In this episode Yuriy Blokhin breaks down how the Lightning Network represents the values for distributed networks that core blockchain hacker communities support around the world. Though an employee of Bitfury, one of the largest companies in the world focused on developing solutions for the Bitcoin Blockchain, Yuriy develops partnerships that benefit the adoption of Lightening as an open-access secondary protocol on the blockchain that makes it more relevant for transactional data.
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Yuriy Blokhin 0:45
We’re back in the studio once again for the start well podcast. This is Qasim, the co founder, whatever you want to call me of start well in Toronto, Canada. And this time I’m joined in the studio with Yuri blocking. Who is the head of partnerships at I guess BitShares Lightning Network? Yeah. And sorry for mispronouncing your last name my.
Yuriy Blokhin 1:08
That’s the lead right Latin pronunciation. Okay, there. Yeah.
Yuriy Blokhin 1:12
And then the non Latin pronunciation. Block him for him. Okay, so Yuri blocking. Yeah, there you go.
Yuriy Blokhin 1:18
Yeah, that was perfect. Thank you.
Yuriy Blokhin 1:19
Um, so, you know, let’s just jump into it. I think there’s so much on this topic that, you know, our listeners and people in the world, of course, in general, are just, I think hungry to learn about in terms of, you know, Bitcoin blockchain, where there are problems with that connection of the two and and what’s ahead of us in the near future, and even the current state and who’s doing what in the scene to help advance the technology to make it more usable. I think that’s kind of a rough context for this conversation. But firstly, if you’d love to, I would love for you to introduce yourself. Just tell us a little bit about what you do.
Yuriy Blokhin 2:00
Yeah, thanks, Qasim. So I started in the tech industry about 10 years ago. And I guess my longest journey so far was a this chat app company called kick, which was started about eight years ago, in Waterloo, Ontario, and I was the first employee there. And you were the first employee? Yeah, employee number one. Yeah, I kick and I helped helped build the first versions of the backhand infrastructure, but eventually moved them to a variety of business development, product management roles. So I kind of have received this very kind of comprehensive tech startup education at Kik. And after that, and traveling the world. For a year and a half, I joined a bit of theory, just during this kind of latest cryptocurrency boom of the 2017, early 2018. And the reason I joined it was specifically to help help that theory build the Lightning Network, which is a way to scale. This kind of the biggest problem of Bitcoin that people make a lot of people have heard already about is this is the ability to send transactions efficiently, cost effectively and time, efficiently. And so Lightning Network was only publicly launched about like, four or five months ago. But it’s growing exponentially with a lot of very hardcore, high quality development talent, all around the world working in a very distributed fashion, there is no single point of failure in Lightning Network, there is no organization that kind of owns the project. It’s at the very least five major organizations around the world contributing like the bulk of the work. And then there are like 1000s of small independent hacker developers who are working, like on their own time. And like, it’s, it’s a very, very interesting community to be part of. So it really leaves up to the ethos of distributed work industry, bit of distributed development.
Yuriy Blokhin 3:59
And it seems like I mean, it definitely reflects from what you how you describe the Lightning Network, and it kind of reflects a lot of the ethos of open source culture and the whole, you know, January GPL, early days movement. Yeah,
Yuriy Blokhin 4:11
exactly. And with the blockchain development, it’s always important to keep in mind that there’s always this the technological work, but also there’s often there’s this kind of diplomatic work of navigating the ecosystem and understanding which groups of developers and organizations they stick to which kind of ethos and values and as in anything of value, there is usually a spectrum. And there are people who are diehard this and diehard minus this, and then there is a lot of people in the middle and you need to learn how to navigate first of all, you need to even understand where you stand. Yeah. And be able to defend that position. Understand that you cannot have it all and learn what matters to your organization and you as a developer or is a business person and stick to that and know where the what the trade offs are. Because that’s kind of a part of a good strategy, like knowing your trade offs and executing them.
Yuriy Blokhin 5:11
Well, especially in this wild west kind of mentality of like people writing the story of or the narrative of, you know, the future, every single minute and everyday right now in this whole world of blockchain and stuff. Um, let’s take a step back and let’s talk about Okay, so, you were at university, Waterloo, Waterloo that led into kick because it was a project born in kW, and yeah, the region which we call, you know, what is it Kitchener Waterloo?
Yuriy Blokhin 5:40
Yeah. Okay, KW region.
Yuriy Blokhin 5:41
So kW, kick kicked off. What’s interesting about I think about this relationship, or this, you know, connection of you working there and then coming into this world with visionary, I’m kind of guessing that that kicks use of was it kicks use of credits or tokens or, you know, payments? Did that inspire you to want to work in this stuff more was that even part of the chat messenger?
Yuriy Blokhin 6:11
When, when I was working at Kik, we’ve had multiple attempts to launch our own FinTech products within Kik. We’ve tried launching the first ever built in debit account for teenagers to have their like first bank within Kik. That was difficult due because of the regulations, then we tried building virtual currency that again, teenagers could earn, and by completing different tasks and watching ads, and they would be able to then redeem that virtual currency for various kinds of fit goods and services. Again, that worked to a certain degree, but uh, it’s only when the the latest cryptocurrency boom of the 2017 came over. And we saw the opportunity that came with that, that’s when it all came together. And at this point, I wasn’t that kick, I was already kind of living in South America, but uh, the team at kick has kind of really ran with that idea and launched a very successful Ico in 2017 raised $100 million dollars. And now they’re aiming to leverage them big audience within Kik, to become the most widely used cryptocurrency in the world, at least by current standards. And the division that they’re executing against is basically there is a gaping hole in the monetization landscape for social products, like unless your Facebook or Google affiliate company, you cannot really monetize through ads because neither you have data nor scale that could be of sufficient interest to any low meaningful advertisers. Right? Anyone Snapchat is struggling very desperately. What
Yuriy Blokhin 8:01
Snapchat? Yeah. Yeah, so I saw something random on my feed about like, new glasses, two new glasses from Snapchat, and I was like, yeah, one of those guys have been down. Okay.
Yuriy Blokhin 8:13
Even station giant is struggling to monetize what can be said about like smaller social services like Tumblr, SoundCloud, Kik, to that extent. So basically can the cryptocurrency by kik is an attempt to create a kind of the third force other than Facebook and Google and kind of create this kind of, quote, unquote, union, so to speak of social networks that can monetize help each other monetize the attention of not the attention, but the country valuable contributions of their members of their networks that then that can be then spanned within all the other resources? Yeah. So you can, for example, earn your kin by doing something useful, meaningful within kick, but then you can go spend it on a monthly subscription on Spotify, or on tipping your favorite rapper on SoundCloud?
Yuriy Blokhin 9:04
Well, that’s interesting. So activities can earn your currency,
Yuriy Blokhin 9:07
exactly, basically moving away from the attention based economy towards contribution based economy where if you create a popular piece of content, you should be rewarded for that. Not Facebook, not Google, but he was a creator. Yeah, and if you’re, if you’re a rapper, of course, it’s cool that you’re becoming famous by posting your track for free on Facebook or SoundCloud, but also it’d be nice if you could immediately monetize your audience episode and your brand in the middle.
Yuriy Blokhin 9:35
Oh, yeah. 100% this, I used to do stuff in the music industry. And one of the old school global music quote, unquote, global music, you know, artists that was here in Ontario for many years, recording awesome stuff under a brand, eco deck or name eco duck, poses something really kind of disheartening. I think it was last night on Facebook. I was like lying in bed about Lucy and it says messaging. And he was basically just railing against the music industry saying you know, There’s just I’m giving up, you know, I’m just burning my studio, if anyone wants some CDs or like, you know, recording equipment, just come and take it out of my dumpster, because he’s so fed up that like, you know, you pour your heart and your souls and artists into something. And then the industry is just been co opted in the last few years by, you know, I guess the new colonialists of the space that are that are making, making money off of the scale and not paying the margins that have existed not the middlemen, but the artists themselves and all that stuff. So, yeah, this, this kind of side to the story, even those young is interesting, and what can provide a better future for artists to monetize their content digitally?
Yuriy Blokhin 10:41
Yeah. So basically, the analogy from the brick and mortar world is, in a digital, we don’t really have a well defined way to have a mom and pop shop, like small digital business that doesn’t rely on like being a part of some chain or some big other thing that provides you scale. And obviously, there are all kinds of examples of such businesses. But there’s still this figuring out like, what’s the right way to do that. And it’s definitely hard to compete. If you have if you run a blog, for example, there is really no good way to monetize other than just ads. And again, what kind of scale Do you have if you’re on the popular blog? So there’s another start well, companies working on substack, where they are helping writers monetize directly their audiences and maintain their independence. And it doesn’t really, basically by now, there is maturity in the market, where people are willing to pay for quality content, if it is high value content,
Yuriy Blokhin 11:39
they just need the means of accessing that payment gateway. Yeah, this is the big promise of these digital payment systems, right is that like, fundamentally, you should be able to pay for anything in any way that you want. Instantly. And without the give the infrastructure, I think the infrastructure is what’s limiting a lot of transactional value being created. Yeah,
Yuriy Blokhin 12:00
it’s costly. With microtransactions. Currently, with the current credit card companies, there is not only a 3% fee, and give or take, but also there is a certain floor amount where you cannot go below that amount for each transaction. Yes, limits microtransactions. Right. Like with the work we’re done here, bit fury on Lightning Network, that’s what could unlock micro transactions, where fraction of a fraction of a fraction of a penny kind of transaction would still be possible, which opens up all kinds of new business use cases like per second, verification, like in payments, where if, for example, you’re taking a Spanish class on Skype and European on a per second basis, and if you’re you kind of need to run after a minute number seven, or if your teacher doesn’t work, you want to switch to the next one. You can just do that and kind of pay as you go basis. Same like with cell phone carriers, like eventually, we are going to arrive at a system where you would pay only on a per second basis just in time in real time, or you wouldn’t have to prepay.
Yuriy Blokhin 13:07
It’s interesting, especially even for businesses that that have regularized cash flow, or at least Yeah, I mean, to create cash flow is a stream, a live stream, as opposed to an I guess, for any company that doesn’t need to watch the ins and outs of their cash flow to make sure that the balance is set up. They’re not struggling, as soon as you’re more profitable, then, you know, then relying on on the money coming in to spend. It’s very interesting, if you could kind of pay not just bills, but any. Yeah, I guess, enact any transaction in the background as it’s needed, as opposed to action based transaction. Yeah.
Yuriy Blokhin 13:52
And it could be used as a way to get people hooked into service, and then some kind of guaranteed cash flow. methods would be still available to like save on scale, if you’re actually consistently using some service.
Yuriy Blokhin 14:09
It’s interesting. I think, in the last couple of years, we’ve, if you think about it, we’ve only just begun as a global society to think about digital payments in general, and subscription based digital payments. In the last, let’s call it like the new Netflix on demand generation of five, eight years. And it’s going crazy in the last three years with everything trying to be a subscription model, because I think the truth holds that people are more likely to commit to paying a smaller dollar value more regularly, then quite simply, you know, feeling like they’ve got to save up to pay for something in a cycle that they’re not used to thinking of like, most people don’t think in business terms of monthly or quarterly or annual reporting cycles.
Yuriy Blokhin 14:56
Yeah, and just also using only what pain the problem was. They actually use that becomes more and more the mentality, that desired mentality for people, obviously, not every service can be provided in such way. But that’s kind of the inspiration. And if you can compare it to almost like it’s a payment wave and wavelength right now for Netflix, it’s one month, but like as other services introduce different payment waves where it could be on daily basis, or per megabyte basis, or per second basis, it’s just like, almost like shortening the wavelength. And still having this kind of streaming payment mentality,
Yuriy Blokhin 15:33
right. And with the infrastructural development you’re talking about, I guess these sort of like, flexible or even AI driven payment models could emerge
Yuriy Blokhin 15:43
exactly machine to machine payments, that’s kind of the big opportunity that people in the Lightning Network aspire towards where these kind of microtransactions micro payments, it could be just cognitively quite taxing to do a lot of these on a personal basis. But what could be powerful as use cases where it’s machines negotiating with each other, or some kind of right away or prioritization of tasks, where cars and traffic, self driving cars and traffic could negotiate based on your preferences of how much you’re in a hurry? Or not, where they can negotiate right away and yielded to each other based on those preferences and like settlement using these kinds of microtransactions with each other, right? Same, yeah, like basically any any traffic, and not only car traffic, but any kind of like traffic in general as a concept. Problems. That’s where machine to machine settlement will become powerful use case,
Yuriy Blokhin 16:40
right? Even talking about, you know, bandwidth on the internet, at large, right? Yeah, yeah. The Open Internet,
Yuriy Blokhin 16:45
which would this this would be dicey question with net net net neutrality and work with such settlements, leaders were no longer a megabyte would be megabyte, but it could be basically negotiable based on the kind of services, right, and there are some very powerful companies in the world that would not want that, like Netflix.
Yuriy Blokhin 17:09
Yeah. Well, even Yeah, they’ve been fighting for years just to kind of get access to bandwidth on the networks that their customers are on.
Yuriy Blokhin 17:16
But ultimately, this could lead to the customer. It’s like if people could pay less for their Netflix or more for Netflix to get certain guaranteed quality, like printers, maybe that could be where the flexibility would be user friendly. But obviously, ideal, Netflix would still maintain the cheap price and still guarantee some kind of level of quality to this girl.
Yuriy Blokhin 17:46
The Tell me a little bit, let’s backtrack and just tell me, for myself, even for the listeners that don’t know much about the kind of, let’s call it the Bitcoin ecosystem. Let’s before we define the Lightning Network, because I think we’ve talked about it assuming a few things already. I want to backtrack and define it. But I also want to define, I guess bitchery as a company. Tell me personally about your entrance into that company. You know, after cake, you said you were down in South America, you can tell us what we’re doing in South America, if you like, and then what brought you to bitchery?
Yuriy Blokhin 18:28
Basically, at the end of my travels in South America also ended up in Estonia exactly during this the very height of the kind of Ico mania of 2017. And Estonia was one of the hotbed for crypto companies starting up and doing ICOs and launching businesses because of the very progressive and friendly government. Oh, really. And I ended up working with a couple of companies have that kind of one way that was cryptoexchange called mothership. Another one is called consensus which is an AI platform for governance right. And basically, as I was there, I was kind of getting deeper deeper into the this growing field and realize that boulder problems I see. Like most of them they reek of opportunism and mania, but lightning specifically seemed like so real so meaningful with its problem with the problem being solved like scalability of Bitcoin payments and turning Bitcoin and not right now bitcoin is basically just pure store of value and a speculative mechanism with lightning you can actually use Bitcoin for day to day payments and
Yuriy Blokhin 19:44
it is the problem with Bitcoin blockchain currently without lightning, the fact that the blockchain or new blocks get added or new records of transactions get added on with a timeline with like this. 10 minutes 10 minute, right time. Is that fundamentally the problem with using it for transactions? Well,
Yuriy Blokhin 20:03
it’s that plus the block size, right? So if it was either if it was faster, or if the block size was larger, and that’s kind of the great debate, the great scaling debate of 2017 was one group of miners wanted to increase the block size. So a lot more transactions could fit into that. Each block and kind of would solve the problem for like the next like, five years C, or the other group of miners wanted to kind of keep everything the way it is now and just build a Lightning Network on top of it. And that was there was a brutal political war in the ecosystem, which ended up in a split of Bitcoin. And one group of miners from China has established bitcoin cash. And that’s an interesting kind of self contradicting phenomenon and that people who have an incredible amount of value staked and in Bitcoin, they have forked Bitcoin and they use that money they earn using Bitcoin to fund the marketing around bitcoin cash.
Yuriy Blokhin 21:07
Yeah, a whole nother currency. And yeah, like, where’s your commitment to Yeah,
Yuriy Blokhin 21:11
and it’s almost there, like undermining what they’re kind of setting upon, on. And they’re kind of cash cow. But the other group of miners, the majority has prevailed, and maintained the block size, but introduced the necessary technical change called SegWit. That would allow for feasibility and implementation of lightning or the Lightning Network. So bit furia was one of these miners who were pro Lightning Network and pro segment and play a bit here played a huge political role in making sure that miners kind of reach consensus and move forward in the least damaging way for the ecosystem. So paint
Yuriy Blokhin 21:53
the picture of bit theories relevance, it sounds like they’re quite relevant, I’m guessing because of the size of the company, whatever that means. Maybe you can help define a little bit. Yeah. The theory.
Yuriy Blokhin 22:06
Yeah, it was started about eight years ago. And it’s, it was one of the very earliest Bitcoin mining hardware manufacturers. And eventually, a couple of Chinese manufacturers grew larger than Bitfury. But still at this point, but here is one of the largest ones in the world, with 500 employees around the world and offices in each continent with the HQ in Amsterdam.
Yuriy Blokhin 22:34
And so the core business is building machinery for mining. Yeah,
Yuriy Blokhin 22:38
yeah, yeah, that’s, that’s the core business. And there’s a large operation in Canada in Alberta. And the core product that the theory is selling is these pretty much like shipping container right in the middle inside of which there is mining hardware. So that you can actually ship your container to work wherever you need to get milk, wherever there is a better Yeah, to wherever there is a better opportunity to mine, aka cheaper electricity to a great city cooling. So like northern countries, obviously are very suitable. So Canada, Norway, Iceland.
Yuriy Blokhin 23:16
So why is it more profitable, or at least more of an attractive business model for a company like Bitfury, to create these, I guess, create the product for people mining, to buy then to just simply deploy that product internally with their own IP locked away in their own data centers or whatever, and not interrelate with people who want to be server side or whatever?
Yuriy Blokhin 23:45
Yeah. Well, one of the key characteristics of distributed blockchains is that you need the money, many people reaching many organizations reaching consensus independently from each other. If bit theory were to just optimize for their personal gain, then eventually it would become so large that it would undermine itself because it would no longer be a distributed network of participants. And you actually, if you are in it, for the long term, you will do want a large number of competing interests in the network because it only makes the network more secure and stronger.
Yuriy Blokhin 24:25
But that’s not to say that they’re not a bit visionary does mine as well. Yeah. Okay. So it finds itself it also creates hardware for other people to do so. Yeah. And does it use this same hardware that it sells? Yeah. Well, that’s great. That’s
Yuriy Blokhin 24:39
anybody just there’s a lineup to buy it. It’s
Yuriy Blokhin 24:42
okay. They can produce it fast enough.
Yuriy Blokhin 24:44
That’s interesting. Yeah.
Yuriy Blokhin 24:46
And then how does so then how does I guess Lightning Network from an internal sponsorship side of things? How is Bitfury kind of makeing Lightning Network?
Yuriy Blokhin 24:59
Yeah, so ideologically but Fury is a Bitcoin maximalist organization. And so what does that mean? Yeah, Bitcoin maximalist is basically, I need a t shirt that says that yeah, it’s a it’s this style of thinking and then blockchain community where it’s basically for a few years there was a maxim where people would say that’s like not blockchain, not Bitcoin, where they would pretty much position themselves as, as a person who really believes in the in distributed consensus technologies, but they’re not really sold that there is value in Bitcoin itself. While now there is a big counter movement, where, after hundreds of cryptocurrencies have been unleashed on into the ecosystem, and people tried and played with them all, it really there is a big reversal. Now happening where people actually really enjoy relative stability of Bitcoin. It’s how distributed its mining power, how all the checks and balances in the ecosystem, really make sure that the even large company like bit furia cannot really kind of just do whatever they want in the ecosystem, it really takes consensus to do anything. And for many, many participants, this is the appealing feature that is missing another cryptocurrency communities, which are extremely centralized, even Aetherium. If you’d look into it, it’s quite centralized. And if you go beyond Aetherium, it really is purely centralized, where people creating currencies also pretty much control all of the mining power around them. And so Bitcoin maximalist is a person or organization that actually really cherishes these properties of the Bitcoin community where a distributed consensus is not only on a technological level, but on the social level as well. On the development community level, there are like many types of distributed in this and like, I think they’re like, like, the last time I’ve heard they’re like seven or eight of them, there is like a list of different properties that could be distributed. And it’s like development distributed this mining distributed, financial distributed this in terms of how it could be exchanged into other currencies or fiat currencies. And basically a bitcoin is by far the most kind of distributed in the most robust and EcoSense ecosystem we have now. So that’s what bit theory believes, and continuously that like Bitcoin is still the king and all the numbers kind of prove that right now. And so obviously, the Lightning Network would be the most strategic investment imaginable for a bit of theory to make into the ecosystem, because right now, we have two use cases of store of value or speculation. With the Lightning Network, it would be actually possible to use Bitcoin as legit payment rails for day to day commerce online, offline, you name it.
Yuriy Blokhin 28:02
And this has been the missing link for the currency to become quote unquote, useful for customers of things. Yeah, purchasers of things.
Yuriy Blokhin 28:11
Because obviously, it can do that with other smaller currencies with much faster transaction times. But people don’t use those currency as the ubiquity is an issue. Yeah, and trust. Like for, for example, the bigger emerging use cases are coming from countries with hyperinflation, Venezuela, Turkey. I’m from Ukraine, and definitely see an opportunity where that could be also seen useful. But in those countries, even like people are naturally very suspicious of every entity organization trying to take advantage of them. And so bitcoin is really the only thing they trust. So interesting, because it is truly decentralized. Like they wouldn’t trust some more centrally formed and managed coin. Because who, who can like, even if those developers have the best intentions, but what if their work gets hacked? Right? If there is no true decentralization of mining power, then even the well intentioned people could really kind of let their customers be upset? Yeah, absolutely. Yeah.
Yuriy Blokhin 29:20
No, makes sense. And so then how I guess you started by saying that the project itself like the Lightning Network itself has so many contributors and participants in it that it plays into this ethos of being open and accessible and de risked is something to rely on. What are their second layer protocols? like lightning? Are there? Are there any specific ones that are that have reached as
Yuriy Blokhin 29:47
Yuriy Blokhin 31:42
kind of like, okay, okay,
Yuriy Blokhin 31:45
I get it. It’s simply a branding play of Lightning Network and lightning labs, it’s just you can include the word lightning in this same like with our project, that’s called lightning peach. Yeah. And it’s, again, it’s just lightning is such a strong marker. As a as a word, it lets any developer or any, anyone in the community know what you’re all about what you’re working on. So it just makes sense for current lightning projects to still use that word in their name.
Yuriy Blokhin 32:13
So tell me about peach, is it a wallet?
Yuriy Blokhin 32:15
It’s a product lineup. Basically, we have identified multiple consumer customer groups within the ecosystem, its merchants, its consumers, it’s a hub operators are like Node operators. And for each of those groups, we’re building products for consumers. Those are like user friendly wallets. Because right now, it’s really difficult to make a payment with lightning, it’s still pretty fragmented landscape with a lot of raw tools only available but nothing that polished. And then we’re also building tools for merchants to easily accept payments. And for hub operators, people who are actually interested in business of running lightning node and routing other people’s transactions and taking routing fees and kind of growing their income. Like we also are building tools to kind of make their work simpler in managing their lightning infrastructure. Because again, right now, it’s so very hacker centric and very optimized for deeply. Feeling Yeah, yeah. Like you. Like, if you want to run a lightning node, you need to really spend all your time in the console, executing commands, optimizing channels. Yeah. So basically, you need to be a developer, you really, there’s no other way around it. Right, right. And we’re trying to make, for example, the process of writing a lightning node, the lightning hub, accessible to anybody with some bitcoin, because that’s kind of the defining characteristic. If you have some bitcoin, you can invest it in a lightning node, and it will start earning some routing fees. In a way, it’s almost like an interest, right?
Yuriy Blokhin 33:55
It’s interesting. I mean, but the node as a service is also probably conceptually relevant, right? Yeah, absolutely. Because also like it to me, it doesn’t seem like a node, you need to you don’t need to have a node for each user
Yuriy Blokhin 34:10
each way right now. That’s how it’s defined the kind of architecture really, but evolutionary, I also agree with you that like it will probably for most users, they would rather sacrifice some of the security in exchange for usability. And then they wouldn’t run their own phone.
Yuriy Blokhin 34:30
If they trust if all the users on a node trust each other. Then they would be able to share the node right? Like a shopping mall. You know, if real world context, all the shops in the shopping mall, trust that the shopping mall will bring them the customers. Yeah, so they all share the resources of the shopping mall as opposed to being their independent shops on the high street.
Yuriy Blokhin 34:52
Yeah. And similarly, consumers who want to use lightning wallets on their mobile phones and Don’t want to kind of the headache of making sure that their lightning node is always online, which it’s not even feasible. You can’t even with the if you want to take care of that, like it’s just not really feasible on the mobile phone.
Yuriy Blokhin 35:12
Well, for me, I remember I mean, this, this harkens back to the the web server days of like the 90s, where it’s like, everyone who had a website literally had a patchy server running on a box that was connected to an in Canada, we were lucky, because we had DSL that that early. But we had all these servers, everyone, you go into a shop, and they have like, their website is being powered on a computer in the back in the corner, you know? Yeah. But yeah, it’s a headache.
Yuriy Blokhin 35:38
analogy, it’s exactly where we’re at now. And there will be evolutionary specialization is just here, what’s a little bit different as the ecosystem is so obsessed with security, for good reasons, because we’re dealing with money now, right? That there would be some cultural resistance as well to kind of outsourcing of psychedelic slash pieces of infrastructure into the cloud. But again, it’s like ultimately, consumers will vote and for like, from all my experience in product management and user experience, people do sacrifice their convenience for a little bit of security. And it’s a matter of helping people make the best possible trade offs, and be also very explicit about when trade offs are being made. And always leave in your product, a way for them to kind of tighten up the security and kind of if, for example, step one kind of default is to kind of use node in the cloud, there should always be an advanced setting where they can Loki opt out of cloud and run my own node, right? Yeah. Even for this, even if it means certain negative consequences, UX wise,
Yuriy Blokhin 36:51
what do you think about this idea of kind of pushing adoption of using the Bitcoin Blockchain as you know, a transactional layer for day to day purchases? What do you think about this idea of jumping in and out of currencies? And what I see is really interesting is most people the the biggest ubiquitous, almost, currency LIS means of paying for anything in people’s minds, conceptually, is Visa, MasterCard, or their credit cards. Most people don’t think of currency if they know they can pay with something. Which I find really interesting, like, especially global citizens, you know, like, you know, the approximate cost of something, because in your head, you work out the exchange rate. But you’re not really putting the card into make a payment in a terminal and saying, Oh, this isn’t my currency is actually so much money, I’m not going to do it. You just do it, because he’s tapping you pay. So to that end, what I guess what are your expectations of the first rollouts of real world shops using this technology? How would it work from the customer standpoint, from the customer experience? Would they be able to like pay over lightning? By buying in the background Bitcoin for the transaction with a Visa card? Is that overly complicated? does that solve any problems?
Yuriy Blokhin 38:17
I think first rollouts will involve a POS solutions, where merchants will simply be able to use their smartphone to accept Sure. payments without any card being involved. Yeah. And it will be some QR code that merchant and customer can exchange and kind of do a direct peer to peer transaction. I think right now, on the consumer side of things, there’s a lot of excitement to simply be unable to spend Bitcoin on real goods and services, especially with the market being relatively depressed. And so you’re saying you’re talking about the people who are holding the coin right now who already have already have Bitcoin. And even in countries with the hyperinflation where a lot of people are using Bitcoin as a way to store and preserve their savings, they still would need to spend, spend it somehow kind of get their vital goods and services. And if in those countries, people with like cheaper Android devices would be able to start taking payments, like merchant street vendors, would be able to take lightning payments. That’s where we see a lot of opportunity for peer to peer Commerce on the street level. To law, some of those that would be aware like no cards, like basically we’re talking about places where like a lot of people are unbanked still, there’s like 2 billion people in the world who don’t have a bank account. And that’s a big problem. The World Bank is actively fighting with and that’s where we do see a lot of potential for lightning payments, kind of it has it has happened already a few times this pattern where there is some technology that really changes the game and The Western world and then the next iteration of that technology, kind of what becomes the more popular way to do it, like with the internet with access to the internet desktop is how most people access the internet here in the West. But in mobile, that’s how most people in the world have actually accessed internet for the first time. Right. And when I travel the world, I will I’m always amazed that like, say, in rural Peru, I have a data plan that is a lot cheaper and a lot faster than here in Canada. Right? It’s hilarious. Yeah, like people are just gathering all the time. Because it’s just like, so affordable. And so the speed speed of accident also very
Yuriy Blokhin 40:41
high. Yeah, we pay like the most, I think one of the highest rates in the world. Garabandal. Yeah. It’s the worst. It’s terrible. Absolutely. It’s owned by four companies. And it’s a joke.
Yuriy Blokhin 40:51
Yeah. And so I think it will happen with banking as well, where, instead of fighting to get people in rural Peru to start using mega bank accounts, I think it will be actual lightning payments and peer to peer commerce. That will be how they would access banking system for the first time.
Yuriy Blokhin 41:08
I would think so. You know, it’s funny, I had lunch with a filmmaker friend of mine, who’s in town from the UK. You know, showing a film at TIFF, the film festival here? Just Yes, I think it was yesterday or day before. And he was showing me this card. And it kind of brought up this this interesting anecdote, you know, that I have from last couple of weeks, right? In Canada. This is just a classic Canadian thing, I don’t know. But like Canadians, like feeling like whatever the infrastructure is, in whatever system that they’re using, it was created for a reason. And let’s just put our faith into it. And we’re very kind of risk adverse in that way. And societally, I think, and it could be this quasi socialist thing where we’re kind of feeling like, yeah, we’re all in this together. So whoever is giving us the stuff to buy, you know, they’re doing it because they’re good, guys.
Yuriy Blokhin 42:00
Yeah, we’re given the benefit of the doubt. Yeah. So like, ever trusts
Yuriy Blokhin 42:03
the banks implicitly to be creating, they don’t see banks is, you know, businesses that have created products to maximize profitability off of your money, you know, they see them as these lovely, you know, arbitrary stores of your capital that will help you make more money somehow. And they just leave it at that, and they don’t think deeper. So I went through this weird thing where we were looking for, quite simply, you know, a card that I could use that I could top up to give at reception for our staff here at stairwell King west, to use for petty cash, essentially, to run out to cross the road to buy milk for the cafe’s for stocks run lower this sort of thing, you know, our little present for a member, if it’s their birthday, something like that. And I was like, you know, now that we’re moving into this cashless society, I could give them every week, a few $100 at the front desk, but then they’re dealing with change, and then they want to like account for the difference in the transactions. And I just want a paper trail of transactions. So my accountant is happy that this is where you spent the money on. And I want a means of payment, that’s flexible, and that can be handed off between people. So collaboratively, they can own the petty cash between all of our stuff. So of course, my natural tendency is to go first to the bank, I go to the bank. And I say, Hi, we’re customers of RBC. And we know that, you know, you guys have RBC ventures, and you have all of these different innovative groups that you’re trying to seed within your organization. And hopefully, your products reflect that. So how do you help me with this? I just want a card I can top up essentially, it could be a Visa debit card. Now, of course, they don’t have Visa debit, because only certain banks have Visa debit and, and so that was shot down with that idea. And then there was no matter what type of solution I was, as a customer trying to hack out of their product offering, they had no answers. For me. The problem was still, that anyone who is using any product from the bank has to be the owner or an authorized signature on that product. So the bank, as a policy, wouldn’t even give me a debit card if they knew that I was going to give it to someone else to use, which I thought was archaic, Machiavellian, stupid, because it’s my money. And I could spend it how I want, right? This is classic, kind of like I’m a crypto guy, it turns out because I rail against this kind of
Yuriy Blokhin 44:30
limit. And banks are held to very strict regulations from like FINTRAC and others,
Yuriy Blokhin 44:36
but it’s stupid, because if I had the cash and get the cash, anyone I want it cash is cash. And people have forgotten that in the last few years that as we move away from a cat or move into this cashless society, that we are giving up control of our own money to the institutions that we just implicitly trust. And so, as a small business owner, I was hitting my head against the wall thinking now how do I simply give these guys a card? And there’s all these products I found out as I started Googling, that are not available here. Of course, they’re in these emerging markets and in Europe, particularly, where you know, perhaps the regulations are less tight or maybe there’s the other side to the coin. The entrepreneurs working in financial services are a little bit I don’t give a fuck kind of mentality saying fuck it, we’re going to create some cool shit that we know people want. Yeah, ask forgiveness, not permission. Exactly. And this is this whole, you know, ethos that that’s reflected on stages all over the time. Now, when you go to these blockchain conferences, and everyone’s kind of saying, Look, just just build some shit, see if people want to use it, because the regulator is probably 10 years behind you anywhere. So now, okay, maybe the Revenue Authority is going to catch on to you, when you file your taxes improperly. And then you know, you’ll get in some, some problems. But this simple little simple problem of me wanting a card that I can top up just simply to replace cash. I have not been able to find a solution, except for which is so weird. And it’s still under my name personally. And I’m still not legally probably allowed to give this card to anyone. MasterCard through like Citibank or something that I got, that’s called a quote, unquote, securitized card. Now, it’s a product for people who don’t have good credit. And that’s the way they market it. And there’s only thing online I could find is accessible in Canada, where essentially, you have to top it up, because they won’t give you any credit. So they’re literally giving you a card that you have to securitize to spend the Security money on. And then what they’re giving you the credit on is they’re betting on you paying back that security to keep essentially just using the car, because you can’t use it for more than what you’ve put on it. And I thought it was so ridiculous that we’ve got this over architected solution is the worst resort. And I was talking to Jay from the UK about this as we’re sitting having lunch the other day. And he was laughing at me and he pulls out this card from his his wallet. And you know, I got a he got it in the UK. And it’s just like top up culture in the UK is huge, right? And it started with mobile phones. This prepaid versus postpaid question is not even a question and most of the world. But yeah, he basically just had gone into a shop in a high street and bought a top of card. And literally using any other means of payment through a website, you could top it up. And he can use it as a MasterCard, I believe it’s still a MasterCard transaction, but you use it everywhere to pay for. So all that long winded story to say, there’s so much opportunity to innovate in the sector, in a way that’s making things usable and making people’s money, actually, more liquid.
Yuriy Blokhin 47:50
And that’s happening already. I think. Like the way I look over the last 10 years, we went through this, like big wave of social media innovation, as most of the younger entrepreneurs were in their 20s. And those were the kind of things that they pursued now that as like this kind of generation of entrepreneurs are getting into their like, mid 30s. It’s like financial and fintech products that are kind of the most popular, I wouldn’t be surprised if in a few few years, there’ll be a big wave of educational technology and health technology, right?
Yuriy Blokhin 48:24
That’s a big one really taken over. And again, in Canada, that’s another one where the bureaucracy and the oligarchies have kind of really locked down the technical the ownership of the technical backends of our healthcare industry, TELUS health, they’re doing some cool stuff to try and like, see new innovations, companies like right health, who we’re affiliated with are doing awesome stuff to transform the retail experience, or I should say, the customer experience of a family practice. They’re opening up these really cool experience centers as family practices, but hand in hand with TELUS health and TELUS ventures, I think, but you still look at all the legacy software that doesn’t talk to each other that is locked up in licensing fees that the hospitals use, and their systems go down literally, every single day. Like, how can you have a hospital? Yeah, a hospital where they can’t access the EMR. You have a doctor who seeing a patient, and they cannot look at the patient’s history to find out what is actually going on. And who did they see as a specialist last week, you know, this is unacceptable
Yuriy Blokhin 49:28
patient data. That’s that’s a big use case for blockchain technology. One of the projects with bit theories and moulden is in genetics where either like people’s DNA could be potentially put and secure, Blockchain based network and why would people do that is that on the one hand, they would be able to fully control who can access their DNA and for example of certain health care services providers want to access their DNA to like to recommend a highly personalized treatment or solution, they can make that explicit decision. But on the other hand, they can also monetize their DNA. Because right now there is a big problem and how to do research efficiently and how to get people of different profiles to provide data for genetic research, for new medicine research. And that’s how people can monetize their DNA as well. And this triangle of research companies and healthcare service providers and people who can really accelerate and increase quality of healthcare services.
Yuriy Blokhin 50:38
Yeah, it’s interesting. I mean, now this gets into that whole big Singularity University to have like, in a couple of years, you know, someone in real will be able to, you know, license your kidneys, like architecture, yeah. And 3d printed and save a life. So it’s quite exciting times. No, I agree this, there’s so much on this topic to keep talking about. And I think we’ll, we’ll Park it here, because I think we’ll pick this up. And we’ll also make a live recording of the session that we’re going to do in person. For the start, we’ll have speaker series in October, which I believe is October 11, that we’re scheduled to do it. For any listeners that want to come and hear more about second layer, protocols, and specifically the Lightning Network and everything that Yuri and his team are working on to do with peach and the open sourcing of this stuff, and how they can get involved. You know, absolutely come to that event. It’s here at start walking west at 786 King Street West in Toronto. And there’s tickets on our website is just in Eventbrite as well, that you can find, and actually leading up to that, I mean, that’s still a month away. But is there anything that you would want to add? Anything that you’re looking for? Are you guys hiring? Are you looking to meet specific partners? Yeah,
Yuriy Blokhin 51:56
basically, what we’re currently very focused on is getting real stories out in the world of people and merchants vendors using Lightning Network to accept payments. So if you deliver a product or a service online offline, and are curious about trying out accepting lightning, network payments and accept Bitcoin from your customers will be very interested in working together and helping you with getting those payments up and running on your website or in your terminal whatever you’re using. So I
Yuriy Blokhin 52:28
think we should start with start well, yeah, before that talk, I think we should build a case study in the next month if we can. So let’s let’s do it.
Yuriy Blokhin 52:35
It shouldn’t be a very easy nice Okay,
Yuriy Blokhin 52:37
so all the listeners come to that event you’ll be able to see how someone namely us start well, co working and club membership venue in you know, Toronto was able to create and hopefully earn some money through you know, Bitcoin using using Lightning. Cool. Anything else to add before we wrap up?
Yuriy Blokhin 52:58
No, thank you for a time Qasim and thanks for waiting.
Yuriy Blokhin 53:02
It’s been an absolute pleasure. It’s always nice to bring our members on the mic. And, you know, opening stories all right.