Will every company be a lightning company? Graham Krizek CEO of Voltage rejoins me on the show to talk about this idea as well as what’s happening in bitcoin and lightning:
- Being near the printer
- Why big companies do financial services
- What lightning does differently
- What use cases are there and who’s looking at them?
- Products at Voltage
- Thoughts on LDK by Spiral
- Article: Every Company Will Be A Lightning Company
- Article: SURGE NOW AVAILABLE FOR VOLTAGE USERS
- Twitter: @gkrizek
- Twitter: @voltage_cloud
Stephan Livera links:
Stephan Livera 00:00:00
Graham, welcome back to the show.
Graham Krizek 00:00:03
Hey, thanks for having me back.
Stephan Livera 00:00:05
There’s lots going on. I know you guys at voltage are doing a lot of stuff around. Obviously the Lightning network and you wrote this piece recently. Will every company be a lightning company? Now, yeah, maybe for some people that’s controversial. Maybe for others in our world, that’s not so controversial. But let’s start. Like, what? What spurred this article? Why did you write this article?
Graham Krizek 00:00:27
So I yeah, the original inspiration for it I guess is really. So I there’s it references a post or a it was a really a presentation from Angela Strange at Andreessen Horowitz a year a couple years ago and it gets referenced a lot. It’s called every company will be a fintech company I think. And so it I kept hearing that a lot and then, you know, I actually took the time to, like, listen, read the article, like, Listen to our presentation, things like that. And I think it made a lot of sense and really the inclination for her the presentation originally is. That no one really enjoys their bank. No one likes the banking system, and in its true form, and to provide a better experience, more apps are going to be adding in financial services into their products and services. So take an example of like Uber or something where they, you know, you keep a balance in your Uber account to either, you know, for the rides. You do right. You’re gonna do that kind of thing. And so being able to bring financial services closer to your end user. Instead of always. Having to go to a bank to do anything makes a lot of sense. And it provides a better user experience. All these different things.
Graham Krizek 00:01:38
And so I kind of with this I said yes, even though that makes sense, but I would take it a step further, if not only are we going to. Does it make sense to move financial services closer to the end user? But if we look to do that, there is lightning. The lighting network is the superior Payments network in the entire world. It’s the best system for sending and receiving payments. And so I’m going to take it a step further and say every company will be a lightning company because as we look to move more financial services to the end users, there is no better system than the light network and Bitcoin. You know Bitcoin inside of the light network, so that was kind of the original idea and really expanding on that and like, how do we? How does that literally work? Like how do we bring financial services to the end users? And why is lightning so important for?
Stephan Livera 00:02:27
That gotcha, And so I think you can, we can understand that in some ways where this is a common term, people use even in Business School, they talk about vertical integration, this idea that. You might not just do one thing you might do. One thing that’s above you or below you in the stack per say. So as you said, like Uber or some of these other companies who want to launch their own card or hold value inside, you know, have Uber cash like an Uber balance and that way they can cut out, they can start to try and cut out middle men. In their own way, maybe take more of the profit for themselves, but as you’re saying, Bitcoin and lightning. Opens that playing field even further and so I guess that’s part of the argument. So what are some of the reasons why some of these, let’s say non financial services companies or at least not traditionally financial services companies are going to try to innovate in financial services?
Graham Krizek 00:03:20
Yeah, I mean it’s several things. So kind of like I’ve just mentioned a second ago is around like the user experience So if you don’t like the user experience of using something like an Uber or some. Thing is good because you don’t have to like always, you know be ACH thing in and out of your bank account. Like every Uber like they have, they have some forms of abstracting a lot of that away. Similarly with like, you know the point system or like take Apple for example. And they’re like Apple card and being able to provide a better user experience when you’re buying Apple products. With their own card. And so I think ultimately it boils down to the user experience. The more that you can, the more that you’re able to bring in house or into the experience, so to speak, the better the user experience is going to be when you have to start connecting four different pieces together and really the user experience really suffers generally. And so I think that that is 1 aspect and then kind of like you mentioned on the efficiency gains of actually one being able to do transactions inside of your own application and services. So if you’re able to keep a lot of that inside of your own ecosystem for your application, you’re able to probably cut, you know, a lot of fees or just unnecessary. API call something like that.
Graham Krizek 00:04:32
Your application can just function more efficiently. And then finally, it generally speaking is more sticky for your end user. Your end user is going to stay in your application for longer. Use it longer if you have that experience again, like the more that users have to jump around to different applications and services, the less likely they are to stay in your experience and really live in it. And so I think that’s another. Area is really focusing on the end user and not only keeping them inside of your app and being having them return as a customer, but also keeping them happy as a customer and that you know that they can get a good experience out of it.
Stephan Livera 00:05:09
That gotcha, So let’s summarize that then. It’s you can deliver a better customer experience in some ways. So that’s part of the argument is customer UX. There’s maybe some efficiency there and stickiness, right? Apple is famous for having their walled garden, right? This idea that you have the iPhone and it connects with your Mac and it connects with, etcetera other aspects. The Apple cloud system that it all kind of interconnects and Microsoft has this and Google has this and they all everyone wants to try to keep users in the ecosystem as long as possible because that’s where you can make the money. Them, and perhaps there’s a there’s even a profitability argument as well. Whereas as you said, some of these gift card balances, some of these companies can. Make some money off of that too, because now they can take that money that the customer is storing. Communicate with the with Uber or Apple or whoever. Take that and turn around on the back end and be running some of that with the money market fund and be earning a little bit of interest there too. So there’s like a profitability argument to it also.
Graham Krizek 00:06:10
I mean there, there is in that. And I think that the other like I think the other opportunity here is if you look at, so say in a world like if we if we take kind of what I’m saying to the extreme of every company will be a lightning company and that like maybe those Starbucks rewards are not Starbucks rewards anymore, they’re actually Sats. And you can you know. Use like your. Starbucks Application is then a lightning wallet at that point and then you think about the interoperability of that amongst everything else in the world. And if more and more folks are starting to, you know, accept lightning, then that turns into your Starbucks application. Being able to the points that you get from buying Starbucks coffee is actually more. Has more real world use than like the Starbucks Rewards points and so I don’t really drink Starbucks at all. I really like it. I don’t care about it, but I would definitely drink it more if they gave me sats instead of the Starbucks rewards because that has real utility that has real value that I can go and use and do something else with. And so I think that there’s that’s a big element as well in this in this kind of equation. Is the ability to, if we were to really. Really leverage this, you know, open monetary network, that is, you know, global being able to do that, adding that into an application opens up to a lot of new possibilities as well. So I think there’s a whole area of kind of untapped potential for these companies to be able to connect into this global economy.
Stephan Livera 00:07:36
yeah, so interesting as you said. So it’s kind of that trade off then because on one side there’s the stickiness angle, right. If you as the company or the big you know. Massive Mega Cult Mega Corp. Want to keep people in your ecosystem in your little walled garden? But on the other hand, there’s this open ecosystem and it’s competing. But there is a there is a difference here, right because? You could say. Getting access and plugging into that open network. Might make people more happy to use this thing to begin with. So as an example, it’s like the analogies people used to make about Internet versus intranet, right? If everybody’s trying to build their own intranet, but rather people want to be accessing the open Internet or being able to e-mail anybody, not just people who are using the same e-mail provider, let’s say. And so there’s kind of a there’s an open angle to that. Maybe there will be more users who can plug in and connect to that. I think similar arguments are also being made about Nostra as well that like this idea that Nostra is this open protocol that because builders on Nostra you’re building an application on nostro, you’ve got this automatic inbuilt base of possible users and so it’s not just like. Ohh, this is Twitter’s monthly active users. Or this is Facebook’s monthly active users. It’s just anyone who’s using Bitcoin or anyone who’s using Nostra could potentially use this application. So in a similar way, maybe there’s an angle around that so. So let’s talk a little bit about.
Stephan Livera 00:09:01
I think there’s perhaps one other angle to this that I was thinking about as I was reading your article. I was thinking there’s also this angle of the monetary spigot, right? So those of us who are fans of Austrian economics and understand that money is not neutral, it matters who gets that new money 1st and so. What happens in a Fiat monetary System is that companies try to subtly jockey for position. Everyone wants to get closer to the money spigot, because if you’re closer to the money spigot, you win right the He who is closest to the monetary spigot wins, and those who are furthest away from the money spigot, they are losing. And savers are obviously losing anyone who’s saving money, as in. Saving Fiat in a Fiat system is losing because their money is getting inflated away whereas. And new purchasing power is going to those people who get you money 1st and that’s why we see some of these companies who try to, let’s say become a quasi bank and that’s why we see even some of these airlines are not actually profitable on the actual airline. They’re profitable on their frequent flyer programs, which are paired up with guess what? Credit card providers who are. Again, close to the banks financial institutions. So there’s an angle there as well that it’s not that they want to do financial services per say or maybe you know the reason they want to do that is because they want to get close to the monetary.
Graham Krizek 00:10:22
No, I totally agree. And I think that that is when we think about there, there’s a lot of uses that can come out of getting close to the, the, the spicket or even just enabling more experiences that allow you to like I think there’s a lot of opportunity and one the efficiency gains like I said of you know, using the network given that it’s. You know the lowest transaction fees that you can imagine inside of a payment network. You can save tons of money just by doing that specifically and then the ability for you to do these other things alongside it. Maybe you can take you know new revenue streams. By adding in these different financial services. So I think that ultimately, yes, I think you’re absolutely right and being able to provide either new revenue streams or increase efficiencies inside of your organization is incredibly interesting, especially in today’s day and age where you know kind of things have you know, flip-flopped a little bit in terms of like how companies are operating. Over the last like you know, year. Though and so I think that’s that is definitely increasingly interesting and being able to get yeah closer to the spicket, so to speak, it’s definitely something people are going to be looking at more and more and again like cutting out you know the middle men of everything that you possibly can is where we see a lot of organizations looking for today. And so I think that there is. That’s going to be increasingly interesting and sought out for organizations. And then so I think as we move along again lightning is going to come out as the superior, the obvious choice for doing these kinds of payments because it’s just the best. And so I think as we look for people that are trying to get closer to the spigot and not being so beholden to just like, whatever this credit card provider is saying, that they’re going to give you. Having a little bit more of opportunity to set your own destiny.
Stephan Livera 00:12:10
And I think it’s interesting that we’re seeing the Lightning network is growing. Of course, we would all love to see more self-custodial self-sovereign adoption. But at the same time, it’s starting with a lot of custodial use. I think we have. To be honest there. But that said, there are a lot of companies and. Exchangers, who are plugging into the Lightning network, and. By plugging into this network, you’ve got access to everybody else who has at least a lightning enabled provider. Whether that is, you know, Bitfinex or kraken, or, you know, whoever, and once you add up, let’s say, cash up and some of these other big names who have a lot of users, that’s now we’re probably in the 10s of millions of people who could use. Lightning with an, you know, with an app so you know that’s a big network effect that you can plug in. To by being a lightning company, right, because all of these other people, maybe they don’t know it, to be fair, maybe they have cash app installed on their phone and they could use lightning. They just don’t know it. They just don’t understand that yet. But I think that’s part of the journey of Bitcoin and lightning. And maybe in this coming cycle that’s going to be, you know, in the next hype cycle, we don’t know when again, I don’t have a crystal ball. I’m not saying it’s, you know, coming right now, but. I’m just saying. Bitcoin moves in these hype cycles and when in the next cycle, I think that’s where we’ll see a lot of this lightning use start to come.
Graham Krizek 00:13:32
Yeah, no, definitely. I completely agree. And I think that it’s, yes, I think there’s a lot of people that so as an organization, when you look at adopting lightning like there it does open you up into a lot of new people like new people that maybe weren’t your customer before that can be your customer. Now it opens you up into a whole global audience. And so I think that that is a huge benefit for. Organizations as they’re. Looking at, you know some new strategies or you know how do you expand globally, it’s the obvious choice to you know as you look at global operations and then and then secondly, I think that yes, I think there’s a lot of folks out there that are becoming increasingly aware of lightning and maybe they’re yeah, just using like the cash app version of lighting, if they even know about that or something you know. Thing there and then I think there’s a lot that is going to happen over the next, you know, year or so and like more non custodial lightning usage, that’s something that us at voltage are very, very focused on. And we’ve been doing a lot with like the release. Of like our LSP? Earlier this year and, you know, working really closely with like the LDK team. To build out non custodial like mobile applications and things like that. So I think that we’re definitely like at the point where a lot of real things are being built for non custodial lightning. Take mutiny, for example. They they’re one of our first users of our LSP, and they’re building a fantastic mobile experience. Or it’s even it goes beyond mobile. It’s kind of anyway. But they’re it’s a great example of like how far we’ve come in terms of actual non custodial lightning usage. So I definitely agree with you. I think that this next cycle is going to be very lightning focus and I think that we’re building a lot of the tools now to really enable that and make it a great experience.
Stephan Livera 00:15:15
So I think there’s probably one other area where I’m sort of disagreeing like, of course I I probably agreed with, let’s say. 80 to 90% of the article, there’s probably one other area where it’s like, oh, maybe there’s a slight screaming here. You were saying by using lightning, people could, let’s say the company could just not have a fraud department. Or perhaps, maybe, maybe that wasn’t quite what you’re saying. Something along those lines. But then I was thinking, well, doesn’t this vary on the on the kind of service that’s being done so. As an example, if we more and more companies become quasi lightning banks, then the those customers. May actually end up getting hacked and having their lightning balances spent from by the hacker. And then maybe that’s still necessitates some kind of internal fraud department at these lightning enabled companies, right? Even aside putting AML stuff to the side, AML compliance just internally having to deal with some of that fraud aspects, yeah, so there’s maybe. Some elements there that I might slightly disagree, but do you want to just spell out some of the benefits in your view as well?
Graham Krizek 00:16:16
Yeah, definitely. I mean, I think that the like there is, yes, I’m not meeting like everyone. You can fire your finance department. You can fire your, you know, don’t comply with any laws or anything like that. It’s more so along the lines of like in in the original post. Like they talk about, there is some like large credit card provider had like I mean hundreds or thousands of employees. That’s like kind of the chargeback department, just dealing with people that are, you know, refuting charges, you know, trying to get refund whatever. And so just looking at lighting from that angle of just chargebacks don’t exist. There’s instant finality when you send a lighting payment, it is done. You can’t. You can’t claw that back. You can’t claw back a Bitcoin transaction. Those kinds of things. And so you can. Significantly reduce the amount of just people operations inside of. Dealing with those kinds of inefficiencies and so it can, it can drastically reduce headcount as far as that goes in terms of like you know chargebacks and things like that, there is still some. amount of you know, you still have like monitor for fraud and all those things. But I think that there’s a lot of a lot of efficiencies that come with the benefits of the network of you know the instant settlement and all of those things that really benefit organizations that are looking at adopting this. And so being able to facilitate that and having you know, cryptographic proof of payment. So there is no there’s no refuting whether something you know got sent or not. Every you can prove every single bit. And so that reduces significant amounts of headcount and just inefficiencies inside of organizations that spend a giant chunk of time just dealing with that alone.
Stephan Livera 00:17:56
And so one other area that you spell out in your article is. Current fintech look, let’s call them Fiat fintech, right The Fintech that don’t do Bitcoin stuff. So of course everyone knows some of these like wise and revolute. And I think in Europe, there’s a popular one called N 26. Anyway, there’s a bunch of these in your view, Graham, why are the current fintech not adequate here?
Graham Krizek 00:18:20
Yeah, several reasons. One that they’re, they’re all usually very tied to their specific, you know, region or geography, they’re not And as we look to you know what it’s like today, everyone is increasingly more global. Everyone knows someone in a different country, everyone has family and a different like everyone is increasingly more global. And so they’re generally. Very restricted to specific geographies across the world. So I think that being able to leverage a global payment network to go global is very significant. And then it’s also a matter of being able to there. I guess there’s two more things. One is like the amount of like the settlement and the counterparty risk involved in that. If we think about, you know what? Those same folks offered like a non custodial experience where someone could actually hold their funds and you are not at risk of the things of you know, prime trust and FTX and all these things that have, you know happened. Recently and then finally the ability to actually go more Internet native where a lot of these service providers are a layer on top of the Internet that really don’t provide the same kind of experience where like lightning can be, you know literally embedded into whatever you’re doing both inside of like you know a browser. Like Alba or mutiny or something like that, as well as like doing it more mobile native. So I think that there is the ability to go more truly embedded into the Internet, do micro payments and things. Like that significant, you know they just basically can’t compete on that. The counterparty risk involved still exists. And then just, you know the restrictions on geography and where who your reach, can who you can reach to.
Stephan Livera 00:19:56
And I think you make a lot of good points there around the barriers that are erected by governments across borders, right? It’s difficult and that’s part of that is why some of these Fiat fintechs exist. Because of those difficulties. But even still, it makes it difficult for them now. I guess the. Follow-up question from my point of view and I’m curious to hear what you. Think so? We’ve got some of these current Fiat syntax. Why aren’t more of those using lightning today in your view?
Graham Krizek 00:20:24
I mean, I think it’s just been, it’s a couple of things. It’s one like education. I think that just frankly, they don’t know enough about it. They maybe see it as this, like big scary thing, or it’s just too hard to parse or something. I think that they’re just not educated on it very well, which is something that we’re, you know, we’re working on a lot, is trying to get more education for those. For this kind. Of users and then additionally, I think that they’re on the flip side. I think that there is probably more traditional fintech that are looking at lighting than anyone thinks. They’re just doing it kind of silently behind the scenes. Internal departments are indeed that kind of thing. And so from, you know, the conversations that we’ve had, there are significant amounts of traditional fintech companies looking at adding in lightning support like we know that for sure. And I think that there is. So I think over the next, you know, year two years, whatever the you know the next cycle we’ll see a significant amount of those actually come out of you know this kind of silent R&D and get them more into the wild. So I think it’s. Two fold of 1 it actually is happening more than people realize and then two. Anyone that’s not is just, not aware of. Like what this is how it can help them. And then how do they implement it? So there’s a big gap that we need to fill there to help them understand what the opportunities are.
Stephan Livera 00:21:37
Well, that’s interesting. As you said that many of them are actually considering it, but maybe it’s early stage and it takes time and maybe for them it’s lower on their priority list compared to some other thing that they’re trying to do. Maybe they’re trying to expand maybe. Trying to, you know, get a license in some other country somewhere or deal with court cases and legal battles and things like this, maybe just lower on their priority list, but I guess that’s probably why we don’t see a lot of Fiat fintechs today using lightning. But of course it would be fantastic if more of them did, and I’m sure there’s probably an established bitcoiner. Base of users inside some of these fintechs who are already users of some of those fintechs. Who would love to use Bitcoin and lightning? It’s just not an option yet in that particular service. And as you said, it’s early. I think the other big point is around tooling conversations, having APIs, having SDK’s having you know these the right things for those fintech companies, the Fiat fintech ones. Not the already existing Bitcoin ones. It’s difficult for them to sort of quickly plug and play, and I guess that’s part of what voltage is doing. It’s part of what other you know, people in the industry are trying to make it accessible for. Them and so maybe. Lightning has gone through this adoption cycle where it started out as the, you know, the true hardcore bitcoiners. And you know they would run their lightning node and, you know, figure it out. And then it took time for lightning businesses to sprout up and come to a level and get to a certain stage of maturity development. Ease of use. clarity, maybe that’s again that where we are in the cycle, right? So we’re just early in that cycle, would you?
Graham Krizek 00:23:15
Yes, definitely. Now I think that is, that’s right. And that’s something that we you know we focus on a lot is where we want you we want Fintech to be adopting lightning to be you know very similar to any other tool or service that they integrate. You know there’s. They’re already integrating all kinds of different SaaS platforms for, you know, analytics or business intelligence, whatever it is like. They’re already doing things and we don’t want to come to them with lightning and say, hey, here’s this completely new thing that your team has to like, do all these different things we want to give them. Hey, it’s just similar to all these other. Here’s the APIs. Here’s how you use it, and we can integrate it very quickly. And so that’s what we’re really focused on building out is making it that seamless experience. And so you know, we’re working on that. I think that there’s a lot of conversations that we’re having with folks to make sure that we are, I guess, building along that path. And there’s been a lot of. Lot of interest in traditional Fintechs to understand and get on board with lightning. So I think that we’re definitely on the path. We’re not there. I don’t think that any service is like, you know, perfect by any means. But I think that we’re definitely on the right path. And I think that there’s been. It’s been very surprising in the amount of interest and reception from traditional fintechs that we’ve seen over the last year. And I think again next cycle, I think there’s going to be even more kind of eyes on the on the industry. And so there is. There’s a significant amount of opportunity and I think that we’re just trying to solve it in a in a really good way, so. Those folks that are coming and wanting to explore lightning can get the maximum benefits with, you know, the least amount of uniqueness or engineering lift. Possible
Stephan Livera 00:24:55
See and I think one other area where let’s say a lightning skeptic could look at us. Now, of course, I probably count both of us in the Lightning promoter camp, but obviously a skeptic could look at.
Graham Krizek 00:25:07
Stephan Livera 00:25:07
Us and say, well hang. On guys. Public Lightning network capacity last I checked is around 5400 BTC, right? This is we’re recording 5th of July 2023. Just for anyone listening and so public lighting capacity is around 5400 BTC, the total amount of BTC out there is something like 19.4 million BTC. You know why is lightning adoption so low? Why is it so small? Why are there only 18,000? You know nodes on the public? Network, let’s say.
Graham Krizek 00:25:37
No, it’s yeah, it’s a great point. And I think that we do hear, we do hear that like every now and then So I think a couple things that I usually. Respond to that with is. One, the channel capacity is only like what you see. There is only the public metrics. So like for example our LSP, all of the channels that we open into like end users are private. You know, so they aren’t announced. They have to be because of like you know, the way that it functions and. There is a significant amount of capital that’s just private, that’s just not part of that metric. So it’s a, it’s naturally a incorrect or maybe not full picture metric for gauging the total you know amount of Bitcoin that’s locked into the Lightning network. So I think that’s number one. And then number two is that you know the channel. The code, the metrics that we have of like node count, channel count, channel capacity are basically the only ones that we have to kind of evaluate the network. But those are all. Kind of. Those are poor metrics to really gauge the success of the system on the real like success of the system are like, how many? How many transactions are we doing? How many you know how much? How is the value of these transactions? Like what is the success of these transactions? All these different things of like how are people actually using it? Where are they using it? All of those kinds of things, and those are naturally. Very private metrics like, you know, the Bitcoin layer one is very public on how, who is sending what, where, when lightning is almost the exact opposite of all of those things are just strictly peer-to-peer because it’s a peer-to-peer network. And so we don’t have visibility into all of those kinds of, I would call them the more important metrics, so we could. Have you know 500 Bitcoin locked into the light network and it could still be doing, you know, significant amounts of volume and doing real transactions across the world? And so it’s still, they’re just not accurate metrics and tracking. How successful is this thing actually doing. And that’s one of depending on who you talk to, that’s one of the great benefits of the light network is we can’t tell you know it’s that private that we really don’t know. So how many transactions? All of these things? And so you know, those are the things that we track more closely is more, I would call them metrics that are more like closer to the success of the network or our product or things like that. And so they’re just, they’re just disconnected. And so it’s a hard one to compare it to.
Stephan Livera 00:27:51
And any thoughts on payment reliability? Have you seen that improve over time?
Graham Krizek 00:27:58
Yes. Yeah. I mean we we’ve definitely been seeing payment reliability improve over time, especially you know when we got started, when I was starting to look into this, it was like 2019 and like, I mean payment success was, I don’t know what the percent was, but it wasn’t good. It was definitely not good. We like where we see it today is, you know much, much higher, much more reliable it’s actually. I would call it an anomaly to have a failed payment. If you have like you know, and understood like well connected node and all of these things. And so we have definitely seen increase in payment reliability, especially with things like our LSP is focused on just in time liquidity. So we are able to detect. If a payment is coming through that doesn’t have enough capacity to reach its end destination, we will automatically zero comp open a new channel to facilitate the payment so that thus just you know increases the payment reliability of one that might have failed previously. You know, now it’s able to succeed. So there’s a lot of work going into the success of lightning payments as well as new path. Running algorithms and things like. So huge amounts of increase in payment success and we’re seeing, you know, a lot of we’re seeing a lot less complaints about, you know, failed payments or things not working correctly.
Stephan Livera 00:29:07
Any comments around volume then in terms of like even though it’s, you know, I don’t know if people say it could would consider we’re in a bear market now or whatever, but have you seen volume still going up even if the price is down massively from all time high?
Graham Krizek 00:29:21
Definitely, yeah, absolutely. Especially because like we’re even, you know, in this bear market, whatever you want to call it, we’re definitely seeing more and more people come and integrate lightning. So we’re definitely seeing more people adding lighting into their products and services. And so with that, it’s naturally increasing, you know, payment volumes and all those things. So still seeing new entrants. As well as folks that are. There are still, you know, that have always had lightning. We’re seeing increases in their, you know, volumes and payments as well. So like Kevin, Root does a good job of kind of like having these like lighting visuals of like how you know what is, how many payments did Walt Satoshi do or guys or any of those folks. And so we’re seeing those generally speaking, you know trending upwards. And so we definitely are seeing. Increase in volume both from new entrants as well as existing providers doing more payment.
Stephan Livera 00:30:13
In terms of lightning protocol stuff and latest developments, is there anything in particular you’re excited to see or something that’s coming soon that you’re excited to see?
Graham Krizek 00:30:23
I mean, there’s a lot like there is, there’s a lot inside of like the lower level, you know, super technical details like splicing and async payments like both 12. Like all of those kinds of advancements I mean, I’m excited to see. I think that There’s probably not many people that aren’t excited to see some of those, like protocol level improvements. So that’s really good. And then we’re also like for us as an organization, we just launched a product called Surge recently, which is very focused on like node observability. So we felt like to date, we’ve all of our customers are even people that aren’t our customers. Have we, as we talk to them, everyone’s kind of building out this kind of metric system and like, observability and all of these things like themselves? So we saw as an opportunity to build out a really robust system to be able to visualize what’s happening inside of your node view. Your transactions get alerted of issues, all those things. And so we launched that, a couple of weeks ago to help with node runners. And actually, you know, operating nodes. And then additionally, you know with our LSP coming online, we’re really trying to solve like make it again, moving to that experience of this very, very easy integrated system that allows people to, you know just. Connect in and start sending and receiving lighting paint. But we focus on that very closely on the infrastructure layer. So actually giving people you have real transactions, you have real lightning channels, you have your own balances, you can, you know voltage goes away, you still have access to your funds. All of those things. And so we’re trying to solve it in a very lightning and Bitcoin native way. And so with that. It’s one of the great things of all these new protocol improvements is that, you know, we are direct beneficiaries of that and showing them into our users. So I’m really excited for basically there. There is. There’s a huge amounts of things being built both inside of voltage and outside. And so I think that, you know, over the next couple of years is going to be very substantial progress.
Stephan Livera 00:32:15
So as I understand with surge, the idea is it gives you in a way it’s like analytics for lightning node and it helps you understand things like channel uptime, channel states usage. Maybe it would be handy for customer support aspects and maybe it’s also handy for optimization That’s basically the idea. That this is software that you are running on your Lightning node and it can extract some of the key information. That can then be used to optimize or update certain aspects of how you run that lightning node. So as an example, maybe you see that a certain channel is inactive or it you know there’s something you can do to improve your lightning node. Is that basically kind of the layman’s understanding of what surge is?
Graham Krizek 00:32:59
Yeah, I mean it, it’s pretty accurate. It’s really just a tool to give you kind of a single pane of glass and to everything that’s happening inside of your node. So you can have like give access to like your finance teams to see here’s all of the transactions. Here’s all of our sins. Here’s all of our receipts. Here’s where all of the fees. So you can have very tight accountability of all of the money flows as well as like engineering teams of getting alerted of if that Channel goes down or if you have you know we show channels that you have open that are totally functional but they are maybe not routing payments. So it’s basically just dead capital sitting there. So you can be more efficient in your capital allocations. And then you know, there’s a lot more that we’re going to add to it. So ultimately we just want to give them full visibility into what’s happening in like, you know. Lightning is very dense with the amount of data and things that are happening inside of it, and so really trying to just show those kind of hidden areas inside of like a lightning node or you know what operations are happening and really give full visibility across an entire organization so. Where you can get buy in from the compliance team from you know the accounting team as well as engineering. So I feel like there’s it solves a lot of a lot of different things for different departments, but ultimately that was, as we talked with larger. That was a big requirement of being able to have something that you know there. There are other departments outside of engineering can get comfortable using and you know getting on board with.
Stephan Livera 00:34:26
I see. So that’s almost a customer requested set of features around monitoring the Lightning node and I. Guess for a lot. Of people at a business level at an enterprise level, they need to integrate Bitcoin, aligning into what they’ve already got and of. They might have some ERP enterprise resource planning system and you know they need something that they can easily plug into all of that. And maybe they’ve currently got a lot of stuff that works on the Fiat side, the Fiat banking side, maybe they can download. OK, here’s the Fiat bank statements. Here’s the Fiat aspects of it, but we need something to plug in the lightning aspect of it. And so I guess. You’re trying to build something on that. That’s kind of where your business, or at least this particular product is sitting.
Graham Krizek 00:35:09
Yes, yeah, definitely. I mean being able to give like again like you know previously as we talked with folks like, they’re basically the ways that they would do that is like, you know, writing their own scripts and you know software and everything to basically do all that. And so, you know, we heard every almost everyone that we’re talking to that’s integrating lighting is rewriting the same application over and over and over again. And so we saw that as the opportunity of like, let’s just let’s write it for them and just give it to them kind of on a on a play. So that’s being able to hook into those kind of more well understood systems that, you know, large organizations usually have and then also being able to be very operations focused for engineers or operators that are actually doing the day-to-day activity of the node.
Stephan Livera 00:35:53
So, so if we look forward then in terms of where things are going if. Every company becomes a lightning company. I mean, are you saying that in a similar way to, let’s say, every company in the 90s needs to learn about the Internet? Because otherwise, you know you’re kind of, you’re gonna get left behind. Or at least you’re. You’re leaving all this money on the table because there’s massive opportunity out there. I guess that’s the sense in which you’re talking. We’re saying every company will become. Or needs to, you know, consider the Lightning network. Although it may seem. Extremely early today, right, because the number of Bitcoin users today is, you know, pick your number right somewhere under 100 million probably, you know, in terms of on chain users is probably more like 5 or 10 million in terms of on chain Bitcoin users today. But that said, there’s a lot of custodial users on top of those 5 to 10 million. And chain users right there might be one exchange who supports, you know, 10s of millions of users, but they’re really custodial. So in the same way, there’ll be a lot of lightning users who are just custodial, like the end user, let’s say who’s using lightning custodial through their company, who in turn that company is your customer voltage as customer, right?
Graham Krizek 00:37:05
Yeah, definitely. I mean, yes, I think that’s a good way to put it up. It’s just the same thing of, you know, companies in the 90s. You know you should learn about this Internet thing. I think it’s gonna be very helpful for your business that you’re doing in all those things. So it’s very, very similar to that and that there’s a lot of opportunity inside of you know having a lightning strategy for a business and even to your point like there is. There’s a lot of folks that can, you know, service Bitcoin and lighting to like the end user. And do you know a lot of things with that? But there’s also customers that we’re talking to that are plan on using it more in the back end of maybe they’re an international company, they have banking relationships and you know across a tons of different countries and they have to settle in between banks. In just side of their back end and they’re looking at using Bitcoin and lightning to do that settlement instead of, you know, the swift network or the traditional payment rails. And so in that context. The end user is everyone that’s using their product is still doing Fiat like 100%. There’s no kind of Bitcoin exposure to them, but behind the scenes they are using Bitcoin to do these international settlements. And so there’s a ton of opportunities that as well, maybe you don’t have to show a lightning invoice to every one of your users. There’s things in your back end that could save you a bunch of money just by. Using Bitcoin for settlement instead of, you know, these other Networks.
Stephan Livera 00:38:21
Yeah, that’s interesting, because I think the use cases that can appeal to us, let’s say to the average user are average person. They’re thinking B to C, But they’re sort of forgetting there’s this massive market of B to B and that market is arguably even bigger than the B2C market. And so that there’s an opportunity. There for lighting, I’ve heard this as well from other people I’ve spoken to. To that, they’re considering it as part of their corporate, you know, they’re looking at it in their own ways. And So what are some of the other things you’re hearing from corporates and lightning? Are there any other things you’re hearing from corporates considering this?
Graham Krizek 00:39:03
Yeah, I mean definitely, I think that there is there’s a couple of different things. I mean we’re hearing more and more interest for people that just want to hold Bitcoin like as kind of a treasury system, you know, like just Michael Saylor’s kind of, you know, made that famous by now of, you know, being able to, like, hold Bitcoin on your balance sheet, those kinds of things. So I see that as all. Almost like it’s it doesn’t have to be a step one, but I see that as a step one of being able to get comfortable with just buying it and just holding it and. You know, get. Well understood in that regard. And then then we’re starting to see more and more people look at it from business operations. So we see it from like I just said of like some internal settlement use cases, we see it. For more of the consumer end, we see a lot of people looking at it from like the reward standpoint, I think that that’s been sort of validated across people. Fold and you know, with micro strategies recent you know platform on kind of their more enterprise level like reward systems. So we see people looking at it from a reward standpoint a lot as well. And then finally, we do see some people doing a lot of more consumer types. So things kind of like cash. Have deposits, withdrawals, those kinds of things? So we see it kind of across the board from like the internal B2B types all the way to direct to consumer. So it just kind of depends on the business model. But we’re seeing people very interested in at least as a number one understanding how they can apply this to their business and that’s something I think Michael Saylor said in his. The MicroStrategy conference in a couple of months. To go is it you know, just look like you don’t need to understand all of the nitty gritty details on Bitcoin lightning. You know, as a get go understand what you’re what you’re trying to achieve from a product perspective and how can Bitcoin and lightning fit into that? And then, you know, start taking a step into like actually looking at integrating it and how it could work. So I see, I think it’s a great. Way of thinking about it, of really just think about it from the product standpoint and then evaluate how can you actually you know apply it and go from there.
Stephan Livera 00:41:05
Yeah, of course And I think those of us who are interested in the technology, we have this tendency to go down technical rabbit holes. But at the same time. You can confuse somebody who’s new to that, and the analogy I I like to use, as I say, it’s not like you have to teach everybody how to design a car. They just need to know how to drive the car, right? They just need to know the basics and so I think a similar analogy there is stuff like lightning address. Right. So. As an example, you as a company or an entrepreneur don’t have to think too deeply about the internal technicals. A lot. Being network you as an example might tell your customer, hey, what’s your lighting address? I’ll pay you out to your lightning address, right? So that’s probably an easy example like where today let’s say a company, a builder, someone is saying oh, I need to get this to the customer. How do I do this? How do I route the mail to them? No, you just use an e-mail you just say, hey, what’s your e-mail? I’ll e-mail it to you. It’s the same kind of shift in the thinking that’s required to get people to understand they don’t need to become a lightning ultra technician. They just need to know they can use it and there’s this easy. There are easy ways to plug in and use it, whether it’s lightning address, whether it’s an LSP or a provider, right.
Graham Krizek 00:42:16
Yeah, exactly, exactly. And that’s where we’re, you know, really trying to push for is just, you know, being able to make this all, you know, very easy, very plug and plug and play, which, you know, admittedly, it hasn’t been that, you know, today, you know, we are fully, you know, aware of the hurdles and you know all the challenges that that we’ve that the network has experienced over the you know the several years that that it’s been Running but again I mean to your Internet analogy, I mean think about when you had to plug in like you know the dial-up like systems your modems and like you know someone made a phone call like your, you would just get disconnected from the Internet, those kinds of things. So you know, we’re graduating from that level on to the next level. And so really just making it, you know. The experience you have today of sending or receiving an e-mail is where we’re getting to and so very excited to be building out that kind of future.
Stephan Livera 00:43:07
And one other question I had just around US versus non-us some curious in terms of when you’re talking to corporate and business businesses around there. Are you seeing a difference in you know are you seeing a difference in countries like are you having a more advanced conversation with companies in the US or is it actually not that different depending on who you talk to around the world?
Graham Krizek 00:43:28
It’s generally been not that different. Th ere are, like we see a lot of activity inside of like Africa. For example, there’s a lot of people in Africa that are, you know, working on lightning services or things like that. So it’s even. From like the more grassroots like Africa free routing and like those kinds of organizations, all the way up into like, you know, some more established like organizations. So it’s been a hot one, I would say over the last like couple of months. But then generally speaking, I think everyone’s kind of on the same level, there’s some people that are really trying to understand like the regulatory environment. For a lot of these things, which I think is more. When we hear that, it’s much more on the alt coin side of things. You know things outside of Bitcoin of like, you know this, you know, you know, business is getting sued for whatever. Like what does that mean for me? And so it’s kind of, you know, things that you naturally have to deal with alongside just the general environment. But I mean, being specific on Bitcoin and lightning. I think that, you know, across most of them, it’s all been pretty standard and I think we see interest from all regions and they’re definitely all kind of ahpushing forward at the same pace.
Stephan Livera 00:44:39
For some companies, there may also be worried about, let’s say, capital gains tax implications depending on their country. If they were to run, let’s say a platform and that platform is, let’s say, paying out Sats, then maybe there’s a consideration there around capital gains tax and how to deal with that aspect of it. Are you having? Are you getting into those kinds of conversations and do you have any ideas around what can be done in those cases?
Graham Krizek 00:45:07
We like a little bit, we don’t. I mean we’re not, we’re not focused on the tech side of things generally speaking, but we do kind of work with organizations to try and help like understand you know what that’s like or at least writing, you know again search is a great you know tool for kind of looking at your transactions. So you can kind of answer those questions. More specifically, so we do work with organizations on at least providing them what they need to answer those internally. So, so we do work with folks to do that. We don’t necessarily have like a direct you know, tax arm or something to give you specific advice.
Stephan Livera 00:45:42
Yeah, of course. I’m just saying because I’m just thinking in terms of what might be a blocker for some of those companies, they might say, hey, we would love to use lightning, but actually right now the tax maybe for them, you know, maybe they’re not ready to be a trailblazer. And so they want to see somebody else go first before they decide to follow. As an example, right. And so if it becomes a. Blocker for them. Well then maybe that’s sort of OK. They’re going to put that on the back burner, focus on some other priority until. So it’s been resolved in some way, maybe in some cases that’s, you know as an example in the US with gap accounting that they’re going to update the accounting standards. Now that’s more for the hobbling use case, but you know, maybe there’s similar sorts of things that have to happen so that the rewards kind of platforms are a bit easier from a tax perspective. Well, that’s just one thing. Is there anything else your you know? Anything else you can share in terms of what is coming up with voltage?
Graham Krizek 00:46:36
Yeah, I mean, we’re just we’re working on a lot You know things like surge and our LP, we’re big things. We really wanted to get out this year, so we did, you know, the first half of the year and so that you know more of the second-half is going to be very focused on platform unification. So bring it all really all everything click together really nicely. Give users that experience of just a similar platform to any other thing that they’re integrating, and then also we’re working a lot. We’re seeing a lot of interest in like the mobile side of things. So people developing you know non custodial mobile apps and being able to integrate with things like LDK and I’m using our LSP for that. So we’re seeing. You know again lots of increase in that and so I think that being able to build out these kind of more unique non custodial experiences. Is definitely something that’s going to continue. And so we’re really focused on that and being able to like beef up our LSP and be able to service those folks more even better than we can today. So a lot I think is going to happen inside of our LSP going forward and being able to really push that forward so. A lot of product enhancements, a lot of things that are going to be coming down the line here soon. So yeah, not a lot that I can say specifically, but I think that we see. A lot of interest in. Mobile development as well as just more larger scale and enterprises looking to adopt it.
Stephan Livera 00:48:04
Also curious if you have any anything you can share in terms of LDK, as in why LDK with the LSP as compared to any of the other implementations?
Graham Krizek 00:48:14
I mean, we see people really liking the LDK experience and for a couple of reasons. One, it gives like it gives the most control for a user over like the experience where this, you know, it’s literally the entire node is running on the phone. And so there’s no, there’s virtually no like counterparty like risk at all in it. And you know, with the enhancements that LDK has done, there is it’s not as when LDK first came out, it was a little hard to implement, but it’s definitely come a long way and it’s much easier to implement now and then there’s a lot of lot of enhancements that they’re doing along. I think that you know from what they what we’ve seen, they’ll probably be the first like ad async payments and some of these newer things. And so, you know, we see people really interested in adding in LDK because it’s the, it seems to be, you know, very lightweight and very easy to integrate. And you know from the people that we have here that have worked on it, you know, they really like the integration and like the spiral team. Has done a. Very, very good job of, you know. Working with the customers and making sure that it’s all you know available and you know answering any questions. So we see it as a very good way to build out the mobile experience.
Stephan Livera 00:49:26
Well, hey, well done to the LDK team. I’m sure they’re happy to see happy customers or happy users of LDK. OK, well, I think those are probably the key things. I was interested to chat about, so probably a good spot to wrap up here. If you have any closing thoughts for listeners. And of course where can people find you?
Graham Krizek 00:49:46
Yeah, definitely not. Thanks a lot for having me. You know, I think that ultimately just, you know, I would say keep, keep on the lookout for voltage. We’re doing a lot of new things. We’re going to be releasing a lot of a lot of new stuff too. So there’s definitely just generally speaking, a lot happening in lightning when you have, I think it’s gonna be exciting time now and over the next, you know two years or so, so you know. Keep an eye on the space. I would say for myself, so you can find me on Twitter @gkrizek, our company account is voltage.cloud the Twitter account is at voltage@cloud, so you’ll definitely reach out if you have any questions or anything you know happy to answer or just, you know, generally chat about lightning and how to add it into your what you’re doing.
Stephan Livera 00:50:27
Well, thanks for joining me, Graham.
Graham Krizek 00:50:29
Awesome. Thanks a lot.