0:00 Alright everybody, welcome back to the Built on Bitcoin podcast. This is my first debate, 0:07 so this will be interesting. We'll see how this goes. We're talking about Lightning and we have 0:12 a couple OGs in the house. We got Harsha Goli, who is trained as an engineer, did a bunch of 0:18 Lightning stuff at Fold, at Swan, a couple others names you've known. Traded that hat in for a CEO 0:26 and doing a bunch of boring compliance stuff at a company called Magnolia. And then we got Paul 0:31 Sztorc, also OG, started writing about Bitcoin stuff in 2014, I think, Paul, with Truthcoin.info 0:38 and a creator of BIP300/301, also known as Drivechains. And yeah, so we got a debate on where 0:47 does Lightning stand today? Is it a failure in 2025? And we got a few points to kind of hit on. 0:53 And we got Harsha taking the affirmative, Paul taking the negative. So we got the basics out of 1:00 the way, let's just jump right in. And maybe you, Harsha, could start with just like a two, 1:06 three minute opening on how do you view Lightning today? Yeah, I mean, Lightning's doing great, 1:12 you know, like we've gotten it implemented at a lot of exchanges, a lot of huge direct to like 1:17 retail, like customer facing, like, you know, platforms have kind of exploded with usage. I 1:22 think like the big, you know, like headliners, right, is that Lightning over at Cash App is like 1:28 taking up 25% of the total, like crypto volume compared to Bitcoin, right. And that's like, 1:34 obviously massive right now people are releasing like, if you have like a massive, you know, 1:40 Bitcoin node on Lightning, you're probably getting between nine and 10% yield. And this isn't just 1:46 like if you're super well connected, like Boz, which I think he gets like even more ridiculous. 1:51 But like, if your blocks like Lightning routing node, or if your AMBOSS is Lightning routing node, 1:56 you get like, you know, a pretty significant amount of revenue, which is awesome. I think 1:59 Lightning is in a pretty good spot. From a technical point of view, it's probably in the 2:02 best spot it'll ever get, right. There are some like optimizations we can make, but all the tech 2:07 pretty much exists already for the best case, like a consumer wallets out there. So you can have a 2:12 unified balance, which has always been the holy grail in Lightning land between like your on 2:16 chain and your Lightning balance. So you can receive via, you know, Lightning or receive via 2:22 on chain Bitcoin, have it be in one unified balance and send the exact same way without 2:26 making any sacrifice when it comes to capacity. Pretty big deal. But yeah, Lightning's in a pretty 2:30 good spot. And I was, I think specifically really interested to like chat with Paul about this, 2:35 because, well, there's a lot like, I think Paul is not the most pro Lightning person. 2:41 Um, but, uh, there's also like a lot of thoughts in regards to, there's a cult that ensures 2:46 Lightning's dominance. And I'm, I want to talk more about the cult in particular, because 2:50 like I meant to be frank, I shit on Lightning all the time, you know, like I'm ready to, 2:55 it's been my space for like a long time. Uh, so I want to, I want to, as someone who's, I guess, 2:59 in the cult, assuming Paul, am I like, am I in the cult? I'd love to hear that. 3:03 I don't know, but maybe if you're, if you're willing to defend Lightning in 2025, you probably 3:08 are. So I'm probably, I mean, like, listen, listen, I've worked at Lightning labs. I've, 3:12 I've like worked on Lightning protocol, like a lot, you know, I'm probably in the cult here. 3:16 I shit on Lightning all the time though. And I'm happy to like, 3:18 In my experience, the engineers who work on Lightning are not in the cult. 3:23 Like Tadge Dredge is not in the cult at all. Right. Tadge Dredge is not in the cult. I don't 3:28 think, I don't really think Matt Corallo is in the cult. I don't think, you know, like all the, 3:35 if you, if you're brought up on stage to defend Lightning at a Bitcoin conference, 3:39 you're usually not in the cult. Even like, you know, someone like John Seth going on stage and 3:43 saying, we know about the problems in Lightning. They are voluminous, not in the cult. So I think 3:51 there's a huge difference between the engineers who work on Lightning every day and like the fan 3:54 club on Twitter who are in the cult and people who are far removed. You know, Michael Saylor goes on 4:01 CNBC and says, he says like a bullshit line. He clearly has no idea what he's talking about. 4:06 Bitcoin is great. And then he says, and all this other stuff will be on Lightning and on these 4:10 other layer three protocols, which is a real quote from him. You know, this is just, you know, 4:16 Madison Avenue salesmanship, and this is not serious. The words don't actually mean anything. 4:20 So that's great. I mean, maybe that's a great idea, but. 4:24 Now this is perfect jumping off point for point number one. But first, before we get into our 4:29 Paul, give your kind of opening statements on how you view Lightning right now. 4:33 It's very difficult, but I'm going to try to give the audience some idea of where I'm coming from. 4:36 And I'm going to try not to repeat too much of what I said with Alice Gladstein. But yeah, 4:40 in 2015, I heard about the Lightning Network. I thought it was really big. Everyone was talking 4:45 about it both positively and negatively. There was a whole debate about it back then. But there was 4:50 this YouTube video describing what Lightning was from Joseph Poon and Tadge Dreiser, the inventors. 4:56 And it only ever had like 300 views, like over a year. So not a lot of people were actually 5:01 watching that. This is the first sign of trouble. And then I wrote some Lightning tech. I did this 5:07 peer-to-peer Oracle thing back in the day, and I wanted to see if you could do Hive Mindana, 5:12 which presented like a unique challenge. You want to do Lightning with this thing? 5:16 So I actually wrote some spec and some diagrams and technology involved using a Lightning network 5:22 on that. I think that was in 2016, a long time ago. So I was originally very excited about 5:28 Lightning. I thought doing SegWit and Lightning was a better idea than doing Drivechain back in 5:34 2015, 2016. I don't feel that way now. This is interesting because Drivechain was invented in 5:41 2015, right before Scaling 2. It was in November 2015. So I knew a lot about both. And over time, 5:50 I've learned more about both. And now I have flipped my opinion. And then over time, 5:55 it's just become more and more clear that the people who love Lightning know the least about 5:58 it, which is part of my point about the cult. And I guess the only real way to give people 6:04 some idea of what I'm talking about is there used to be this company called Theranos. 6:07 That was a scam blood company, but it was really, really big. It had this famous female founder. 6:13 There's a Netflix documentary about it that's really good, that I highly recommend. 6:17 It had all these people, like generals were on the... Henry Kissinger was on the board, 6:23 and there was photos with presidents and stuff. So it was incredibly prestigious, 6:27 and it was worth a lot of money. And of course, from the outside, it looked great. And from the 6:33 marketing department side, it looked great. But then the actual engineers working on the technology 6:37 knew it didn't work. One of them actually took his own life. He was a Stanford professor who 6:43 had quit Stanford to work for this biotech startup. And he couldn't live with the lack 6:49 of integrity, and he killed himself. And then there are other people. This is a fantastic story 6:55 that everyone should look into. But basically, they would do demonstrations where they'd bring 6:58 people in and have them prick their finger with the blood and put their blood in this little 7:03 machine. And then they would give them a tour of the facility. And while they were giving them a 7:07 tour, they'd have people from Theranos come in, take out the blood from the Theranos machine, 7:14 do blood tests on older traditional machines that had nothing to do with the technology they were 7:19 working on, the pre-existing Siemens machines. And then they would come back and present 7:24 as if this had been done by their own Theranos technology. So for example, when someone does 7:29 a Nostr, does a zap, and they click a lightning icon, that is fraud in a way, because it's very 7:36 likely that people are using a custodial app like Primal or something. And if it's custodial 7:42 to custodial, then zero lightning transactions have actually taken place and zero Bitcoin 7:47 transactions have taken place, especially if it's the same custodian. So when I hear stories 7:53 about people say, oh, lightning is great, and my friend used lightning last week, I don't know if 8:00 they really used the real lightning network or if they were just a gullible person who fell for the 8:05 fraud and fell for the demonstration of the machine. So that's just where I'm coming from, 8:10 and that's why I'm totally unfazed. In 2025, I just think, well, maybe this is one of your later 8:15 questions, like what would it take to change your mind? You can imagine like in the Theranos point 8:19 of view, you would want to see some kind of accountability for this mass lying that had 8:23 been going on, some kind of separation in the app of like, this is custodial, this is really using 8:29 the lightning network, this is really not, we are not going to bundle these things together anymore. 8:33 Or at least if we are going to do custodial, we're going to explain that you are not using 8:38 the Bitcoin network, you do not own any Bitcoin, you do not have your keys, not your coins, 8:42 you are not using, every custodial lightning is someone who is not using lightning. 8:47 So if that were made clear, then I would be, but now I don't even know, when someone says I use 8:51 lightning, I just freely assume that they are just being tricked. And I just, I don't believe that, 8:57 even though they say I have direct firsthand experience with lightning, I know that many of 9:01 them really do not. So it's just a tragedy that they think that they are having a great time on 9:06 lightning. And that does nothing to change the fundamental issues with it being unable to reach 9:10 8 billion people. So I'm sorry that went on for like more than two minutes. But the comparison, 9:15 and Theranos really was like a pretty big deal for a lot of reasons, right? But the comparison 9:19 between like Theranos and like people, how people implement lightning is a bit disingenuous, right? 9:24 Because like, you know, in those like meetings with investors where it was quite literally, 9:30 like this isn't like the crypto usage of fraud, it was like actual financial fraud, right? Like 9:34 investor fraud is what happened with Theranos, they would literally say it did one thing, 9:39 and then go backstage, and then have it all be done manually. This is like, like the worst case 9:45 scenario version of fraud. But like in the lightning case, specifically with the example of 9:49 Nasr, that's not really fraud, I do hear the frustration, right? Of like, people feel like 9:54 they're using lightning. But there's real reasons why various different like, you know, apps like 10:00 Primal or whatever have a, I think, more of a self custodial, like take on this, right? Like, 10:06 are you familiar with Stacker News? With Sorry, I didn't hear you said. 10:11 Stacker News. It's like a forum website that uses like lightning and you know, kind of like this 10:18 Nasr like zap idea, but it's more based on Reddit really is what it is. 10:22 Yeah. I thought it was pretty cool, but I haven't really been. 10:27 It's pretty cool. Yeah, yeah, yeah. It's a little bit, I think a little bit. 10:31 Network effects are tough. Network effects are really difficult. 10:34 They are. They actually, I think, hit like, started really running into like usage problems 10:40 after they rolled out a completely self custodial model for their lightning zapping stuff, right? So 10:45 like now when you get on there. Yeah. And so like, and this part of the problem is, yeah, 10:51 well, it's not, I think the highlight, you know, from a product standpoint, what actually happened 10:55 is there's like this new, you know, friction point, right? Like this, it's not really lightning 10:59 makes the whole thing bad. It's now in order for someone to use this website where basically before 11:04 you just go in, you log in with your Twitter profile. Now I have to like get my wallet, 11:08 somehow attach my wallet to this setup, my wallet, which is typically on my phone. Now, 11:12 this is like a huge friction point. As someone who's used lightning since the beginning, 11:15 this was like kind of annoying to me, you know, and I had like figured out how to like close a 11:18 little like window. Cause I don't want to deal with this. Right. And frankly, like, 11:23 yeah, yeah. I don't care. I didn't care about the self custodial aspect. I just didn't, 11:26 you know, I want to get on there and make my comments, you know, but that's not really like, 11:30 like fraud when it comes to the usage of lightning. This is just like one company's 11:34 a specific approach to how they brought self custodial lightning to their website. And 11:39 primal went about it a different way. Primal went about it. It sounds like where if you go from, 11:43 you know, primal user to primal user post or whatever interactions, it just does that in 11:47 house. Cause that's just way easier, way simpler. And I bet the primal team doesn't have the, 11:51 like the infrastructure or the team like in place to get like self custodial 11:56 zapping going. I'm not really a big nostril user. I don't know if you guys could tell, but. 12:02 Sure. But the thing is this is in the Theranos documentary. 12:06 Yeah. I'm specifically pointing out the parallel to Theranos being a little disingenuous, 12:10 just so it's clear. Yeah. I don't think that it is that disingenuous. I mean, 12:13 of course, no analogy is perfect. And I'm just trying to give people more of a, you know, 12:18 a first approximation of like where I'm coming from. But the Theranos people really thought, 12:24 you know, fake it till you make it. And they thought, sure, it doesn't work now, 12:28 but right around the corner, we're going to get it to work. Or many of them did. And that is what 12:34 people think with lightning also. They just think once we get timeout trees, once we get CTV, once 12:40 we switch from HTLCs to PTLCs, you know, once we do this, once we have op expire, they just think 12:47 it's right around the corner. And I don't think the Theranos people are quite, it was a huge fraud, 12:53 but I don't think it was the worst fraud ever. And this is again in the documentary, which is 12:58 like, you need an delusionally optimistic person to be an entrepreneur, to be a scientist or to be 13:04 anyone who wants to change things, an artist, you know, a musician, a performer. So you need 13:09 delusionally optimistic people in the world. And that that's in a way a good thing. So I actually 13:14 kind of think Theranos, I'm trying to say Theranos wasn't so bad. And I'm saying lightning's not so 13:18 good. And I'm saying they kind of overlap a little bit. And so this is just a reality of trying to 13:25 change the world that it's very difficult and that you are tempted to, for the good of the troops, 13:30 say one little white lie after another. And then after 10 years, it adds up to a massive delusion. 13:37 You know, let me, let me jump in for a sec, because I see both sides. Because there's 13:44 definitely the people who think that you'll be able to buy coffee on lightning, self-custodiality 13:49 is going to be super easy. And I think that's for anybody who has a brand that's pretty much dead, 13:55 or there's friction, like you said. And I've had that same experience with Stacker News, 13:59 where it's like, this was easy. Now it's not easy. And I'm not using Stacker News because of it. 14:04 It's interesting that you mentioned, Paul, that people who are more technical are not in the cult, 14:10 which to me speaks to, if you understand the hurdles, you're more clear-eyed. 14:16 So I guess the question might be, how technically feasible are overcoming the hurdles? And I think, 14:24 Harsha, you said at the outset that when it comes to the technical side, we push it about as far as 14:28 we can go. So it's kind of like, how fundamentally broken do we think lightning is to a scale to the 14:36 masses? How far along are we? Because then that can kind of hopefully illuminate the people who 14:42 still think that you'll be able to, you know, buy burgers and whatever on the lightning, 14:48 self-custodially. So I actually, I want to ask one question for Paul on this topic. I think that'll 14:55 help frame the conversation going forward. What is lightning's big problem currently? What is the 15:00 big issue currently with lightning, just so everyone's on the same page? Well, I think it has 15:04 quite a few problems, but one for me is that you need layer one bytes in order to join. And also, 15:11 you need, in order for it to remain secure, you need a very credible option. You need a very 15:16 credible ability to access L1 bytes. But there's not enough L1 bytes for 8 billion people. That's 15:22 the whole reason we're doing the whole scaling and layers thing. So it's just kind of a flat 15:27 contradiction to me that, so, and then the fact that that's what required to onboard people and 15:35 keep their usage in the non-custodial safe zone. As a result, it's misleading when people say, 15:43 oh, I joined the lightning network and it's been, I've been using my channel for a year and it's 15:47 been working great for me. Because that's not the point. That's already expected. The problem is 15:53 that we can't have 8 billion people do that. So I think the L2s, they will have their own network 16:00 effects and people are going to want to use some L2 that like their friends are on, their trading 16:05 partners are on, and they are not going to want to use one that only less than 1% of the earth's 16:11 population can use like in a given year, which would be the lightning network. I really think, 16:15 truthfully, though, I do think the bigger problem is the cult itself, that it's now impossible 16:20 to criticize lightning and it is impossible, you know, anyone who tries to tell the truth about 16:25 the lightning network is actually sort of shamed and tried to, dealt with it in an aggressive way. 16:33 This is, to me, this is all just further proof that it does not actually have the 16:37 the will to succeed. It is defensive and shallow. 16:44 Well, it sounds like if they're like the cult, right, which we have seems to defend it pretty 16:50 well. It sounds like there's a lot of people behind this technology, one way or another, 16:54 that that allows it to have some level of staying power, right? I guess, like, just to point that 16:58 out for just a second, which which is valuable when it comes to like surviving. Because really, 17:04 like, you know, for any product, really what you have to do is you have to survive as long as it 17:07 takes until you get your golden moment. That's when you thrive. It's really just like surviving 17:13 as long and as long as possible up until a luck moment. Investors call this the hockey stick, 17:17 you know, thing, right? It's just flat, flat, flat and then shoots. Right. But hasn't it been 17:21 10 years, though? It's been like seven, not even right, like beta, but like we left beta and like 17:28 what, 2018, 2019, something like that. The original idea was from 2015 and maybe, you know, 17:35 the network effects are a prison and also a kind of life support. They want creative destruction 17:41 also. Many, many, you know, many different ideas. And is success like onboarding the world? 17:50 Yeah, yeah. In particular? Yeah, it is. So, OK, onboarding the world. And so, you know, 17:55 maybe shrinking down that goal right before we onboard the world is we onboard a significant 18:00 portion of folks in general. Right. Yeah. Yeah. Do that. Whatever that looks like. So, 18:04 yeah. Call it 100 million. Right. Which is probably I think that someone's on the map 18:07 on this and I have in front of me, but I'm going to be very taxing on the Bitcoin network. Bitcoin 18:11 hasn't scaled to this amount either at all. Right. And I don't think lightning is a deep peg 18:15 for Bitcoin. So if Bitcoin hasn't scaled this amount, then lightning surely isn't. So I think 18:19 like for this conversation, it's not lightning has failed to onboard the masses. It is Bitcoin 18:24 has failed to entice the masses. I think that's a fair categorization. Correct. 18:29 Well, I would say that they are far more interrelated than that. Frequently, when 18:33 the price of Bitcoin goes up and it seems like we have a new wave, like a new era, 18:37 a new all time high, and then you get new people. This has happened to me many times 18:41 in my life as a Bitcoiner. The price will go up and then all kinds of friends will message you 18:46 and say they'll send you a text and they'll say, you know, you're into Bitcoin. The ideal thing 18:51 would be able to send them like five or ten dollars worth of Bitcoin, like immediately, 18:55 so that they can start playing with it. But you actually can't do that. 19:00 But that didn't happen this cycle, right? Like this cycle is different. It's like 19:04 I'm worried that we're going to decay. Yeah, that's a big concern of mine. I'm actually 19:11 worried that we the opportunity to actually cause a chain reaction of adoption is maybe we missed 19:17 the window of opportunity over the last 15 years. And now people have decided that they just 19:23 they're not going to have an open mind to this Bitcoin thing anymore. And it's just 19:27 a weird thing that governments and corporations do. And it's not for them. 19:33 Maybe or they're banking on Bitcoin going up again. Right. And instead of like, you know, 19:37 spending Bitcoin, they're just buying it on exchanges and these never moves from 19:41 these exchanges. That seems to me like what all my friends have been doing. 19:45 People are doing that. They will continue to do that, I think. 19:50 I think like my like what I'm what I'm calling out here is it seems like lightning's failures 19:54 aren't really lightning's failures, but rather like the concept of self-custody and Bitcoin's 19:58 failures, if not even Bitcoin's failures to attract more retail this way. Right. Which we don't have 20:03 insight into the difference between retail buyers and institutional buyers. I think like self-custody 20:08 as a whole, I don't want to say it's failed because that sucks quite a lot. But it certainly 20:13 is on the back foot. Right. With this recent wave of like industry news that we've been seeing, 20:19 self-custody is not winning. But that's not a lightning problem. Right. 20:23 I think it's well, part of it is that lightning makes it so much easier. It's so much more 20:27 enticing to trick people into going the custodial lightning route. So lightning actually competes 20:34 with the self-custody and makes it relatively look more difficult than it would normally be 20:38 if we had never invented the lightning network. We could just tell people, you know, this is what 20:43 you have to do. You have to run this node or you use Electrum and, you know, whatever, Electrum 20:50 will turn on and sync in, you know, two minutes. If we did that then, but instead everyone's 20:56 pushing the lightning network. So actually the lightning network is not only does it not work, 21:00 but it is like a virus that is like a zombie virus that people get flipped to the other side. 21:06 They leave really the Bitcoin team because lightning is aligned with not having self-custody. 21:14 When you show the lightning network, you're really shilling people not using Bitcoin. 21:21 And so that's, we have this parasite inside of the Bitcoin community that's robbing it of its 21:25 blood, all blobbing is energy and it's, you know, a brand and it's what would normally be the steps 21:31 that we would need to take to make Bitcoin a success. This is kind of like the Novocain that 21:35 just papers all this over and says, well, just, you know, just go on Oster and zap someone. And 21:41 then people have no idea, you know, this takes, this also makes it less likely that people will 21:46 be interested in taking a real engine. It's kind of like if you had, let me use a different 21:51 metaphor. Well, let's stick with the Theranos metaphor. Like let's say you're really interested 21:54 in blood testing from a young age, and this is an obsession of yours. You're, you know, 21:59 you're like 12 or 13 years old and you read all these books about blood and you're a really weird 22:03 guy or girl or whatever. And you're so excited and you hear about this company, Theranos, 22:10 and you're so inspired. And then you, you want to, you know, change the blood. Well, 22:16 what are you going to do when you, as you start to get older and you need like an internship or 22:19 you need, everyone's going to tell you to work for Theranos in that world. And then you're going to 22:23 show up to Theranos and you're going to realize that it's all fake. And it would be much better 22:30 off for the world if, much better off for the blood testing world if Theranos didn't exist at 22:36 all. So does that make any sense? This whole self-custody thing is a chicken and egg problem 22:41 to some extent. If more people were doing it, more people would talk about the problems, 22:45 more people would solve the problems. The whole thing would be a flywheel of success. 22:50 Instead, it's going the other way. More people are in denial about the problems in lightning. 22:54 More people are shilling fake lightning that's not real. And more people are driving away 23:00 any smart person who actually investigates the facts will be driven away by this reality. So 23:05 that's very unfortunate, I think. I don't, I don't think I really understood. I don't think I 23:11 understood. You said a couple of different things that seemed like they conflict. One thing in 23:15 particular you said is lighting tricks folks into like custodial solutions, right? And then later 23:20 you said people who get into like the lightning space as engineers or whatever, they dig into it 23:24 and find out it's fake. Are you talking about how most lightning usage really is like a custodial 23:29 setup instead of like a non-custodial setup or most lightning usage doesn't actually happen? Is 23:35 that what you're trying to say? I don't think I understood fully. Well, I was at in 2019, 23:40 but this has happened many times since. But, you know, I was in a big group of people and they 23:45 were all so excited about a new lightning wallet that came out and they're sending each other 23:50 10 Satoshis or four Satoshis or one Satoshi. And they're all they can talk about is how amazing 23:55 this is. And of course, while it is completely custodial, zero Bitcoin transactions, you can just 24:03 download the app, make an account and receive one Satoshi. Now, I know that that is not possible 24:09 because in order to join the lightning network, you need to open a channel with someone. You need 24:14 a L1 transaction, the funding transaction. You need to wait for it to confirm. But none of these 24:20 people know that. So this is the fake, you know, this is a fake world that people are getting 24:25 excited about. And now this is the thing that when Michael Saylor goes on CNBC and says this 24:30 will be solved by lightning and other layer three protocols and other whatever stuff that he's going 24:33 to say, he is now a participant in this delusion. And this is what will be disappointing to the 24:42 people who really want to scale Bitcoin. They'll think, well, actually, Bitcoin is just a fraud 24:46 because what gets what gets high on the totem pole is lightning, which is fake. And so that 24:51 little person, the new genius is 13, 14, 15. 24:56 We'll think, first of all, I got to get out of here because these people are all crazy and then they're going to think I'm going to have to my job now is going to be even more difficult, because if you want to do your blood testing company, not only do you have to do well on your own, but now you've got to compete with Theranos, which is tricking people. 25:09 So it's clear to me that the overall effect of the lightning network has been to make Bitcoin less likely to succeed. That is still the case today. This has been the case for a very long time. The fact that people think like we added Bitcoin to an exchange or that some people believe that they're using lightning, in many cases, a false belief, that all that is just making the whole situation worse, in my view. 25:36 OK, how do you feel about the increased usage from Cash App with lightning? What do you make of that? 25:43 I haven't. I've got I've reached such a point that I have to confess, you know, to the audience that I'm not familiar with that. But you can imagine why, hopefully, because remember, I wrote like my lightning limitations post back in like February, April 2022. 25:58 So this is like me saying that the blood machine doesn't really work. And so, you know, in the ensuing years, it's possible that one of two things have happened. One is that more people have been tricked and that they just don't realize that they've been tricked or that maybe everyone got their act together. 26:16 In which case, I don't know why the custodial Zaps are showing up as with a lightning icon and why they're referred to as Zaps, which would mislead people into thinking that they're lightning transactions. But it's possible that this Cash App data is unbelievably bullish for lightning. 26:31 It's also possible that it's very small. Numbers are very small. So 20 percent is just a small percent of a small number. I don't actually know. I have to say, you know, I throw myself at the mercy of the audience because I don't I don't because this is this isn't what matters to me anymore. 26:45 What matters to me is the lightning that we're going to stop lying to everyone. And the answer is probably no. 26:51 So I really I really want to tackle the lying thing for just a second because lightning has so many flaws. Don't get me wrong. Lightning has been caught up in so much like bullshit at the regulatory level. Right. And it's stuff that nobody knows about for some reason. 27:06 And it's stuff that, you know, like does stop up lightning. I would love to talk about it. But this comparison to Theranos, it like fundamentally breaks down in a couple different ways. 27:15 Let's talk about one way in particular. The Theranos thing was a complete fraud because fundamentally, like at an atomic level, there is not enough information in a drop of blood to be able to perform a thousand different tests. 27:30 That is like fundamentally that like just just, you know, you can't sample that. That's just not how that works. Right. And that was always going to be a failure with Theranos. With the lightning network, it's a very different problem. But fundamentally, this concept of using HTLCs and this like crazy Mexican standoff way to ensure unilateral exit where people can like, you know, route transactions through each other is fucking crazy and wild. 27:57 And it does work. Right. Like the crazy part. I think it's actually a good analogy to the blood density thing. Actually, let's let's talk about the HTLC for the intermediate nodes that need to use the HTLC to route if you have A, B and C. 28:14 The whole point of the lightning network was something like a six degrees of separation type of a thing where maybe you don't know your counterparty, but you guys both know someone along the route. These people use the HTLCs to route. This was the big invention. I'm glad you brought up HTLCs because HTLCs are the big thing that makes it the lightning network versus just the bidirectional payment channels that preexisted the lightning network. 28:41 So it's annoying when people say bidirectional. But anyways, the HTLC expands the size of the transaction by a certain amount. Yeah. So if you want to brought if the people on the other parts of the route try to scam you, the HTLC provides you a recourse. But the problem is the HTLC requires like a couple set up bytes. It requires a 32 byte hash. 29:05 Then you have to spend it. You have to spend that output later. So you have to have the preimage. You have to have selecting it. There's eight bytes for the value. So just to get this money back into your account, it consumes a certain number of bytes. 29:20 And a long time ago, in 2022, when I wrote my Lightning Limitations post, I have a whole section on the HTLCs. I don't remember the exact number, but it's something like at least 60 or 70 bytes. And it's possible to shrink a regular L1 Bitcoin transaction to something like, theoretically, I think you could get it down to like 92 bytes or something. 29:42 So actually, the reason I bring this up, like why do I bring this up? The HTLCs are the additional ink you would need to write to the blockchain. So the fee in the failure case, the fee you have to pay is comparable to what you paid to do an L1 transaction anyway. 30:01 So in a world where the L1 transaction, the fees are prohibitive for L1 transaction, they also are prohibitive for HTLC. So if the L1 fee rate is a $5 transaction, you can't use the HTLCs to do a $5 transaction. 30:15 What if I did 500 transactions over the lifespan of that channel? Would it not be worth it? 30:20 You cannot safely route a single payment. If the current fee rate is like $5 per L1 transaction, this is the rate that just comes from the usage. If it costs $5 to make an L1 transaction, you basically can't route safely an HTLC that's less than $5. So this is a fundamental problem with the HTLCs. 30:45 Yes, I can. It'll cost me my whole channel for sure, but if someone tries to rip me off or the channel fails— 30:51 If someone tries to rip you off, you'll be better off not having the HTLC because you could take them to court, so to speak. You drop it to L1. You will get the $4 payment or whatever it is out of the HTLC. But my point is by the time you're done with all that, it will have cost you $5 worth of L1 transaction fees. 31:11 So you'd actually be better off not enforcing the HTLC. You would be better off not enforcing the HTLC. But then you see without the HTLCs, the whole Lightning Network idea is kind of just a big smoke and mirrors, which is exactly what it is. 31:23 Wait, but the HTLC thing still stands, right? So you're talking about if a single small HTLC fails, right? And then let's say it's $0.01 and the cost for me to remediate this is $5. Fine, sure, totally. 31:36 Right. 31:37 But there's a cost. 31:38 Yeah. 31:39 But if it's a channel set up by them, they're the one paying that cost, not me, right? Because they set up the initial amount or whatever that they set aside in the multisig. That's how this whole thing works. 31:48 Yeah, you have a— 31:49 So I don't even pay the cost. 31:50 The intermediate person is routing from—let's say you have A, B, C, D, and you're B or something. 31:56 Your thing is you're taking the HTLC from—like Alice wants to pay Dave or however it is, and Dave is going to have a—I don't remember which one someone's going to create. Someone creates R and someone creates H. 32:15 And then the B and C nodes, what they will do is C will take their money from B, and they'll say, I have this money coming in from you, which is $0.01 on this HTLC. 32:29 And if it times out, then we'll just—but once we have the HTLC, we'll then update our channel balance and delete the HTLC. 32:36 So the HTLC is only for temporarily during the period when they have not yet updated to the final amounts because you don't want to just front someone the money. 32:45 I don't know if this is the best way of explaining this, but basically let's say—okay, Alice has—are we really going to do this with actual numbers? 32:52 Maybe we should. I don't know if it will be helpful or confusing to people. 32:56 If you think this is a real flaw, honestly, I think you should take this to the mailing list because people should talk about it and know about it. 33:02 But I don't think this is a flaw in the slightest because from my point of view, there isn't too much of a reason for someone to do this. 33:06 And if they were to do this, then other nodes would ban them, which probably happens because this is just gross abuse of channels. 33:12 And then lastly, if this does somehow escape how nodes police each other, and if this somehow does result in an actual griefing attack that is costless for the attacker, then why aren't we seeing this actually happen online? 33:25 Well, I think there are many griefing attacks. That's the issue is that ultimately the Lightning Network actually does rely on who you have chosen to open a channel with. 33:37 So at the end of the day, it does kind of rely on brand and reputation, and that's part of why it makes it not work. 33:44 It's not like a cypherpunk anonymous crypto thing. It is very much kind of a trusted brand type of a thing. 33:52 I think I just noticed the goalposts moving a little bit. 33:55 It's not, though. It's just that the HTLC part doesn't work. So it's why pretend that we're using HTLC. 34:02 But it clearly works. Like, I don't—it clearly works. 34:05 There's this thing called the dust limit in Lightning. 34:08 It's a Bitcoin thing. 34:10 Yeah, and when they do that in that case, they do not use the HTLC for exactly the reason that I mentioned. 34:16 But then they still call that Lightning. But in my opinion, now we're watering it all down. But this is an official part of it. 34:22 What are you referring to? 34:25 If you route a payment that is beneath the Lightning dust limit, which is different than the Bitcoin L1 dust limit, and it will not use it. 34:34 And it will not use. There will be an HTLC. There will be no hash. There will be no time lock. 34:38 There will be no additional output. So there is no HTLC. 34:42 And it's below the dust limit? 34:44 You send one stat over the Lightning network, you think someone makes an HTLC? They do not. 34:48 Yes, it's called updating the commitment. That's exactly what happens. 34:51 There's no HTLC. 34:53 The dust limit is a consensus thing, dog. Like, that's not a Bitcoin thing, right? 34:56 Like, you can get a transaction mined below the dust limit. It's totally fine. 35:00 I'm not talking about the L1 dust limit. I'm talking about the Lightning dust limit. 35:03 On the L1, you can have zero value output committed. 35:06 Yeah, totally. 35:08 You can send a single Satoshi over the Lightning network, and that'll be like... 35:12 I agree that it will look like that's what happened, but there was no HTLC. 35:17 So that's just part of my own view of the sort of delusion. 35:22 When you say HTLC, are you referring to all the metadata that is actually communicated back and forth in the roundtrip communication? 35:29 I'm talking about B and C have a transaction that spends... 35:33 The channel between B and C is a 2 of 2 multisig output on L1, right? 35:39 So let's say maybe they each have 5 Bitcoin in there. 35:45 Just for one second real quick, because the high-level explanation... 35:49 I'm sure you know this, right? 35:50 But the high-level explanations of how things work fundamentally are very different than how things actually work in the implementation. 35:57 Because we're talking about communicating bits of information to each other. 36:01 Things happen at specific times, and HTLC is not actually communicated. 36:05 That's not something that's actually going between two peers. 36:07 It's just specific little bits of information that allow each peer to create the HTLC if they needed to. 36:14 Just so the listeners and everyone kind of know this. 36:16 So when I say update commitment, I'm referring to a specific message that's sent between B and C. 36:24 And this also might be a little too deep in the weeds here for listeners. 36:27 And so happy to kind of move on. 36:29 And I do push back that one Satoshi does result in an update commitment message. 36:35 What would normally happen is they each have 5 BTC, B and C. 36:39 And then if A wants to pay D one Satoshi, then A and B have a transaction where they update. 36:48 Let's just assume that works perfectly for some reason. 36:50 B and C, they're going to take some steps where they make a – 36:55 B and C will say something like, I will pay five back to my own account, five to your key. 37:03 And I will pay – they'll change the five to like, you know, 4.9999. 37:08 And then they'll have one Satoshi go to this HTLC. 37:12 That will allow them to claim the one Satoshi from Alice in the event that C goes AWOL. 37:19 Now my point is that that is totally pointless for them to do because this third output uses more – 37:24 would use more L1 space if you actually had to broadcast it. 37:28 So you would regret ever having it in the first place. 37:31 You would prefer not to have it. 37:33 So you would just rather do something else, either wait for Alice to just give you the one Satoshi 37:39 or front the one Satoshi from B to C without any recourse going to the blockchain 37:45 because you don't have any, because it's not worth it to go to the blockchain for one Satoshi 37:50 when it is going to increase the size of all the stuff that you have to write on L1 37:54 to get your purchasing power back by, you know, whatever that was. 37:58 I don't remember the exact number. 37:59 It was like 75, 76 bytes or something. 38:02 Sure. So are you saying that this specific end scenario in this specific edge case 38:08 that results in a suboptimal, like, cost to you is a reason why Lightning is a failure? 38:14 Is that what you're saying? 38:15 It is not the number one reason. The number one reason is the onboarding bytes. 38:18 But this is a reason that says if the HTLCs will not work in an environment of high fees, 38:23 but yet people say the response to high fees is the Lightning network. 38:28 So that is a core contradiction. 38:30 But it does work in high fee situations. 38:33 Remember, this is a very specific – like, what if it's a payment that's a large payment? 38:38 Like, is this not all – 38:39 Yeah, in that case it would work better. 38:42 What if it's many payments of large payments? 38:45 Like, what I'm saying is it's a very specific end case. 38:49 The large payments, though, are more difficult to route, so they fail for a completely different reason. 38:54 Let's talk about an actual failure case in Lightning, right? 38:56 Here's something that Lightning is actually fucking fresh at, right? 38:58 And this is something that Carla is working on over at Chaincode and it's channel jamming, right? 39:02 Like, right now, if you have a Lightning node, you open yourself up to the possible of a griefing attack 39:07 because there are certain resources that can be constrained, 39:09 which is a number of HTLCs that you can fit in a given channel at a given moment, right? 39:14 That's a real problem with Lightning right now, and it's definitely a protocol limit, like, currently, right? 39:19 And I don't know what Carla's approach here is, and I assume that she's got a great one, 39:23 but that's a real issue here. 39:25 Like, maybe we should talk about that and how, like, you know – 39:27 We can. 39:28 But it's kind of, like, not worth it, though, because there are so many fundamental problems. 39:34 Any single fundamental problem will kill the project. 39:37 You know what I mean? 39:38 We haven't talked of a single fundamental problem. 39:40 You brought up an edge case of a specific failure case while ignoring all of the possible – 39:44 It's not an edge case, sir. 39:46 It is – I said whenever you want to pay below the L1 fee amount, which is – 39:50 that is potentially very high, and it's not a theoretical thing. 39:54 During the Ordinal's phenomenon, the L1 fee rate spiked, 39:56 and all of the legit Lightning channels, like, had to close or experienced some kind of disruption. 40:03 This is what pushed people further towards custodial Lightning, 40:06 and this is also what pushed a lot of the Lightning people to give up on Lightning 40:09 and switch to stuff, other stuff, ARK, Federman, whatever. 40:13 Because, like, this is – and that's what started Bitcoin Season 2, 40:16 which is, like, instead of – we're no longer just going to run the same playbook from 2015, 40:20 which is just Bitcoin plus Lightning. 40:23 We're going to do ZK rollups and all this other stuff. 40:26 So – 40:27 Okay. 40:28 So, like – 40:29 I don't agree with any of that that you said. 40:31 Let me amend what I said. 40:32 Yeah, another problem with Lightning is that it is this endless make-work program for developers. 40:39 They can collect the salary forever to fix the next tiny little screw. 40:43 The whole thing is not worth it because we have to complete the whole circuit of getting to 8 billion people, 40:48 and we don't want an endless – 40:50 So, there's more work to be done. 40:52 We have to get to 8 billion people, but it's also a make-work project. 40:54 I do want to talk about that for a second because that didn't make sense to me. 40:57 But let me amend what I said because I have to be pedantic, right, which is fair. 41:03 In the specific case where a transaction that I want to send might be lower than the on-chain fee, 41:09 that is currently the – like, the current cost – 41:11 which, by the way, it doesn't really matter what the current on-chain fee scenario is. 41:15 It's more about, like, how much I set aside, like, in the channel to begin with, 41:18 which is a problem in Lightning we should talk about, right? 41:21 That is an issue. 41:22 It is an issue. 41:23 It is partially solved with ephemeral anchors, 41:25 but, like, it will be just costly in general during any of these, like, exit situations, right? 41:31 That's just generally a problem with Lightning. 41:33 And we've had, like – 41:34 You get another different problem. 41:36 I'm so happy to talk about the problems. 41:39 You know, let's talk about them. 41:41 Those are valid issues to me. 41:42 But in this specific scenario, yes, it is suboptimal. 41:46 You don't lose money, but it's suboptimal to try and, like, do a justice transaction. 41:51 Right. 41:52 For your sub-transaction. 41:53 Right. 41:54 Sub-fee thing. 41:55 Exactly. 41:56 However, the cost of that justice transaction needs to be amortized over the course of the lifespan of that channel. 42:01 If I've had that channel for five years and it's routed thousands and thousands of transactions, 42:05 think of all the fees I've saved, right? 42:07 Yes, this justice TX cost me $5 this time, but, like, what about all the fees I saved? 42:12 Like, why are we ignoring that? 42:13 I disagree. 42:14 I think what you would actually – 42:15 The past is the past, so this is, like, the sunk cost fallacy. 42:18 What you actually want to do is compare, do I want to bother keeping the Lightning Channel open for how many – 42:24 how much future use do I – 42:26 so you would amortize it on all the future use. 42:28 But if you think you're going to get scammed on the very next transaction, 42:31 why wouldn't you get scammed on the very next 10 transactions in a row? 42:34 Why wouldn't you get scammed on all of them? 42:36 And why wouldn't you just say, I'm just going to close – 42:38 I'm going to cut my losses and close immediately? 42:41 So I kind of almost would flip that around. 42:43 If you know that somehow being able to broadcast to L1 would give you magical protection for two years, 42:50 then I would agree, but it does not. 42:52 You don't know. 42:53 You have to make your decision today on the very next – 42:56 the transaction you see right now. 42:57 If you – you don't even want to have the HTLC. 43:00 It would be a bug if they implemented the HTLC, which I think fortunately they have not. 43:05 It makes no difference to me either way. 43:07 It's just, like, one mistake or another. 43:09 So it doesn't even make any difference. 43:11 This is fundamental to the design of the HTLC, that it requires L1 bytes in order to work, 43:16 and the L1 transactions are actually pretty small. 43:19 That – this is not even a big – would you want to talk about the onboarding? 43:23 That's my number one thing. 43:24 Let's talk about the onboarding. 43:25 Okay, okay. 43:26 So, like, okay, I'm happy to talk about what I think is the biggest issue in Lightning, 43:29 which is not enough people support it. 43:31 That's, like, to me, the biggest problem, right? 43:33 Like, top – like, number one, right? 43:35 What are your thoughts on why people don't support Lightning? 43:37 I think it doesn't work, and they can tell that it's badly designed 43:40 and that it requires liveness. 43:43 It requires people to, like, connect to you and know your IP address. 43:47 I know they don't literally need to, but in practice it requires, like, a highly active connection. 43:52 You need to sign money in order to receive. 43:55 I think the user interface is – the user experience is bad because you have a hot wallet. 43:59 You must sign to receive money. 44:01 When you compare it to the way Bitcoin works, you can just post the address, 44:05 and then you can have your computer be off, and you can go on vacation, 44:08 and people can be sending you money, and it's very secure. 44:11 It's very – you know, it's cold storage, like, by default. 44:14 So I think these are reasons, and also in practice it's pretty – 44:17 Bitcoin is actually pretty fast. 44:18 It is not instant. 44:20 Whenever I send Bitcoin, I always find the blocks are so slow, slower than average. 44:25 Ten minutes, yeah. It ain't enough. 44:27 It's not instantaneous. 44:29 Like, yeah, the ten minutes in Bitcoin suck. 44:31 Like, the thing is most people don't even realize that their transactions take three days 44:34 to 90 days to settle in fiat land, but, like, it looks like it settles. 44:38 Right. 44:39 Okay, fair enough. 44:41 What, like – so what about the companies that are super bullish on anything Bitcoin, right? 44:44 Like, Swan, for example. 44:46 Swan is a super bullish company. 44:48 You'd assume that they'd implement lighting. 44:50 Why haven't they? 44:51 And they've got, like, Swan. 44:53 I think that Swan – I think that Corey is, like, a sociopath liar. 44:57 I've seen him lie many times about things for which it doesn't even make any sense 45:01 why you would lie about them, and they would be easily caught, et cetera. 45:04 So I don't – you know, I don't know what Swan is doing. 45:07 I know that Swan is some kind of beef with all kinds of people who are just funny 45:11 and just don't take themselves too seriously, which would include Eric and Udi and Jonsef 45:16 and all these other people that I like. 45:18 So I just assume that Swan is just, like, a deranged, insane place, and I – you know, 45:22 I don't know why they would do or not do any rational or irrational thing is – 45:28 you know, it's beyond my skill to perceive. 45:31 I have absolutely no idea why they would or would not implement lightning or anything else. 45:36 Okay. 45:37 Fair enough. 45:38 Like, personalities aside, right? 45:39 Like, personalities aside, I know exactly why Swan didn't implement lightning, right? 45:44 And they really wanted to. 45:45 They really, really wanted to. 45:47 See, in the U.S. – and I was also at Voltage as well, so I, like, help onboard tons and 45:52 tons of people to lightning. 45:53 In the U.S., in order for you to be in the flow of funds in any way, shape, or form, 45:56 you've got to be regulated, right? 45:58 Like, most people who have a Bitcoin node, they – like, they probably shouldn't be 46:03 posting Bitcoin transactions by themselves, but, you know, the SEC and all these state 46:08 empty, like, you know, banking divisions haven't gone around people up yet, so it's probably 46:12 fine. 46:13 But the way that the rules are written right now, if you interact with money, if you're 46:16 in the flow of funds and money, you've got to be regulated. 46:19 Being regulated is a BFD. 46:21 Oh, my God, right? 46:22 Our company is getting regulated right now, and it's a huge problem, right? 46:26 It really is. 46:28 I agree. 46:29 Like, if you – if you interact with lightning, that's a lot easier for you to get on the 46:34 regulator's radar, right? 46:35 It's not the most – it's not the worst thing in the world, but it is. 46:38 And typically, most of the, like, folks who want to integrate lightning, they probably 46:44 have, like, some level of exchange functionality, right? 46:48 SWAN is an exchange, kind of, but they're not regulated like an exchange. 46:52 They rely on partners who are actually regulated like exchanges. 46:56 The thing is, those partners, these custodians, they don't support lightning. 47:00 And because these custodians don't support lightning, SWAN can't support lightning. 47:05 That's the reason why SWAN couldn't support them. 47:07 Okay, fine. 47:08 Maybe SWAN is a terrible company that, you know, you personally described. 47:10 I know a lot of people don't feel super positively about them, right? 47:13 But what about Fold? 47:14 I mean, everyone loves Fold. 47:16 Fold is pretty much the exact same way, like, set up the exact same way. 47:19 And many, many other companies in our space operate in the exact same way. 47:22 Because here's the thing about these MTLs, about this licensing. 47:25 It's very costly to go about. 47:27 So unless you want to bankrupt your entire company, like, raising $3 million, $10 million 47:31 isn't enough to, like, get the MTLs for these, like, for this kind of business. 47:34 Money can't pay the license. 47:35 Yeah, exactly. 47:36 Yeah. 47:37 And then on top of that, you have to have, like, banking relationships and these compliance 47:39 folks, like, love to keep people out, you know? 47:41 It's a monopolist guild. 47:43 It's corrupt, of course. 47:44 That's part of my viewpoint. 47:46 No, for real. 47:48 This morning, we got our banking application rescinded from a big bank, right? 47:53 This is from their digital assets team, because we had assets that were too risky for them. 47:57 We only support Bitcoin. 47:59 Like, what are you talking about? 48:01 I mean, it's often a pretext. 48:03 It's often a lie, of course, also. 48:05 They say there's an X. 48:07 That sounds nice. 48:08 And really, it's a completely different reason. 48:10 So all these companies in this space are hyper-reliant on these custodians that have these relationships 48:15 already. 48:16 For a myriad of reasons, these custodians don't support Lightning. 48:18 It's not because Lightning is bad. 48:20 It's because these custodians are fucking falling apart. 48:23 Like, I can do an entire episode on that, how that world is going. 48:27 But they're falling apart, and it's really bad. 48:29 But is this what you mean by adoption? 48:31 Because what I'm talking about, the L1, I mean, you cannot physically join the Lightning 48:35 network without first acquiring some Bitcoin or opening a channel on L1 or doing some 48:40 extremely fancy and convoluted thing where someone opens a channel for you in, like, 48:45 a big batch or something. 48:46 There's just not enough space to actually join the Lightning network in the true non-custodial 48:53 Lightning network. 48:54 You cannot fit more than, like, 1% of the population of the Earth. 48:59 Let's fit 1% in. 49:01 I agree that 1% is better than 0%. 49:04 I would agree with that. 49:05 But I do think that, actually, it's something where we are all going to want to be using 49:10 the same thing in the end. 49:13 And so, if something maxes out at 1% and something else maxes out at 100%, then that second thing 49:20 is what should get more attention than the first thing. 49:25 Maybe. 49:26 Maybe. 49:27 Maybe. 49:28 Genuinely, maybe. 49:29 But, listen, something I've learned in my, like, career in tech as a whole is, frankly, 49:35 tech means nothing, right? 49:37 It only gets you so far in terms of, like, how excited people get over it. 49:41 After a certain point, you get to the moon through hype and marketing alone, right? 49:46 Like, that might be the cult that you're describing, because Lightning is very much in the, like, 49:50 hype and marketing phase, right, where the tech has plateaued. 49:53 Like, tech is cool. 49:54 It's not going to onboard, like, 8 million people or whatever this population is right now, you know? 49:59 But it's going to onboard a significant amount, and we've got to do a lot of things to get 50:02 to where we need to go. 50:04 That's not a bad thing. 50:05 That's a necessity to get anywhere, right? 50:08 Like, that's just the truth of it. 50:09 Right now, I'm, we're a custodian, we're a Bitcoin custodian, and we're going against 50:13 behemoths that have literally billions of dollars in funding, and our edge, we don't 50:17 need to get billions of dollars in funding. 50:19 Our edge is purely just going to be hype and marketing, right? 50:21 Our tech is great. 50:22 It's phenomenal, but that's not even the focus of our company anymore, you know? 50:26 We have good stuff, but we've got to do a lot of things to get to where we need to go. 50:30 We have good stuff, and I hope to, like, you know, like, slip pills of self-custody 50:34 to people's food without them realizing, but, like, they don't give a shit about 50:37 self-custody. Let's just be roms here, you know? 50:39 They don't care. So my goal is just from a, like, hype standpoint. 50:42 And so, like, I guess toward that point, like, Lightning does well because of the 50:47 cults, right? 50:48 Like, it seems like the folks that you're talking about are, like, the Nostr Twitter 50:51 people who scream loudly without understanding. 50:54 Yeah, I call them the NGU people, right? 50:56 But that's, like, LinkedIn and Bitcoin, too. 50:59 They're going to take this stuff to the next level and they're going to keep this stuff 51:01 from dying when it's during, when there's a bear, you know? 51:04 So I am thankful to them, you know? 51:07 I mean, I hear what you're saying, but it does sound in a way like I showed up to a 51:10 Lightning debate and I just heard my opponent say tech means nothing and everything is 51:15 about hype. And that almost is almost like what I was hoping to convince the audience. 51:20 So, I mean, I'm happy that we agree that the Lightning tech does not work and that is 51:26 bullied by irrational hype. 51:28 But that's what I thought I would dare to say. 51:30 Wait, well, what about all the things I pointed out about all your callouts and stuff? 51:34 But, like, what about all that stuff? 51:36 Are we just going to take over all that? 51:38 Which callouts do we want to talk about? 51:40 I'll talk about whatever call you want. 51:41 Let me jump in. Let me jump in for a sec. 51:43 You guys are making my job easy. 51:44 We've been going for 15 minutes. 51:45 Let's pivot slightly. 51:48 Custody is a big topic through this. 51:51 I think I agree with Paul's argument that many people think they're using self-custodial 51:56 Lightning and they're really using ruggable, potentially Lightning. 51:59 That's true currently based on how much custodial Bitcoin is out there with Lightning. 52:03 And I'm not super technical, but people talk about the hub and spoke model of Lightning a 52:06 lot and which brings in LSPs. 52:08 So thinking forward to how we solve scaling Bitcoin through Lightning, how do we think 52:15 about LSPs? Because they're currently mostly centralized entities. 52:19 Is that a dangerous point of contention that we're giving so much power to a voltage? 52:25 Can these things be decentralized over time? 52:27 How do you guys see that point? 52:29 Well, I'm glad you asked about that, because at first, back in 2015, 2016, I was all in 52:36 favor of hub and spoke. 52:37 And I thought it doesn't matter because you have hub and spoke, but there will be, you 52:41 know, there'll be like a thousand hubs or something. 52:44 And most importantly, anyone will be able to create a hub. 52:47 And I thought we'd all be protected because I didn't understand the Lightning technology 52:51 back then as well as I understand it now. 52:54 I thought all of us are going to be protected by like HTLC, is going to be protected by 52:57 our own cryptography. 52:58 So we're always going to be able to get our money back. 53:01 And so I thought it doesn't matter at all hub and spoke. 53:04 And I thought, let's make it hub and spoke all the way. 53:06 You know, let's dial the efficiency, the economic efficiency, the technical efficiency, 53:11 the physics. Let's dial it all the way up, make whatever kind of crazy hub. 53:15 We'll make like a ring, like a galaxy of hubs, and then we'll all have spokes. 53:21 And I was all for that. 53:24 Now, I think it is a slightly different situation where what has happened is people have 53:28 kind of realized that the self custody is too difficult. 53:32 The HTLCs are not worth it. 53:34 You know, it's just better to just what gives you more product market fit is just 53:40 custodial. So it's almost like a red herring at this point. 53:44 It's like there is no hub and spoke. 53:46 Everyone just has an account, you know, whatever, a blue wallet or something. 53:50 I hate to, you know, I don't want to call anyone out or something, but I'm just saying 53:52 that it's like it doesn't work. 53:54 The bigger issue is just that it doesn't work. 53:56 So the hub and spoke doesn't make any difference. 54:00 It's just the whole thing is an illusion to me. 54:03 So it doesn't make any difference. 54:06 Yeah, I am worried about the hub and spoke thing, there are pros to it, right, because 54:10 frankly, the hubs are always really well maintained, well capitalized nodes. 54:15 And so there's a lot of upside to routing through them. 54:18 I always call it the super high way of lightning, right, to route through them. 54:21 Of course, there are downsides with that. 54:23 Yeah, it's not the greatest thing in the world, but also at the same time, the 54:27 services that a lot of these like nodes provide are super dope. 54:29 Like, honestly, like C equals, I'm not sure if they're still around, but their 54:33 services that they had were pretty awesome. 54:35 And we could connect like all sorts of cool stuff with them. 54:37 And plus a green wallet with Blockstream, their LSP is pretty dope, you know, because 54:40 I can basically have like a super lightweight, like lightning client, connect to 54:44 them. And I always thought that was super neat. 54:47 Yeah, I'm not like, it's just like a different pro and con set up, in my opinion. 54:51 You know, I like so on the custodial side, here's here's something that like, I don't 54:55 think people quite have like figured out just yet. 54:58 I'm happy to like spill the beans to any other custodians out there who want to beat 55:01 me to it. But like things like Spark and Arc and other like, you know, a setup similar 55:06 to this are actually really, really cool because you can have like this custodial 55:12 setup where there's no setup like necessary for the user, like keys are just on their 55:16 phone and it doesn't even really matter. 55:18 Things are driven by a centralized entity, call it whatever you want, a Spark organizer 55:22 or whatever they call it. But like, you know, each person has all the information on 55:27 their own device and they can unilaterally exit via lightning whenever they'd like. 55:31 I think that's a bee's knees, you know, like, yes, it's going through centralized like, 55:34 you know, hops, if you will, for incoming and outgoing. 55:37 But it's certainly more centralized or more better, more decentralized than than a 55:43 Postgres database. You know, I think that's pretty neat. 55:45 I think that's a, you can respond, Paul, but I think this will be the last question 55:49 and then we can go to closing thoughts. 55:50 I think it's important. 55:52 How can we get more self-custody? 55:54 And I do, I think it's a chicken and egg problem, as I've said. 55:58 So I do think, obviously, we want to ramp certain things up. 56:02 And when when that first person texts you and says, oh, you're into Bitcoin, the 56:07 Bitcoin price is going up, I keep hearing more about Bitcoin every day. 56:10 You want to be able to just like, whatever, send them, you know, a message, send them 56:14 whatever, send them five dollars worth of Bitcoin and they're not going to sink a 56:19 700 gigabyte node, you know, on day one. 56:24 That's incredibly stupid. 56:25 I'm not in favor of that. 56:27 So we do need custodial ramp up, independent of whether or not Lightning survives or 56:33 takes over is the number one thing. 56:34 It makes no difference. Lightning dies. 56:36 We need some kind of. 56:39 Ramping up of the commitment that people have and, you know, people are not going to 56:44 generate their own wallet by like rolling dice or shuffling cards, you know, on day 56:49 one. Although, again, we want that we want that option for the right, that easy option 56:54 for the whoever it is, you know, the big the big important Lightning user or Bitcoin 57:00 user or whoever someone is fleeing, you know, mainland China with all their money or 57:04 something or North Korea. 57:05 And we need them. They want you know, they don't know who they can trust. 57:08 So they want they want to build. 57:09 So we want so we want that. 57:11 However, I do think it the way the chicken and egg problem works, like an example I 57:16 bring up pretty often is that. 57:20 People have learned how to drive a car, you know, for a while and probably in the 57:24 future, people won't have to learn how to drive a car, you know, thanks to self-driving 57:28 technology, Waymo's, et cetera. 57:30 Right. Exactly. 57:31 Uber or whatever. So just like. 57:33 The elevators operate themselves in the past, you had to have the elevator operator 57:37 because people would, you know, get like, you know, cut in half or mangled by the 57:40 crazy. They wouldn't trust the elevator. 57:42 So you had a full time guy. Now, what I'm getting at, though, is driving a car is 57:45 actually really difficult. 57:46 And but. 57:48 The benefit was worth it, so and we built all this, these systems, the driver's 57:53 licenses and driver's ed, driver's education, you know, the learner's permit, we 57:59 built this huge thing because we're an ambitious society who wanted people to have 58:04 the autonomy of the car. 58:05 And, you know, it wasn't easy. 58:08 But it's not like the end of the world where there's a will, there's a way. 58:12 So I think this whole custody thing, we could make the software so that it is a 58:17 little bit easier for people to self-custody and we could make the expectation higher 58:22 and say, this is why you want to own your own Bitcoin, because you can't get rugged, 58:28 whereas it's only it's inevitable that people get. 58:31 So I don't see the world as like we show up on June 20, we wake up and there's a 58:38 certain level of demand for self-custody. 58:41 I don't see that as the situation that is the situation. 58:44 But I'm saying it's a function of what we do in the Bitcoin community. 58:49 Our job is to make it really easy for people to run their own node and roll their 58:53 own keys and have total control of their own money. 58:57 And our job is to make it as easy as possible. 59:00 And then that's what we should be hyping up. 59:02 We should be hyping, hey, with Bitcoin, you can do two or three multisig and what 59:09 can you do at your local bank? 59:10 The most you can do is put someone else like on the account and have like a one 59:13 of two between like you and your spouse or something. 59:18 That's pretty lame, but we have just two or three. 59:19 If you want to do a two or three escrow, you got to use like escrow.com or you got 59:23 to like hire lawyers or you got to like make an LLC or something, you know, but 59:28 Bitcoin, we can just do all that. 59:30 We can do five of seven multisig. 59:32 We could do three of nine or stuff like that. 59:35 So we got to hype up. 59:37 We got to make the technology easier to use, and that's what we have to hype up is 59:41 what makes Bitcoin different. 59:42 We say, well, listen, you know what? 59:44 On whatever it is, on Backpage or on Craigslist or whatever, or on various 59:49 messaging apps, you can't send you can't text someone money because of this cabal 59:56 that you mentioned before. 59:58 It's monopolist guilds and they're they're protectionist junk, 1:00:02 anti-competitive moat that they built. 1:00:04 But with Bitcoin, anyone you can just send an email or you can just send a text or 1:00:08 you can just send a QR code or whatever. 1:00:09 Anyone could send money. 1:00:11 There is no onboarding. 1:00:13 There is there is complete privacy. 1:00:14 So we want to show that type of thing. 1:00:16 That's what we want to do. 1:00:17 And that's what we should do is I'm trying to say. 1:00:21 So I don't think it's like not enough people out there want self custody. 1:00:26 It's like we are not making it easy for them. 1:00:28 We should. 1:00:29 But, you know, this is just one of the many mistakes we've been 1:00:32 making over the last 10 years. 1:00:35 You said, how do we how do we make like self custody better? 1:00:41 How do we get people excited about self custody? 1:00:42 How do we like bring it to the masses? 1:00:44 I'll tell you exactly how we do it. 1:00:45 Right. 1:00:46 As someone who's worked on getting Bitcoin in people's hands since 2015 and is like 1:00:52 deep in the swamp right now, there's basically two problems. 1:00:57 The first problem is moving the Bitcoin from the seller's hands, the custodian's 1:01:01 hands into the hands of the person who wants to get it. 1:01:05 This is largely solved one way or another by if not Lightning or ARK or a million 1:01:10 other non Bitcoin protocols, right? 1:01:12 With someone out there, it's relatively soft, right? 1:01:15 That's not the problem we should really be worried about. 1:01:17 The problem that we should really be worried about is, OK, we can 1:01:21 instantaneously, almost for free, move the funds from point A to point B. 1:01:24 Fine. 1:01:25 But the issue is the fiat system does not allow for instantaneous transactions. 1:01:31 OK, what this means is if you're in the middle, if you are giving someone Bitcoin 1:01:37 and getting fiat money, you have the opportunity to get rugged yourself 1:01:42 because the other person issued a chargeback. 1:01:44 This specific issue is why it's so difficult to get Bitcoin in the hands of 1:01:50 people, right? 1:01:51 People genuinely, most folks have no idea how big of an issue this is. 1:01:55 But those scammers and those like, you know, folks are always calling you. 1:01:59 They're they're destroying this industry. 1:02:01 And it's because of that specific part that makes like a complete instantaneous 1:02:05 Apple pay option really difficult to provide folks, even if you have all the 1:02:10 licenses. So the first like so the idea here in order for us to get self custody 1:02:15 in the hands of everyone is Bitcoin and stable coins or whatever end up being 1:02:19 such a good solution that it actually ends up pressuring fiat banking rail folks to 1:02:24 implement a completely instantaneous depositing option. 1:02:29 We have wires we have fed now. 1:02:31 They cost a lot. 1:02:33 Sixteen dollars and eighteen dollars respectively. 1:02:35 It's really expensive. 1:02:37 OK, and but there are no chargebacks with those options. 1:02:40 If we can push the fiat banking rails to get to a point where they have a sub five 1:02:45 dollar option, right, that is instantaneous, then we can get into a point where we can 1:02:50 actually start offering like completely self custody solutions with Apple pay that 1:02:55 are maybe a little bit subsidized by five dollars, but entirely reasonable for people 1:02:59 to get into that. 1:03:01 That world is what we want. 1:03:02 We want Bitcoin to like pressure, you know, rail banking. 1:03:05 So that fiat rail banking ends up like, you know, pushing that we need more people 1:03:09 get Bitcoin and their self custody solutions. 1:03:11 And it's easy. It doesn't matter to me if it's Bitcoin or lightning. 1:03:14 Honestly, I don't I don't give a shit or arc, you know, I don't care. 1:03:17 I want that end goal. 1:03:18 So do you think like a stable coins partly, I think were invented to fill that type of 1:03:23 a thing of like a fast fiat? 1:03:28 We'll see, I've got my own personal thoughts on stable coins, right, but I can't deny 1:03:32 the fact that they that they are like valuable for a lot of reasons that we can like 1:03:36 kind of rely on them for this. 1:03:37 Maybe the stable coins will become that like intermediary rail, right, in which case 1:03:41 phenomenal. But listen, I can't pay my rent in stable coins just yet. 1:03:44 You know, I certainly can't buy groceries with stable coins. 1:03:46 So we are not there yet. 1:03:48 You know, right now we're in this weird phase of banks issuing all their individual 1:03:51 stable coins, which reminds me of like the Confederacy or like the Articles of 1:03:56 Confederation, where every bank had their own notes. 1:03:58 And I'm not excited to see how this turns out personally. 1:04:04 OK, let's close, let's close on this question because we covered a shit ton and 1:04:11 there's a bunch of topics around CTV upgrades, you mentioned ARK and Spark, which 1:04:16 kind of speak Lightning. 1:04:20 In 2025, with all that's going on, all that we just covered, is Lightning worth 1:04:25 investing in or not? 1:04:27 Let's start with you, Harsha. 1:04:30 And as an investor, I think Lightning is at a pretty good time. 1:04:35 Yeah, like as a as a group trying to push Bitcoin forward. 1:04:40 Yes. So like we support Lightning at Magnolia, honestly, it wasn't difficult to if 1:04:45 I'm being completely real, you know, maybe it's because I've been working with it 1:04:47 for so long, but it was just spinning up a node and just like, you know, like having 1:04:51 a couple of protocols and procedures set up in our compliance docs. 1:04:53 It's not a difficult thing. 1:04:55 You know, if I really cared, I would like partner with Voltage. 1:04:58 There's so much infrastructure for Lightning now that supporting it and investing 1:05:01 time into it isn't difficult. 1:05:02 So it's just low cost at this point. 1:05:04 It's somehow it's it's genuinely easier than Bitcoin, which is very funny to me. 1:05:08 Which is very funny to me for a lot of reasons. 1:05:10 But yeah, I'd say, yeah, sure. 1:05:12 Invest in Lightning as a business, you know, hang out, have fun. 1:05:14 It's not going to solve any of your real problems you're going to run into as a 1:05:17 business in the Bitcoin world. 1:05:18 But, you know, have fun with it. 1:05:21 What about you, Paul? 1:05:23 Well, I don't think so. 1:05:24 I mean, I really I am I'm more of a pluralist, though, but I do think we should 1:05:27 try everything. So but actually, Lightning just gets so much more so much 1:05:32 disproportionate attention that it really shouldn't get. 1:05:37 And the only way to accurately reflect that state of affairs is to try to 1:05:41 emphasize people that they should. 1:05:44 Pace less attention to it, and so that's my point of view. 1:05:49 OK, so it's almost more like a ratio thing, from my view, there's definitely 1:05:52 Lightning is weird because it's it's been going for so long, it works kind of 1:05:57 depending on the use case, but people are like in two big camps. 1:06:00 There's like it's going to slowly die and it's going to be we're going to be on 1:06:04 roll ups or some L2 thing and you're going to use a bridge or it's the future. 1:06:09 That's like the two poles. 1:06:10 And they both fully believe that, which is wild. 1:06:17 Yeah, I mean, and a lot of the people who have studied Lightning, like Barack or 1:06:20 whatever, the guy who invented ARK, he crashed the Lightning network twice. 1:06:25 These are the people who say it will be something else. 1:06:27 And then the people who think Lightning is the future as an anonymous Twitter 1:06:31 account with no face and a fake name that joined in 2022. 1:06:38 So I got it. OK, cool. 1:06:42 Well, gentlemen, this has been this has been great. 1:06:43 Let's do quick closing thoughts. 1:06:45 Anything you want to leave with like a minute or two harsher, feel free. 1:06:51 Closing thoughts, dude, I think Lightning's like still pretty cool to work on. 1:06:54 I think people are doing some really cool stuff with it. 1:06:56 I think we're at a point right now where it's not really tech based. 1:06:59 Right. I think a lot of the issues with Lightning are really just like bubbling 1:07:03 down support for it, for the folks who actually really need it. 1:07:05 That's what we're trying to do. 1:07:06 We're trying to like bring this like Lightning banking integration, 1:07:09 which, by the way, no one does, not even Lightspark. 1:07:12 OK, like two other folks that they can actually onboard folks 1:07:16 with Lightning into Bitcoin. 1:07:18 That's that's to me like the missing ingredient here, you know, 1:07:21 and we're going to try and solve it. 1:07:22 We also support native Bitcoin, too. 1:07:24 And we've we've already had a significant amount of interest 1:07:27 in our Lightning offering, even though we're pre-operational. 1:07:29 So I'm pretty bullish. 1:07:32 All right, Paul. 1:07:34 I just think that, you know, Lightning, there's way too many moving pieces 1:07:38 constantly need new genius developers to come up with a new solution to this that. 1:07:45 You know, transaction pinning and et cetera, et cetera. 1:07:48 It's just basically not worth it at this point. 1:07:50 There are, you know, better ideas out there, 1:07:54 including but not limited to my own Drivechain idea. 1:07:59 But really, regardless of what happens with that, I think overall, 1:08:02 this was something that was a response to the large block. 1:08:07 Argument in the block size war, and it became a kind of political slogan 1:08:13 and that and it became irrational, and it has built up a giant cult 1:08:17 of people who are willing to defend it, who don't really understand what it is. 1:08:21 And meanwhile, the march of science has been proceeding in the background 1:08:25 and people should pay less attention to Lightning and more 1:08:29 more open minded about other things, which there are very many. 1:08:35 I think that that is what people should do. 1:08:37 So. That's my point of view. 1:08:41 All right, I think we can we can close it there, people in the comments, 1:08:45 if you're part of the cult, comment, if you're not comment, 1:08:48 we won't be able to stop them, you know, the cult in droves. 1:08:52 Yeah, hopefully this was helpful for people. 1:08:54 I definitely thought we stayed on track pretty well. 1:08:56 And this is super interesting. 1:08:57 So thank you, gentlemen, for coming on and debating Lightning. 1:09:02 Yeah, this is fun. I had fun. 1:09:04 So thanks for having us. Yeah, this is a good time. All right.