184 - Why Facebook’s Stablecoin Failed, with David Marcus

David Marcus started a company that was acquired by PayPal, he then became President of PayPal (running the company), then he joined Facebook as VP of the Messenger app, and that’s when he started Facebook’s Libra project. Currently, he’s the CEO and Co-founder of Lightspark, a company that builds out Bitcoin Lightning tech. ------ ✨ DEBRIEF | Ryan & David unpacking the episode: https://www.bankless.com/debrief-david-marcus ----- From whitepaper to being summoned in front of Congress in 3 weeks…what really happened to Facebook’s stablecoin endeavors and what can we learn from it? This episode is a post-mortem of Facebook’s highly ambitious crypto project from 2019. They tried to build a stablecoin but the U. S. government stopped it. Topics covered in today’s episode: 1) Facebook’s Libra project…why did it fail? Who tanked it? The U. S. gov? The banking lobby? Why can’t the West seem to innovate its banking systems? 2) Why SuperApps won’t work? 3) Why our David Marcus thinks the money layer of the internet will be built on crypto…but more specifically…on Bitcoin! ----- TIMESTAMPS 0:00 Intro 7:20 The Libra Project 9:10 Facebook’s Involvement 9:59 Super App Thesis 12:05 Getting Government Approval 14:39 Messaging & Payments Intersection 16:45 Releasing the White Paper 18:05 Libra’s Government Reaction 19:50 Summoned to Congress Experience 21:25 U. S. Crypto Competition 25:40 Government Money Power Structure 30:00 FedNow 42:40 Will Twitter/X Become a Super App? 48:18 Bear Case for Super App 51:42 Lightspark 54:35 Bitcoin vs. Stablecoins 58:15 Why Lightning Uses Bitcoin 1:06:25 Bitcoin vs. Ethereum 1:11:37 The Future in 5-10 Years 1:14:40 Closing & Disclaimers ----- RESOURCES David Marcus https://twitter.com/davidmarcus Lightspark https://twitter.com/Lightspark ----- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  We're falling behind at a rapid rate that's actually basically compounding to us losing or being on a losing path against other nations or regions that are making really solid progress.

• 0:20Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. On today's episode, we have a postmortem of Facebook's highly ambitious project, all the way back from 2019. Facebook, at that time, tried to build a stablecoin, but the US government stopped it. From white paper to being called in front of Congress in three weeks. What really happened and what can we learn and apply about crypto? There's two Davids on the show today. We are guiding this conversation today by David Marcus and of course, my co-host, David Hoffman. But David Marcus is one of the architects of Facebook's stablecoin project.

• 1:04Ryan Sean Adams?

  A few things we get into today. Number one, Facebook's Libra project, why did it fail? And who tanked it? The US government? The banking lobby? And why can't the West seem to innovate on its banking system? Number two, we talk about super apps and why David doesn't think they work, including Musk's most recent attempt with Twitter, aka X. Lastly, we talk about why our guest thinks the money layer of the internet will be built on crypto, but not just crypto, that will be built more specifically on Bitcoin. Yep, and this is where the episode takes a turn into debate territory. No, we didn't get into the full debate with David on Ethereum versus Bitcoin. You'll have to tune into the debrief for that. David, why was this episode significant to you?

• 1:47David Hoffman?

  This episode threads a number of different subjects that I think are going to be increasingly relevant for the crypto industry. One is payments, of course, we know payments, but also social, messengers. Why do messengers and payments go together? And then what does the government have to say about that is the third variable. And I think understanding the incentives from each Variable payments, messenger and government regulation. I think understanding each one independently inside of its own silo will help carve out the path for where this ultimately goes for what will hopefully ultimately become crypto native payment applications, messenger applications that don't exist yet.

• 2:30David Hoffman?

  But I think if you listen to this episode, you'll kind of understand that these things are probably going to come together and also the government's going to have something to say about it. So I think these are the themes to pay attention to and why this episode is significant.

• 2:41Ryan Sean Adams?

  I know it was killing you, David, not to have the Bitcoin versus Ethereum debate, but

• 2:45David Hoffman?

  I really had to plug myself.

• 2:47Ryan Sean Adams?

  I saw you. I saw you, but the spice will flow in the debrief, of course, which is available, of course, for bankless citizens now on the premium RSS feed. Click the link in the show notes. If you want to upgrade, you can access that. We're going to get right to the episode with David Marcus. But first, we disclose just one disclosure today. I hold Bitcoin. David, do you have any Bitcoin?

• 3:06David Hoffman?

  Nope.

• 3:07Ryan Sean Adams?

  No Bitcoin for David.

• 3:08David Hoffman?

  No disclosures for me.

• 3:09Ryan Sean Adams?

  We are long-term investors. We're not journalists. We don't do paid content. There's a link to all bankless disclosures in the show notes at all times. Let's get right to the conversation with David Marcus. But before we do, we want to thank the sponsors that made this episode possible, including Kraken, our recommended crypto exchange for 2023. Go check them out.

• 3:29David Hoffman?

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• 4:14David Hoffman?

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• 4:58David Hoffman?

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• 5:41David Hoffman?

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• 6:01Ryan Sean Adams?

  Bankless Nation, we are excited to introduce you to David Marcus. He's an entrepreneur and tech executive in the world of payments. We're really interested in his lens on where all this stuff is going. And I think the discussion today is much broader than just payments. So I first ran across David in 2019, and this was the year he testified in front of Congress on behalf of Facebook in support of this project called Diam. I'm sure many Bankless listeners remember Diam. It was also called Libra for a time. This was Facebook's attempt at a stablecoin. The US government maybe shut it down? I'm not sure what happened. Maybe we'll hear more from David today. And before all this, he started a company that was acquired by PayPal. He later became the president at PayPal. That means running the company.

• 6:43Ryan Sean Adams?

  And then he joined Facebook as the VP of their Messenger app. And that's when he started the Libra project. And right now, he is a co-founder of Lightspark, a company that is building out Bitcoin's lightning technology. And this intersection of Web 2, government, crypto, that's what we have on the docket to talk about today. David, welcome to Bankless.

• 7:03Speaker 00

  Thank you, and good morning.

• 7:05Ryan Sean Adams?

  Good morning. Wow, I'm hyped to actually have this conversation with you because you came across my radar back in 2019 with the Facebook Libra Diam project. And I think that's actually a logical place to start if we're going to unravel the future of payments and how the government and crypto and big tech is involved. So let's start there as a case study. Can we first talk about the Libra project, David? So can you give us some context? And then we'll talk about maybe what went wrong or what the roadblocks that appeared actually were. So what is this project for those who weren't familiar with it at the time?

• 7:43Speaker 00

  So Libra, I like to call it Libra. I feel like Diam was not really its real name, but it ended up there. But so, look, what we tried to do then was actually to try to bring to the world an open protocol for payments or money on the internet, which is still lacking as we speak today, which is kind of an anomaly and a shame. But basically, what we tried to do is build really good tech for real-time net settlement of money on the internet. And and and one of the artifacts that was actually needed at the time to make it it happen, we at least we thought so was actually a stablecoin. So the whole package was actually a technology, a blockchain that was basically the Libra blockchain,

• 8:24Speaker 00

  a smart contracts programming language, which was moved, that's still alive today in in different forums and on on high performance layer ones out there. And and a stablecoin and and basically the the thesis was if we're doing it from Facebook, but then devolve our control and our governance over it, then we can actually really have a positive impact in the world. Unfortunately, no one actually believed the power, you know, power dynamics behind it. And and the brand association with Facebook at the time was just not palatable from a political standpoint. So yes, you were right in your intro. The project was killed or shut down by by the government.

• 9:10Ryan Sean Adams?

  That's so interesting. So there's some details there to to really unpack. Maybe you could start us with this. So what was in it for Facebook? Like, why did Facebook even want to go down this this this project endeavor?

• 9:21Speaker 00

  Well, I think that, you know, if you think about Facebook and the role the company has played over over many, many years on all kinds of different contributions that have changed the direction of travel of technology, you know, more recently on AI or even in VR. You can see that there's a pattern there of trying to bring breakthrough technologies, then bring it to the masses and try to really help with the distribution it has to advance all kinds of different problems that that people have had. And again, like, you know, right now, very successfully so with with AI contributions to open source and and others.

• 9:59Ryan Sean Adams?

  It feels like there's also a tie with kind of messaging. And I believe you were you were you're part of kind of the the Facebook Messenger group as well. And we certainly see this pattern playing out in, you know, China, super apps, your Chinese super apps, the the We Chats of the world, the Alipay's of the world. Is this kind of part of the inception of the idea? What China is doing, some of the Chinese tech companies. And so if we just take messaging and we add the ability for an individual user to actually not just send communication messages, but to send money. Then we've got a kind of a killer app combo. And this begins to look almost like a like a super app. Is that part of the thesis here?

• 10:42Speaker 00

  So definitely not the, I mean, so I think China is a, you know, in a totally different world because like it actually leapfrogged credit cards to go straight from messaging based payments in WeChat and others. And I don't think that's actually applicable to the West at all because we've have had like, you know, credit cards and modern, modern payments experiences, despite the fact that they're not built on modern rails for a very long time. But yes, when, when I left PayPal, so I was leading PayPal. I came to Facebook to actually build the Messenger product or, you know, build it into a standalone product. When, when I joined, one of the first things I did was actually try to add payments to it.

• 11:26Speaker 00

  And, you know, this is, this is a product that enables people to move money inside of Messenger in the US right now, not globally. And as you know, WhatsApp is also part of Meta now. And so the thought was definitely to try to enable global payments inside of those platforms to enable people to actually move sound digital money around the world in a really seamless and cost effective way. Because we thought it would actually solve real world problems at scale and really unlock a lot of value. So there was definitely a distribution play on the messaging apps, but not only on the messaging apps of Meta that was actually super relevant at the time to us.

• 12:05Ryan Sean Adams?

  So Facebook has this idea. They want to like, you know, Facebook wants to create kind of a payments application inside of its Messenger app. And so the idea behind Libra is kind of born. We can use some smart blockchain tech, combine that with, you know, smart contracts. We'll probably need a stable coin for this sort of thing. Then what has to happen? So can you, can you bring us forward to 2019? So does a company like Facebook have To like go ask for government permission in order to do this or like, how does it work? Because here in crypto, we just like release code, you know, like we publish it on GitHub. And then people, you know, run it on their nodes and it just kind of like we no one, you know, Satoshi didn't go in front of Congress and ask for anyone's permission.

• 12:51Ryan Sean Adams?

  But but tell tell us how this works in inside of a corporate environment.

• 12:55Speaker 00

  So, look, I mean, when when you work, when you build a project like this at the at the center of a company that reaches at a time 3.5 billion monthly active users and is as as at the center of public policy for all kinds of different topics, you can't just launch something like this and and hope for the best. So there were a lot of rumors when we were building Libra. And the rumors were actually a lot worse than the reality at the time. And so we felt like, you know, we had everything ready. So we're just going to issue a white paper that that describes what our intentions are,

• 13:38Speaker 00

  what the technology is and where we're going with it. And and, you know, with that, bring more people along for the journey, but also engage with regulators all around the world in talking about the the things that we didn't think through in terms of compliance and, you know, regulatory requirements. We thought of a lot of them, but, you know, different countries have different requirements and and different approaches to this. So we felt it was going to be an open conversation. And a conversation, it it was immediately, actually. I think, you know, we published a white paper on, I think, June 18 of 2019, if I'm not mistaken, and I was testifying in front of Congress, maybe three weeks later.

• 14:23Speaker 00

  And so that that was a pretty, pretty rapid response.

• 14:28Ryan Sean Adams?

  Wow, three weeks later from white paper to in front of Congress. It's got to be record.

• 14:32Speaker 00

  Yeah, I think that's a that's a record that will probably not be beaten by anyone. But yeah, it's that's what happened.

• 14:40David Hoffman?

  Unpacking how you ended up in front of Congress so quickly, I think, is worthwhile, and I want to do that. But I actually want to start by talking about the intersection between messaging and payments. As someone who is intimately familiar with both, maybe you can articulate the vision as to why these things fit so well together. Because I think when people realize, like, oh, Facebook is doing a blockchain, there was a big, there was like reverberations throughout the crypto industry. But maybe you can articulate the most bullish vision for why payments and messaging just pair so well together?

• 15:17Speaker 00

  Yeah, sure. And let me break that question in a two-part answer. So, like, the first part is actually messaging is a great place for payments, because typically, when you pay someone, you have to have a conversation about that payment, or you have to, you know, someone has to ask you for money for you to actually send them the money. And so having a messaging app where you have a conversation where you know who you're talking to, and enable that thread with transactional capabilities actually fits really, really well with the objective that two people in a conversation, or even a group

• 15:50Speaker 00

  of people in a group chat, have for a payment. So that's why it fits so well. And then the other part is actually, you know, how do you, how do you take this and make it available to hundreds of millions, if not billions of people? Actually, interestingly enough, in early 2018, we went to see the Lightning Labs team in SF, and we looked at Lightning as one of the ways to actually do this. And unfortunately, the tech just wasn't ready for prime time, and certainly not for scaling to the type of scale that Meta had with its

• 16:31Speaker 00

  messaging apps. And so, we felt that at the time, the only way that we could actually make this work from a scalability and finality times and all of these things standpoint, we had to actually go build new tech, and that's what we did.

• 16:46David Hoffman?

  So when, three weeks later, after releasing the white paper, you end up in front of Congress, was that expected? Did you see that coming? Or, like, what was the expected response to the release of the DM project?

• 17:00Speaker 00

  Yeah, so I mean, I definitely expected both enthusiasm and a lot of pushback. Internally, we had both. And I honestly felt like, um, my expectation was actually that we would get a lot more pushback in Europe and other regions than in the US, just because it was kind of a US-centered, like, or started product or project. And it turned out that, you know, the US was the most conservative in that sense and the most aggressive in dragging me in front of Congress in the early days of the project.

• 17:39David Hoffman?

  Yeah, why do you think that is? What's the motivation for them to have been so conservative around this project?

• 17:45Speaker 00

  I mean, I think there was a lot of political influence there in the sense that, you know, they just didn't want Facebook in the middle of money, just generally speaking. And the reach of the company with its core products was just something that scared a lot of lawmakers, basically, at the time.

• 18:09David Hoffman?

  My interpretation of that answer is that Facebook, with the social network that it has, combined with a payments network, also combined with its own currency, which is what this was, really started to infiltrate into the business model of the government. That's my interpretation of that.

• 18:26Speaker 00

  I'll leave that interpretation to you, but I feel like, look, I mean, and by the way, it wasn't even our own currency. It was really a stablecoin that had, by all of, you know, today's stablecoin standards, a lot more distributed governance and decision-making than any of the other ones out there right now. If you remember, we had like 28 Libra members who were part of a consortium that was behind this and everyone had an equal vote in the direction of travel of the project, including...

• 19:08Speaker 00

  It's stablecoin. So, you know, I think, you know, it served as a blueprint for a lot of projects that came after, which is good. And, you know, I think that it was a fascinating and intellectually stimulating and challenging experience. So I don't regret any minute of it, but it was worth a shot. And now, you know, we're trying to do something on the Bitcoin blockchain using Lightning for the purpose of trying to bring an open payment protocol for the internet. So still very stubbornly focused in trying to fix that problem for the world.

• 19:46Ryan Sean Adams?

  So full circle. And we'll certainly get to what you're up to. I'm just wondering, kind of never having been summoned in front of Congress, like just on a human level, like, what's that like? I mean, is it nerve wracking to just be brought in those, you know, congressional halls and, you know, to face various lawmakers and to be on the hot seat for whatever they want to ask and whatever political point they want to score? Yeah, what's that like? What was your experience of it overall?

• 20:14Speaker 00

  Well, look, I mean, for me, the first part of it was actually, you know, I'm an immigrant and an American by choice. And so for me, there was a part of it, which was actually, okay, you know, this is actually an honor that I get to go and defend the project that I really deeply care about in front of, you know, our highest authority or chambers of legislature in our country. So, and, you know, that was particularly true in the Senate room, which is a very impressive room with, you know, marble adorned walls and a big seal of the Senate. And, you know, there are different modes of testimonies. And, you

• 20:55Speaker 00

  know, when you're the single witness, the entire attention of everyone is on you versus like a panel of experts testifying in front of Congress. So I had the honor of having that single witness testimony mode. And of course, it's intimidating and you need to, you're representing a project that's much bigger than you and a company that's much bigger than you. And so a lot of, a lot of pressure is on for you to do the best job you can do to defend the project that you're passionate about.

• 21:27Ryan Sean Adams?

  My feeling on the arguments is one of the strongest arguments, you know, I believe in general proponents put forward, but also still crypto really puts forward today is US government, aren't you interested in exporting the US dollar on top of like crypto rails or open internet standards? And if you don't do this, then go look at what some of your nation state level competitors are doing, namely China, because they have a, an export strategy for their digital currency and they are very aggressive, both domestically, they've got that whole system set up. I mean, we mentioned Alipay and WeChat. The system seems to work fairly well from a technology perspective and they're aggressively trying

• 22:10Ryan Sean Adams?

  to export all of that to the world. And so Congress, if you don't wake up and let us do it, or some American company do it, then you're ceding this position over to your competitors. That to me was the most salient case. Now, you can, you can put aside for a second, and we'll come back to this, whether the US government was, was comfortable with big tech, you know, being, being the, the carrier of that burden. But that case in and of itself, it seems like the US has still not jumped and snapped up, which is, why aren't you interested in exporting the dollar on digital internet rails? Why didn't that, why did that land? Or did it land in some small pockets? What's your take on that?

• 22:52Speaker 00

  So I mean, this is something I'm really super passionate and can get really worked up about. But, you know, I feel like I'm, I'm a fairly patriotic guy and I feel like I want the US to win at technologies that are going to be changing the course of, of the equilibrium of power in, in, you know, a hundred year timeline, right? And

• 23:17Speaker 00

  I definitely feel that the entire crypto industry and new payment rails and all of that is definitely one of those strategic things that we absolutely cannot afford to lose. And, and you know, currently, as far as, you know, the, the regulatory world out there and the arbitrage happening, the fact that we don't have the clarity we need to operate and the fact that, you know, we're, we're really not competitive. I think today, the first Bitcoin ETF was launched in Europe and, you know, we're still turning down all of the ETF applications out there that would actually enable a lot, many more people to have access to digital assets and in this case Bitcoin.

• 24:01Speaker 00

  And so I feel like, you know, we're falling behind at a rapid rate that's actually basically compounding to us losing or being on a losing path against other nations or regions that, that are, are making really solid progress on a core technology that is actually, I feel that, I mean, the problem is also that, you know, we as an industry have done a fairly poor job at explaining the real world problems that the technology solves and how it, it's actually becoming essential that, you know, people are, are empowered with real time, digital, sound transactions that are global in nature, that are interoperable.

• 24:45Speaker 00

  I mean, if there's an internet of money that happens tomorrow and we're not, you know, part of the discussion or we're not, you know, even part of being in the driving seat, then, you know, we would come to regret it. And I think that, you know, that's, that's a perspective problem that we've had as a country. And, and yeah, we're falling behind. I think that if you're looking at what's happening. Now, even in Hong Kong, where China has kind of changed their worldview in terms of what's permissible in Hong Kong as a reaction to Singapore basically dragging in the best talents to come and build crypto companies and new technologies, you can see the world

• 25:28Speaker 00

  changing. In Europe, the same deal, or in the UK now, those governments are trying to attract the world's best talents to come and go build there, and we're basically turning everyone away.

• 25:40Ryan Sean Adams?

  Yeah, I mean, so put aside any beef the US government might have with Facebook or its business model, but this basic idea, and this is why it's still very perplexing to me, David, and I'm wondering if you could shed some light on, you know, whether there's any underlying power structures behind this. But the US, you know, in the 1990s was very supportive, very innovative with respect to the early internet, this open communications standard. And that's how we got Silicon Valley, right? The US dollar is also the world's leading reserve currency. So the US already has two major wins under its belt. It has Silicon Valley and the success of the internet. What did we do during the 90s? We basically

• 26:20Ryan Sean Adams?

  just let the internet be the internet. We put some sensible regulation in place, we supported our tech companies, and then that's, we got what we got today. I mean, American entrepreneurs just brought us to this place. That's a playbook that's worked. We also have the dollars. We have the most to lose if the US doesn't stay ahead of the curve. So why is it so different with like money over the internet? Like, why is there such a different posture? And I'm wondering here if you think that's because there's a different power structure. So the internet really didn't have a power structure in DC that it was competing with? And I wonder if maybe money has a power structure that's competing with?

• 27:04Ryan Sean Adams?

  You're on a podcast entitled Bankless. It's pretty clear kind of what our thesis is, is that there are a lot of banks out there with some, you know, interesting power structures and definitely some ties into government in DC. Do you think effectively it's kind of like the banking lobby? I mean, if JP Morgan or a major bank came with, you know, the similar strategy as Libra, would they have been let in the door? What's your overall take on this?

• 27:31Speaker 00

  Well, so first of all, you're right that anything that touches money is different. I mean, there's definitely, there's, there's no technological reason for us globally being in the sat state we're in of how money moves today, the correspondent banking system, the, the fact that this is basically a messaging system that transits through many banking institutions with the batch settlements later in 2023 is ridiculous. I mean, you, you, you could actually argue that, you know, structurally,

• 28:09Speaker 00

  it's kind of shocking that everything that we could have converted into zeros and ones and that are moving on the internet the way that is moving, is moving the way it is, and that the only thing that is not actually digitalized at scale and moves on the internet the way that everything else is, is money, right? There, there, there's no technical reason for that. It's a structural reason. And so, yes, you're, you're right that there's, there's definitely a need or perception of a need of a lot more control when it comes to money. And there are ways to actually grant governments control over these things, but I feel like the, the status quo is something

• 28:52Speaker 00

  that generally speaking, has served, you know, the establishment at large really well. And, and, and yeah, there's, hasn't been any change. I mean, if you look at the underlying payment networks of SWIFT, ACH, and, and the, and the likes, and even like, you know, the, the very successful, arguably the most successful fintechs of all times, like the visas of the world. All of these things are innovations that happen in the late 60s to 70s, right? And, and you know, those are, are for the most part, the, the, the networks and underlying

• 29:35Speaker 00

  technologies that we're all dependent on for, for global payments. So, so yes, there's definitely other power structures and incentives that are at play here than just, just the technology that a bunch of companies could actually come up with and, and, and basically unlock trillions of dollars of payments that are currently not happening today because of the limitations of our aging rails.

• 30:00Ryan Sean Adams?

  I'm sure FedNow will fix all of this and maybe Fed, FedNow 2040 will actually add smart contracts or something like this.

• 30:08Speaker 00

  I mean, we can talk about that, by the way. I think FedNow is actually a really good progress, but it's going to help banking institutions move money faster for, for them or between them. And it's a US solution. It's not a global solution. And so in Europe, you have SEPA and like a bunch of other countries, you have different, and, and those systems are not interconnected with one another. They're not communicating with one another. And so, you know, the internet would not have delivered the incredible amount of value that it has if it wasn't a global open network that enabled everyone to access it and build on top of it, right?

• 30:47Ryan Sean Adams?

  Right. I mean, FedNow is basically like a private American, you know, blockchain, like it's not really a blockchain, but network for American banks. You know, that's all. It's very different than an open permissionless protocol.

• 30:59Speaker 00

  It's progress, though.

• 31:00Ryan Sean Adams?

  It's progress. I, I'm wondering if you think it's as simple as this. So we had somebody by the name of Richard Turin on the podcast. It's been a while, actually. He wrote a book called Cashless, kind of, it was my first kind of learning episode in, in terms of what China's doing with their digital currency. And his take was basically this, in the US, we've decided that tech companies and banks have to be separate and they can't, you know, become one. And so we have a tech industry and we have a banking industry and our government. Gets very uncomfortable when these things start merging together. In China, you know, the banks didn't want to the tech companies to come eat their lunch. The Chinese government just said, Matt, we don't care what you want.

• 31:46Ryan Sean Adams?

  You know, best solution wins. And of course, tech companies are much better at, you know, creating technologies and apps and solutions that actually scale and work. And so what we have is the result of we have Alipay and we have WeChat. And they've eaten the banks lunch, basically. So it's back to your point of this being kind of structural. In the US, we've decided that our banks and tech companies should be separate, at least up to this point. In China, they didn't. As a result, China has a more advanced digital money system and digital payment system. Is that an overly simplistic take?

• 32:20Speaker 00

  I think I think there's more nuance than that. I think that, you know, in China, the there's no problem of government control of different sectors of the industry or separate companies, right? They virtually control all of them.

• 32:39Speaker 00

  I think that in the US, the it's a little different, right? Our top banks have been regulated to the Wazoo after the 08 crisis, right? And so it's de facto, you know, those big banks are de facto, you know, under the control and purview of the government. And so as such, it's it's kind of an interesting world where that level of guarantee of control is making a lot of people very comfortable that this is basically a group of entities that that should be allowed to do a bunch of different things under strict regulatory oversight.

• 33:22Speaker 00

  And that, you know, if you have new entrants that are trying to do new things and that are big new entrants with a lot of scale, that, you know, they they should be under a lot of scrutiny because of the risks that, you know, this might might pose. I think, you know, If you would talk to a lot of the lawmakers that are on this side, that's you know, basically their worldview, that they have a bunch of really regulated entities out there that they can really control. And that, you know, within the bounds of of that regulatory framework, they should be able to do things. And then other new entrants, basically the same, the same rights, because they just don't have that same level of oversight or regulatory authority over them.

• 34:08David Hoffman?

  So David, I'm getting the sense that there's a lot of variables about how the United States financial system and our regulatory system and our technology arm, there's each one is presents its own variable. And I think in 2023, there's a void that has been created as a result of all of these things. Like the United States government is like, hey, Silicon Valley, don't touch the banks. These things don't touch, you know, can't cross this line. And then the banks get regulated by Dodd-Frank and all the post 08 crisis stuff. And then, and then we also have this, the petrodollar, which is a variable here. And I'm wondering if just to like, what void is left because of maybe because of regulation, but it seems to be that crypto,

• 34:51David Hoffman?

  especially inside of the United States, is trying to fill this void. And I'm wondering if you can help try and define the actual shape of this void and why it's here and why isn't it being filled by the rest of the non crypto part of the United States? Does the question make sense?

• 35:07Speaker 00

  Yep, totally. Well, look, I think there's definitely a definite lack of competition right now that's hurting the most vulnerable people globally, just not only in the US, but also in the US. I think, you know, when we started the journey of Libra, we went and talked to a lot of people who were actually unbanked and asked them, you know, whether They, I mean, why were they unbanked, actually? And whether the problem was actually that they just couldn't afford banking? Or was it something different? And invariably, and by the way, we talked to these people when they were at cash checkout points, you know, in those money transfers locations where they would pay 10% to cash a payroll check, right?

• 35:52Speaker 00

  And basically, they would say that they would prefer paying a 10% fee to those cash checkout points rather than have fees levied on their bank accounts at a time they could afford at the least and in unpredictable ways. And so, and basically, they decided to be unbanked in the cash economy because of the predictability and them being in the driver's seat of when they're actually going to pay a fee for a service that they are accepting the full cost of, right? And, and basically, so you have a lot of people that are left behind. I think at the time, it was nearly seven or eight million households in the US that

• 36:35Speaker 00

  were completely off of the banking rails, which is, you know, a pretty staggering rate if you think that all of them should be able to afford a simple, basic account that would enable them to actually move money in a seamless way, in a digital way, right? So, so yeah, a lot of people are left behind. I also think that a lot of transactions and a lot of money movements that, you know, could happen globally and domestically are not happening because of the structural inherent costs of the rails or the current pricing models that are out there.

• 37:12Speaker 00

  And, and that basically traps a lot of value in GDP, so to speak, inside of the constraints of the current system. And, and that's just because there's just no competition or very little competition. And the competition is really on the margin for the very few bips here and there, targeted typically to merchants or to larger institutions. And, and actually, there are lots of really good crypto answers to that. I mean, Leroy was definitely one proposal of how you would do that with a very, very low-cost, global... Uh, payment protocol on the internet that would enable anyone to actually move money around.

• 37:54David Hoffman?

  I like this answer because it, um, I hear it subdivided into two different parts. There is the, just the fees that people are taking to the face just because that is what they will accept in order to participate in the financial system at all. But then the other half of the answer, I think, is actually, I think, is slightly more interesting just because it's a little bit more emergent. As in, just like the way that our current payment networks are built inside of America. There is a constraint on the way that payments are expressed in the economy because they're confined by a regulation, the banking sector, and the lack of ability of being inside of Silicon Valley, inside of fintech. And so there's a lot of just like unknown ways in which economic activity could manifest

• 38:38David Hoffman?

  if our payment networks were actually able to support and enable this kind of economic activity. But I think what you're saying is that they're not simply due to the constraints of A, the form factor, or B, the regulation. And so we actually don't know how much GDP is latent inside of the United States economy, simply just because we don't actually have the payment form factors that can unlock them.

• 38:59Speaker 00

  Yeah, that's correct. Yes, that's well, even better said than I did. But yes, that's what I meant.

• 39:05Ryan Sean Adams?

  Part of the thing that, that drives me crazy, and I think many, you know, listening in crypto crazy, is that it feels like the US government, and I'm speaking broad strokes as an apparatus, like kind of the bureaucrats in Washington don't get it. But honestly, the bureaucrats in Washington don't seem to get this. I mean, that the current US financial system, money system, kind of sucks. Like, it really does, all right? We pay 3% on our payment transactions. Okay, why? I mean, God bless Visa, but like, and you mentioned, uh, you know, China kind of skipping the credit card phase and going straight to, you know, digital. They pay like just 20 bips per transaction?

• 39:44Speaker 00

  Yeah, even less than that.

• 39:45Ryan Sean Adams?

  I still have a checkbook, David. Okay, I still have a checkbook. Why? Because some of the bills that I pay actually don't take digital payments.

• 39:54Speaker 00

  Which basically, which by the way, a checkbook is basically your, your, your. Private key on a piece of paper that you give to everyone, by the way.

• 40:02Ryan Sean Adams?

  It's absolutely insane. Meanwhile, you know, I look at kind of the WeChat, it's all QR codes. This is just like, that's the way it should be, completely digital, completely QR codes. Just feels like the US isn't acknowledging, neither the banking sector nor kind of, you know, the US bureaucrats are actually acknowledging how bad the banking system sucks. And that frustrates me. And I think that is why we're seeing adoption in crypto. It's just because this is an open alternative that people can use to bypass the existing crappy system that we seemingly have to live with. You're nodding your head, so I, you know, I'm guessing you agree with this.

• 40:40Speaker 00

  No, I mean, I feel like, look, people, um,

• 40:45Speaker 00

  people want solutions to their problems. And so, you know, when presented, there's actually, let's move out of the US for good, good measure in terms of giving more salient examples. If you look at Argentina, or if you look at Venezuela, or if you look at countries where clearly the central bank and the government has devalued currency, had, you know, monetary policy that led to hyperinflation to the point where basically your money that's in your pocket is burning a hole in your pocket by the time you can actually spend it. So you get your payroll, you get like a wad of cash,

• 41:27Speaker 00

  and you run to spend it immediately because anything that you can buy is actually going to hold value more than the banknotes you have in your pocket, right? And if you look at what happens in these country, in these countries, you have a lot more crypto adoption because people are looking to actually have a fair store of value for the legal hard labor that they performed and that they deserve to keep the value of, right? And so they go and figure out solutions. And to your point, crypto, Bitcoin, stable coins in this case, and different wallets are a solution to a real world problem that in this case is actually, you know, super, you know, life, life threatening for, for all of these people

• 42:12Speaker 00

  because they just can't afford to make ends meet and, and to put food on the table of their families. If they don't do that, then crypto is an answer for, for, for these people. And so that's the kind of the more extreme world that that that exists outside of the US, where they they don't have the benefit of having sound, good money, which arguably the US dollar really still is compared to all of these currencies out there.

• 42:40Ryan Sean Adams?

  Well said, and I completely agree. I, you know, another potential solution for this, though, is that another tech company like a Meta, like a Facebook, stands up and says, no, we'll fix this. We will actually build the super app. We'll combine kind of the messaging, we'll combine the money, and we could do it. I think recently it's been interesting to me, post Elon Musk's acquisition, you know, and running of Twitter, some of his product direction of turning Twitter into a super app. And I'm not sure exactly what super app entails, but for me, most basically, it entails kind of social and kind of like finance money. It's both of those things together. At least if you're going to compete like the Chinese super apps do,

• 43:25Ryan Sean Adams?

  that feels like a working definition of super app to me. Let me ask you, David, do you think that something like Twitter, X, I guess we should call it now, is going to be successful on this type of super app endeavor? Or will they face the same roadblocks that that Facebook did?

• 43:43Speaker 00

  I mean, I think we'll see, and I think it'll depend on what they decide to go tackle and how.

• 43:52Speaker 00

  It's back to to my previous comment around, you know, the the fact that, you know, if you're, it's a it's a question of control and oversight, right? So if you're building really, you know, new payment experiences on top of the existing rails, then it's probably fine. If you're trying to bring in new, more efficient, more open rails, then it's a lot more complicated, especially if you're a tech company that has a lot of distribution. And so, you know, one of the reasons we decided to actually go build on top of Bitcoin is because it's already live, it's open, it's censorship resistant, it's neutral internet money.

• 44:38Speaker 00

  And, and we believe that, you know, if there's anything that's actually going to withstand the, the, the various tensions and pressures, it's going to be something that's open, not controlled by any one entity, one person, not having one person that has an outside voice in the direction of the protocol or the community.

• 45:01Speaker 00

  And, and that's why we decided to build on top of Bitcoin and build it on Lightning, because we believe that, you know, that's basically the only thing that will withstand that kind of pressure. So if you're looking at it from the, the network side, that's, that's the key thing. It's like, really, can you make something that actually really looks and behaves like the internet right now, be an efficient way for people to move value around? And, and, and again, I think that if you're just like on the front end and you're just putting a nice app that enables people to do something on existing rails, then, you know, that's, that's a completely different thing.

• 45:41David Hoffman?

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• 46:24David Hoffman?

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• 48:01David Hoffman?

  and you can also explore Web3 with the in-app search features, market leaderboards, and price charts, or use Wallet Connect to connect to any Web3 application. So you can now go directly to DeFi with the Uniswap Mobile Wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap Wallet today on iOS. There is a link in the show notes. Taking the stance that a super app is kind of a logical conclusion, like an inevitability, I'm not sure if that's a whole entire other debate.

• 48:29Speaker 00

  I'm not sure I agree with that, by the way.

• 48:31David Hoffman?

  Maybe we can poke into that, but let's say, let's take this on faith that just like the Chinese Eastern model of just like put everything into one single app and grow its network effects is like a logical conclusion of apps and say that inevitably in the West, in America, we will find a way to get there. Would you say that the window of opportunity is closed for a Western super app to exist that also uses fintech for its payments? So like if we're going to get a super app in the West, it's gonna have to be built on top of a more disruptive, non-US native payment rails like Bitcoin, like crypto,

• 49:13David Hoffman?

  for example, like do something like DM rather than just like building on top of Venmo or PayPal or Visa. Would you agree with that statement?

• 49:22Speaker 00

  So first of all, let me just be the less enthusiastic person for super apps in the West. Again, I think that what we've seen in China is really specific to China, China, basically, before WeChat became a giant super app that enabled them to do all the things that it enables them to do was mainly a cash economy. And there was very little to no credit card penetration. There were no real efficient ways for people to move money around. And as we discussed earlier, if you're in the middle of a conversation,

• 50:07Speaker 00

  that's a really good place to initiate payments. And so it leapfrogged to becoming a super app. And because it had like payment capabilities, then you could build all kinds of commerce applications that actually lived inside of the same app. I think structurally in the West and in the US, we're in a very, very different place. And that's why I'm not sure that super apps will ever become a thing in the US, right? I think that we go as consumers to different apps for different use cases and different apps have a job to be done for us. And I think that breaking that paradigm, when there's no significant

• 50:47Speaker 00

  better way of doing things within a super app is just not going to happen. So, but that's still...

• 50:57Speaker 00

  Doesn't answer the problem of, okay, how do you actually enable people to move value between those apps, between consumers and those apps, between these services in a more seamless, effective way at a subatomic unit of a currency that you can't move today? And in a global way, which certainly cannot happen today. So I think those are more exciting problems to work on. And yes, for those problems, you definitely need new capabilities, new rails, new open interoperable rails that are currently not adopted. Or I mean, there's no winning protocol for money on the internet at this point.

• 51:42Ryan Sean Adams?

  So we've talked a lot so far, David, about your big government, the US, Western governments. We've talked a lot about kind of tech companies as well. And we've just hinted at crypto and what crypto can do in this whole space. Now, now I think we want to turn the conversation to crypto. So what role does crypto really play? And what specifically are you building at Lightspark? Like, what open standard are you building on top of? And what are you hoping to achieve?

• 52:14Speaker 00

  So yeah, let me start with the latter part of your question. I feel like so what we're building at Lightspark is basically tools and software to facilitate or accelerate the adoption of the Lightning Network as an open protocol for payments on the internet that would enable all of the things that we discussed earlier. Very cheap, low-cost, interoperable, open payments on the internet in a very native way to the internet. And and we picked Lightning because we believe, as I hinted at earlier, that the underlying network that can transport this money can only be a network that, you know, is basically behaving like the internet

• 52:59Speaker 00

  and that's not really controlled by any one entity or group of companies or where a single person has an outsized voice. And when you look at it that way, the only network that actually fits the bill, the only asset that also fits the bill is Bitcoin. And it's way harder to build on top of it than, you know, building on EVM. But it's it's worth it for that specific use case. I think for other use cases, EVM is a lot better and building on Ethereum is a lot better. But for the case of true neutral censorship resistant Internet of money

• 53:46Speaker 00

  or money of the Internet, like native digital money for the Internet, Bitcoin is really the only the only show in town. So that's that's why we're building it on top of it. And and so Lightning is a channel based payment system, which is very unintuitive, because typically we're not used to locking liquidity in channels, rebalancing those channels, finding routes through channels of third parties to actually find a destination in a really efficient way. And and that's what we've been working on, trying to make basically Lightning behave exactly like you would come to expect from an enterprise standpoint. We're not a consumer facing company. We're just building tools that will enable large scale and smaller scale companies to

• 54:32Speaker 00

  send and receive value natively on the Internet in a predictable, reliable, easy way.

• 54:39David Hoffman?

  I'm wondering, was there a cost benefit analysis between choosing to use Lightning Network versus something like stable coins? I know you put a ton of emphasis on like, you know, shared open standard, no company behind the the currency, etc. But there's been a pretty clear division between payments in crypto between Bitcoin and stable coins, where stable coins are just predominantly the unit of account for actual payments inside of the crypto industry. And so there's like, I'll call it the purist side of things, which is like, okay, we'll do the Lightning Network on top of Bitcoin because it is the, you know, the immaculate currency, Satoshi Septa Way, no one, no parties, all of that, all of that stuff.

• 55:23David Hoffman?

  But then there's like, okay, stable coins, you're kind of beholden to USDC or you're beholden to Paxos or someone. But it also is the thing that is being used as payment. So was there like a kind of a cost benefit analysis? And maybe you can walk us through that?

• 55:36Speaker 00

  Yeah, so I mean, for the record, I'm actually all for stable coins on top of Lightning when that becomes a thing and there are a number of work streams that are out there to make that happen. I think my problem is actually if you're dependent on one stablecoin or one asset to be the native core settlement asset of a payment network, then you have a problem because the algorithmic stablecoins don't work. In my opinion, I really believe that it'll never work. And so, stablecoins need to have a reserve and someone controls that reserve.

• 56:16Speaker 00

  And if someone controls that reserve, then it's the single point of failure of your entire payment network if you're solely dependent on it. And so, the way we look at the world and the way we're building is basically that a fraction of a Bitcoin on top of Lightning is a little bit like a TCP IP packet for value. This is basically the transport network for the value that you're trying to transport from point A to point B. And so, you can definitely do that with Bitcoin natively and move Bitcoin around, but most people, to your point, don't want to transact in Bitcoin. They want to buy Bitcoin and sit on it for the longest possible amount of time. And so, what we need to make happen is basically

• 56:57Speaker 00

  enable those transfers in Bitcoin, enable transfers that are basically converted at the edges into whatever fiat currencies you want. So that basically you're sending, you know, dollars to another place in the world that wants pesos or whatever it is and they get it. And Bitcoin is completely abstracted from the transaction. Or you want to add Bitcoin, but my point, you want to add stablecoins, sorry. And my, but my point is actually that you shouldn't depend on any of these things to actually make the network work. At the basic layer, your TCP IP packet needs to be this neutral thing that no one entity or person controls. So that's how we see this thing actually working over time.

• 57:39Speaker 00

  And so, you have neutral settlement asset, neutral settlement network, not controlled by anyone, open, subject to regulations in various regions that are relevant to the region and, you know, the endpoints that are basically regulated endpoints that are using the network can actually fulfill those regulatory obligations at the edges. But then you have a truly open interoperable network and you choose to use whatever asset actually solves your problem best, right? Fiat, great. Stablecoins, great. That's basically the way, but not dependent on one thing.

• 58:16Ryan Sean Adams?

  I think Bankless listeners will know, you know, David and I and Bankless, we are big fans of Bitcoin and the Lightning Network and anything that helps us go more Bankless, obviously. And we're also huge proponents of Ethereum and have done a ton of episodes and a ton of work inside of kind of that ecosystem. And I, you know, I hear Bankless listeners asking this question, so I want to relay that question on their behalf and also on my and David's behalf. Why not Ethereum as a potential? And some context for that question is, I actually do think that Ethereum can support kind of the, you know, the money type use cases that you're talking about. We've been proponents of, you know, Ethereum

• 58:59Ryan Sean Adams?

  as an asset similar to Bitcoin, like money. Bitcoin has some other attributes like immaculate conception. I think you could get into sort of a debate about that, but at the end of the day, most free market folks will tell you that the world will select the best money, right? It's kind of not up to, you know, you or I or like podcast debates, we're not going to select the money. Time will tell. And the most effective money will be selected for it. But anyway, Ethereum went through kind of a state channel type of phase and it never really took off. So I remember state channel technologies that are comparable in some ways to Lightning on Ethereum, what is called Raiden. There's lots of just different attempts at state channels. The reasons it failed are, you know, kind of partially lost

• 59:44Ryan Sean Adams?

  to me now, but some of them are capital efficiency was very difficult. And it just proved that there were easier ways to kind of scale cheap payments. You know, Ethereum's been going into kind of a layer two type of direction as late, which is a bit more robust than just a state channel style payment network. So anyway, the overarching question is, why Lightning? Why Bitcoin? Why not Ethereum?

• 1:00:10Speaker 00

  Okay, so first of all, I want to make an opening comment. I think in our industry, we're all totally insane for being so dogmatic about one thing versus the other. I think we're so self imbued in, you know, EVM is better, Bitcoin is better, the new layer one is better. And if we just take a little bit of elevation altitude and realize how meaningless we all collectively are compared to the real world out there, it would do us a lot of good because we could then elevate and be like, okay, like,

• 1:00:50Speaker 00

  this is not a religion, we're not swearing allegiance to like one chain or another, or a protocol or another. We're all here to solve problems and there are very many problems that we need to solve collectively. And if we just focused on working and picking the best solution for the problem at hand, instead of fighting each other all the time, then I think we would all be better off as an industry. So that's my plug for, we're all working towards the same goal. Let's stop being dogmatic about how we actually solve the problems.

• 1:01:26Speaker 00

  Now, so, and by the way, I'm, I'm not, you know, a laser eye Bitcoin person at all. I believe that, you know, there's good stuff that Bitcoin actually provides and is unique for. And, you know, and we were going to talk about it in a sec. And I think there's a gazillion things that Ethereum is actually much better at and will solve different kinds of problems. The reason I actually believe that Bitcoin is the way to go for all things related to money and payments is, is, is a multiple, multiple step thing. So the first one is what we've discussed, like there's no...

• 1:02:12Speaker 00

  Leader or visible leader of the movement, that's not through, that's not true of Ethereum, right? We have Vitalik, and I'm a big fan of his. I think he's done amazing work, but he has a very, very powerful voice in the ecosystem. And I think if he thinks that a change in the protocol is actually going to bring something better for all kinds of different reasons, people will listen to him more than any other random person working on it. So that's one. Two, the proof of stake approach to governance is solving many problems and is actually good

• 1:02:52Speaker 00

  in terms of incentives for all kinds of different things. But I think that the reality is, human nature gets in the way, and the vast majority of people actually don't care about the direction of travel of the protocol, and they're going to do delegated stakes with large exchanges that will have also a predominant voice in how the world is going to look like. And their core business is actually not money movement, it's trading, and they're regulated entities. And so as such, I feel like that's a weakness of the overall network and the governance that works great for tokenized assets, for trading, for decentralized compute, for NFTs,

• 1:03:34Speaker 00

  and for all of these things, which is what it should really be. But if it touches at the core payment systems that we talked about, it's a weaker, it's a weaker setup from a governance standpoint and presents more of a surface of attack. And then lastly, there's Bitcoin the asset itself. So Bitcoin the asset itself has no equivalent out there in terms of liquidity against other assets, whether it's fiat or other assets at exchanges or other trading companies. And that in itself, if you're trying to have a neutral global settlement asset out

• 1:04:22Speaker 00

  Is a huge deal, right? Because then the spreads between the actual settlement asset and the currencies that people want to touch or trade in is actually quite tight compared to other assets, including ETH. And that's a good thing. So for all of these reasons, it's actually worth, you know, really powering through the pain of building over a channel-based payment system, which to your point, hasn't worked before. Yes, for capital efficiency reasons, but that actually can be solved. But mainly, I think, because it's way too complex to actually manage and operate, which is exactly what Lightspark does, is actually

• 1:05:06Speaker 00

  remove all of that complexity for people. In the same way that, you know, you would think of, you know, back in the early internet days, like, you know, BGP routing and all of these things were really very complicated things, like so much so that even now, if you would ask people to explain it to you, it would be hard to happen, like to find someone who's actually able to have a cogent answer to that question. And so, you know, it's hidden now, in the low layers of a Cisco router or whatever router it is, but it just works. I think we can do the same thing with the Lightning Network, make it really work, and remove all of that complexity. And that's what we're focused on. And so,

• 1:05:47Speaker 00

  that's a long-winded answer to your question of why Bitcoin and the fact that I think that, actually, it would do a lot of good if we figured out ways to unlock all of that Bitcoin liquidity for all kinds of EVM apps, in a way that's not wrapped Bitcoin, in a way that's actually, you know, can we actually build an effective ways to bring all of the innovation, all of the energy, all of the technological advances that are happening on Ethereum, and Bitcoin liquidity together. I think if we were able to figure something there, we would all benefit from it.

• 1:06:24David Hoffman?

  I know we don't want to enter in the world of dogmatic tribal fighting, but there's a few things that I have to have to say just or else all of my Ethereum friends will get mad at me for not bringing it up. The proof of stake is governance, the centralized governance angle. The Ethereum, what I would and what I agree with is that that's actually just a technical inaccuracy. In fact, the Ethereum specific flavor proof of stake and proof of work have the same level of governance over the chain. People conflate proof of stake with on-chain governance, but really it's just a randomness mechanism and a decentralization mechanism. And so because you own shares of Ethereum, you get to process a certain amount of transactions,

• 1:07:09David Hoffman?

  but that doesn't give you any sort of control over the direction of the chain. It's meant to be as governance minimized as proof of work. It just gets conflated very, very frequently with other delegated proof of stake systems like Solana that do have on-chain governance. So I just kind of want to throw that one out there.

• 1:07:29Speaker 00

  Yeah, I mean, I feel like that's where it is now. I feel like, you know, the where it's going in terms of concentration of power, I think, is a different question. And I think, I mean, to me-

• 1:07:43David Hoffman?

  And we would say the same things about proof of work miners.

• 1:07:46Speaker 00

  No, no, of course. Yeah, I just think that the difference is actually that, you know, the proof of work miners and the hash rate distribution is actually, I think, more fungible, as in it'll move around and the difficulty will adjust versus like regulated exchanges that are delegated for the sake of proof of stake that, you know, are very tangible and, you know, unmovable objects. So I think, I mean, we can go on for a long time. Again, I think-

• 1:08:17David Hoffman?

  Yeah, we totally could. We could totally- And this episode- We can make this a Bitcoin versus a Ethereum.

• 1:08:22Speaker 00

  That's exactly not the point. I think, you know, I mean, my perspective, like, that's my own personal point of view.

• 1:08:29David Hoffman?

  Yeah.

• 1:08:29Speaker 00

  Is that, like, there's this immaculate conception thing called Bitcoin that is going to be just great for money-related things, specifically targeted to moving value globally in a seamless, really, you know, cost-effective, interoperable, open way. And then there's going to be all kinds of other innovations that are actually required to happen, that will happen on Ethereum. And we need both to succeed for us to achieve this goal of, you know, more efficiency, more decentralization, more power back in the hands of people. And, uh, and we need both of these things to succeed. I mean, there's a kind of an interesting angle there where,

• 1:09:09Speaker 00

  for instance, like, you know, in most parts of the world, collateralization of assets for access to capital is completely messed up, right? It's like, you know, bureaucracy, corruption, all kinds of different things get in the way of you collateralizing your house, or your car, or any asset that you own, for you to unlock access to capital and basically get to prosperity. And so, for instance, like, that should be the focus of NFTs. Like, NFTs can be that collateralization asset, that collateralized asset that exists on-chain, that you can provably say is yours. And then you should be able to unlock access to capital by doing that. I would love for more people to work on that, rather than attaching JPGs to NFTs.

• 1:09:53Speaker 00

  But, but that's one, one use case when you think about, like, financial freedom and opening, uh, opening more capabilities, through these technologies. That's one thing that actually Ethereum will be much better at than Bitcoin. But then, the, the, the mechanism by which the capital is dispersed, and you have access to money, and you move it around, then you make the economy more efficient, and you unlock all of that GDP that's stuck in archaic rails. That thing is more a Bitcoin thing, right? So, but those two things, you can see in this example, how these two things could work much better, uh, together than, uh, separate.

• 1:10:31Ryan Sean Adams?

  I think, I think part of the reason, David, you're saying that, you know, that, or part of the reason I see that this isn't a religious bet, even though I would, I would totally argue that many crypto tribes are, you know, making religious predictions and making religious bets. But the good thing about all of this is we get to see who's right in the end, don't we? We get to see, like, we can make our bets, basically, on the assets that we choose, that we think have store value type properties and monetary properties. And as entrepreneurs as well, we can make bets. And I think it is notable that you're making a bet on Lightning, the state channel technology. One thing I will say is back to kind of like the shared values that we all have.

• 1:11:11Ryan Sean Adams?

  I think that Bankless has the shared values of a decentralized, open, permissionless money system, right? And to the extent that Lightning embodies those values and makes that happen, we are incredibly supportive of that. And so what we're all making our bets and trying to work towards that future. And on that, I think we can, we can certainly stack hands.

• 1:11:36Speaker 00

  Absolutely.

• 1:11:37Ryan Sean Adams?

  So David, as we kind of close this out, last question for you. So as you zoom out and think about the long term for all of this, if, if you're successful, if crypto is successful in general, if we start to separate money from state, payment from state, and even from tech companies and the way that we're all hoping and planning to, what does the world look like in five to 10 years?

• 1:12:01Speaker 00

  Well, first of all, I don't think that I'm in the camp of people who want to fully separate money from state. I feel like actually, you know, my, my, my own personal objective is actually make the underlying rails really efficient, really open, really interoperable, and enable more people to have access to them. I think that Uh, the, the world where actually good governments cannot control their own monetary policy, et cetera, this, this, uh, this, you know, world, um, where it doesn't exist would be, uh, chaos. Ah, so you are definitely not a laser-eyed maximalist then.

• 1:12:43Speaker 00

  No, no, I'm not. I'm, I'm definitely not. I feel, I mean, I feel like, so here's my view on this. I feel like those technologies and the fact that there are alternatives that people can actually go to will be a very helpful check and balance to keep everyone honest on the other side. The fact that there's no alternative is bad for everyone. And I think that, you know, if you're a good government, you have good monetary policy, you look after the interest of your constituents, um, then, you know, everyone will choose to continue using your thing, uh, and that's great. Uh, if you're, uh, Venezuela, uh, then, you know,

• 1:13:25Speaker 00

  I'm all for Bitcoin being an escape valve for people who are basically getting screwed over, uh, uh, again and again. You want to force the competition. Yeah. I mean, you want to have alternatives for people. Um, and those alternatives can actually be regulated because like no one wants like, you know, actually bad money laundering, terrorists moving money around and all these things for which, by the way, those new networks are a lot, a lot harder, uh, for them to operate because like they get caught a lot more than on the traditional system. But you, so you don't want like total world chaos. Like you want like a check and balance and alternatives that are really solid alternatives

• 1:14:07Speaker 00

  for people. Um, and I feel like there's a measured path here of those things being well-regulated to protect consumers and to enable governments and good governments to conduct monetary policy and to control, uh, you know, their country to some extent. Um, I think that's important. And so. So you know, there's kind of a technological angle of like unlocking all of these capabilities for people while enabling good governments to do their work. And I think that's, um, that's, that's where I stand personally.

• 1:14:40Ryan Sean Adams?

  Yeah, I, I, I agree with that. And I think that's where, you know, so if we get out of this whole crypto experiment, that the world has another option other than fiat in which to digitally store their value. Like we win that. Not, not to say that everything is 100% crypto, of course. And then we also achieve a banking system based on open, credibly neutral, permissionless internet style decentralized architecture. I think those are the wins that we're all searching for.

• 1:15:10Speaker 00

  I'm on the exact same camp here. This is exactly the way I think about things.

• 1:15:14Ryan Sean Adams?

  Well, David, we wish you much success then and much luck. You are one of the rare breeds of Bitcoin builders who are pioneering lightning and, um, you know, uh, best of luck with that. Very excited to see the progress in the weeks and years to come.

• 1:15:28Speaker 00

  Thank you so much, and thanks for having me.

• 1:15:30Ryan Sean Adams?

  Risks and disclaimers. Of course, Bankless Nation, gotta let you know again, none of this has been financial advice. Crypto is risky. Ether is risky. So is Bitcoin. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.