Julie Landrum of OpenNode joins me to talk about what they’re building to help people onboard to Bitcoin & the lightning network as a payment standard. OpenNode first got their name as a merchant payment processor but we chat about how the company has grown and evolved over the years. We chat:
- Bitcoin infrastructure services for merchants, bitcoin companies
- Dealing with the cyclical nature of Bitcoin
- Spend, HODL, earn?
- Chargeback risk
- Dealing with regulatory requirements
- El Salvador adoption
- International adoption
Links:
- Twitter: @OpenNode
- Twitter: @juliecity
- Site: OpenNode.com
Previous episode:
Sponsors:
- Swan Bitcoin
- Hodl Hodl Lend
- Compass Mining
- Braiins.com
- Unchained Capital (code LIVERA)
- CoinKite.com (code LIVERA)
Stephan Livera links:
- Show notes and website
- Follow me on Twitter @stephanlivera
- Subscribe to the podcast
- Patreon @stephanlivera
Podcast Transcript:
Stephan Livera:
Julie, welcome to the show.
Julie Landrum:
Hello, Stephan.
Stephan Livera:
So Julie, you’re at OpenNode, and I’ve been a fan of OpenNode for a while. I believe the last time I had some people on was Rui and João from almost 3 years ago just off the top of my head was the last time, but I have been mentioning you guys and I’m interested—I like seeing what you guys are doing. So yeah I’m looking forward to hearing more about what’s going on, and a bit of your story. So let’s start with you—where do you come into all this? How did you get into Bitcoin and how did you get into OpenNode?
Julie Landrum:
Sure. And thanks for the opportunity to speak to you and to your audience—first podcast, so newbie. The best place to start is I worked in traditional payments for almost 20 years. I worked at J.P. Morgan, Chase. I worked at American Express for like 11 years, and then I spent a couple of years at Visa. So I’ve been a payments-obsessed person for a really long time. And one of the first memories that I have of Bitcoin is around in 2015—my role at Amex specifically was network strategy. And what was amazing about that was that it gave me the opportunity to travel, it gave me the opportunity to learn about all the different facets of the network from a product standpoint, capabilities, policies—which are very important components of how the networks manage change throughout all of the bank partners that they work with—also traveled the world with American Express, did a lot of voice of the customer (VOC), work with our bank partners, and was also involved in things like the UK rollout of contactless. This is ages ago—the contactless rollout in the Tube. And then the last project I did at Amex was the implementation of Apple Pay—also hugely fascinating. But in all of those projects, what you could see was that actually nothing was changing the base layer of how things worked: authorization, clearing, settlement—three consecutive processes steeped in decades of old technology, and very inflexible. And so when new products came about, we had to fake how the backend really worked. In 2015, I remember putting together a strategic assessment of Bitcoin for—you get the revolving door of bosses when you work in those types of places. And I remember just thinking, Wow, this is amazing. We should be looking at this. We should be thinking about this. And the feedback I got was twofold. One was that the report was too long. And secondly, that it wasn’t going to be possible for Bitcoin to help us with our numbers the very next quarter. So a lot of times those places can be very roadmap-deficient in the sense of just looking for growth spurts—very short-term kind of thinking. And I was like, Huh—I was very disappointed, because it had definitely piqued my interest. I definitely thought it was something special. And then the last thing I remember before leaving American Express was—Amex is a huge company, it’s a global company—and I became very interested in the way that, as a company, they managed their treasury. And for me, that became a much more interesting and valuable network than the card payment transaction network that they were operating. And the reason for that is that you realize that at large multinationals who are net settling large amounts of funds across the world have to work with settlement banks, they have to manage currency risk, and actually that presents a ton of opportunities. And when I think of TransferWise—fast forward 5 or 10 years later—they took that internal multinational network of bank accounts and created a product offering, created a service from that. So that was really interesting.
Stephan Livera:
Yeah, that’s really fascinating. And I think one point that you touched on there was—over the years—that there were these big changes. Even from my perspective as a consumer—and also I actually was working in the banking industry for a couple years in a past fiat life. But as you said, there were these big shifts, so things like chip-and-PIN and then contactless and so on. But you were mentioning how it’s almost like it was fake because on the front end it looks very slick and smooth and, Oh, it just happened and it works—but actually on the backend there’s all this stuff that goes into it. Could you expand a little bit on that contrast of like what the nice flashy front end looks like for the day-to-day user on the ground tapping their card at the coffee store, versus what’s actually going on in the nitty-gritty in the background?
Julie Landrum:
Sure. Yeah, exactly right. And I think that description encapsulates the FinTech developments that we’ve seen over the last 10 years or so, which is that they tend to be—they’re great because they’re user experience-focused as you mentioned, but they’re limited because they’re actually quite superficial. They don’t necessarily transform the guts of how money actually moves. So counterparty risk still exists, fraud exists, because specifically the card payments world works on the basis of POL payment transactions. There’s all this back and forth, the possibility of your personal information being collected and breached, there’s chargebacks—there’s just a lot of antiquated but necessary interactions, and they’re necessary because the system requires all of those things in order to work. So when you look at fantastic companies, like I just mentioned TransferWise, but also Stripe and Square and Adyen and all of these fantastic processors who over time have created a layer of abstraction for merchants and consumers in the product offerings, they’ve done an incredible job modernizing—or seemingly modernizing—payment solutions in the world, but actually nothing changed on the backend, and this goes for banking and cards—until Bitcoin. And for me, that’s when I realized—after leaving Visa, so a couple years later—and I was thinking, I want to work in payments, but I want to work for a great company with an amazing mission and incredible products. And there was not one single company that didn’t trace the transaction back to these antiquated, centralized, arguably monopolistic gatekeepers of our global financial system—so banks’ payment networks. And that’s when I started to get much more interested in Bitcoin, and much more interested in the notion of incredible technology that would allow the instant and final settlement of value that would allow people to access a monetary system that was not controlled by centralized actors, and that didn’t require intermediaries. It took a while for me to find Bitcoin in that way. I think a lot of people talk about walking through the desert for a few months or up to a year just trying to think like, What am I going to do with my life? How am I going to spend the next 20-30 years of my professional career? I just no longer wanted to contribute to what I saw as the dinosaurs of payments. And then super-luckily, I just came across OpenNode—and I didn’t reach out to the guys—but I definitely just started following everything that they were doing and talking about, and starting to learn about the Lightning Network. And they got in touch, and I’m quite a bit older than those guys, but I definitely saw huge promise in the work that they were doing—completely shared the mission. And yeah, I’ve been working with those guys for nearly 3 years. At the beginning I was almost like, I’m based in Europe—I was the only person who wasn’t actually based in L.A., but I just remember thinking at the very beginning that these guys are building a global company, and we should start doing that now. So yeah, it’s been an incredible ride, especially thinking, What a risk to join a startup. What a risk to work in Bitcoin. What a risk to have so much belief in the Lightning Network almost 3 years ago when it was a lot less liquid, a lot less talked about. And it just seems like all this time, the world is conspiring to make everything that we have been working on successful. So it’s been an incredible journey, and it’s not even the beginning, almost.
Stephan Livera:
I think you’re right there. It is extremely early in this whole Bitcoin journey. And I think for me at least, looking at OpenNode, as I first saw the company I believe it was 2019 or around there, that the focus was very much around merchant solutions and merchant services. And so do you want to tell us a little bit about what that’s been like? And as I understand now, that’s not the only thing OpenNode is doing now. It’s actually a range of products, that perhaps that was where OpenNode first got its name, at least inside the Bitcoin community.
Julie Landrum:
Sure. Yeah so OpenNode is a Bitcoin payments and payout infrastructure provider. So we believe that—we focus on empowering individuals, including individuals who work for businesses, because businesses are people too, and just providing access to the best monetary network that the world has ever seen. That’s our entire mission. And the way that we started on that path was, as you said, predominantly in the early days, it was enabling online merchants to accept Bitcoin and Lightning Network-powered payments. Very quickly, we established some great partnerships in the e-commerce space. So we support plugins for some of the major e-commerce platforms like Shopify and BigCommerce. And so we very quickly saw how the right distribution partnerships can really help us scale the business and increase our reach. And that’s actually one of the things that was established in traditional payments that we think continues to have tremendous value, because all of the FinTechs that we talked about before, it used to be that they built huge customer bases and offered great services, but the backend was still a mess. So now imagine Stripe and Square and TransferWise and every really amazing company that has been doing incredible work to abstract complexity for users and drop fees and all the rest of it—imagine all those companies now having a Bitcoin payment rail as part of their offering. From that point on, you have end-to-end optimization of the tech stack. And OpenNode now is very focused on not just merchant payments, but helping businesses with payments and payouts as well. We talk about the payments landscape as going to buy the proverbial cup of coffee. The reality is that payments is another way to talk about global money movement, and wherever there is money to be moved, OpenNode plans to be there. So we’ve evolved from being a payment processor for merchant payments online, to offering in-person merchant payments as well, working with businesses’ platforms to allow them to white label our payments capabilities and our custodial account capabilities. And we’re very quickly headed to a place where we are going to be powering the Bitcoin rail for major payment processors, payroll processors, donation platforms, remittance providers—these types of businesses don’t necessarily need to disappear. There’s value in, for example, the services that a money transfer operator provides. The difference is that they in the past have either been predatory or have been constrained to using rails that are expensive and slow and therefore impact the customer experience. The important thing too that I would note is that when we work with distribution partners today, we’re very focused on making sure that we don’t recreate what was not good about traditional payments, which is: you start with a base layer that costs X and then everyone in the value chain adds their piece, and then the end merchant or the end business ends up having to pay loads. Or the largest businesses get these incredible volume discounts where it’s actually the small businesses and the medium-size businesses that are always left holding the bag, or paying the most expensive rates. So what we do is when we work with distribution partners, we work backwards from the transaction processing rate that the end merchant pays. It allows us to make sure that we can maintain equity, that we can maintain some kind of equality, and also to make sure that our distribution partners feel like they’re sharing revenue with us, not take something and reselling it marked up to the end client. And we’ve found that to be extremely effective. Actually, this just in—I can announce today that we have completed integration with Primer.io, Which is an automation platform for payments. So with Primer, OpenNode becomes a connection partner, and any merchant or business that’s using Primer for their payments can now add Bitcoin and Lightning Network payments to their checkout, just as part of their Primer setup, which is automated, no code—they also have dozens of connection partners like Stripe and Adyen. They aggregate all of the major processors as well as fraud solutions, et cetera, and then make those available to merchants so that they can pick and choose what processing paths to follow as part of their processing setup. So we’re really excited to work with Primer. And again, this is like tip of the iceberg stuff. We’re going to be present in many more payment processor offerings. We also announced this year our partnership with Deskera, who are a large small business software provider in Asia similar to a QuickBooks or a Xero, any payment flow where there’s invoices, where there’s receiving payments, where there’s sending payments. Digital wallets we’ve started to integrate with. We power Belo and Cafecito in LATAM. In process, we have a ton of digital wallets in the roadmap, exchanges doing Lightning Network transfers. So again, our infrastructure offering is going to be massive, and it covers a complete range of solutions from no code, to API integration, to managed accounts, to even infrastructure-type services at the node level for companies that are coming onto the Lightning Network and want to operate at scale.
Stephan Livera:
Yeah, that’s really fascinating, because I think in the early days, it was—at least for those of us in the Bitcoin world—it seemed like the conversation would be like, Yeah, tell this merchant to take Bitcoin. Whereas it’s almost like what you guys are doing is trying to play more of an infrastructure role now on top of that merchant role. And so this idea is, if you can hook it up so that merchants who can just use their already existing payment providers, then they can just piggyback on that and then automatically have Lightning based on that. Now I didn’t know about Primer and I just had a quick search on them, so that’s interesting as well. So can you tell us a little bit—do you know how many merchants are using Primer?
Julie Landrum:
I don’t know. What’s really interesting about Primer is that, as I mentioned, they aggregate connections with all the leading processors in the world, and all of the leading alternative payment methods. And what they do is they don’t charge a transaction processing fee—they charge a service fee to the merchants. So it’s almost like what’s new about what they do is, before Primer, as a merchant or as a business, you had lock-in with one payment processor, or you had redundancy and maybe you maintained two relationships, but it would’ve been quite rigid. You’d have one and then you’d have the other, and you’d have to manage what you sent where. Primer almost makes these payment providers like building blocks for your overall payment strategy. And in that sense, they charge in a way that reflects the value of just that service. I don’t know how many merchants they have, but we already have a pipeline. We’ll be starting to announce some of the major merchants soon. It’s great: they’re global, they work with merchants from many different industries, and also, when you work with very engaged distribution partners and allies—again, specifically these processors who have huge knowledge of traditional payments—they also have very sophisticated, very advanced sales teams. So for a company like OpenNode there were 10 of us until the end of last year. That’s also a fantastic kind of partnership asset that we can leverage. And you mentioned you didn’t know we were doing all these things—we haven’t really made a lot of noise in the last couple of years. We’ve been working really hard. When it comes to conferences, we like to power the payments. We don’t really talk a ton. For example, like all of the Bitcoin conferences, we have a great relationship with the BTC Inc. guys. So yeah, all the growth has been organic, and now we’re really looking at our roadmap and our pipeline. And it’s a massive hypergrowth kind of scenario.
Stephan Livera:
And so then the interesting part for the merchants—and let’s say people are listening out there and they want an idea of how it looks, if they want to sign up with OpenNode—what does that look like? Because I guess part of the idea is they might be thinking, Look, I want to take Bitcoin and Lightning payment, but I don’t have the time to go and figure it all out. What exactly is OpenNode doing for them? And then how does that work on their side? Like, you take the Bitcoin in and pay them out with fiat, right?
Julie Landrum:
Yeah. So let’s start with the products that we offer directly, and then we can talk about how merchants can access OpenNode payments through maybe their existing provider or maybe their existing e-comm platform like Shopify, BigCommerce. So if you come directly to the OpenNode site, there’s a sign-up process. There’s a very basic KYB/KYC process that merchants need to complete. When it comes to no-code solutions, we offer payments, we offer invoices, payouts, a dashboard that allows businesses to monitor and manage their transactions and funds. From a settlement standpoint, merchants can elect to receive Bitcoin payments as Bitcoin. They can also ask us to automatically convert Bitcoin to their preferred local currency at the time of the transaction. And the third option that we provide is what we call split settlement. So instead of having to take 100% Bitcoin or 100% dollars, you can elect to have your transactions settled, let’s say 80% fiat, 20% Bitcoin. What’s great about that is that it allows merchants to start taking some exposure to Bitcoin if that’s what they want to do, without having to make a totally black and white decision of no exposure, full exposure. So that’s been really popular, and that’s a really good way for merchants to begin the journey of holding Bitcoin. And then on the flip side, when it comes to payouts, payouts can be funded with BTC. They can also be funded with fiat. So if a business wants to pay a trade partner or pay contractors in Bitcoin, they can fund that with local currency. And then recipients, if they have an account with us, can on the flip side receive Bitcoin or their preferred local currency. So in the case of payouts, we talk about payouts as being Bitcoin or Bitcoin-powered, because sometimes neither the sender nor the recipient actually holds Bitcoin—the full transaction is fiat to fiat, but it’s instant, lowest cost, final settlement, and a finite transfer of value, because we’ve used Bitcoin as the intermediate currency, and because we’ve used the Lightning Network as the mechanism to move that value.
Stephan Livera:
I’m curious to hear a little bit more about that. Could you just explain a bit? Could you maybe walk us through just an example of how that would work if somebody’s going fiat and you guys are handling the Bitcoin in the intermediary stage, and then it’s a fiat payout on the other side?
Julie Landrum:
Sure. So imagine you are a business operating in LATAM and you have business partners in Europe, and what you are used to doing is paying out those business partners in euro. So you need to start the process let’s say in Mexican peso, you need to go through the correspondent banking system and all the associated costs and delays of sending Mexican peso as part of some high-value transfers to many different places in Europe with recipients receiving that in Euro. With OpenNode, and with the help of our exchange partners and our bank partners, we can take in peso, we can convert that to Bitcoin, send it across to the recipient account instantly, nearly feelessly, with very, very low transaction costs, and then the recipient can determine, for example, that they want to receive that value in euros in an account that is associated with OpenNode. And the last mile for them is just to do a local bank transfer from euro to their destination bank account in euro. That takes a day—it just does. We can’t change the traditional legacy financial system, but already what we’re seeing is that businesses have a lot more flexibility. There’s so much that they can do from a cashflow standpoint when they know that the funds have been received. They need one more day to make it to their destination account, but there are lots of things that companies can do knowing that that value is there. And instant transfer of Mexican peso to euro is unheard of—absolutely unheard of.
Stephan Livera:
And so what kind of fees are we talking about then for that kind of process? And actually before we go there, I’m actually curious as well: are you seeing any merchants who actually just close the loop? Like let’s say they start maybe taking Bitcoin and holding some fiat, and then eventually they get to that point where they actually pay their own suppliers with Bitcoin. Do you see that?
Julie Landrum:
That’s the best case because that means the best financials for those merchants, because then they don’t have to convert back to fiat. I would say we more see payout recipients keeping Bitcoin, and then having that help them start to operate in a Bitcoin standard. So a lot of times we’re seeing small businesses do that—like keep the Bitcoin. And then we know that they are only coming out of Bitcoin to pay in fiat when they have to. One of the things that OpenNode is going to launch to help those people live in a Bitcoin standard world but have access to fiat is we’re going to be issuing a debit card that links to the account so that people can pay for things in fiat over traditional rails when they need to. The fees right now—the headline fees for payouts are 1%, but those are too high. We know, for example, that domestic payouts—which is really a bank transfer from a business to another business—can be as low as 20 to 50 p. They tend to be fixed amounts, or they tend to be very low percentages with caps. We have the opportunity to be as competitive as we need to be in order to compete with that. But I would say where we are going to fulfill most of the demand in the short-term is in the cross-border space. So we’re pricing different corridors, and then also of course you have the value of instant. The fees are going to be ultra-competitive—there’s nothing that is going to be a barrier to people using this technology to move value.
Stephan Livera:
Of course. And important to point out that using these kinds of techniques, this kind of technology, it will end up being cheaper than if they were using standard fiat rails. And so it would be interesting if you could talk about that difference in the fees and maybe point to where some of that is coming from as well?
Julie Landrum:
Sure. So in the payments world, it’s really hard to come up with actual pricing. Like you have to do average, because payments in the traditional world depend on: what kind of card is being used? Where the person is coming from? What is the industry of the accepting merchant? This is why when we see merchant statements in the traditional world, they’re like novels. And then merchants are also hit with service fees relative to fraud, dispute management. OpenNode from a payment acceptance standpoint has a 1% standard global fee for merchants to accept payment in BTC—1%. And over Lightning, that is instant. Your average acceptance fee—domestic—in a market like the US, let’s say through partners like Stripe and Square, I think is something like 2.9% plus 30 cents. So there is a fixed portion and a variable portion, but that is a basic fee—it doesn’t include foreign card payments, it doesn’t include high-risk industries like cannabis, and it doesn’t include the recurring fees of having an acquirer processor, nor does it consider that the payment can take anywhere from 1-3 days—again, in a domestic context. It just blows it away across the board.
Stephan Livera:
Of course. And the other aspect is that many end consumers don’t see the cost that they’re paying. So they don’t realize that the cost of all this has already been built into what they are purchasing. And so that’s been a bit of a narrative in the Bitcoin world that, Okay, maybe over time, there could be some of that fees come out, and the end consumer might be the one who wins there because of more competition around businesses, assuming they take on Bitcoin and use Lightning to obviously lower their fees.
Julie Landrum:
Yeah. Those discussions happened in the traditional world as well, specifically as markets were trying to regulate the high fees that were being charged in tandem by banks and by Visa and MasterCard. And it’s an eternal debate of like, If merchants pay lower fees, will the consumer see those benefits? It’s hard to say, but what you can say is it’s probably not right that global businesses, global merchants, global entities everywhere, are taxed anytime they engage in the transfer of value by centralized entities. There are few of them—there’s probably like 5-8 dominant banks per market. There’s probably no more than 3 or 4 dominant payment networks in the world. There is a way for transactions to occur in a way that’s faster, cheaper, and in a way that benefits everyone. And that encapsulates why I was so drawn to working in Bitcoin, and specifically in Bitcoin payments. OpenNode is seeing the promise of this monetary system, and we intend to become the payment standard for the Bitcoin standard.
Stephan Livera:
That’s really cool. And also in the payments world and the fiat world, there’s all this talk about chargebacks and chargeback risk, because it is such a big cost for banks and businesses and everyone dealing with this kind of credit card fraud and people who are just charging back. So how much does that matter into Bitcoin companies? Is that totally gone? Or is there still some level of that that they’re paying the cost for?
Julie Landrum:
That’s a good question, because I think that’s a point that is commonly not fully understood, which is: fraud and chargebacks, because of the design of the legacy payment system, are required. They have to be part of that system. When it comes to Bitcoin payments—and let’s talk about acceptance specifically, retail acceptance and widespread retail use—there is nothing that prevents any company or any group of companies from standing up buyer and seller protection programs, because if consumers have become accustomed to a certain level of protection for purchases, that is absolutely something that can be built and managed. It could be escrow—it could take a ton of forms. It could be something that is actually a service that’s provided by a third party, but maybe you pay a little bit extra as almost like buyer’s insurance in order to benefit from the ability to dispute a transaction outside of a direct merchant relationship. The important thing is that this can be built. It’s not a barrier to retail payments being able to be adopted globally, but it’s not an inherent requirement of a flawed system.
Stephan Livera:
I see. Yeah. So it’s almost like you’re saying, in some weird way, there might be businesses who build out a similar kind of function even on a Bitcoin standard.
Julie Landrum:
Absolutely. There are cultural and ingrained expectations that both businesses and consumers have when it comes to payments. The important thing is that the base technology, the base settlement layer, has changed, and that has allowed for just a completely new, very secure, interoperable, decentralized monetary system to underpin anything and everything else that’s going to be built on top of that.
Stephan Livera:
Yeah. And I think that’s an interesting point to make, and I think it’s perhaps running counter to what most people might have previously thought about Bitcoin and merchant payments and so on. I’m also really curious as well—I’m sure some listeners might want to hear if you’ve got any stories about El Salvador and merchants in El Salvador? Can you tell us a little bit about your experience there?
Julie Landrum:
Sure, happy to. El Salvador was a really exciting time. I think it made for a very busy summer for a lot of people in the Bitcoin space, and certainly for a lot of people in El Salvador. We’ve had the incredible good fortune to work with some of the largest telecom companies, retail companies, fast food restaurants, insurance companies. And what I would say is—until Advancing Bitcoin, I’d never been to El Salvador, but I speak Spanish. So what did we do? We started targeting prospects, sent them e-mails introducing OpenNode, and going through due diligence, going through a very quick educational process. And ultimately, these guys—pretty much every company we worked with, they were very sophisticated in terms of their understanding of payments, they were very knowledgeable about what their requirements were as soon as they were announced and analyzed, and they helped OpenNode develop our service further because they challenged us to meet their expected requirements when it came to traditional providers. And I would say the whole process was just fantastic, being able to answer questions—our primary objective was to offer a solution that would be an operational success for these companies. We couldn’t foresee or influence how much of a commercial success Bitcoin would be in El Salvador, how much of a cultural success it would be, but what we wanted to try to do was to ensure that the experience of Bitcoin would be a positive one, a successful one. Our technology when it comes to API integration is very simple—it’s very easy. We regularly have clients who stand up an integration with us in a matter of a week in terms of integration with us, and then maybe a few other weeks on their end tying it into their operations. The tech teams were very sophisticated, as I said. Launch was dicey, because the Chivo wallet, clearly there were issues and it was very difficult to identify and tackle those issues because we didn’t actually have a direct line to the Chivo team. It’s been great. It’s been a great experience. Of course, we saw the initial impact of the $30 that was airdropped to the Salvadorians, and there’s been a pullback in spend from that time, but there are definitely certain industries and certain players who we’ve seen maintain a level of processing volume that is very material—number one. And number two—I lost my train of thought.
Stephan Livera:
So you were just chatting a little bit about which industries have seen their volumes stay, even despite that initial surge of interest. I think it’ll be interesting to see what happens going forward. Will there be a lot more tourism in El Salvador? Will there be Bitcoin tourists who go there and spend it up down there because they want the experience of being able to spend at all the different stores with that? So that’ll be interesting to see. And Julie, if you could mention—if you can—which companies in El Salvador are using OpenNode? I’d be curious—if you’re allowed to say, that is.
Julie Landrum:
I can only refer you to Twitter and the screenshots and the videos of the experiences. I think what’s really interesting is you have a market where businesses were responding to a legal requirement, and then you have brands that may or may not be planning further rollouts who don’t necessarily want to shine a spotlight on themselves for this. And I think you can actually extend that to lots of businesses, lots of places. Like in our pipeline, we have banks based in the US who will be offering Bitcoin payments and Bitcoin-based services. We went from a time of trying to generate demand for Bitcoin payments to getting to a point where major players were like, You know what?—It’s not a matter of if, it’s just a matter of when. And now there’s so much activity. There’s tons of activity, and we’re happy just doing the work. We can announce it when everybody feels more comfortable about getting behind it. For now we’ll take their actions as a really massive signal that this can work. You can stand it up within 7 weeks. You can incorporate it into your roadmaps outside of El Salvador. And there are many companies that will pull the trigger.
Stephan Livera:
So that was an interesting point of discussion I saw as well, where people were saying, Look, as an example, there may be large multinational corporations who have a presence in El Salvador. And if some of these multinational corporations are sharing infrastructure across countries, theoretically they would say, Well, if it’s easy for them to turn it on here, then they might now find it easier to turn it on in some other countries elsewhere. As you were saying, that they may not be willing to publicly make those kinds of statements, or even overtures, but just the reality of having done an integration in one country, and now you can leverage some of that work elsewhere—it’s there. So that’s really interesting to see. I’m also curious—as obviously OpenNode is Bitcoin company—but you have to spend a lot of your time dealing with, ironically, fiat banking and fiat relationships, because you’re still having to make that fiat payout for the merchant or the customer or whoever. Has that been difficult for you? And have you seen the fiat world say, Oh, no, no, no, we don’t want to help bank you because you’re a Bitcoin company.
Julie Landrum:
It’s getting better. It’s kind of the same story, right? Like many years ago, many companies, many individuals were struggling with banking relationships. Operationally, I would say our operations team probably spends 90% of its time on fiat, bank transfer-related issues, not because of nefarious turning us off, whatever—just because it’s painful. The sending bank has an issue, the receiving bank has an issue in between. Nobody can see—the thing when it comes to bank transfers in particular is that when a payment is on route, it disappears off the face of the Earth until it reappears. It’s just gone. So there can be failures at the origination point, failures at the beneficiary, and in between, nobody knows what’s going on. That does not sound like an amazing payment system that works for people who are trying to figure out where the money is coming from, where it’s going, how fast it’ll get there. So yeah, we spend a lot of time chasing bank transfers, unfortunately. The Bitcoin transaction processing in comparison is flawless. You don’t lose payments. You don’t drop payments. Obviously the blockchain has never been hacked. There’s no crazy latency when you use Lightning. The fees are predictable. It’s very pure. It’s very robust technology. Is it everywhere overnight? No—like, it has to grow. It has to be tested. We have to continue to strengthen and make it more reliable as we get more demand and more throughput, but there’s nothing that says, This is not going to happen.
Stephan Livera:
Right. And I’m also curious as well: so in the Bitcoin community world, there are people saying, Oh, who wants to spend their Bitcoin. I’m just HODLing. But on the other hand, you’ve got the people who are like, No, actually we want to be able to have this whole circular economy, and people should be able to spend it. And so I think what historically we might have seen is you see a lot of action around big price moves. And so as the price is running up, then lots of people are spending their Bitcoin, and that’s where you would see the payment processing companies see big surging in their volume. But then there might be a bit of a doldrums for a while. I’m curious as well, like are you just steady growth then, because you’re seeing more and more companies who are onboarding into OpenNode?
Julie Landrum:
So what I would say is: in a rational market, there will be spend impacts with volatile price moves. But that’s mostly true on the payment side, because you have to make a decision as a spender to let go of your Bitcoin. But remember, OpenNode is involved in many payout flows, and when it comes to payouts, specifically those that are funded in fiat, there is absolutely no impact. And payouts, even in the traditional world, people talk a lot less about payouts, which are more B2B salary, remittance, lots of flows like me to you, me to you—but actually, the B2B and the general money movement aspect of me to you is much, much bigger than the entirety of the spend market. So even processors—like I think I saw recently there was a massive processor in LATAM saying their payout volumes were probably 70% of their business, payments are 30%. So payouts are a hedge, in that respect, to massive price movements. And then on the other side, you could see lower prices driving someone to make a disposal for tax reasons—or any reason that is going to motivate someone to sell will motivate someone to spend. And then what we also see is we have merchants and businesses who are starting to very much incentivize the use of Bitcoin in payments. And in those cases, again, if it’s not a stack that you’re already holding, you might go out and buy Bitcoin in order to benefit from the kinds of discounts or loyalty-type things that a company is offering. So, yes—it would be naive to say price has no bearing, but when we think of payments from both a purchasing but also a sending perspective, the impacts on a business like OpenNode are mitigated.
Stephan Livera:
Yeah, that’s a really interesting point, and probably one that many people have not really thought through. Because there are a lot of people who are going to start receiving salary in Bitcoin, and if OpenNode is helping process salary for people, then that’s just an ongoing every two weeks, or every month, or however often people are getting paid. So that’s an interesting aspect. And I think that really comes in when instead of thinking just B2C, start thinking B2B, and then you start seeing it from that point of view, then I think you will start to see a lot more reasons that people are going to use Bitcoin for payments, as opposed to just thinking of the individual who’s thinking about whether they spend some or not, and spend some fiat or spend some Bitcoin. If they have fiat, that is.
Julie Landrum:
Exactly. And that’s where the intersection with the Bitcoin standard is so powerful—like there are communities operating on a Bitcoin standard, there are people operating on a Bitcoin standard, there’s sports teams operating on Bitcoin standard, there’s countries that are looking to operate on a Bitcoin standard. And in those cases, the more prevalent it becomes, the less daily prices will matter, because people will have opted out, and they will still have money movement needs.
Stephan Livera:
So at the end of the day, OpenNode is really providing a lot of infrastructure out there for people—even Bitcoin companies—who want to use the Lightning Network. You’re doing this play around helping power other people’s use of the Bitcoin network. So where do you see all of this going with the Bitcoin and Lightning standard? Do you see more and more people coming onto the Bitcoin standard every day? Or is it just like a steady growth thing? Or do you see it more like we’re going to see, like in Bitcoin’s history, these big waves up and down in terms of adoption?
Julie Landrum:
I think in the growth of Bitcoin as an asset, you’re seeing a reaction to the central planning of money, and I think that in the growth of utility of Bitcoin the network, you’re seeing a reaction to the failures of centralized payments. And I think there’s going to be two things that drive our growth. One is growth of Bitcoin. But also, the more businesses that we engage with, the more platforms, the more people, the more countries, the more governments—there are different pain points everywhere. For Argentina, it’s inflation. So merchants want to be paid in something different. In cross-border, it’s the time and the cost of sending money from here to there. There are just so many pain points that Bitcoin the network can solve for, just as there are so many pain points that Bitcoin the asset can solve for. And we’ll bridge for as long as businesses and merchants need us to bridge into fiat so that they continue to manage their operations, manage their businesses in currencies that are maybe more stable in some cases—less stable in other cases. There’s just a ton of work to do to demonstrate and educate on the power of this technology that is really changing the game completely.
Stephan Livera:
I’m also curious as well, like regulatory pressure or things like FATF travel rule and things like this, where they are trying to basically force Bitcoin providers to then go and identify the other party in that transaction. Is that something you see as like a regulatory risk coming down the pipeline for OpenNode, or not?
Julie Landrum:
What I would say about the regulatory stuff is—first of all, OpenNode is a managed, custodial, regulated service. We will always comply with regulatory requirements. Our hope is that the solutions that we build abstract complexity and onboard more people into this Bitcoin standard. And two, as usage grows, and value and fungibility of Bitcoin grow, we expect that as an industry, as a movement, as a community, we will have a larger say in the regulatory developments. So for now, I think we continue to believe in the fundamental characteristics of the currency: privacy, sovereignty, scarcity, and we will continue to support that and to fight for that. And in the meantime, we’re going to do everything we can to grow adoption and eliminate barriers to usage within the legal and regulatory framework.
Stephan Livera:
Okay. So that’s probably most of the key questions I had in mind. I guess just to finish off, if you’ve got any thoughts around what people out there can do if they’re trying to grow adoption as well—what kind of ideas do you have in mind that Bitcoin enthusiasts could they be doing?
Julie Landrum:
So I think we see three main categories of end clients when it comes to Bitcoin payments. There are people who need Bitcoin—they need it because their currency is collapsing, or they are unbanked, or they are being robbed every time they’re trying to send money. And those people, the education is kind of inbuilt. They don’t need anything from us in terms of impetus to look at this technology as an option. Then we work with a lot of users who want Bitcoin. They want to accumulate it. They think it’s better. They already are sold on the idea that this new alternative system is going to work for them, it’s going to work for the world. So then we’re left with a third category of people who are curious or skeptical, and when you think about the first two categories, the people who need Bitcoin and people who want Bitcoin, these are the people who are going to be your army of educators. Not because they’re going to write books necessarily, but because they run businesses, because they make financial decisions every day, they have many financial touchpoints, both in terms of how they accept payments and how they pay out. And we think that this movement, when you add incentives, when you add individual experience, when you add communities, sports teams, all of these groups of experience and nuclei for education, it’s a grassroots movement. We don’t need to Bukele the whole world. Let people come into contact with this technology. Let them experience the benefits of it and share it with the people that they work with and the people that they live with. It’s all happening.
Stephan Livera:
Fantastic. It’s all happening. So Julie, where can people find you online?
Julie Landrum:
Oh, find me. I think I just broke like 150 followers on Twitter. I’m @juliecity. I don’t post very much. I just hang out and see what’s going on. But definitely follow OpenNode at @OpenNode on Twitter, opennode.com. We are hiring, we are growing, particularly engineering functions, sales functions, and also growing international. We’ll be at Bitcoin 2022. And we have been relatively quiet for a while. We’re probably going to start to make more noise, celebrate achievements, bring more people with us, and continue to get hyped about this monetary revolution.
Stephan Livera:
Fantastic. Well thank you for joining me, Julie.
Julie Landrum:
Pleasure, Stephan. Appreciate it.