{ "episodeId": "SLP405", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "stephan_livera": { "name": "Stephan Livera", "role": "guest", "tag": "STEPHAN" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.51, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, for episode four hundred and five, my guest is Paolo Ardoino. He's the CTO of Bitfinex and Tether, and also the CISO of Holpunch. So Paolo joins me on the show to chat about a wide range of topics. We talk about Lightning security, Lightning adoption, Tether reserves, this question of whether Tether pumps Bitcoin, Tether audits and- attestations, as well as what's coming with Keet and Hole Punch. Now, just a quick note on this show, unfortunately, we lost the first part of the recording, so what you'll hear is actually us jumping straight into some of the discussion around Bitfinex and Lightning security. Now, apologies about that. Paolo was willing to re-record that part, but we just didn't have time to make it happen quickly, so I thought best to put it out. The information is good, so I'm sure you'll find value in the discussion that we were able to record this show. Is brought to you by Swan Bitcoin, and Swan is organizing a conference called Pacific Bitcoin. It'll be on November 10th and 11th this year in LA, California. This is an excellent opportunity to learn about Bitcoin, or potentially if you've got friends and family members who you are just trying to help them learn about Bitcoin, maybe getting them to attend this conference would be a great opportunity for them to actually hear from some of the people in and around the Bitcoin movement. There are so many awesome speakers, people like Lynn Alden, Mark Moss, Alex Gladstein, Pierre Rochard Parker Lewis. So come and join us at Pacific Bitcoin November tenth and eleventh in LA, California. That's pacificbitcoin dot com and use the code livera to get a discount on your tickets. Mempool dot space is the Bitcoin explorer built by Bitcoiners for Bitcoiners. It features real time transaction tracking and mempool visualization so you can quickly get the information you need about your Bitcoin transactions. You can also keep an eye on mining and get some sense of where the blocks are being mined and by which mining pool. Mempool dot space Is available over Tor and also completely open source, so you can even run your own mempool explorer at home on a Raspberry Pi. Over one million people use mempool dot space every month. The project is operated freely for the benefit of the Bitcoin community without ads or third party trackers. Go and try it out, it's mempool dot space. When it comes to securing our coins, we have to consider hardware and CoinKite dot com are the leaders in the Bitcoin industry in Bitcoin hardware. They produce the Coldcard, which is one of the most recommended Bitcoin hardware signing devices. Now The Coldcard is a very versatile device. It has gone through multiple iterations, the latest version is Mark four, which is available on the store. It has NFC support, it has an additional secure element, and it has all kinds of different options and versatility that you can utilize as part of your Bitcoin security setup. So you can use this as part of a single signature setup, you can use Bip eighty five, you can use SeedXor, there are different Duress pins, BrickMe pins, all kinds of features that you can use to tune your setup just how you need it. That website is coinkite dot com and use the code Livera for a discount on your cold card. And now onto the show with Paolo. Okay, so with Bitfenix being an early Lightning adopter, did you have any concerns around the security of it that, you know, that there might be vulnerabilities out there in the wild or that potentially an attacker could try to, let's say, grief the node or do, do all kinds of things to Bitfenix's Lightning nodes?" }, { "speaker": "stephan_livera", "time": "03:25", "start": 204.6, "text": "So, you know, we, we at Bitfenix had an in-depth review of, of Lightning and I think that, one of the most important things that Bitfinex did was actually prove that, Lightning was already a, a well-thought and secure, network, right? We were the first exchange, I think, to launch five Bitcoin channels just to prove that it could be used as a safe way to transact and send out, or receive, even large amount of, of, of money. There are quite Bitcoin where at peak, quite a lot of money, around three hundred K. So So we are seeing nowadays more and more usage on a daily basis by traders that are, you know, want to get in or out of positions, pretty quickly, and they want to send, Bitcoin collateral or, or send out Bitcoin collateral. So I think that is, super interesting, but, you know, the one of the core functions on an exchange, right? Especially an exchange that has been around for such a long time like Bitfinex and has been always loyal to the ethos of Bitcoin is, is, actually not being scared of technology, right? If we were So without, you know, this type of, approach, you wouldn't have Bitcoin in general, right? So there is always a little bit of risk, in doing things, but it's more impor-- it's really important to, you know, have an in-depth review, do your own audit, do your own research, and then you should really embrace Bitcoin technology, right? We did that with, with also Liquid. We have been supported, supporting Segwit pretty soon, so- I, I think that, for us has-- is always been, you know, we, we love tech and we love Bitcoin, and we feel like our role is to demonstrate that, i-- this, despite all the fraud, most of this technology is actually, extremely safe. And nowadays, Bitfinex has the biggest, Lightning nodes, I think, still that has around, that have around altogether seven hundred Bitcoin, right? So i-it's not small money, and we feel really comfortable we have our setup with Watchtower Of course, of course, we'd have, we have our own, you know, we, we protect ourselves, we protect our customer money, of course, but still we feel really, really comfortable in, in, in, in running these big nodes. And, you know, I always say that, Bitcoin tech is the most solid one. You don't know, so I'm the guy that run, you know, the, the, the nodes on the back and installs all the upgrades of all the blockchain nodes as well, Lightning nodes are at the most solid ones. You don't know how many times I have to restart, upgrade, all the other blockchain nodes is like, everything else seems really kept together by rubber bands." }, { "speaker": "stephan", "time": "06:12", "start": 371.93, "text": "Right. And so sometimes on Twitter we see these debates around how easy it is to sync up a node, and we see various debates, and some of that devolves into technical debates about exactly what qualifies, should it be a full node, what about an archival node, what about fast sync, and so on. But, I suppose, hearing it from, the exchange CTO who has to run all of these different chains, I guess that's, the real market test, let's say. And just as you said before, right, with security and people saying, \"Well, oh, we don't know if Lightning is secure yet,\" but at the same time, you're putting into practice with almost seven hundred Bitcoin, which at today's value is, what was that, like fifteen million or more in USD terms, probably even more than that, so, you know, we're talking serious money. And so I think it's interesting to see that, We see on the Lightning front is we see people saying, \"Oh, look, there's not that many people using Lightning today. a lot of people would rather use altcoins or use maybe even stablecoins and things like that.\" I'm curious what your view is on that, because you obviously being part of Bitfinex and have, you know, working with companies like, say, Bitrefill, I guess you, you sort of have some insight into that as well. But I, I guess the question I'm asking is, do you foresee Lightning being used for day-to-day commerce and taking Time until later." }, { "speaker": "stephan_livera", "time": "07:32", "start": 451.86, "text": "So first of all, people don't prefer to, to my-- So people don't prefer altcoins to transact, right? So the, the reality is that people prefer altcoins to speculate because it's really easier for someone that have inside information, you know, in some project, to make one hundred, to make one hundred x in, in, in profit, right? Because, you know, there is some token that is backed by VC that is pumping and- And, you know, you can still make, in, in six months, one hundred x. That is extremely difficult with Bitcoin if you think about it, because Bitcoin, in order for Bitcoin to grow in value, there has to be, so there is, i-is kind of a longer process in a rightful way, right? So it's not like you create value out of thin air. If there is a community, there is a lot of work, there is adoption, there is nation state adoption that needs to happen. And so, but that how, that is what money should be, right? It's not, money shouldn't be something that create value out of thin air and, you know, is, is extremely speculative. Money should be something that people feel comfortable in holding for, for different reasons. And that's why, you know, we are seeing a lot of usage of, of altcoins that is full, fully speculation. And of course- Of course, when you have, you know, some bags of, of altcoins, you might want to, you know, throw them to, you know, somewhere to buy something or exchange them for something in order to get, out some, some value. But, I would distinguish the usage of altcoins compared to, to Bitcoin when it comes to actual, as, as a payment system, so or, or like a value se- a transfer system. So nowadays we are seeing stablecoins and actually Tether mainly, to be used as the primer, The primary, way of, transacting wealth for, or sorry, transacting for micropayments, right? So that is, I think that, Tether in this moment is serving as a pro- as a easier approach to digital money for the majority of the people, because not everyone understands, Bitcoin from the get-go. And I want to be clear that, I don't think, that, Tether is superior to Bitcoin Bitcoin, Bitcoin, there is only one Bitcoin. Tether isn't centralized, right? Tether is, is a centralized token using a decentralized transport layer, so the Tether isn't Bitcoin. Still, it's, it's, it's a system that at least for the time being, right? So i-i-it's offer, it offers a good, an, an on-ramp for people, as well as, probably as I said, an easier approach to understand the, the technology, right? So my, my father, before moving to had to have a wallet on his phone that was similar to PayPal, but had, you know, was holding and day, day after day the same value, the value that he was expecting, right? So, you know, in his life and the majority of people's life is still based on fiat standard rather than Bitcoin standard. In the future, that might change and we'd be really happy to see that change, right? So maybe in twenty years we won't need Tether, who knows? But, nowadays I think Tether is, is something that Still has its utility and use, is, is used a lot as a, as a payment system. I think that as a store wealth, Bitcoin is definitely, more used and is definitely also more superior because, has, it has so many inherent values, right, in terms of, unconfiscatability and, and, you know, sensible money, financial freedom, you know, and, and so on and so forth. So, I, I, I think that there is this, sort of- Dualism between, between Bitcoin and, and, and Tether in that sense. When it comes to stable coins, I think that is, you know, ninety-nine point nine percent speculation, we'll see, what the history will, will tell, but at least, it, it is what, what I feel at least now. but, when it comes to Bitrefill, you mentioned, I, I love Bitrefill, by the way, I think is one of the most brilliant ideas that, that we are, we Can build the product or can build a huge use case that's something that is serving millions of people without to have or invent yet another token, right? So, think like Sergey and the team are, are doing wonders, are really fundamental part of the Bitcoin ecosystem, really like that. But definitely they are heavy users of Lightning before ourselves, and we are, you know, we are, you know, settling, a Bitcoin user can buy, Bitcoin. Gift cards and the, the, the transaction is immediately settled by, via Lightning. So I think that is a brilliant example as a huge, use case where, Lightning can, help two companies to settle immediately, overcoming the FX problem because our users pay, you know, pay immediately, there is no time to wait and, Peterfield can, can hedge themselves immediately on the, on the price of which they bought the, the, the, the gift cards from, from the supplier. So That is, and we are seeing that also in El Salvador, right? So we are seeing, big companies like, McDonald's or Starbucks that are being, asked to adopt, Bitcoin Lightning payments. And, you know, you, and, and they did, right? So in, in a way, is, see, you, you don't need, it's not that complex if there is a good reason for it, right? So people think that, Bitcoin or Lightning payments are really complex, but then when For or when pushed, even big companies and, and, and corporations are, are, you know, don't take much time to support it. So most of the time is just goodwill and, you know, and priorities." }, { "speaker": "stephan", "time": "13:32", "start": 811.7, "text": "I see, yeah. And I think to the point around comparing, let's say, Bitcoin usage versus, let's say, stablecoin usage as well, as you were mentioning, it seems that historically a lot of people were very high time preference in the Bitcoin sense where they would pay a lot of fees to move between exchanges very quickly, and it seems that over, For years, it seems like some of that volume has kind of shifted into stablecoins. Like, that's probably, that's kind of my understanding of how some of that's shifted. But then I'm curious as well, from your perspective, in terms of Tether customers and users, did it start with that trader use case, but actually now we're seeing non-traders who are using Tether and stablecoins?" }, { "speaker": "stephan_livera", "time": "14:10", "start": 849.54, "text": "Yeah, I, I think that, you know, initially Tether was created in two thousand and fourteen. Tether is the company that created this entire stablecoin market, and, Provide a better way to, to do a cross-exchange arbitrage, right? In order for a, a financial industry to mature, especially a new one like, like the Bitcoin one, you ha- you need to make sure that the price of Bitcoin across exchanges is as aligned and as possible, right? You can't have an exchange like in two thousand and thirteen that has Bitcoin trading in one thousand dollars and other, let's say, trading in one point two thousand dollars, right? The, in, in, in finance, in trading, the when this happens There are traders that sell Bitcoin on a exchange where the price is higher and buy back on the exchange where the price is lower. In order to do this, you need to move Bitcoin from one exchange to another. That is, fairly easy, takes ten minutes on average. And, but, the problem is was that in two thousand fourteen, in order to move fiat from one exchange to another, it was taking five days because all, you know, international fiat transfers and was really painful. So the brilliant and simple idea of, of Tether was why we don't reuse Use Bitcoin as a technology, but, we put a dollar on the blockchain. Simple as that. So started all with, with this small concept, and over the years, then people figured out that actually, Tether could be used as an inflation hedge, could be used as, think about Turkey or, or Argentina. At some point, like in, in last month, Tether was trading six percent above the dollar in Argentina, and was, same in Turkey. I was talking to these, friends in Turkey, and he said, \"Look, you know, as, he has, his children, right? So, and, he thought that, and, and as many parents do, you know, they, they think, okay, I want to, I want my children to go and study abroad, you know, want to see more cultures. But the problem with the devaluation of Turkish lira that devaluated around, eighty percent in the last, sixi-six, sixteen months, at the end You know, foreign, countries. So if, for example, if, he wants to send his, his, his, children to, to study in, in Europe or in US, it, it can't because, you know, he, he lost eighty percent of his buying power ag- against the dollar or, or a little bit less ag-against the euro. So he's using Tether to, to save money because he wants to-- he was just to save money, don't, doesn't want to speculate, he doesn't want to Of what, to his children a better life. I think is there is nothing wrong with that, and but that is, if you think about it, is a huge case that, makes sense for everyone, right? Is in Argentina, Brazil is, is even Italy, right? Is, we are all people that, have been emigrating, everywhere, right? And in order to do that, you need to, you need to, to be able to, to have some money, put aside. So i-it's becoming kind of, a way to, to save money, a way to combat the devaluation on national currencies all around the world, and also is, is, is considered by some, some countries. We are seeing, the parallel government of, of Myanmar, like NUG, from, from, you know, led by San Suu Kyi, was, adopted Tether as their, legal tender. A-and that is, although as, again, Tether is a centralized money, i-is a way that, you know, it, it, it allows also this type of, o-of freedom acts, that, same happened with, with Ukraine, that, when the war started, they announced that they would accept three currencies, the first one was Bitcoin, second Ethereum, the third one was USDT. So we are seeing more and more use cases, of stablecoins around the world, is, is money that is faster, is programmable, is, at least a bit more censorship resistant than, than- Than the other, there, there is now a big question mark and after, after the last few days events, but, still I think there is, i-it's, it's something that is changing dramatically the way we are looking at, money, fiat money in the next, ten years." }, { "speaker": "stephan", "time": "18:32", "start": 1112.18, "text": "So as I read you then, you're seeing it maybe it's like an onboarding tool in your views, you're seeing it like, for, for the people who aren't ready to go straight to Bitcoin, they might use Tether as like their little bridging Kind of getting there, and I guess as you're saying, this is for people who are potentially not capable of dealing with Bitcoin's volatility, because, if you're gonna use Bitcoin like all in as a saving, then you have to be willing to do that over the long term, and as part of that, generally, you need to be able to at least have enough income so that you don't have to spend it now, because otherwise, you're gonna have to spend down all your Bitcoin in like a bear cycle, and, you know, obviously that's not advisable, although So to the point, as you were saying around the censorship resistance aspects, I'm curious whether you see stablecoins as like, are we going to see a lot more regulation come? So I, I guess probably there's two main angles I could see. One is kind of like this idea of if governments around the world try to regulate stablecoins as a money market fund or as a bank in some way, or the other one would be probably some kind of KYC/AML requirement on the users of the stablecoins. so- So I'm curious, from your point of view, do, do you see those as like big risks for stablecoins, or do you see it more like this is just a big growing market and, you know, that's just going to be part of the, the process of, let's say, quote-unquote, being able to be accepted by governments?" }, { "speaker": "stephan_livera", "time": "20:00", "start": 1199.8, "text": "So, there is a lot to unpack here, right? There is also the concept of CBDCs, and the competition with the privately issued stablecoins, right? So, yeah, yeah. And it's all about there is And so forth, right? We, even, even in the US, the was a bill was proposed to Congress to ban the US from doing their own CBDC for the potential risk in consumer privacy. For example, if you go and buy, a coffee with and pay with your, credit card nowadays, you, you know, the, the central government will not get that information, right, from your credit card, right? So, the credit card will only, signal, transactions that are suspicious. Right, big amounts, maybe above ten thousand dollars, and, they are suspicious, right? So if you are buying like a car, it doesn't matter, right? But, for example, if you, if you are interacting with something that, or someone that they deem Nasty, they will signal, your transactions called suspicious activity report. Now, but in a CBDC world, the, the, the scare, the, the fear is that, CBDCs could be used by, by central governments to track every single action of every single citizen and control their decisions in because they can control their money, right? So i-is, is probably is pushed a little bit to the extreme, but, you can see how, in, in some countries can that can- Can, easily happen. So it's, it's, it is interesting, I think, that, when it comes to CBDCs, they aren't actually a competitor of privately issued stablecoins like Tether, but CBDCs could be still used as a way to, as I was mentioned before, improve the interbanking system and settlement system, right? So imagine that, now is, based on rubber and bands that cost to, taxpayers, ton of money on a, yearly basis. So taxpayers are- Are, are spending, you know, everything i-is, i-is flowing in, in, into the pockets of, of governments that didn't improve their, their technological, fundamental technological infrastructure in the last thirty years. So if we use a little bit of blockchain technology, peer-to-peer technology and so on, could be a leap forward that will reduce the co-maintenance cost of a public financial infrastructure by, by a lot, big margin. So I, I don't mind to see blockchain use in that sense. In a way, money has been digital for the last thirty- Years already, right? So it's just we, what the CBDCs could do is just to do a leap forward and forget about thirty years of technology and just adopt the last stage of technology when it comes to financial settlements that are blockchain. I, I don't have any problem with that, I think could be even an intelligent move. But, when it comes to privately issued stablecoins, you can imagine that, you know, no central bank will issue on Ethereum or Solana or Onto or so, whatever, right? So they, they will never take the risk of Picking one or picking a winner, they will never take the, the security implications about, you know, imagine like, a CBDC issued on Ethereum, and now there is the Merge, the Verge, the Spurge, how I, I don't know all these names, but, you know, you know, you can see like, people scratching their head and saying, thinking, okay, and now what we are doing? Are we support-- for supporting Ethereum proof of work or proof of stake? Like, I mean, that's not how, you know Right? So, they, they don't want to get into these problems. So, I think there is a big case for privately issued stablecoins. That is, this is a long, long, long story to, to get to this point. Then, definitely regulations will come, are coming, from there, there are two aspects of, I think regulators are really interesting, although there, there is a lot of noise around stablecoins, actually the, the thing that, from what we are hearing, regulators are more interested to regulate DeFi, right? So and, and stablecoins are a good proxy for DeFi because they are the ones that are more used in lending pools to, to, to provide yields and, and interest basically. They are the ones that, DeFi pools are considered, The tools used to subtract revenue to banks, right? We have been living in a world for the last thirteen years, the interest rates on, on bank deposits were almost zero. And so, so you can see that the first opportunity when people could get ten percent yield per year, they, they would take it, right? So, was much better than losing money or not making any money on your bank deposits. But, that is what regulators can call systemic risk, right? So if everyone started to pull out money from, from their banks, what happens, right? What could happen? These banks might get, be subject to a bank run and, and, and, and be bankrupt, right? So, you know, they, they really don't want to see that happening. So that's why what I'm hearing is that, the one main concern is actually, you know, DeFi lending. Also on the other side, you have, stable coins regulations that definitely are something that, that is extremely interesting to follow. On one case, we believe that, stable coins should be regulated as cash, right? So, we have primary markets, so when a customer acquires or deems a stable coin through Tether or our competitors, and the secondary markets are blockchain movements, right? So on, on, on blockchains, of course, as Tether, we come- Comply with, with the requirements that law enforcement, has asked us. For example, we collaborate in, in freezing assets when they ask us to do so and so on. Remember, Tether is a centralized stablecoin using a decentralized transport layer, right? So we use ba- the banking system, because everyone talks about, dollar-based stablecoins, right? So everyone, a-and their sisters are trying to create their new stablecoin that is fully decentralized, but all the attempts so far Have not been great. So either they are too small, so no one cares and they don't have much utility, or when they become big, actually they were, you know, taking on, a, taking on so much risk like Terra that then became systemic and completely wiped out, eighty percent of the value of the crypto industry. So the problem there is that, everyone wants-- so here's the absurdity in a certain sense. People want dollar stablecoins. But also people want these dollar stable coins to be fully decentralized, but they want to be, to use these dollar stable coins to then cash out, right? So, and now you scratch your head because, no, you want to cash out, so you want someone giving access to or, or, or accepting that you can go back to your bank account, but you want it to be fully decentralized. And so, I mean, there isn't a good way to make it work, right? So you can, so someone has to deal with the banks, and if someone has to deal with the banks Banks, it means that you are still recognizing the importance of the traditional, banking industry, right? Because, you know, you want to cash out and buy a house, a car, whatever, or, or a laptop, whatever, a phone. So In a way, I feel like people should make up their minds, right? So if you want a dollar stablecoin, you should be ready to, to have some compromises. Otherwise, there is Bitcoin, right? To me, anything that isn't Bitcoin is inherently centralized. So, so I, I'm happy to live with that concept, and I'm, I'm happy to, you know, that Tether works well because it has this, this bridge between, you know, the old and the new, and, and we believe that, we Regulators eventually will see stablecoins as something that definitely needs to be regulated, has to be subject to clear standards, providing like disclosures, providing, a certain type of, attestation or audit, requirements, and so on and so forth. That is all fine, but, it has to, we, we need this type of clarity, and hopefully they will see in this is, you know, the, the path we are, we are, we are seeing Seen, at least the current discussions are suggesting that stablecoins will allow to operate in, in, in, in, in ha- as they are operate on, on chain, but of course with the still the requirements that we have of, you know, freezing, collaborating with law enforcement, so on. So Tether in the last eighteen months was able to, Collaborating with law enforcement was able to give back to their legitimate owners around one hundred million dollars, right? So sub-- we have seen so many hacks around the world in, in DeFi, and, in the end, the Tether has been, you know, this, this, this, this company that, helped as much as it could to, you know, when we receive, when, someone is subject to a hack, they go to law enforcement, we get a request from law enforcement, if the judge confirm the stay, we Freeze the funds and we work out a solution to provide back the funds to the, to the legitimate owners. So, that is also a good story, can be seen in both ways, right? So you can say, \"Well, but you can freeze money,\" yes, but also you can give, you can help people in that way. So that's something that, For a centralized stablecoin is at least compared to a bank, is a big, improvement because, banks are much slower in, in this type of approach, in, in, in helping people, I believe, with their, with their own funds. So i-it's such a, a changing, you know, we are s-such an a changing, moment for stablecoins that will be definitely exciting to see where we are going." }, { "speaker": "stephan", "time": "29:51", "start": 1791.39, "text": "Yeah, sure. and so I'm also curious then, in terms of- Of where things are going with the censorship, as you rightly said, so it's, it's an openly centralized model, obviously, as opposed to the purported decentralized, you know, idea. And so obviously, over the last few days, we've seen this whole thing happen with the Tornado Cash. So for listeners who aren't familiar, basically there was an Ethereum mixer protocol that essentially got sanctioned by the OFAC Treasury Office, meaning especially for US individuals, that they are now not allowed to interact with this system. And so what we've seen is this weird interplay where because of that OFAC action, USDC addresses, which is a competitor stablecoin, has been frozen, or at least certain components of it. And so it kind of creates this weird dynamic where, I guess, it just will mean stablecoin issuers will just have to be very sort of cognizant about what's going on, in various governments around the world, and some of them may say, \"Oh, we want you to freeze this,\" and then it might put you in a really awkward place, right? Because then you have Like, okay, US government has told us to phrase this, this other government has said to phrase that. I, is that basically the position you would have to, you're kind of being put in?" }, { "speaker": "stephan_livera", "time": "31:05", "start": 1865.28, "text": "Yeah, definitely is, is going to be tricky, right? So, again, complying with, with the requirements, the regulatory requirements is, is going to be, critical because again, we are relying on the banking industry, right? So we, we need to be, to be, to maintain the same level of, of scrutiny that the banking industry has Around that. On, on this specific case, but in general, it's also important to understand that so the, the big, question that needs to be clarified, in is, so there are two type of addresses, right, in, involved with stablecoins. There is, the addresses that are owned by the, the stablecoin issuer, that are like the treasury wallet and the smart contract, smart contract. And also, and then there are addresses on the secondary market that are owned by the actual users, right? So, the clarity-- so there was never clarity on, if, stablecoin issuers, because there was, you know, never the chance to give this type of clarity historically because it's such a new thing. So are stablecoin issuers required to freeze someone else's address as a blanket, freeze? Right? So this, in this case, for example, well, we don't- Serve US customers in our case, right? This is, a US-- what, what was suggested was a US requirement. But at the same time, the question is, because we have been working with many US-based law enforcement agencies, recently, you know, after the last few days, on things that are even related to this specific case, but has always been like a direct request of freezing specific addresses, because keep in mind that, as you said, there are multiple regulators around the world, and the problem is that there are ongoing investigations on, that- That are involving these addresses. So if you blanket freeze them, then you, you, you actually are interfering, you could be interfering with other regulators' investigations. So it's always like, so you need to have a direct interaction, and so far, no one contacted Tether to, to freeze all those specific addresses, right? So it's always, it's important to, comply with the, with, with, with the, the requirements, of course. At the same time, it's important to, to have full clarity, because otherwise you're just doing actions randomly. And that could jeopardize the years of work of someone else, right? So, i-i-it's super tricky. So, it's not, the perfect position to be." }, { "speaker": "stephan", "time": "33:29", "start": 2009.42, "text": "Back to the show in a moment. Are you a Bitcoin miner or interested in the Bitcoin mining industry? Brains dot com is the place to go. They have a blog with all kinds of educational content, and if you're a Bitcoin miner, you need to check out Brains OS Plus. 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This is a great opportunity to remove single points of failure, give yourself that peace of mind, and help you sleep at night. Unchained dot com slash concierge is the website, and use the promo code Livera to get fifty dollars off your concierge onboarding program. And now back to the show with Paolo. Yeah, sure. and I think the other, obviously, this has been a line, this has been a line in the industry for years and years and years, people have been doing this whole line of, \"Oh, Tether is pumping the price of Bitcoin or cryptocurrencies and things like this.\" And I know this has been like a regular line that we hear over and over, so I'm curious, what's been your response to that? And maybe if you could just outline for people a little bit on the process, like what happens, I guess, maybe Of mechanically what's happening in terms of when new tethers are being printed and versus when tethers are being, destroyed or redeemed." }, { "speaker": "stephan_livera", "time": "36:20", "start": 2179.86, "text": "So the process is pretty simple. So in order to acquire tethers, so we have a one hundred thousand dollar limit, so we work only with, let's say, big clients, big institutions to acquire tethers, right? And redeem tethers. So the, the process is, you get, so a customer wants to acquire, USDT, they send one hundred thousand dollar with as a wire to our bank Account and we send back to their design, desired wallet one hundred thousand USDT tokens. A customer wants back his, fiat, and they send one hundred thousand USDT tokens to our treasury wallet, and we send them back a wire for one hundred thousand dollars minus the fees, right? So as there is both for issuance and redemption, there is ten basis points fees. But that is as simple as, really as simple as that. I think the big, big misconception, but I think it's not like a- Genuine misconception for most of the time is actually, you know, there is this narrative that, Tether has been pumping Bitcoin price. I think that is extremely stupid on many different, for many different reasons, because, it's like saying that the only reason why Bitcoin has value is because of Tether. That is, I mean, I think that everyone agrees that or should agree that is not the case. Bitcoin has a huge, use case around the world, has been, you know, growing much before Tether has been, you know, is being adopted by nations, is being adopted by huge institutions like Fidelity, BlackRock, and so on. So there is, there, there is, so Bitcoin has value, full stop, right? And is really important, is like one of the probably the most important currency that we have nowadays. The, also the, the misconception is that, Bitcoin price was going up because Tether was printed. But actually, you know, the people are, the funds and institutions want to enter in Bitcoin, so they need to issue, sort of, acquire Tethers in order to buy Bitcoin, right? So the fact is that if you are like, if you want, and we are, have seen a lot of, of these, institutions recently in the last year and a half to, they wanted to get a huge Bitcoin exposure, right? We have seen You know, many, f-day, from Fidelity to, you know, any, all these big companies in Tesla and so on. All these companies aren't like, so they aren't using OTC desks or, or, or hedge funds in order to get exposure and buy position. So if you are, if you want to buy half a billion of, of, of, Bitcoin, the dollars of Bitcoin You don't send all the money to one exchange and click market buy, right? So you want to work with the OTC desk that will give you the best price, right? In order to get the best price, you need to work across multiple trading venues. And the last thing you want is to take like a half a billion and, and split it in, you know, fifteen wires and send fifteen wires around. The, the easiest and most common use case is buying USDT, and there are basically every single exchange in, in- On this third support USDT. So you take US, you buy USDT once and you send this USDT out to the fifteen different trade venues and you can, and by the way, the USDT markets are the most liquid markets. So it's, it's simple as that, right? In order to buy Bitcoin at the best price with the highest liquidity, you just, you, you use the USDT markets. And so in order to do that, you need to acquire USDT. And so in a way, we are the central, liquidity pool For the entire crypto" }, { "speaker": "stephan", "time": "39:53", "start": 2393.46, "text": "ecosystem. I see, yeah. And so I think that's also, yeah, so I guess in simple terms, new Tethers are created when a person issue, wires, you know, USD, USD into the Tether bank account, and then the reverse process is when they are destroying Tethers, it's, you know, it's the other way around. They wanna redeem that fiat cash back into their bank account, okay, same process. And then, I guess the other aspect is Tether travels across different blockchains, right? So you, it's on Liquid," }, { "speaker": "stephan", "time": "40:22", "start": 2421.84, "text": "So, yeah, I think perhaps where I'm seeing it is I, obviously, I would prefer people to just go straight to Bitcoin, but I recognize, I understand there is a, there's a demand out there. Maybe I'm not necessarily the market for that, but I can understand, I can recognize there are people out there who do use that, and so they may be using, let's say, Blockstream Green, or they may be using, the Tether. I think Tether has a native wallet or its own wallet application, and so I suppose those are some of the main things Around the, the bank accounts, the reserving, the audits, and these questions that people sort of have. So I, I know there's been a bit of a storied history with Tether, so I'm curious if you could sort of give people just a bit of a, an understanding about, you know, the use of different reserves, in terms of Tether's balance sheet, you know, just so that people are understanding what's going on at Tether so they can get a picture from that." }, { "speaker": "stephan_livera", "time": "41:14", "start": 2474.41, "text": "Sure. So one of the big mi-biggest misconceptions is that, Have audits while everyone else and all its competitors have, full audits. And that of course isn't true because actually the industry standard and every single stablecoin issuer has, is relying on attestations. So what has been produced on a quarterly or monthly basis by, by, stablecoin issuers is actually are actually attestations and not full audits. So We think that, in the next, two years, the industry standard will move to full audits, and Tether is actually actively working to have a full audit. we don't know about the others, but we, we believe that we could be one of the first, if not the first, to have that. So, on a, you know, continuous basis. So One of the, other, interesting and most, discussed parts is the com-famous commercial papers, right? So actually Tether, voluntarily in two thousand twenty-one, with the first attestation, produced, what-- something that no other stablecoin had at that time was called breakdown reserves, right? So when the-- our breakdown reserves, so all the stablecoins were saying, \"Well, we have all the money, don't worry,\" right? But, we went one step further There and we said, okay, we have this stuff in our portfolio, you know, and there were thirty billion dollars of commercial papers, and people started questioning that. So we said, okay, fine, you, you want to see a bit more, let's, let give, let us give you, the ratings of these commercial papers. And the result was that vast, vast majority was, A1, A2 rated by Standard Poor, so super safe stuff, right? It's not like, you get a commercial paper from the grocery dealer on the end, on the end Is stuff that, i-is extremely liquid, stuff that has just few basis point more in, in return on, in interest than, than US Treasuries. So things that you can sell on the market without any, any loss. So, still, there was a lot of, concern remaining, right? So what we said publicly, was June two thousand and twenty-one, we said, \"Fine, we are going to phase out commercial papers. In order to do that, and we are going to increase our US Treasuries exposure.\" So, what we started, we started doing that, and, at the end of, this July, so to the July two thousand and twenty-two, from thirty billion previous year, we went down to three point five billion, three point four billion, and by the end of Aug-August, so in twenty days, around twenty days, we will be at two hundred million, and by October, we'll be zero. So we have been, I think that this has been, and now Chinese commercial papers and, you know, the, all this, stuff, Is, has been really, concocted to, to, to make us look bad, but inherently we think even with the last, two, last two months has been showing that Tether is actually, you know, the, the company that doesn't take, the same risk that, all the other heroes or considered heroes of our industry were taking, right? So everyone, since the Terra Luna, crash, everyone was looking at Tether, right? So so- So much Tether news, I have been doing like, probably a hundred interviews, right? Always repeating the same thing, right? We were the only institution that was able, e-even co-including tra-traditional financial institutions, that was able to payout seven billion dollars that were ten percent, or always ha-has to be proportional, ten percent of our reserves in forty-eight hours. In recent financial history, there was one institution called Washington Mutual, they went bankrupt because they had to pay ten percent of their reserves. Dollars in ten days. So we did much better, and they went bankrupt, we, we didn't have any issues. In one month, we paid twenty billion dollars that were twenty-five percent of our reserves without the blink of an eye, we could have done much more. But yeah, in doing all this period, right? Everyone was looking at us and concerned about Tether. It happened that actually all the mighty heroes of, of our, in crypto community, you know, were taking loans, right, without any collateral, without any backing. They were doing The craziest things, right? Some of these were even public companies under the SEC, overview. How that could have happened, right? And all these, some of these are actually, some of these companies are, are owned by some of our biggest critics, right? So you now scratch your head saying, \"Well, okay, why, why?\" So you're criticizing me about what, what, what the hell is happening there? Because feels to me that, if you are giving a loan, you should be overly, overly collateralized, and yet, you know, we were the This should be done, right? If you are offering loan, you should be over collateralized with something that is extremely liquid, and we, we demonstrated that really, really well. So, long story short, definitely a lot of misconceptions around Tether. We, we should have done, I think, a much better job in terms of communicating with, with our community these type of things, and I think that nowadays recently we started doing, doing that much better, right? It's, it's true that, one, one interesting fact is that, and Until was, May last year, May 2021, Tether didn't even have a marketing team, right, or, or a PR team. So we thought, like, really naively, and I can say this, openly, that, you know, you, you have just to keep your head down, work, and, you know, everything will be fine. But we, we realized that it's not always like that, and we were naive, right? Also a little bit, dumb, but because of course people need to have information" }, { "speaker": "stephan_livera", "time": "47:00", "start": 2820.13, "text": "Around, and, and doing all huge marketing events doesn't mean that you are a bad guy, just maybe it just means that, you know, you, you are focused on, on, on your own stuff. But we realize that we have to improve and we fix that, we are fixing that, right? We are, we, we want to be more and more, provide more and more information. We are stepping up the game also when it comes to attestations, and you, you might see that in the next few days, a-and so on. So definitely many things" }, { "speaker": "stephan_livera", "time": "47:30", "start": 2850.21, "text": "These last recent events should be a teaching moment that, you know, when, maybe Tether was used as a, distraction while the rest of the industry was taking the, the bad parts from the two thousand eight financial crisis playbook." }, { "speaker": "stephan", "time": "47:46", "start": 2866.44, "text": "Yeah, unfortunately. And so as you said, the so-called heroes of, you know, shitcoin Twitter, so yeah, we, we, we, yeah, we won't go too into that, but I think, I think it's interesting as well just to see how quickly the market has grown, right, over the last It seems that the whole stablecoin market now, yes, it took a, you know, took a bit of a crash after the whole Terra Luna blow up, but I'm curious your thoughts and what that portends and this notion that in some sense, like, yes, it's US dollar denominated, but in a, in a, in a sense, you're kind of like a, you're almost like a central bank, and you're holding like reserves, like US Treasuries, and in some sense, you'll become, like, over time, if Tether just keeps growing," }, { "speaker": "stephan", "time": "48:30", "start": 2910.13, "text": "That you're issuing loans and things like that, but in a, in a loose sense. I'm curious, do you see that perhaps a lot of people around the world will kind of run to USD because, let's say, their local currency is, is horrible, right? Like I've, I have family in Sri Lanka, they, they got wrecked on, you know, LKR, massive devaluation, and I'm sure, you know, there are people out there in various countries around the world who want this product. So I'm curious your view, do you, do you believe It's kind of bullish on the sta- on stablecoins as a market." }, { "speaker": "stephan_livera", "time": "49:04", "start": 2943.91, "text": "So you can argue that the stablecoins are actually an instrument to increase the hyper-dollarization of the world, right? So, a-and that is an argument that we heard a lot also in, in the Congress talks, right? for good or for, for worse, that is, that is also true, right? So as you said, you know, and that is what we are seeing every day, companies and, and the private people, especially People are running to the dollar, but think about Argentinians. An Argentinian person can only buy two hundred dollars worth of dollars on a monthly basis through their bank account, right? And, using-- and so the problem is that even if they have dollars in their bank account, that doesn't mean that the, the, their bank will not seize those dollars if, the, the country is in distress, right? And that is something that people in the country, Argentinians, worked really hard for. So you have control over how How many dollars you can buy, and even if you buy them, you can't, you might not be able to use them because they can get seized. So in the end, people are just trying to look at their own safety, right? They want to, you know, they, they want to protect themselves, and, there's nothing wrong with it. I, it's like, is, is in human nature try to be safe, right? And, you want to have to be safe yourself and your children. And, the, that's progression that, that, more and more people are learning. If you go in Argentina, Brazil, Salvador, Venezuela, everyone knows the term Tether, right? And they know, they're used to use Tether as, as their money, as just, i-it's just dollars for them, right? And, it's the, the, crazy thing is that we never spent a dime in, in marketing, there because it's, it, it, it happened organically. So when you create a product that, i-i It grows organically, it means that you created something useful, right? And, it, it grew not because we were good, right? Or we were, you know, thinking to all the use cases. It grew just because people needed it, and that's probably for good or worse, worse is, is like the, the, the best outcome, for, for a product. So I, I think that, that, that use case is, is, is, is extremely important and it needs to be supported. Sometimes, you know, when I talk to people, even, you know, I li- I lives, I live part of my time in Switzerland, I move in Europe a lot, and when I talk to people, sometimes they, they don't understand why either Bitcoin or stable coins are needed, right? Because, you know, Europe is, is, is, in general, is a wealthy group of countries, quote un group of, countries. And so people don't realize that maybe, just maybe, there is someone else in this world that, is living in different condition. And, you know, what is true for a certain, for a cer-certain country might not be true for another one, right? You said you have, family in, in Sri Lanka, but, you know, don't, don't think that Italy is, is a, you know, is a wealthier country in a way, right? So it's like, we have still euro, we have seen" }, { "speaker": "stephan_livera", "time": "52:19", "start": 3138.6, "text": "But, you know, it's, things are getting unpredictable, and with the, this geopolitical uncertainty, things can might get actually worse and worse pretty quickly. So having, a lifeline, and, and accessible lifeline, to people, I think i-is part of human rights." }, { "speaker": "stephan", "time": "52:39", "start": 3158.79, "text": "Yeah, for sure. I also wanna chat a little bit about, I guess, maybe this is getting to-- We were talking earlier a bit about how Tether is across multiple blockchains, right? Across- You know, like Liquid and plus some, you know, shit coin chains. but I'm also curious to get your view on some of the different protocols. Now, I know obviously Bitfinex is an investor and has people working in, say, RGB. Also, there's, you know, Synonym with OmniBolt, and then Lightning Labs have Taro as well, which is perhaps another competing, you know, similar, has some similarities to RGB. So I'm curious your view on those protocols, how, how you see Tether, would Tether be going and traveling on All of those, or just say OmniBolt and RGB because they're the ones that, you know, Bitfinex has, some investment into." }, { "speaker": "stephan_livera", "time": "53:25", "start": 3205.44, "text": "Well, no, I think that the, the role of Tether is, you know, as long as the technology, is there and can be used with a good degree of, of, of safety, it should be supported, right? So the fact that, so we invested in RGB and OmniBolt before Taro, right? And, we will continue to do that. for us, it's important" }, { "speaker": "stephan_livera", "time": "53:49", "start": 3228.54, "text": "An approach, Omni Bolt has another approach, and RGB has yet another approach. They have some overlapping, but they are all good for, for same or different use cases, and we should be supportive of, all these solutions. It's not like we don't want to, as long as the technology is there and it's good, we want to be supportive of that. So, we have a great relationship with Lightning Labs, we have a great li- we of course are funding different projects, and to me, it's like, you know, maybe the- These aren't the ultimate solutions, there is something to even more, even further to research. So, for example, we are, what if we could, build, better lightning channels or, or like more efficient, have maybe more efficient routing and so on. So, you, you, you never know, and the only thing, the only way to know is to hire great talented people that will spend some time in, in researching, testing, proving, and, Maybe some of these protocols will, in a, let's say, day-to-day, mass scale use case will fail, right? Maybe they aren't really ready to be, or, or they might not fulfill the requirements for, for mass adoption. And then you keep moving on, but if you don't try, if you don't invest, you'll, you'll never know, right? So that's why, that's what we are doing. So we plan to be supportive of, all, all the different flavors, as long as, of course, all the premises in terms of" }, { "speaker": "stephan", "time": "55:15", "start": 3315.12, "text": "Then that for people who are designing products, building services for people in markets that have high inflation, right? The Sri Lankas of the world or the, you know, the Venezuelas of the world, then perhaps it would be useful to have wallets and applications that support both Bitcoin and Lightning, obviously, but potentially also have support for Tether on, you know, RGB, OmniBolt, you know, all these kinds of things, so they kind of have like a multi-currency wallet, that easily allows them to sort of flip back and forth if they need to between Bitcoin and And Tether in that particular use case, I suppose." }, { "speaker": "stephan_livera", "time": "55:48", "start": 3348.31, "text": "Yeah, I, I think that, I see a world in which, you have, you're, you're maintaining your main wealth in, in, in Bitcoin, and then when needed, you just flip some of, a small portion to, to USDT just to pay for the things you need in that specific moment in time, right? So I myself, I want to see, hyperbitcoinization and Bitcoin use as a standard, right? We need more services that are- and more companies that are actually valuing themselves based on how many satoshis or, or Bitcoin they, they hold rather than, you know, always thinking back to, to the Fiat standard." }, { "speaker": "stephan", "time": "56:26", "start": 3386.21, "text": "Yeah, I, I think it's really interesting, and I, I'm, I'm curious to see where that develops. Also wanted to chat a little bit about Keet as well. So I had a, I had a quick play around with, you know, so, so for listeners, Keet dot io is this, kind of like a Zoom comp-competitor in a" }, { "speaker": "stephan", "time": "56:45", "start": 3405.32, "text": "Idea of hole punch. So what is it? What's the connection here?" }, { "speaker": "stephan_livera", "time": "56:49", "start": 3408.59, "text": "Yeah, so a few years ago, Matthias, myself, Matthias Busch, myself and, we started, we, we are big, proponents of, peer-to-peer web, right? In, in, in the nineties, when, when the web started to grow in adoption, was actually, truly peer-to-peer, right? People were, was, web was, created for, for knowledge sharing, right? And that is one of the biggest achievement of humanity. But then more, more companies started to look at it and started to create the services that were fully, fully centralized. And the, the, the, there is this concept that, you know, most of the services are actually free services, right? Social networks and, Zoom and for many and WhatsApp is all free. And if it's all free, then you start, thinking how they can cover the cost of this, of, of their infrastructures, right? So, because- Because there are immense costs in terms of hundreds of millions, if not billions, per year. Now, of course, you are the product, you are the data you're producing with the video, audio call, with the sh-sharing content, sharing chats, text, everything that you can think about, you are what you are producing is their product and, actually is the way for them to make money. Now, myself and, you know, and, I've been always, big proponent on the fact that, things should be fully, decentralized and, and Matthias myself started thinking and discussing three years ago. So this project, goes back three years, well, actually five years, but three years, we founded, with, Bitcoin X Tether and Hypercore, that is, his company, we funded, this concept of whole punch. to make it, easy and short, the comparison is, imagine, I'm sure you're familiar and your, your listeners will be familiar with the BitTorrent as a technology, right? BitTorrent is that unstoppable file sharing, network. And, BitTorrent had many interesting protocols, that was using the distributed hash table called DHT, that is a way to, is a key-value database that is distributed. And then use hole punching, that is a way to connect two devices behind firewalls without passing through a central server. And the third technique was, swarming, that is a way, so if you remember when you were seeding a file, and more, the more people were downloading a file from you, they could start resharing the file among themselves. So the more people were accessing, accessing the file, the, the download for everyone was becoming faster. So we discussed, a lot and we thought, okay, but, you know, this is great technology, right? We have been fond of that technology as, you know, actually unstoppable, communication technology for, for, for, for last, fourteen years. And, and by the way, Bitfinex has internally in, in the Bitfinex, private network, we use the very same technology to create our microservices system that are powering, Bitfinex. That's why Bitfinex never goes down on, when under load, because we have this, we are using this very technique in, in internally to, to create this high resiliency. And basically what we said is, okay, but BitTorrent is just for static files. What if we could reuse the very same technology to, to create, to, to, for live stream, live data stream, live data streams? So when you are on a, on a call, when you are sharing trading signals, when you are doing every, almost everything in your day-to-day life, you are creating live data streams, but usually these data streams are going to centralized servers, right? So now we are on Zencastr or, you know, there is Riverside, there is Zoom, there is-- But think about it, right? So if I want to call you and talk Why we should use a central server? What is, what is the, what is the reason, right? So, because the reality is that there is no reason, right? So, you have an IP address, I have an IP address, and we should be able to connect each other without passing through someone else's server, right? So, that is the, the insanity that we are used to in our, in our life. And even more so the other narrative is that even, even if devices and computer, physical com-modest computer Can actually could, eternally, do connections one to one without central servers. Mobile phones instead would not be able to do that because they are limited. And that is the other biggest lie, lie. Mobile phones are more probably more powerful than your desktop, right? So the M1, the new M1 laptop that, of Apple is has the same chips on the mobile phone and, and, and the, the, the desktop, and actually the mo- mo- the, the mobile phone is extremely optimized, right? So it can do things that are quite, quite important, rendering, taking amazing photos, doing, really shooting 4K videos, so everything that can, and that requires CPU, GPU And, and so on from, from the phone. So the, that is the, so the fact that you can't connect directly is, is really a big lie, and the fact that you need a central server is a big lie. So Usually, you could argue that you need a central server because, you know, you are behind the firewall, right? You are at home, I can't easily connect to you, right? So if I want to do a phone call to you, a video call, then how my traffic can reach to you and vice versa? But that's why, you know, that is what BitTorrent does. BitTorrent was using this technique, use, called hole punching, that was-- is allowing to bypass firewalls in a certain condition. Well, it works, we, we are proving that works all the time. We announced this technique. But it's a technique that is, cooked in, into the older routers and, and firewalls and LAs. If, if the connections are a-agreed to start from the internal side, so all, all the connections are, you, you can always connect to the outside, but the firewall blocks connection from the outside, right? But if you-- we all both start a connection from the inside, and we have a third party that sends specific type of, packet to both of us in the same timeframe, then you can establish a direct connection without any- Central servers. Simple as that. Well, it's not that simple, but it's simple as that. Now, we could enter in all the crazy details if you want, but, long story short, this proves that you can establish a connection that can go between two computers, two devices, two phones. Now, the, the benefits, and this is why we created Keet as the first demonstration of this technology, is that with Keet, now we can have, a chat, we can reuse the DHT, that is, that key-value store. Or as a meeting point for people that want to create a room, right? So you want to create a room, where you have like ten friends, one create the room has a, as a link that is a, actually a pub key of the room That gets stored on, on, on the DHT, so the others can reach out and find the room through the DHT. Then you have hole punching, that is allows people to, to all these, friends, peers, to connect to each other without a central server. And now suddenly you realize that, first of all, using Zoom, for example, there is, there are, there are many concerns. First of all is So the technical, limitations are that Zoom has to compress your bandwidth and reduce the quality of your video and audio because there are, there are millions and millions, hundreds of millions of people using it, right? So they need to save bandwidth, otherwise their bandwidth will choke. As much as they have bandwidth, it will choke, right? There is, is, is centralized, so there is no way around. And so with Keet, you actually don't need to do that, right? You can decide the quality of your video because there is a slider. But actually, you, you, you have to take a shower before using Keet because we can get you the highest quality video calls ever made. Right? So you, if you have anything on your skin, you will see that, right? And then, the crazy thing is that we, we, we are using to describe Keet and the advancement that we have is, imagine that we are on a Zoom call, and I want to share with you a three-gigabyte file, a video file, right? A video that I shoot. I drop it in, in the chat, and this file will go to the first, my computer needs to upload this file to Zoom servers. It takes two hours when the Zoom, and of course, Zoom server is limited one hundred megabytes. So, but let's, let's make a po- by hypothesis that you can do that. So, you upload three gigabytes, it takes two hours, then everyone can start downloading it and see the file. It takes like four hours and, super annoying, it's not real time. But with Keet, you have a three gigabyte file, so no limitation, could be even one terabyte file, for all to care, because there is no infrastructure, it's just your" }, { "speaker": "stephan_livera", "time": "01:05:52", "start": 3952.06, "text": "You drop the file in the chunk in Keet, and all the your friends can start, can p-press play, and they can start streaming directly from you. And then they can swipe the slider to two hours and a half, and their computer will just ask for the chunk of data that it wants and need at that time. So it won't download everything, you can just stream and sweep in and take in the chunks that of the video that you want. So you have Much higher quality, video calls, lower latency because you don't need to pass through central service, you go, go directly. You can share big files with no limitation and immediately can be streamed. And the beauty of it is that you, you imagine that you have one, one thousand people call, because you can do that with Keet, you will be able to do that with Keet, and you share a file that, a three gigaby-- a gigabyte file. A question would be, what if everyone is starting to watch the file, your, your, or the video? Your bandwidth will choke because you-- they will all use your bandwidth. But the beauty of it, remember, we are using Bitcoin technology and there is swarming. So if someone starts playing, the more people are playing the fight, they're actually sharing the fa-- the, the chunks among themselves. So Doesn't matter. There is no, there is no infrastructure. Everything is super simple. We built all these primitives that allow developers to create applications like Heat extremely easily. Also because the programming language and the technology we're using is the same technology to build websites. So now, from, from December when we are going to open source it, everyone that is a frontend developer that can do websites can build fully peer-to-peer applications that can replace things that, cost billions of dollars like Zoom." }, { "speaker": "stephan", "time": "01:07:33", "start": 4053.45, "text": "Fascinating. And I, so I played around actually just earlier today with, Federico, funnily enough, just to test it out, and, yeah, I thought it was interesting. So I think that's probably the other criticism I've seen amongst the communities, they're saying, \"Oh, why isn't it open source?\" A bunch of Bitcoiners are typically more privacy and security focused, so I'm curious, why wasn't the application open sourced at this point?" }, { "speaker": "stephan_livera", "time": "01:07:55", "start": 4075.99, "text": "So it will be fully open source, both Keet as an application and the whole Punch as a platform" }, { "speaker": "stephan_livera", "time": "01:08:04", "start": 4084.43, "text": "Interesting decision, but I took it, being, you know, having-- Matthias is, is the, is a big, prominent person in open source. I myself, as, as well, I published, you know, I, on, Bitfinex GitHub, public repositories, we have more than two hundred public repositories, open source repositories, and with MIT license, right? So for us, of course, the goal is to get open source, and Matthias has like one thousand public repositories, right? So in our mind is, is always Full open source, and there is no question around that. Now, we wanted to avoid the classic, crypto play where, you know, you get, you release something, after one day, you get forked and get a shitcoin on top of it, right? So We wanted to get as far as possible to create a good use cases to prove that we could cover like, the, the chat, the Zoom replacement, and now we are working on Telegram, like, Zoom is video first, but Telegram is text first, and then video as an addition. So we want to cover a few use cases to avoid that someone takes the technology in the, that is would be still an early stage and fork it and add a shitcoin on top of it. So, in, we are not pushing this down the throat of everyone. So we, there is a big alpha logo, on top of it, so, so that people understand that, you know, they, they, they need to choose to use it, and, we have been extremely public about the fact that it's not open source yet and why this is the case. So we want to change that, but also we want to, no, we don't want to lose the opportunity to create a, to use a technology that is so, could be so disruptive and seen used for by some Web three BCS, for, for, you know, they're to, to pump and dump something, right? So, it is what it is, there is no perfect solution, you know, we, we are so focused on the technology now that we don't have the time to watch our back for, for that from happening. So it will happen anyway, we know that. But, we want to be at a, a bit better stage also with the structure of, of the, of, of the framework and so on to actually provide more use cases that are free as in freedom rather than, you know, paper talk." }, { "speaker": "stephan", "time": "01:10:18", "start": 4218.41, "text": "I see, yeah. And so, does that mean then there are other applications coming down the line, from, you know, using the hole punch protocol?" }, { "speaker": "stephan_livera", "time": "01:10:27", "start": 4227.96, "text": "So we are discussing about peer-to-peer VPNs, I believe that is one of the most interesting ones because nowadays VPNs are blocked because Of, IP addresses, right? So it's really easy to harvest, maybe NordVPN and, and, and, and the pure VPN IP addresses and the infrastructures, to, to, actually, you know, blacklist them so no one can use in a specific country VPNs. But, with, with Keet, you can build the peer-to-peer VPNs and, they would rely on residential addresses, and so, you know, then it becomes impossible and unstoppable. so you can do also peer-to-peer mapping, right? So you can actually That, that is quite exciting to me because, mapping are, and I believe that, the two things that are the most important thing actually of, of, of what we should be doing and what should be peer-to-peer, should be search engines, right? So all part of my, research in university, in computer science and math was, related to search engines. And, to me, that is really an exciting topic. I feel like, people shouldn't be told or the, the, the data shouldn't be, How much someone is paying Google, but should be more sorted based on, you know, the locality of that data, right? So if, for example, I want to come to Sri Lanka, I want to eat well, I want to know what someone living in Sri Lanka running a, a node providing an index on the best restaurants would think, right? So there is a lot of work in, in, in search engine and, and knowledge sharing that, that feel, feel we stopped and will stop due to incentives from, from big tech companies. And also, there is an interesting, and really underrated problem in this world, right? So in, in Europe, there is something called GDPR and a bunch of laws that prevent, that should, that tell you, as a, as a company operating in a certain country, that the data should resides in the territory that you are operating in, and even more so that is true for is, is even more true for, for public administrations, for example, Switzerland, Denmark, France, Italy. So you, actually there are, laws that would prevent you to use, communication suites that will move your data that you are producing, video, audio, and sending files and so on, outside of the boundaries of your country. Right? Or, or play, or outside of boundaries that have different rules. For example, you can my, you might still be, be sending data outside of countries that are, that are still anyway part of the GDPR consortium in a way, but you can't like, you shouldn't send, data to countries, especially private and important data like public administration produced data. to other, to a communication system owned by other coun-countries. In Denmark, I was talking to Matthias, there is this, recently, you know, they had these schools all buying Google Chrome, Chromebooks, right? And then they stopped that because they understood that there was nothing preventing Google from harvesting and indexing people, children' homework. Right? So this is going to be more and more important. I was talking to a few public administrations in Switzerland, and they said we would use Keet because we have a big problem. We, we ne- we are using other solutions that we shouldn't be using, but there is no other good solution. So we need to be able to talk and have a good talk with high quality, with resiliency and so on, has to work. But we need to be able to use this, and the data has to remain in our own country. But whatever other solution, the-- you, as a, as Zoom or, or Google, you don't have like a, you don't know where the traffic is passing through, you don't know how, where, which data center everyone is sitting. But with Keet, it's actually peer-to-peer. So if everyone in Switzerland, the data will remain in Switzerland, right? And if you choose to, to talk to, with someone that is not a, outside of Switzerland, that is a choice" }, { "speaker": "stephan_livera", "time": "01:14:28", "start": 4468.57, "text": "But that, that information, that communication line will just get to his house and residential, residential IP address without passing through centralized servers. So that is There is much more to, okay, these guys are, build a privacy, you know, a privacy chat. It's not that, it's something that more and more data and data centers will be weaponized around the world, because imagine you are an Italian and you have, you are using, you know, all the social networks and you cloud storages and so on, and eventually something change in the poli-- in geopolitical setup, and then, you know, your data is not anymore your data, you know? When, when thing, things, hit the fan, you know, things can change pretty quickly. So you want to have a system that allows you to communicate, to store data and so on in a safe way where you con- retain control over your data. And that's why I'm so critical about Web three, in many cases, because feels to me that, it's still Web two with a diff-different hat. So they aren't solving the problem of centralization of data. They're just trying to tell you that, yes, before in Web, Web two, the big tech companies were making all the money, and now instead they can leave you some crumbs so you can make you feel like you're making some money that is probably zero point one percent of the, the how ma-much value you get squeezed from your own data. And If there is a big issue internationally, you won't have-- your data isn't anymore yours, it's also written in terms of services most of the time. The data isn't yours. So we wanted to, to fight that back and give an opportunity, an alternative, because we feel like, the, the world needs-- is going to, into a place that is even, is always more dystopian and/or Orwellian." }, { "speaker": "stephan", "time": "01:16:14", "start": 4574.13, "text": "Excellent. And so with the Keet application, you mentioned as well the possibility of building in Bitcoin and Lightning. Payments as well. So could you tell us a little bit about that and what that would look like?" }, { "speaker": "stephan_livera", "time": "01:16:27", "start": 4587.1, "text": "Sure. So Bitcoin and Lightning payments are, are quite interesting, because we feel like, so and that is, you know, a few days ago I made to explain this, I made a meme, was taken from the Joker, Dark, Dark Knight, you know, when he said, \"It's not about the money, it's about sending a message,\" right? So one of the questions we had with, with, with Keith is why you aren't using Lightning" }, { "speaker": "stephan_livera", "time": "01:16:51", "start": 4611.89, "text": "Motion system because has, is already installed, has, you know, some nodes around and so on. And I personally re-love Lightning, as we said, but, the analogy that I made is, is not about money, means Lightning is built for the primary use case as is protocol that deliver wealth, transfer wealth and route wealth. So if you want to send one thousand Satoshi, one million Satoshi, it's just the same payload, the same data that needs to be r-routed. Of course, the- These are, they are still have protocols to transfer data around, but, the other part is it's about sending a message. So it's about, the analogy is it's about sending data, so it's not about sending wealth and transferring wealth, Keith, and whole punch is about sending data. Now, with the, we, with the Keith and the whole bunch, we wanted to use the best protocols that we could develop that would offer the highest throughput to send, Megabyte, gigabyte, terabytes of data around the world without any limitation. So you need, so, and also we needed the freedom to innovate and, and, and, and move fast, right? So instead, Lightning has bolt specifications and so on. So it would have, would be really hard and slow for us to adapt to that, that isn't even the use case for which this protocol has been assembled and put together. So for us, but we recognize and we know that of course it's not, we, we, we aren't living in communism, right? So people need to be paid, for, for the work they are doing. So yes, the K, the whole Panchest K is offering primitives to provide payments. So we are offering a Lightning Network integration so people can decide to be paid in Bitcoin for the services that they are providing or USDT." }, { "speaker": "stephan", "time": "01:18:37", "start": 4717.82, "text": "Excellent. And so would that be like built into the application then, and like it, it would show an invoice, that kind of thing Make the Lightning node, like, is that kind of what you're envisioning?" }, { "speaker": "stephan_livera", "time": "01:18:49", "start": 4729.22, "text": "Yeah, so the first approach that we are considering is using Greenlight from Blockstream, that is like a non-custodial, hosted on, on their premises node, right? So because we, in order to follow the, the spirit of peer-to-peer, of course, ne- has to be non-custodial. This is like, will be fully open source, non-custodial, and so on. So that is really important. At the same time, we wanted to" }, { "speaker": "stephan_livera", "time": "01:19:14", "start": 4754.8, "text": "YouTube, it is that I really believe that Keet and the other products that we build on, can build on, on top of Hall Punch are actually the key to increase the install monetary base of Bitcoin one hundred times in the next three years. So it means that we, if we, we are the first company in a certain sense to build actual mass adoption applications, alright? So we, if you go on a Keet website, it's not like, okay, there is this crypto token and all these complex financial incentives. It's a chart, right? So use it as a chart, and we had thousand downloads in the first two weeks, right? And there is no even mobile. So I believe that it can really spin up, and there's no cost for us, it's just bunch of developers developing and contributing the code, right? So there is no final, there is no infrastructure to run, so it can be used by one billion people without any problem because, you know, there, there's actually no cost. So that's why I, I, I feel like it's, the, is important to have something like a green light, and of course, we Have you're running your own node and connect to your own node and so on. But we wanted to start with, with the, Greenlight initially because it, it was just offering a, a faster way to, to provide, self-custody, lightning and Bitcoin access to, and rails to, to people." }, { "speaker": "stephan", "time": "01:20:31", "start": 4831.97, "text": "Of course, yeah, sure. and listen, if you're interested, I've got an interview with Christian Decker where we speak a little bit about Greenlight, so you can check that out. and, also curious" }, { "speaker": "stephan", "time": "01:20:44", "start": 4844.24, "text": "as Does it have a business model itself, or is it just sort of funded as a project by Bitfinex? Like, what's the model there for the sustainability ongoing?" }, { "speaker": "stephan_livera", "time": "01:20:52", "start": 4852.69, "text": "The underlying protocol, so the Holch Punch protocol, will be always free and remain free as well. Keet will, Keet will remain free. So we have other ideas, right? So as we said, there, there are plenty of services that can be built on top of Holch Punch. But the beauty of it is that, Holch Punch as a company will not have more control than others on the network. There creating direct communication with each other. So any developer will be, we are creating basically an even playing, even, playing field ground to, to create applications so any developer can actually create, take an existing Web2 application and build it on top of a whole punch and, get paid for it and will not get any cut out of it. And that how it should be, right? So We want to create applications that generate revenue, definitely, and we plan to build a startup fund to make that happen, to fund, companies that create value on top of whole punch, but not value that need to have a yet another token first of all. So we want services to be useful and, and go back to the word, you know, the, the, that crazy word before, you know, all this, ICO boom where If you were, in order to make money, you have to create something useful, right? So, that's something that I quite miss. And, I think that we hope and, we, we can recreate that type of environment and eventually what we have now, we are seeing now in crypto is not sustainable. So we will not be different than anyone else. we want to create, we want to give a platform for everyone and keep in mind that This and the kit, you, you attested kit, right? The, the entire interface, the application was created by one front-end developer, one only, right? So one person was able, using the whole Punch framework, was able to create all that user experience, right? So that's why I think it's super powerful and is creating this field where everyone is at the same level and they can cre-easily create applications that, because you, you forget about everything. It's just like, you hook together, you puzzle, you pu-pie- you Lego together Different things and boom, you have an application that can scale to billions of users. So that's, that's why we are really, really excited about that." }, { "speaker": "stephan", "time": "01:23:08", "start": 4988.85, "text": "Yeah, I think it's fascinating to see, and I think it's interesting to, I guess, pull together some of the different insights. Like, I guess for probably myself and many listeners who maybe in years gone by, if you used BitTorrent, one of the funny or the key insights was this idea that every peer has their own upload bandwidth as well, whereas previously the model was, oh, no, the server has to have all this bandwidth But actually in BitTorrent and similarly with whole bunch, it's like each peer is also, is downloading but also is uploading off their own connection, whatever, whatever high connection or low connection they have, they're also uploading. And so, yeah, I, I'm, I guess I'm curious to see where that all goes. so, I think, yeah, I think that's probably a good spot to finish up. I mean, we've been chatting for a little while, but, definitely exciting to hear all the different things that are going on. Paolo, where" }, { "speaker": "stephan_livera", "time": "01:24:01", "start": 5041.44, "text": "Otherwise on GitHub, P R D N, or you can, go on Keet.io, there is the Discord channel, there are all already a huge community there, ton of crazy, crazy ideas, to work on. So, stay tuned also for the mobile version. I think the next time we will, we could do the next, podcast on Keet. we-- I actually had already, we did two podcasts on Keet already, so it's, it's not, i-it's fairly easy, but we are also building toolings for, On Keet, so, with really high quality. So w- maybe next time we can, we can test that. But, yeah, I'm the guy that makes memes a lot on Twitter." }, { "speaker": "stephan", "time": "01:24:42", "start": 5082.91, "text": "Fantastic. Well, thank you, thank you for joining me, Paolo. Thank you," }, { "speaker": "stephan_livera", "time": "01:24:45", "start": 5085.16, "text": "thank you, Stephen." }, { "speaker": "stephan", "time": "01:24:46", "start": 5086.34, "text": "If you're enjoying the show, make sure to retweet and share it out there with people on social media and your family and friends. The website is stephanlivera dot com slash four zero five. That's it from me. I'll see you in the citadels." } ] }