[00:02:49] Jesse Shrader: After experiencing that, that really pushed me into, okay, how do I pay less in fees? Because really I was paying like $60 for a single transaction and that was just a crazy time for, for Bitcoin transactions and that that pushed me into into lighting.

[00:03:07] Preston Pysh: Before you were a Bitcoin or you have this interesting background in legal services and specifically with class action lawsuits.

[00:03:15] Preston Pysh: For overdraft fees, predatory loans, identity theft. What did that experience kind of prepare you for and how has some of that experience kind of leaked over into what you’re doing right now with designing this whole new financial system, global financial system.

[00:03:34] Jesse Shrader: From the legal services background, most of that was in class action lawsuits.

[00:03:39] Jesse Shrader: Really, I, I was there as a, a temp worker, you know, answering phones, reading from a script and just reading to the, the people who called. You know, what, what was the class action lawsuit that the callers were involved in? And yeah, the first case they put me on was about overdraft fees where banks and like one, one particular bank, but really all the banks did this.

[00:04:03] Jesse Shrader: They would, they would reorganize debit card transactions in highest to lowest dollar order. And, and the consequence of that was that the bank could charge more overdraft fees to a customer because they had more overdraft fees when their bank account balance was zero, if they switched around the order of it.

[00:04:22] Jesse Shrader: Like, there were tons of cases that went through that building. You know, there’s a whole whole section dedicated to to Wells Fargo as well as, you know, other identity like security breaches. The target issue happened through there where every target customer that had a debit card transaction between several years their information was leaked.

[00:04:45] Jesse Shrader: So that was kind of laying the groundwork of letting me know that there’s some real problems with our payments infrastructure. Even if you’re talking about just debit cards before you get into, into credit. Of course, like in the building, there was also like, like mortgage lending, discrimination, et cetera.

[00:05:05] Jesse Shrader: But really it was a huge learning moment for me about payments.

[00:05:10] Preston Pysh: Back to your start in Bitcoin, you met Tony Potdevin is the name, and he was working for ThunderHub. And people just have to realize, like back at this time, 2017, when you, you two met, and Lightning in general, like this was more of a like people didn’t even know if like this was going to work.

[00:05:33] Preston Pysh: Like anybody who was dealing in Lightning back in 2017, they weren’t dealing with anything like what we’ve got right now, which are the, these turnkey solutions with running a node on Umbrel or whatever one that you’re using. I know for me personally, back in 2017, it was just like a talking point. Like yeah, you know, and maybe a few years this will be something that people are actually using or doing.

[00:05:54] Preston Pysh: But for now, like you got layer one and maybe there’s a, maybe there’s a scaling solution, so. Tell it to us from your point of view when you met Tony and like what it was that you guys thought you were going to, were going to do with Amboss.

[00:06:09] Jesse Shrader: Yeah, so early days of, of Lightning was just a couple of telegram groups where some folks that were wanting to experience Lightning were getting together and say, I’ll open a channel to you, maybe you can open a channel to me.

[00:06:25] Jesse Shrader: And like, this was like the reckless days. That hashtag reckless was all over the place because Lightning was very experimental at that stage. Now as we’re experimenting with these things and l and d is improving, which is like one of the, the main implementations of Lightning. As that was improving, it became more and more comfortable.

[00:06:49] Jesse Shrader: So then. There was a, a size limit for Lightning channels that were, that was part of like the initial setup just to like protect users from funds. But really I got connected with some of the early tool builders and one of those was, was Tony Potdevin, and he was building ThunderHub, which he had built in a, in a hackathon.

[00:07:13] Jesse Shrader: And when, when he built that, that was like an actual user interface that I could understand. You know, I’m not, I’m not a wizard when it comes to working in commands line. And, you know, I know a couple of commands just enough to be dangerous, but putting together a user interface for Lightning was so important.

[00:07:33] Jesse Shrader: I got connected with Tony sent him a, a few suggestions. And, and he saw me helping early Lightning users out in the chat. Just, you know, how to get ThunderHub set up, how to navigate the interface, like what opening a channel was, what’s sending a payment, what’s receiving a payment these types of basic pieces as well as like setting up channel backups.

[00:07:56] Jesse Shrader: So those early tools. Like us getting together was, was, was pretty important. You know me on the more social side and then Tony who’s like just a ruthless tool builder that iterates really quickly.

[00:08:12] Preston Pysh: It’s crazy to me to think that, you know, like I use, I use ThunderHub whenever I was, every channel I’ve ever opened, I’ve opened it through ThunderHub.

[00:08:21] Preston Pysh: And for me as a non programmer, like it was an intimidating interface. But if when I take a step back and I think about, well, what would it be if I didn’t have that interface to use to even open channels? And I don’t even know, I don’t even know how that would be possible without an interface like ThunderHub.

[00:08:40] Preston Pysh: So he’s the guy that literally designed ThunderHub and made it possible so that I can go to another node just for people that haven’t run their own full node. Let me just describe it to you real easily. So, I run a full node, I go and I can go to Amboss, a website that literally indexes all the people that are running full nodes and I can find basically their IP address, or it’d be like your mailing address if you were going to mail a letter to somebody.

[00:09:05] Preston Pysh: I can find this mailing address for other nodes that I want to connect to, and whenever I connect to them, I’m opening a channel with Satoshi’s. Bitcoin then can be routed back and forth to each other, and there’s a whole bunch of people that are doing this between the nodes I. The only way you can find other people is you’ve gotta have some type of global index that people can reference.

[00:09:27] Preston Pysh: And that’s what Amboss is. And then ThunderHub is where you would go to actually open these channels and say, this is the address. This is how much I want to open, and do it in the next block. This is the fee that I’m willing to pay and, and whatnot. So that’s what we’re talking about. If people are, are wondering that maybe aren’t as intimately familiar with layer two, but.

[00:09:47] Preston Pysh: Okay, so you met him in 2019. And so how did you guys, how did you come up with the idea for Amboss? Like what was it that was driving you to, to know that there was something here to build early days?

[00:10:01] Jesse Shrader: There’s a big question of like, who do I connect to? What are smart decisions in this new economy that we’re, we’re creating?

[00:10:09] Jesse Shrader: The whole, like Lightning network in general. I mean, you’re taking your, your savings and you’re deciding I’m going to put it in a new format that creates a pathway to another node. And by, in so doing that creates a payment network that operates without credit and without debt. You have to make decisions that are costly.

[00:10:31] Jesse Shrader: I’m going to make a Bitcoin transaction that’s going to create a new pathway in order to make that decision. Especially if the, if the decision is costly, I’m going to need some information. And so that was the main driver behind Amboss. Mm. Like, how do I package all the data together about this network and kind of create a map of it and be able to guide people on how to make a better payment network without credit, without debt that works really fast at where you could pay next to zero fees.

[00:11:06] Jesse Shrader: We started indexing the Lightning Network. And there were a couple of tools out there that did something similar. You know, one was like one ml and then Fiat Jaff behind Noster. He actually created one of these explorers as well. But the, the early product was a Lightning network explorer, which basically just means.

[00:11:29] Jesse Shrader: All the nodes on the network, we’re going to going to give you a profile page. You can have your name, the color of your node on there. You can have all your different channels listed, and we’ll just make a whole bunch of data visualizations to help you understand the data about your node. So that was the main driver.

[00:11:50] Jesse Shrader: And then figuring out like, oh, okay, we need to start organizing node operators using markets.

[00:11:59] Preston Pysh: I would think that this would just be so overwhelming at the beginning was, was there a point early on where you guys were like, okay, like what in the world are we doing here? Or did would it, did it just kind of immediately start clicking and like all the data out there, like you were just a pig in mud?

[00:12:15] Preston Pysh: Like walk us through, walk us through those early days of, of what this was like.

[00:12:20] Jesse Shrader: Figuring out like, okay, how much did I just pay to open a channel? Like, where did the money go? And we know like it’s reckless at this point. Like we’re always double checking the node. Like how do we know that the money is still there?

[00:12:36] Jesse Shrader: Yeah, because I’m watching the my balance and it’s changing around, why is it changing? And like there’s no one that is able to really answer that question for you because there’s like developers that are working on the protocol, like, how are we supposed to like make safe guardrails for people to help understand like what just happened with their money.

[00:12:58] Preston Pysh: I’m, I’m laughing, Jesse, because this is the exact feeling I had when I create, when I opened my first channel and I had all these tools at my disposal. And this is how I felt. So I couldn’t imagine how, how everyone felt in the early days without having some type of graphical way to view that the channel’s been opened with this other party, right?

[00:13:22] Preston Pysh: Like I could see it, I could literally see it on your plat on Amboss and. With ThunderHub, and I could see that these things were happening, which you would think would put a person at ease. But the, the way you were just describing it is I was just like, did I do it right? Did I just literally like, shoot 10 million SATs into the ether and they’re gone forever?

[00:13:40] Preston Pysh: Like I just didn’t have any type of, and there’s nobody sitting next to me like while I’m doing this, and it was a little intimidating, but keep going. I, I want to hear more. Keep going.

[00:13:51] Jesse Shrader: Like what Bitcoin does really well is accounting. Like you’re just keeping track of things. And you know, my background is environmental engineering, so like there’s going to be flows from one point to another point.

[00:14:04] Jesse Shrader: And it all at the end of the day, has to all add up. Like, these are the calculations that I’m doing, and in order to like return a profit, you have to have an idea of what, what kind of funds are you spending? And so I ha I’m having to do that calculation and like checking against my node, making sure that everything lines up just to give myself comfort.

[00:14:26] Jesse Shrader: And now with Amboss, like we’re just trying to streamline all of that activity to help people, you know, make better decisions when it comes to using the Lightning Network so that we can actually create an alternative to traditional payment networks.

[00:14:43] Preston Pysh: Is there any other evolution that you guys have noticed?

[00:14:46] Preston Pysh: So you start with basically this data analytics basically coming up with a footprint of the entire layer two Bitcoin network. As you’re trying to operationalize Amboss, like was there an evol, were there any evolutions that happened or like moments where you’re like, Hey, maybe we should also be doing these other things, or did it have you guys just con continued to try to make the original idea just better and better each day?

[00:15:11] Jesse Shrader: One piece that that we noticed is that people were coming into the Lightning network and it was happening faster and faster. So when people joined, they would usually come into the groups and ask why can’t I receive a payment? Like, hmm, like, I want to, like, send Lightning to my node. And we would just have to tell them, oh, like, you can’t do that because like, you need someone else to open a channel to you.

[00:15:40] Jesse Shrader: Like, how are the SATs going to reach your point B if there’s no road that’s going there. So really like liquidity, enlightening is, is directional. Because there’s no credit and no debt, like someone has to allocate their savings to you so that you can receive a payment. And we realize that this is a huge user experience problem.

[00:16:03] Jesse Shrader: That huge problem of acquiring inbounds liquidity means that there’s a market there. And so what we put together was what we called magma. Where we just created a marketplace where you can log on and look at the different nodes that are willing to open channels to you. And they all have prices there.

[00:16:26] Jesse Shrader: So you could just, with a simple Lightning payment, be able to buy a channel to your node. And the, your Lightning payment only goes through if they actually open the channel to you. So that’s how we set up this marketplace because like in the early days, I was actually trying to sell channels. Say like, oh, okay, you need liquidity.

[00:16:47] Jesse Shrader: Well, it costs me money. So how much are you going to pay me to open a high quality channel to your node so that you can receive payments? So this is something that I was doing via Telegram, just a simple messaging app. But with Amboss, we’re like, Hey, we put a company together, like let’s create a marketplace for this.

[00:17:09] Jesse Shrader: That actually matches up. People that have been are been saving Bitcoin with the people that need to receive payments, because we know this is going to be huge in the future when we’ve got people selling goods on Lightning and they want to be able to receive payments and receive those reliably.

[00:17:25] Preston Pysh: You know, for people that are listening to the conversation, most are not running their own node.

[00:17:31] Preston Pysh: Most are not tech savvy or really kind of doing the things that the hardcore bitcoiners are, are technically doing with their, with their coins and, and testing and trying these things out. So this is a question that I was going to ask you much further along in the show, but I think it’s pertinent to do it right now just because people that are listening have have heard us talk about you need an inbound liquidity, you need this technical thing to happen in order for all this to, to really kind of work.

[00:18:00] Preston Pysh: And they’re probably thinking to themselves like, There’s just no way that this is going to catch on. But for folks that don’t have a layer two wallet, like you can go and download Wallet of Satoshi, you can go on the Cash app and you can seamlessly use layer one, layer two Bitcoins. You don’t even realize which one you’re using.

[00:18:17] Preston Pysh: It’s already seamless to the end user. The UX is completely seamless for that person. Help them kind of understand. I guess how you see this evolving five to 10 years from now, what is the typical user of Bitcoin? Are, are they, they don’t have to know any of this stuff. Is that a problem that they don’t have to understand all this as far as like the centralizing forces, or do you think that the fact that they have the optionality to do these things if they really want to, is enough to make sure that Bitcoin doesn’t have any type of attack factor?

[00:18:53] Preston Pysh: I think is, is where I’m really going with the question.

[00:18:56] Jesse Shrader: When people, when, like the end user uses Lightning generally, right now they’re using custodial wallets. That means that your, your Bitcoin that you claim is yours is actually being held by someone else. Now, thankfully, like we’re, we’re in early days of Bitcoin, where now a lot of these developers and wallet creators are our friends.

[00:19:20] Jesse Shrader: You know, there’s, there’s not a lot of enemies to Bitcoin and to Lightning right now. But that may not always be the case. Now, to actually take another step and say, I’m not going to trust another company or, or person. Like, I’m going to have to set up my own infrastructure. And that infrastructure is essentially a, a small server.

[00:19:46] Jesse Shrader: Now we’ve kind of operationalized this a lot. Umbrel and Voltage have done, you know, phenomenal jobs at like making, running your own server a much easier process, but that is a way to do it and minimize the amount of trust. That is going on in payments. What this actually does in effect is like almost sets up a city on a map and there’s going to be highways going between all of these different cities on the map.

[00:20:16] Preston Pysh: No, no, no. That’s per, that’s perfect. So, so well back to this, back to this question. So do you think that the fact that people have the optionality to basically set up their own infrastructure and run it. Is the main thing that we need to ensure continues to exist, which it, which it is with Bitcoin.

[00:20:37] Preston Pysh: That makes it so much different than the legacy financial system, which you don’t even have anything remotely close to that optionality to to run on your own. Does that prevent the attack vector of centralizing forces?

[00:20:50] Jesse Shrader: Is that enough? Yes. I mean, people are going to be able to run their own infrastructure and just reduce, reduce the trust that they have had in other systems.

[00:21:02] Jesse Shrader: Let me share this story with you that we were processing payroll for, for Amboss, and we were thoughtful that something may be happening in the banking sector. Now we’re processing payroll, but, and using a payroll provider. But what we didn’t know was our payroll provider was banking at Silicon Valley Bank and half a month’s payroll was, had already left our account and we find out soon after that that Silicon Valley Bank has gone bankrupt.

[00:21:36] Jesse Shrader: Wow. And, and has, has no funds. Now what situation are we in right now? Did do we just lose half a month’s Payroll. And not, not because of any fault of hours, but simply because we were using a vendor that was banking at this bank that until then I had never even heard of there. There is trust in our payment system and this was like happening automatically and that I had no worries about it before, but now I’m concerned about it.

[00:22:07] Jesse Shrader: Now I’m wondering, is the FDIC going to step in and bail out my deposits? My payroll, am I going to get that money back at all or are they going to devalue the money and bail out the banks like they did in 2008? This is the problem that we’re trying to solve by creating a complete alternative to any trust-based financial settlement.

[00:22:33] Jesse Shrader: And we can do that using our own infrastructure and by using Bitcoin, which can’t be devalued in that same way as the US dollar or any other fiat currency.

[00:22:45] Preston Pysh: Talk to us a little bit more about the existing centralized payment system, because I, I know you are pretty well versed on all the issues that, that it currently has, but for people that aren’t intimately familiar with the nuances of these issues.

[00:22:59] Preston Pysh: And then what we’ll do is we’ll also talk about the potential issues of a decentralized payment system like Bitcoin and, and layer two. So let’s go ahead and hit the existing legacy system and do a little bit of a compare and contrast.

[00:23:11] Jesse Shrader: So I’ve been reading this book called The Anatomy of the Swipe. And it goes into detail about, you know, what happens, you know, when you’re actually swiping your, your payment card at a payment terminal and you’ll swipe your card and then, you know, soon after you’re going to see a nice check mark, whatnot.

[00:23:29] Jesse Shrader: It says, ah, yeah, transaction approved. And then at least in the US you’re going to add some funds to it right after that, as like a tip. And like the actual debit from your account is the original amount, but then you’re stacking on this tip on top of it, and the actual settlement from that payment doesn’t happen until like 45 to 60 days later.

[00:23:56] Jesse Shrader: Now, during that time, like no money actually moves until. Much, much after that, that swipe period, you know, days, weeks, sometimes months. And during that period, while you’re waiting for the actual settlement to happen there’s still a risk that the merchant, whoever sold you, you know, your meal, your goods, what have you.

[00:24:20] Jesse Shrader: They may not actually receive those funds because you’re going to pull what’s called a chargeback. And so you can just reverse that payment. All of our, the Fiat payment system that we’ve become accustomed to is a debit system. So if your information on your debit card gets leaked, then someone else is actually going to be able to pull money from your account.

[00:24:46] Jesse Shrader: Now, like that’s the opposite way that, that Bitcoin operates where every single payment is a push payment. So, so you’re individually approving every time any funds leave your account or your wallet.

[00:25:02] Preston Pysh: Any other issues that you, that you’d like to highlight? I know that you’ve talked publicly about barriers to entry for competitors against like Visa and MasterCard and things like that.

[00:25:13] Preston Pysh: You already mentioned the counterparty risk there with the Silicon Valley Bank and oh lordy, but yeah. How about the barriers to entry?

[00:25:20] Jesse Shrader: Yeah. When we look at payment processors of the world, really, there’s, there’s three Visa, MasterCard, American Express, and just Visa. You know, settles 5 trillion worth of payments every single year.

[00:25:36] Jesse Shrader: So this is a massive industry, but, but Visa used to be a nonprofit and it is now a, a private company. It is using the same technology that was set up back in the 1970s. So there really hasn’t been a whole lot of innovation that’s happened in terms of payments. Yeah. So when you go to swipe your card, the merchant is actually going to pay about 3% of the transaction just to make that settlement happen.

[00:26:06] Jesse Shrader: Now on the consumer side of things we’ve been enticed by the idea that we’re going to get, you know, one to 2% cash back. So that’s going to be money back in the account, but what we’re not taking into account is the actual increase in prices just because of the inefficiency of the settlement system.

[00:26:28] Jesse Shrader: So the prices that we’re paying are being marked up by 3% or more just because of the fact that the merchant is actually going to have to pay those settlement fees and take on the risk that there could be chargebacks.

[00:26:44] Preston Pysh: So Jesse, I want to get into some of the really interesting things that you guys are now doing at Amboss, which is providing a marketplace, this magma marketplace for people to open channels for individuals, for companies, for whoever it might be that’s wanting inbound capacity liquidity.

[00:27:04] Preston Pysh: Walk us through how you guys created this open marketplace, what it looks like, the number of people that are actually using it. Just tell us everything you got.

[00:27:16] Jesse Shrader: We launched magma a little over a year ago, and we allow people to just say how much they’ll charge to take their Bitcoin savings and allocate them towards payment rail.

[00:27:33] Jesse Shrader: So that’s what’s being created is with a Lightning channel is is a new payment rail going to a new destination. So anybody that wants to start up a business and accept Lightning payments with their own node and their own infrastructure just goes onto Amboss.space/magma and goes and clicks buy on one of those nodes.

[00:27:54] Jesse Shrader: And they can also like review and determine whether that’s a valuable node to buy a channel from. And depending on like the price that they’re willing to pay, we’ll get information about what’s the value of liquidity that the, that the market is finding. So you could price your channels very inexpensively.

[00:28:17] Jesse Shrader: And then like, we’ll have a, a better sense of, you know, what’s the cost of settlement from like, continuously operating this new payment network. Yeah. This, this gives us a, each of these channels that are sold for like a month, three months, or six months at a time, they’ll agree to, to keep it open. And they’ll also promise to keep their routing fees very low so they won’t pay.

[00:28:44] Jesse Shrader: Consumers won’t be paying a, a transaction fee each time. So a merchant can go through and just, just buy one of those, one of those channels and set up a new payment rail to their business.

[00:28:55] Preston Pysh: Teach people why this is so different than the existing financial system, credit-based financial system with respect to risk-free rates and what this might potentially offer in the future.

[00:29:10] Jesse Shrader: When you’re using a credit card, for example.

[00:29:13] Jesse Shrader: That issuer is essentially loaning you the funds and they’re going to charge a high interest rate if you fail to pay. Instead of doing that, what we’ve created with Lightning is a way to, to simply take your Bitcoin and, and make it be used for payments. And when you’re doing that, you’re actually not giving up custody of your Bitcoin, even if you’re the channel creator.

[00:29:39] Jesse Shrader: So you don’t have to worry about someone else taking your Bitcoin, even though you’ve just increased the utility of this new monetary asset. Now I can use this awesome store of value as a medium of exchange, and I’ve just set up that that network. Now I don’t have to trust the other person and I’m getting a yield off of it.

[00:30:03] Jesse Shrader: So this is the first time that this has ever existed is you can earn yield from your Bitcoin without having to trust the any other party really. You just have to trust your own infrastructure that you’ve set up.

[00:30:19] Preston Pysh: I’m going to put up a chart, Jesse, here, so people can see what this looks like today. Describe this for people that are only listening to the audio so that they kind of know what we’re looking at.

[00:30:30] Preston Pysh: But it, I mean, it’s a yield curve. It’s a, would we call it yield? As far as, oh, you know, the financial definitions get tricky here because you’re not giving up custody of the coins. It’s almost like you’re renting the, the, the liquidity. I don’t know what the proper terminology would be, but anyway over to you.

[00:30:53] Jesse Shrader: There’s really no words for it, but instead of Libor where you, you have an idea of like a reference rate for interest, what, what you have up is called what we’re calling the liner, which is the Lightning network rate, and this is a dual index. There’s two pieces to it. So there’s the liner cost, which is what does it cost a merchant to get set up with liquidity?

[00:31:19] Jesse Shrader: And we can see that when we first started the marketplace, there wasn’t a ton of volume, so it was up closer to 5%, but we’re, we watched it drop down to about 2% that folks were paying for that initial bootstrap of, of liquidity. If they’re paying 2%, that means that they’re saving an entire percent of their transactions versus a payment processor.

[00:31:47] Jesse Shrader: Now on the other side of things, there’s the people that are using their savings to create a new payment network, and that’s what we’re calling the liner yield. So that’s the green line, which is below, below the liner cost, and that actually shows that people can earn yield without giving up custody of their funds at any point.

[00:32:13] Jesse Shrader: So people can earn up to what we’re seeing is above 2% yield for providing liquidity to the lighting network. This is really where it comes together because on the one side, if you’re a holder of Bitcoin, why aren’t you using your Bitcoin to create a new payment network? And on the side of the business operator, why are you using a less efficient settlement method that uses credit and debt when you could use the lighting network and you could have instant settle back settlement and no chargeback risk.

[00:32:51] Preston Pysh: Jesse, I want to talk to you a little bit about the inscription stuff that’s been happening on layer one. This has made the fees really blow out and get much higher. How, how has that impacted Lightning and channel management? Because anytime somebody wants to close a channel or open a channel, they gotta do that on layer one, which has these high fees.

[00:33:12] Preston Pysh: Now just walk us through some of your thoughts on that.

[00:33:16] Jesse Shrader: By, by putting other things in the blockchain, everyone is essentially bidding to get into the Bitcoin blockchain and get be part of this immutable record. When that happens, in order to like create a channel, you know you’re going to have to bid a higher price to be part of the Bitcoin blockchain.

[00:33:35] Jesse Shrader: And it’s costing a lot to actually create this new infrastructure. Now, like despite the, the higher fees that are, are being paid, there’s still an opportunity to earn yield by setting up this infrastructure. When, when folks are adding inscriptions, they’re, they’re adding images and whatnot, and they’re essentially stamping the blockchain.

[00:33:58] Jesse Shrader: They’re also doing that with, with new assets under this BRC-20 standard. And consequently there’s been a lot more concern about, am I opening the channel, a Lightning channel to the right person or to the point where it’s just saying, okay, this is a crazy fee spike. I’m not going to pay it a transaction fee that’s quite that high, and I’ll just wait until this hype, this mania is over, and then set up my infrastructure at a time at some point in the future.

[00:34:32] Jesse Shrader: I think the prices for a Bitcoin transaction will be more reasonable.

[00:34:37] Preston Pysh: Have there been any metrics you guys are doing, the analytics and the data on everything Lightning, is there any metric or chart that you’d like in particular or that you think is really representative of a certain idea?

[00:34:51] Jesse Shrader: If you pull up the order details chart on Amboss.

[00:34:57] Jesse Shrader: Okay. You can actually see this really significant gap in when we’ve seen magma orders happen, and that was quite recently with this like BRC-20.

[00:35:11] Preston Pysh: Oh yeah, look at this excitement. Is that right in here, Jesse? The after, yeah, the start of May then.

[00:35:18] Jesse Shrader: It’s just this, this huge like gap where there was essentially zero volume through our marketplace for Lightning channels because the network was just like, well, forget about it.

[00:35:31] Jesse Shrader: I’m not paying that much. Like can’t I just wait to set up the infrastructure at a time when fees are much more reasonable? I love it.

[00:35:41] Preston Pysh: Recently there was this announcement down at the Bitcoin Miami about Ark, and this was an attempt, well, I don’t know if attempt is the, is the correct word, but it’s a protocol that’s trying to remove this burden for inbound liquidity that we talked about a little bit earlier.

[00:36:00] Preston Pysh: It also has some privacy benefits. I’m curious what your thoughts are on Ark and whether you think that it’s going to be something that actually catches on, or if it just kind of fizzles out and kind of goes away. What, what, what are you thinking?

[00:36:14] Jesse Shrader: I would like put this in context because you know, Lightning was a white paper.

[00:36:19] Jesse Shrader: In 2016, and it’s still early days and it’s seven years later. Arc has received a lot of excitement recently, and I, I hope the ideas accelerate, but I think that’s really the stage that we’re at right now is like the initial idea phase. It’s being talked about quite a bit, this discussion about is this the direction that we want to take a second layer on Bitcoin and, and what does it mean for the lighting network?

[00:36:50] Jesse Shrader: It sounds like Ark may be able to work. With Lightning in a way and using a, a shared UTXO model. It, it’s still like early days to even understand what this thing is. Although it’s it’s exciting to, to actually have potentially private payments and not have this inbound liquidity problem.

[00:37:15] Jesse Shrader: One thing I’m curious about is the network effect because, you know, with Lighting Network, you know, we’ve got now businesses that are set up on it and developers that have like different camps and are working on different aspects of it. Like it’s a, it’s a whole like flourishing ecosystem of development that’s happening.

[00:37:37] Jesse Shrader: And that might be hard to replace just because of the network effects that it has. Like this is when you go down to El Salvador, like people are using Lightning. Like that is like the method of payment that people have become familiar with.

[00:37:51] Preston Pysh: Yeah, I agree with you. I think it’s very, very early days. I mean, you’re effectively at the white paper phase, like nobody’s actually implementing anything on this protocol yet.

[00:38:01] Preston Pysh: The one thing that I found a little bit interesting, or maybe a barrier to use is just the refresh. I guess There’s the refresh that’s required every 30 days for people that are, that are using it. It almost seems like it. It might be a tool for. Larger companies or entities that are operating on Lightning in the future.

[00:38:23] Preston Pysh: Like maybe it’s for them and not as much the end user, which is a little ironic because it almost seems like it’s for end users, end end users to have in immediate inbound liquidity, and it’s, it might not even be used by their retail or individuals in practical use if, if at all. But I’m just curious to, to hear some of your thoughts on that.

[00:38:45] Preston Pysh: How about for a guy that’s so close to Lightning, what is something that you think a lot of people are missing about the Lightning Network right now that you’re excited about or you think is really important moving forward?

[00:38:59] Jesse Shrader: What I’m really excited about is enterprise adoption of the Lightning Network, and that comes in two forms.

[00:39:06] Jesse Shrader: One in just the formation of, of markets around Lightning. The, the fact that folks with Bitcoin holdings can start earning yield at very low risk without making the same mistakes that people made by allocating their Bitcoin into CFI yield platforms. This whole system doesn’t need to blow up and we can have cheaper payments.

[00:39:30] Jesse Shrader: So that would be a win. And the second piece is after attending the the MicroStrategy conference, and having KPMG on one side of me and Fidelity on the other side, all done up in suits and getting palpably excited about the lighting network. Michael Saylor can essentially tip his employees for meeting their workout goals at work or showing up to meetings on time and everybody in the room.

[00:40:01] Jesse Shrader: Like that. I would never expect to be excited about Bitcoin and Lightning are really excited about it. They’re, they’re freaking out if they’re going to be over a minute late to their next meeting because they would miss out on the stats that they would get. The other aspect is just new use cases.

[00:40:19] Jesse Shrader: Nostr is incredible as a new social network and a social network protocol. Like, we can have just internet native payments that are just flying around. You know, I’m posting a, a meme a day on Naster, and people are sending me me SATs just like throughout the day. I, I check my phone. I’ve got a new notification from Wallet of Satoshi saying, you know, you just received 21 stats or 101 stats.

[00:40:50] Jesse Shrader: Just sending me like a little lol message with Satoshi’s that I can save, as, you know, real money and use my node to convert to Bitcoin and I can move it to cold storage, what have you. The whole thing is exciting. It just really lowers the, the friction involved in payments.

[00:41:08] Preston Pysh: Yeah, I completely agree with you.

[00:41:09] Preston Pysh: This past 12 months, everything just started to become very real. I know whenever I was just opening the channels earlier, when I w, when I started using Amboss initially, Like I was using Lightning, I was setting up these channels, but there wasn’t really like any type of operational use case, like out there.

[00:41:29] Preston Pysh: You know, you’d do like test transactions where you’d send a friend a hundred SATs or whatever, but there was nothing that was like real to it. But once you started using it on Noster, seeing like what Michael’s doing at Micro Strategy and just. People are really finally starting to harness this idea that if there’s no fees for even the smallest 2 cent transaction, and I can immediately settle those two things.

[00:41:57] Preston Pysh: It’s kind of phenomenal what type of use cases are, are starting to pop out of that, that were never possible before. Streaming stats to listen to podcasts or whatever it might be. And I think we’re just kind of just starting to hit the tip of the iceberg of, of where some of this is, is going to start going.

[00:42:14] Preston Pysh: So I’m with you and I totally share that sentiment. Jesse, if people want to learn more about you, is there anything else that you want to hand people off to, to, to teach them more about Lightning or Bitcoin or Amboss? Fire away. Let them know.

[00:42:29] Jesse Shrader: Certainly read as much as you can if you, if you understand Bitcoin and you want to dive deeper and start to understand not only Bitcoin as a store of value, but Bitcoin as a settlement network, and Bitcoin for payments for global settlement.

[00:42:46] Jesse Shrader: Yeah, I’d push them to, yeah, pick up Mastering Lightning and yeah, start building, run a node install ThunderHub and start exploring on Amboss. I love it.

[00:43:00] Preston Pysh: Jesse, this was a real pleasure and thanks for making time to come on the show.

[00:43:04] Jesse Shrader: It’s my pleasure, Preston. Thanks so much.

[00:43:07] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener if you enjoyed the show or you learned something new or you found it valuable.

[00:43:12] Preston Pysh: Just search for, we study billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm.

[00:43:31] Preston Pysh: If you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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