that's like using Lightning in an application setting versus using Lightning as infrastructure or Rails.
James Andrew - 00:43:21:
Okay, I think there's a huge future in that, but I think that the actual killer app hasn't been found yet and that it will be much more general than these particular applications like paying podcasters. Although I think that's gotten some traction. Where I see this going is I'm really glad you asked this question because what I'm really excited about here is a future in which Lightning node operators are actually able to offer what you might call cloud computing services to actually compete with Microsoft and Amazon. For instance, right now I'm running my major code that runs this on Amazon, on Azure, because they're the ones that have the scalable architecture machines. You have to that's the only game in town, one of the three, Google, Amazon, or there are a few others on the other side of the world, but you have to use them. But what I see is now that we have the payment rails, see, the payment rails are the thing that needs to be there. But like, for example, Danny's node danny has a node that I can interact with via his API and I can actually earn sats by sending him sats. Right? But it's not a big leap to think that Danny's node and my node could all of a sudden run some new type of a service on top of our node that would host a docker container or host a static website or run a node JS application. The kind of things that you normally have to do or store a file out there on Amazon. Let's say you want to you know about IPFS, it's almost like BitTorrent for files, but currently you need to go to a centralized service to do what's called pin the files, which is essentially where you pay them to host them in a decentralized manner, but someone watching this. If you have time, please implement that as an umberlap so people could charge Sats to store your files. Now all of a sudden we have what I call this, Kevin, layer three mining. Whereas layer one mining is mining as we know it a bitcoin main mining. Bitcoin the main chain. Layer two mining generally, I like to call it that, is this earning of sats by doing things on the layer too, like routing payments. But now what if you add services, another layer, the Internet has always been built in layers. You add another layer where now you're providing some value added service of computation or storage of some sort. People are already doing this, providing VPN services with that. There's an example of providing networking capacity, right? You're paying for that. I think. And I hope because I like the world in which this exists. That this is going to become a much bigger thing. And that this decentralized world of Lightning node operators is all of a sudden going to be able to compete. To actually host almost a new area of the Internet that's very much more decentralized and where everything is transacted in SATS or in some Taro token that is representing usage of a service in a way. Because I think there's still going to be utility for that sort of a thing and I think that's already starting to happen. So these individual apps, I haven't really seen any that have really hit yet, but I think it has a very, very bright future.
Kevin Rooke - 00:46:47:
That's fascinating. So now on layer two, this layer two mining, as you call it, if you're running a routing now you're earning sats and your fees are denominated in sats. Sats are basically a unit of account as a routing node operator. On this layer three mining, what's the case for Sats being a unit of account where even though, like, the competitors Amazon and Microsoft and Google are using dollars as a unit of account.
James Andrew - 00:47:21:
Think there's really a good case there that the best unit of account isn't sats because what are people used to? What do people want all of a sudden? Because you want to do this, you're still running a business and you have certain needs as a business. And I don't think not everyone wants to get into the business of managing bitcoin's volatility. I mean, there's a big risk to being a miner. It takes a certain appetite to participate in that world. It's a big part of your business. The risk that you have to factor in of the ebbs and flows of the price of bitcoin. But let's say look at it instead. Let's say you build a special purpose application. Here's a great example of an app that could run on this. Let's say you could run code that would allow your computer to without you being able to see inside it. That's probably able to be done render frames of a movie, right? It could actually run an instance of Blender or whatever software it is, just like they do out there in the world right now with what's called a render farm. You have to pay and you get many, many computers. But every Lightning node operator could participate in this and say, you know what, I'm willing to provide my computer for this service for this rate. And just like the Lightning Network seeks the most inexpensive pathway by going through the fee rates of factoring in the nodes, reputations, et cetera, just by setting your rate, you could all of a sudden participate in this network. Now, if you're going to do this, what are you going to want to earn? Let's say you are a studio and you want to offer your computers up to render frames because you know, at the end of the month you've got a project and you want to accrue credit in the system because you're going to need to run a big job on it and you're going to need to render thousands of frames. So if you earn in sats and you let your computers be used for 1000 frames of rendering over the month and then it comes time for you to cash in on the value of the system and render your own frames at the end of the month to deliver your project. What if your stats are half value and now you can only render 500 frames. So you need either just straight up USDC or I think what you'll end up doing is because I would love to to get off of the whole fiat world system current system thing, right? What if I think what it will be is you possibly would even have tokens that represented value in the system. Like what if you had a system like that and every time you rendered a frame, you earned a frame render token? I've rendered one frame, two frame, three frame, four frame, five frame and at the end of the week that person over there is going to accept these render frame tokens and you're both earning in these tokens. You essentially can make a token that is stable to a service, stable to an individual service. Now I know some people are going to hate that idea and want to rip that idea apart as no, nothing but bitcoin and that is very much an idea that is in my mind still developing and I'm very open to hear what other people have to say about the ways that this could work. Possible disadvantages of it, but I can see that happening. But in the meantime, I think people are tending, I'm seeing it out there right now to default to using a stable token that exists, right?
Kevin Rooke - 00:50:36:
Yeah, I can see the use case for a token pegged to the value of dollar because a lot of people have costs denominated in dollars. I don't quite understand the value of that token, that stable application token pegged to the value of that application though. What's the reasoning there versus using sets?
James Andrew - 00:50:55:
The reasoning there is that what you're really doing is you're trading the value of your silicon, your actual computer resources. Let's say you have a GPU or bank of GPUs that can render frames and they're worth a certain amount this month. Next month they're going to be about the same amount. Right. The thing of value has not changed in value over the end of the month. So if there's a way that you could record credits and debits in the system based upon the trading of the value of the asset with ignoring the volatility of the stats, I think that might have benefit dollars. It could be pegged to dollars, but what if you don't want it to be pegged of dollars? Maybe it will, maybe it will just always be USDC. But I could imagine that people could make like purpose built representations on Taro for a given service or network that the system continually agrees to reckon it as the unit of account in that system. Whether people like it or not, Taro is fermenting assets and people are going to figure out interesting things to do with it. And I think the idea of having a point of the realm for some subreal m as it were, then Bitcoin may make sense.
Kevin Rooke - 00:52:15:
So would that look more like gift cards or like loyalty programs at restaurants? You show up for ten meals and you get your 11th one free. Is that the kind of like application specific token where you're paying your value to the thing that the application provides?
James Andrew - 00:52:34:
I think that there is something very much to that application, yes. But I'm also very excited about an application on Taro you're able to issue, I think they call them a collectible on Taro. You're able to issue OneOffs. It's essentially an NFT. So we've already talked about almost the credit gift card style. It's almost like a point system, this point of the realm idea for the rendering. But what also I think there's a lot of use case for is I think that these individually issued tokens could actually be a major part in revolutionizing the way software is delivered. Because right now think about like if I'm a company and I issue software, there's this centralized system of licensing with codes, et cetera. But what if I could just issue you a token that represents that you have, say, purchased something from me and now you have a subscription and your features that you have. If I'm able to issue you a token that you are not able to trade to someone else, it's bound to your wallet. Then all of a sudden there's all these interesting ways where you might end up like building up a hierarchy of these tokens that essentially whitelist you to various services and experiences out there on the internet. So I think there's this whole and all these things can be transacted on Lightning. Like, what if you make a call to a web service to say, I want access, and the result is a Lightning transfer of a permission token that now the service checks cryptographically that you hold and now you enter?
Kevin Rooke - 00:54:03:
James Andrew - 00:54:04:
Yeah, right. I think that's going to happen.
Kevin Rooke - 00:54:07:
It's fascinating. This is the fire hose of information. It's absorbing it all.
James Andrew - 00:54:11:
I love it. Oh, this is great. I love it.
Kevin Rooke - 00:54:13:
I want to ask you specifically about Taro because I know you've been studying, even looking at it very closely, and you've got a ton of ideas. What are some of the things that you think people misunderstand about Taro today?
James Andrew - 00:54:29:
Misunderstanding? Let's see. I'm going to say, how do I answer that? Well, I know a lot of bitcoiners, and it's not so much misunderstanding. They are very apprehensive of their correct understanding of Taro. I don't know how to answer that. What people misunderstand. I think a lot of people don't really understand it, technically. I only barely do. If I really wanted to get into what Taro is. It's a new system of merkel, some sparse merkel trees. So if you don't know that, you're misunderstanding it right. How it actually works. But I think there are very few people that are really tracking it and most of the people that are are understanding it. So maybe I've got to avoid any questions. I don't know how to answer that better.
Kevin Rooke - 00:55:22:
Yeah, there's been a lot of discussion about it, and I think people are waiting to see it e to fruition, to see how it's going to work. There's been a lot of discussions about how it's going to revolutionize this or that or how it's not going to. And I think maybe that just has to play out. Are there any other applications on top of Taro that you want to specifically mention? Anything you're really excited about?
James Andrew - 00:55:48:
We mean things that could be done with it. I think that the number one thing that I'm going to see that I'm excited about, it turns out, is the wrapping of other tokens, particularly USDC on bitcoin. If that can play out and work like I picture in my head all of a sudden, I think that could draw people quickly into Lightning as businesses, because services will arise that will offer this to people. And it could be like a rush to the dot-com era to get a dot-com to get your own Lightning node, because you need to be participating in this new way to send stable tokens, possibly USDC, as the winner for the next years. Sometimes one company really takes the cake on it, and they're doing some pretty big things right now. It could be that that pulls people in, and then that could serve to grow the Lightning Network at a dramatic rate. If you look at it right now, do you know without looking it up, like, roughly what percentage of bitcoin is locked issued bitcoin is in Lightning nodes right now? Have you ever looked well, the public.
Kevin Rooke - 00:57:03:
Capacity would be like 5000 bitcoin, and then out of 21 million or out.
James Andrew - 00:57:07:
Of yeah, I think it's more now. It's almost like it's almost 8000. I think now it's growing up, getting high. Let's see. 5000. You're right. Sorry. It's 5000. That's right. It just crossed into 5000 from 4000 is what I was thinking. And if you look at that, it's about two and a half basis points. 2.5 hundred of a percent. Now let's think about that for a minute. If you think about any amount of money, you say two and a half basis points. It's not a large amount, it's a small amount. If you join a company and you get equity and you get two and a half basis points, like, okay, I'm on there, but you're not a founder. Right? And so if you think about how much the Lightning Network is doing already in the world right now, and the direction it's on with that little of all of issued bitcoin in it, let's do this little mental experiment. How much bitcoin could ever possibly be in the Lightning Network? What if it's well, theoretically well, maybe we probably wouldn't want that because we want I think I kind of could imagine an upper bound in my mind where it would, like, be half and half. What if all of the world economy becomes 11 million bitcoin in cold storage, sort of anchoring 11 million bitcoin moving as sats and as other assets around the world in the Lightning out? Now, that's an extreme example, and I suppose you're right that theoretically it could be all of it, but that's the picture I had in my mind. But even if you just go 10x and it goes from 2.5 basis points to 25 basis points, there's still 10x. And if you go 10x again, it's what? 2.5%, right? And so if even there, that would be two orders of magnitude. What does the world look like then? And what does that, if that does play out due to the price of bitcoin as the utility of the bitcoin network through Lightning is realized, what if that's the driver? What if it's not hodl, the narrative, the hodl narrative that alone drives the price of bitcoin as an asset, but it's the one I like to tag it deploy dply, deploy your bitcoin. Because when you hodl it, it's just sitting there like a rock, storing value and doing it really well. But when you deploy it, all of a sudden it turns it into, like gasoline from oil. It's like supercharged. And so I think that the growth of the Lightning Network and this all goes back to your original question with the application. It could very well be such a simple application as the presence of a stablecoin on. Bitcoin that all of a sudden makes a Lightning Network practical for merchants and businesses all over. And maybe that's it. Maybe that's like a big, big part of what is like the tailwind. I heard Alyse Killeen, I think you've had her on the Investor. I heard her on Pump Show, and she said this she said a couple of months ago, she said she thinks that the Lightning Network adoption could be a tailwind or a wind that drives, that pushes the next bull run in bitcoin. And I think that she's right.
Kevin Rooke - 01:00:26:
Yeah, it could very well be. And I mean, Lightning adoption, the public capacity numbers have just been ticking up every single day for, I mean, basically for the last year, year and a half. It's pretty incredible to see how resilient that number has been. If you think about now, you mentioned the potential for like two orders of magnitude, and then you're still only at about two and a half percent of bitcoin on Lightning. What are some of the changes if you try and squint out into the future? What are the changes that you think we'll see in the world when we have either a majority of institutions, a majority of people onboarded onto Lightning and using it on a day to day basis? What changes will people observe in the world?
James Andrew - 01:01:11:
I think it will serve generally to drive up the velocity of commerce and also the minimum size of a payment. So what if all of a sudden payments, like right now with this sort of lower bound, you generally know you're not going to swipe a credit card for $0.10. Most options won't allow it. There's some minimum bound. I mean, I think stripe will let you charge a dollar, not less. Right? Well, all of a sudden, if one thing that you can do with Lightning, if all these people are on these institutions, are on this network, there could be a whole revolution in the way commerce takes place in terms of the granularity. It could be that our devices all the time are making little teeny teeny teeny payments for things. Very small payments for things at almost a protocol level according to certain rules that you're not even there. Like choosing every single payment. But you're just. For instance. Running software and the payments are flowing through in real time to all the producers of the stuff that makes the software and the services you're consuming. So I think a very good example of where this could get adoption very early is in various providers of data services and data feeds. Let's say, look at the whole finance world where you subscribe to a feed, right? Bloomberg charges billions. They make $5 billion a year in revenue from the Bloomberg terminal. What if all that data was able to be subscribed to and paid for directly on demand with little tiny sats payments, so that the vendors of the data could just essentially hook it up to their API and now all of a sudden you have this internet that is monetized at a protocol level using Lightning. I think we would see new kinds of commerce and much faster commerce and whole new modes of interaction due to the speed and the low cost of the clearing.
Kevin Rooke - 01:03:06:
I agree. I think that's really a great way of phrasing it. When you think about more commerce or commerce happening faster do you also think that leads to more commerce globally in the sense that GDP growth? Is this going to unlock productivity?
James Andrew - 01:03:24:
I like the way you're making.
Kevin Rooke - 01:03:25:
Meaningful inflection point for humanity.
James Andrew - 01:03:28:
I hope so. And particularly in the case one of the use cases of all this that I really like is that it could open up direct commerce to people all over the world for things like disintermediating, all these things like fiver and upwork that are like the brokers. If you're over there living in some country in Europe or Eastern Europe or somewhere and you want to work with someone over here there's this big company that's taking this huge cut and that is like managing these things almost like an airbnb does manages the airbnb. But what if people could participate in a system whereby like the paying for a podcast example what if you could generalize that to allow for micro contracting all over the world so people anywhere that could watch some YouTube videos or some Khan Academy videos carefully could get booted up into the system and offer services and be paid for them like per the minute or per the hour in a way that there is no intermediary. You're just going into some system that you're able to match the buyers and the sellers of this in a decentralized manner possibly by merchants and vendors all over running software on their Umbrel nodes to do this without Amazon involved, without PayPal involved, without Visa involved. Right. Without any of these we're just transacting ourselves. I think that that could open up a lot of opportunity to a lot of people around the world, particularly in the less developed areas of the world. Thus, yes, Increasing GDP.
Kevin Rooke - 01:05:02:
Yeah. I think there's a lot to be said for this unlock of helping people earn bitcoin and like that first little bit of earning. Whether it comes from listening to a podcast or doing a little micro task I think it's a really important feature that we spread bitcoin among more and more people and it's more widely adopted that way and then it's kind of like a little gateway into it where. You know. People are more protective of their money than their time which is a bit of a paradox but it tends to be the case that people would rather test something out by putting a lot of time into it than spending actual money that they've earned. So I think it could be an interesting unlock there when you get people.
James Andrew - 01:05:48:
Kevin Rooke - 01:05:50:
I want to jump into a segment I do at the end of every show called The Lightning Round. A couple of rapid fire questions for you. Are you ready?
James Andrew - 01:05:59:
All right, go.
Kevin Rooke - 01:06:01:
I hope you're enjoying the show so far. I just want to give a quick shout out to our sponsor, Stakwork. Stakwork is a Lightning powered platform that generates high quality transcripts from all of your audio or video content. They combine AI engines and hundreds of human workers all over the world who are paid over the Lightning Network to assemble these transcripts. And that's what lets Stakwork create better, faster, and less expensive transcripts than anyone else. I've used Stakwork to transcribe all of my episodes on my personal website. You can check that out. I just get the Stakwork file, copy paste and go. No additional editing required. If you want to learn more about Stakwork, you can visit stakwork.com. That is stakwork.com. Okay, what is one thing that I think? You're in the middle of two ecosystems, you see two sides. You see a Lightning ecosystem. You see a Web3 ecosystem. What do Lightning people get wrong about Web3 when they make fun of it?
James Andrew - 01:07:11:
I will tell you the narrative that it's all a scam is just not true. There have been a lot of scams, but when I actually went and hung out with the people at the Solana, people of the hacker house, the energy of the generally, I call them kids, I'm 46, right? They're all like probably 18 to 22, 23, right. They're following them around on tour. They have companies that they're not even paying each other. They're just going from what they call Hacker House to Hacker House working. And I would meet them, say, what are you working on? And a lot of them are working on some really cool stuff. And a lot of the talent that's young talent is seeing, this is cool, and they're gravitating over here. And to say to characterize it all as a sham, all as a scam, is something that I think was reasonable to think in 2018 or 2017, like, if you didn't like because it was a lot. But there is actually a lot of, I think, serious work being done out there in the socalled Web3 ecosystem. A lot of noise, a lot of it's not going to make it. But that's always been true with the Internet. If you were back there in 19, what, like 85, 86. I remember I was got online at 83. All of the services, the online services that existed, they're not even in the public's mind anymore. Copy Serve is gone. Prodigy, there was a special special service just for making airline reservations and all these things thought they were going to be the next big thing. Dow Jones had a service. It all went away with AOL, but there was something important happening there. And I think likewise in what's called Web3, there's something important happening there, but a lot of the current use cases might not last. But I would say the idea is I would commend to bitcoiners and Lightning people to come out of that era of just saying it's all scams because it looks silly and stupid from the other side. When you're there among people that all know they're not working on a scam, not to the best of their ability.
Kevin Rooke - 01:09:17:
I like that. I appreciate the nuance there. I want to flip the question around and now ask what do the Web3 folks get wrong about lightning?
James Andrew - 01:09:28:
I will tell you from my experience at Mainnet particularly, most of them don't even know about it. Most of them because you know what? A lot of them came into the so-called Web3 world in the last two years. I mean, there's a lot of people that came on board because they discovered this new thing called Solana. So they don't even know. They're like unaware even of the history of bitcoiners and all the coin world and sort of bad blood there. They're just like new people to this whole thing and a lot of them just don't understand the Lightning Network. And I think one of the big things that they get wrong when they do know it, there's this meme that goes around that there are these unsolvable problems with Lightning that have been proven and everyone knows that it's not going to scale. I encountered that one and a lot of it is due to a paper that came out in 2018 that showed all of these big problems with the Lightning Network, many of which have actually been solved. Because at this point, because what those people that say that don't account on is the tremendous level of technical prowess and innovation among Lightning development kit. I mean, we've got some of some really brilliant stuff going on in terms of the application of certain cryptographic principles combined with like high speed networking and the economics, the whole economics of this peer to peer system. There is work being done all the time on it. So I would say anyone who thinks that it's just proven that it's not going to scale, that's just not true.
Kevin Rooke - 01:11:04:
I like it. I want to touch on the point you made about people not knowing that Lightning even exists or people not being aware of it. Why do you think that is?
James Andrew - 01:11:17:
I think because it has only been actually a very short time that its utility has made itself known outside of a very small group of people. And even at this point, if you want to understand Lightning and feel it and grok as the word is, to really understand why it's such a big deal, I don't think it's really possible to wrap your brain around it without actually going through the process of setting up your own Lightning node and opening channels, getting into the command line. You feel it. You feel something there that you experience, you understand, oh wow, this is going to be big. This is going to be big in a way that I felt back at the beginning of the internet, connecting from one computer to another. This is going to be big. I think that there is a cost to getting to that level of being able to do that to a lot of people. So if you're an average Web3 person, you're probably not going to be comfortable running LNC a lot, or learning about how to run balance of satoshis. These are things that it's still in a certain like hobbyist techy, or at least someone that has that aptitude. You have to be in that club. And so I encourage people to like it's worth it, push into it, just read the instructions, and even if you don't think you're that person, learn it. But so far there's been this wall of technical complexity. I think I would say.
Kevin Rooke - 01:12:47:
I also experienced that myself. When I first started running a note, I was astonished with all the activity that was happening last year. I started figuring out like, well, there's payments moving through this node, like how's this happening? And there was stuff that you just never would have, I never would have known it had I not tried. And I think there's a little bit of because the Lightning is so private and some of these metrics around activity are hard to gather. I think people tend to just round it down to zero and just say, yeah, you can't really tell how much is on activities on there, but it's a really tiny percentage. We'll just call it zero for now. So maybe that's helping the Web3 crowd kind of ignore it for now, but yeah. What are the activity happening now?
James Andrew - 01:13:33:
One of the things I would like to add to that is Web3 people are very much about what they call community. And usually a lot of times it just means being a member of a discord and getting early on an NFT drop. Right. A lot of times I think that a lot of it's not that genuine or it's not what I've known as community in my life. What I found in the Lightning network is there really is a community of node operators. It was really cool. I was able to actually met, like I said, I met danny out at the socratic seminar in San Francisco. I went out there to see Max, one of the investors in my company, and I met him. And I also met Sachin from River Financial, and both of them had been helping me online through Twitter messages just because I would ask them. And then Sachin even actually I emailed him and he wrote back and actually whitelisted my node to be able to connect to their node. And whenever you meet someone and you're like, oh, hey, it's like you understand that you're in on this cool thing. And I find that people are really genuinely excited to help each other do things from something other than a pure profit motive. We sense that there's this thing I used to feel on the old school Internet, this sort of collaborative excitement that's kind of like what you remember when you have when you're kids and you're just out building a fort and you want to hang out with other people and do that because it's fun. There's that kind of community energy enlightening right now. And I think that's really cool.
Kevin Rooke - 01:15:14:
Yeah, that is well said. And I guess, you know, it also brings up an interesting point. Like in Web3, I think if there's a new token that's going to drop, it's actually in your best interest to not tell anyone about it and just buy as much as you can yourself. And, you know, you kind of are competing against the other participants in the community. But on Lightning, if you're running a node, you actually want to be connected to people. You really want that connection and like, it helps you to be well connected.
James Andrew - 01:15:47:
Yeah. And I would say that this also extends outside of the node operators to like, for instance, Max. Max Western has hive. Mind ventures. He's been on here too, right. Max has the same excitement. It's like he's a VC in the space. Right. But when we're talking, it's not just like some VCs are in something. It's like, okay, we're in here to make a return. It's what we do next after selling the company. But you know that when you talk to Max, he has this just passionate about it. And I think that everyone that really gets it, that experience, there's this level of excitement. I experience that also with Ryan Gentry too, at Lightning Labs. It's like we all feel like we're in on something really cool. I'm talking to you about these things now and we know that we're kind of in on this secret that's not going to remain a secret for long. That's the maximum, I think. I think it originated that, but I feel that way very much and I think it's really exciting.
Kevin Rooke - 01:16:41:
Yeah, it definitely feels like a very special community to be a part of. I want to ask if you could only hold one asset for the next decade and it could not be Bitcoin, what asset would it be?
James Andrew - 01:16:53:
Oh, man. I think right now there's nothing other than I think it would have to be the dollar. Right now. I think we're that early. I think it's a boring answer, but like practically as a business, for instance, I've had to reform my to as a business, for instance, I'm not able to to hold Bitcoin on the balance sheet because I need to know that money is going to be there. So until I see something other than Bitcoin stabilized, it's got to be the dollar. But of course, I do believe it's good to hold Bitcoin, too. That's the only thing I tell people to invest I've ever recommended to anyone. I never recommend that people invest in any of these other tokens out there. It's Bitcoin, but I don't think there's anything other than that other than the dollar.
Kevin Rooke - 01:17:36:
Interesting. Final question. Are there any books that have meaningfully changed your view of the world?
James Andrew - 01:17:46:
Many. Let's see. On one hand, I'll tell you, the Bible has I don't talk about it a lot, but I'm someone that actually is a Christian and believes that. But that, of course, is like a very fundamental thing to me. I believe it is 100% true. I don't talk about that a lot because it doesn't come up a lot. But that's just sort of part of who I am. Other than that, in books that have been written recently, there have been some big ones. I think the creature from Jekyll Island was a big one. That opened up my view of what the Federal Reserve really is and what these organizations are really up to. And if anyone hasn't read it, I commend it to your reading, at least the first three to four chapters. And it talks about the real bad agenda of these things like the IMF and the World Bank and how they are being used to subjugate nations by debt and slavery around the world. By loaning the money and printing more of this money up just a loan in ways they'll never be able to pay it back. And then seeing what's happening to the hyper, is it technically hyper yet? It's on its way. Inflation of our own funds. So the creature from Jekyll Island. And that was another one. Another one was design patterns. It was the first book called Design Patterns. And it was the first one is called The Gang of Four book. That was a software book that first published the idea that there are patterns when building software and you can talk in these patterns. Patterns are names of things like Observer Bridge. This is a pattern. There's one called a Singleton, which has made its way into the world's vocabulary. And that book made me start to look for patterns in the world all over so that you can once you identify these patterns, you're able to sort of lay hold of whatever it is you're working on much more directly. And it's absolutely changed my life as a developer and as a coder.
Kevin Rooke - 01:19:46:
That's fascinating. These are some new recommendations for me to read. Where can people go to learn more about you and lightning bridge?
James Andrew - 01:19:55:
You can go lightningbridge.com is where we have it if you want to try it. I'm on Twitter. We have a Twitter to Lightning Bridge. Just follow Twitter. I like to tweet about Lightning stuff more and more on there not just our product that's actually you can search for Lightning Bridge. Our actual name is LtngBrdg, but you can just search Lightning Bridge.
Kevin Rooke - 01:20:17:
Cool. Thanks so much for taking the time. I really enjoyed this conversation and this is great.
James Andrew - 01:20:23: