← Built on Bitcoin with Jacob Brown
Built on Bitcoin with Jacob Brown
Bitcoin's Hidden Banking Rails: Harsha Goli on Magnolia, Stablecoins, and Compliance
01:04:24
Loading summary
Transcript74 lines
- [00:00]
A
All right, Boom. We are in the pod. Just like that. Harsha, welcome back for round two. How are you doing?
- [00:07]
B
Quite well. Doing quite well. How about yourself?
- [00:10]
A
I am fantastic. Things are. Things are exciting. Although we're just joking about off camera. Like, somehow LinkedIn is like the alpha now and X is so dead that bitcoin Twitter just looks like no one's doing anything right now.
- [00:26]
B
You can get thousands of impressions on LinkedIn right now. It's. It truly is the new alpha. My gosh. I think I made a tweet the other day and I got maybe like 187, like, impressions on it. Not even interactions. I don't know about X anymore. I don't.
- [00:39]
A
It's bad. It's bad. Nikita, get your shit together. But the alpha starting off, starting off big. LinkedIn is the alpha. Okay, so I want to jump in. So we, you know, actually been on the pod two times before. The first one was actually almost exactly a year ago, January 24th of last year. And we nerded out about compliance, which super typically boring topic. You brought the heat and dropped gems for like an hour. So appreciate that. And then like six months later, lightning debates were going crazy. You spent a lot of time on lightning. So there is a lightning debate between you and Paul Sports out there if people want to go watch it. We didn't talk about Magnolia much though, and that's what I want to do in a lot of this episode. But first, I want to touch on one thing about compliance, which is during that episode, you said to the effect that most bitcoin companies operate in a gray area or they're just outright not compliant and they're just waiting to get caught. Like, you know, they're small enough to not be on the target, but they're clearly in the wrong. So. So a year later, is that still roughly the case or, like, what's. What's the kind of pulse on the average bitcoin company being compliant today?
- [01:55]
B
Yeah. So great question, by the way. It's been a year since, like, since I last said that, and things have changed, right? Like, it's been a year for all these different companies themselves. I was actually curious about some companies that actually raised, like, quite a lot of Money earlier in 2025, but not enough to make, like, you know, the integrations with banking partners and stuff like that. I was curious, like, okay, like, what are they going to do here? And what was their actual, like, you know, like, angle toward this, like, direction, and they basically fall into two camps. I was doing, like, some Follow up on this, like for a different thing. They basically fall into two camps. One camp is you just haven't heard about them. You know, like, they're just not like you. Like, they have a website now, it's still there, but you just haven't heard a single update from them. Right. Arch Network comes to mind. Right. I just have not seen anything about them at all. And you look at their website and it's completely changed now. It's not like DJ and focused in the slightest. It's actually gone the entire opposite direction and it's like very, very focused on institutions. Right. So they basically decided like, okay, yeah, the thing that we're going to try and do, like, you know, staking for Bitcoin or whatever, right, that that's not going to work out. Maybe it's too crowded. Like, maybe I need like, you know, custody partners to actually make this work. Okay. Now instead we're going to pivot and try and figure out a way to appeal to higher up the ladder people who are already, already figured out the compliance side of things, but maybe that there's some, some value that we can provide over there. So, you know, folks like you and me on our like, you know, like, rung up the ladder, we're not going to hear about them at all. But then you've got this other like, side, right? The folks who have like a retail audience that they needed to cultivate and they really need to monetize that like, you know, retail audience, right. You can only run on fumes for so long, frankly. And they've pretty much all onboarded onto to one custodian or another, right. Whether it's like bridge Magnolia, like ourselves, bitgo0hash. Pretty much everyone has decided like, okay, we do need to actually integrate here. And the only ones who haven't done this are people who have partial coverage to their own mcls. Right? So if you don't have New York and you don't have, you know, like Texas or Florida at this point, it's because you're running on your own infrastructure or frankly you're running on like, like someone else's subpar infrastructure. Right. But like at this point, everyone is trended toward like full coverage of not only us, but also like Europe as well.
- [04:21]
A
Interesting. And I have, I have seen that similar trend of everyone. Retail was the hot topic, you know, couple years ago. And then it does seem like post Trump token, everything kind of changed in retail. He sucked all the air out of the room and now institutions are the ones that have the money and everyone's trying to like go with that trend.
- [04:42]
B
You know, it's, it's funny though that it's not just like crypto related that also applies in AI, right? It's almost not, not to like, you know, divert too hard, but like it, it almost feels like everyone's kind of agrees that retail is generally kind of tapped out, you know, and like every, like what, what's there is there currently is. We're going to have to, we're going to have to have a new hype wave to come in. But now a lot of the actual like dollars and cents are going to be at the enterprise level.
- [05:07]
A
Yep, makes sense. One thing you said there though is like, everyone is kind of gravitating around a few compliant stacks and the natural question that comes to mind is like, do we, did we just introduce a new layer of like massive centralization with decentralization theater underneath the surface? Like, is that the case or are these things constructed where like they're kind of robust?
- [05:33]
B
Yeah, it's a good question, man. Like, you know, honestly, as someone who has built, worked on this side of finance my entire career, like, it is kind of striking how similar things are like, are looking right toward Wall street, especially now. In my opinion, 2026 is going to be the year of like bitcoin collaterals, right? It's, it's the actual like utilization of, of the amount of value that we attribute to bitcoin in other interesting ways. Right. That, that's just the way 2026 is shaping up to be. But also that's definitely how Wall street currently operates. Wall street currently operates on a deep system of collateralization. Whether it's putting up your house for collateral or taking like, you know, putting like taking loans against like your stock, for example, right. Which is heavily incentivized by a tax code. It does seem to look strikingly similar. And it's also kind of fascinating because at the payment level, by and large, especially with the rise of like neobank integrations, so you can like use effectively crypto on Visa Rails, right? Or even MasterCard rails. It's starting to look very, very similar. But there is still this like, this segregation right, between crypto and finance that is starting to get a little grayer. I wouldn't say it's integrated well at all right now, but it's starting to look grayer. And while it starts to look gray, we can really kind of see like bitcoin and crypto on one side and finance on the electrical finance on the other side. They're kind of stacking up in very similar ways right now, you know, even down to you know, things like ETFs and things like, like Bitcoin derivatives or you know, like parallels like MSTR and the other like, like Bitcoin treasury companies that really kind of dominated the cycle of last year.
- [07:12]
A
Yeah, yeah, it's in too because like for a while there was that clear bifurcation of like crypto is over here doing like decentralized things or on chain things. And then like Robinhood and these apps were doing fintech stuff and Fintech was always bigger and like the, the landscape was always much more competitive for the consumer. At some level I felt like crypto was small and so you could be B tier but be A in crypto if that makes sense. Because there's just so many people now as Robinhood and these people come on chain, it's like what's going to happen faster? Is fintech going to adopt to crypto or is crypto going to compete with the fintechs and be web 2.
- [07:55]
B
I was making this joke a couple days ago, you know, when no one uses crypto, it looks like Bitcoin, right? Where it's just like the blocks are empty. And people point to all these scaling methods like Lightning, which I spent a large part of my career on, or all the other alternatives and they wonder what's the purpose of those, if the block fees are going to be low forever. And then when it works really well, people look at point at Ethereum where it's like, hey look, there it is over there under the volume of actual usage and look how it's faltered know quite significantly and look how it hasn't really like figured itself out. So like what's the actual path here? You know, is there like a, a payments reality for crypto? Right. And it really does like genuinely suck. That, that's, that's up in the air. But the thing that isn't up in the air, the thing that everyone kind of agrees is, is un debatable is the value that's in crypto currently. It, it's there, you know, and that value can be utilized, you know, and right now it is being underutilized. And the few folks who, who are, you know, providing actual tools to, you know, take out loans against your portfolio. You know, I think a year or two ago they were charging something on the order of like 15 to 20%, you know, in order to like take a loan out. Now that that price has gone down significantly, right. I think now it's like hovering between 10 and 12, 13. You can get the odd one for 6, 7. Not to make the meme, not doing
- [09:26]
A
the joke,
- [09:28]
B
but right now that pressure does exist. That is clearly an underutilized function of Bitcoin and other cryptos that I think people are really going to be pouring a lot of investment into.
- [09:41]
A
Interesting. Okay, I want to jump into Magnolia in a sec, but the funding rate thing has always been an interesting one for me because when you're in, if you use like Unchained, you might pay like you said, 10, 12, 15, whatever it is. If you go on chain and use something like AAVE, you're going to see like 4, 5, 6. And one question at first glance, you're like, why is that the case? That's crazy. Like it's half the rate. Why don't go do that. You are taking on smart contract risk, custodian risk, depending on. But I guess the question is, one question comes to mind is like, as compliance tools get better and these things start to merge, do you think they end up collapsing or is it always going to be alpha in one or the other?
- [10:27]
B
I can't say. I really can't say if anything is going to collapse. I will say compliance has really entered a very strange world right now. AI and compliance is both. It's really one thing or the other. It's either genuinely a complete lie. Right. And like there's going to be lawsuits over this, right. And people are going to go to jail. Like it's. It's crazy how red the red is, you know, but then it is actually doing a lot of good too. And it's really good. Right? Like something that we've done on our end, specifically utilizing like the absolute heck out of AI is like we have reduced our like KYB process, which is the process a custodian like us has to go through in order to onboard someone. It used to take like man, six to seven weeks. Jesus. Six, seven weeks. All right. And it was like always a pretty like lengthy back and forth process with the cfo that was like really tedious. Now we're down to like a week max, you know, purely by just like utilizing a bunch of AI and tons of different forms that we have like getting a lot of things pre filled and you know, making it as simple as possible for our businesses. That's like one really positive utilization here. An example of a negative utilization. I'm not going to name names, but we did have like, we, we used a vendor last year that would help us like get. That would help us like do like streamline a lot of our compliance in order to get licenses and states. And it was like a vendor with AI in the name, you know, and like, you know, AI all over the website. And after like, I think a couple of months of using it, it was just pretty clear to us, like this is they're not using any AI whatsoever. Like not on the slightest, you know, and anything that even remotely touches something like AI comes back wrong and we have to change it, you know, like, so like what is going on here? You know, this is, this is actually garbage, you know, and so it's just like, like I said, the red is really red and a lot of other people like definitely use them a lot more than us. We use them significantly. But we weaned off once we realized like this isn't meeting our standards. But yeah, stuff is kind of wild right now.
- [12:32]
A
Interesting. Okay, I'll definitely put a pin in the AI stuff because it does seem like, especially with the cloud bot stuff and all this going on in the past, Mac Minis going crazy right now.
- [12:45]
B
The hacks are coming for all of us, dude.
- [12:49]
A
Initially it was like, AI makes me a little bit more efficient. Now it definitely feels like if you're not doing AI, you're going to get left behind by the AI native company. And so everyone's like freaking the F out. So I want to ask about some questions around that in a little bit when it pertains to a company focused on security and compliance and these kind of things. But let's jump back high level. Give us a brief overview of all the things that kind of Magnolia touches, because I want to put back the curtain on some of the specifics.
- [13:19]
B
Yeah, dude. So we do a bunch of things right, but basically what we do is we make money move, right? Like if there's money involved here, I want to be able to move it as simply as possible. Like to me, something that's very frustrating in finance is this like, you know, by fabrication, as you pointed out of crypto and finance in traditional finance, like USD, even like, you know, other countries and stuff. All this, all this, like wealth really should not be separate, separated as hard as it is right now, it really is. So what we have is a tool that tries to mate them together as much as possible as seamlessly as possible and with as little friction as possible. So that includes something like a banking as a service, like a bank as a service. So if you integrate Magnolia, you can spin up bank accounts for your end users, just like you would be able to a chase you know, you could have like an entire Neo bank experience, right? Which is pretty cool. You can also do all sorts of other things like auto pay, which is apparently a really tough feature out there for people to implement for a myriad of reasons. But that means you can enable like a DCA like, like effect for your end users. Right? We also do like stablecoin conversions too. So not just bitcoin conversions and that's really cool for things like, you know, bitcoin back lending. It turns out most of these folks like actually just do disbursements in stablecoins and here's something that was really kind of fascinating for me to learn. The whole like stablecoin to use it in trading markets thing is completely dead. No one takes bitcoin back loans out to do that anymore. What everyone does instead is they take these loans out for real world things. Whether it's paying for a house or paying for tuition or whatever it is, everyone's using these for very real world applications, especially at the retail level. And so if you get stable coins you have to convert that at an exchange and that's another couple points off that you lose. So it turns out being able to convert stablecoin directly to Fiat and then sending that out all in house is a very valuable thing for a lot of these firms out here. Those are just some of the tools that we have. But basically you have money in Fiat, you got money in Bitcoin or Stablecoins. We can move it all which way. And we also run a price oracle as well. So you can enable what's it called non custodial Bitcoin back lending with DLCs. Right. And relatively trust minimized as well. And that's a much stronger setup than a multi sig setup that some folks have or a in house price oracle that other folks have.
- [15:54]
A
Yep, yep. Yeah and I think we'll touch on that because I had the Lagos homies on recently and you guys are powering some cool stuff there. Same one is banking as a service thing because it's like. So one of the reasons why I like Magnolia is I like companies that are doing the unsexy thing but that's also like kind of the alpha is like everyone's doing trying to be a Visa payment rail or like the Dex, the uniswap of bitcoin or whatever it is. It's very consumer facing. You guys are more backend API business to business, but this banking of a service. So there's a licensing piece here is what it sounds like. There's a Spinning up a kind of like tradfi bank account which for the some bitcoiners are turning in their grave here and that. But super useful just to practically buy some shit. But unpack that a little more so people understand when you read in the timeline like baas, it's just kind of like an acronym. But why is that super useful for a bitcoin project that's trying to do stuff?
- [17:00]
B
Yeah dude, it just lets you keep more fees, like avoid more fees. Right. Like with credit cards there is a significant fee to deal with chargebacks with. Actually just being able to spin up a bank account, it's a lot harder to do. Right. And you're right, a lot of folks are turning over the graves. But the truth is if you want to turn more pre coiners, you're going to have to take the cash. You know, that's just how this is going to work. Which means, you know, a setup that is as you know, comfortable to them as possible to get them to Bitcoin is as advantageous as possible. Right. So our setup tries to treat bank accounts a lot like bitcoin addresses. You can spin up bank accounts as needed. So we support virtual bank accounts. We're working on Europe right now. You can go live in all 50 states. But what that means is once you have a bank account, you can send money to it just like you would a bitcoin address and you can withdraw money from it just like you can a bitcoin address. It's very simple, right? And that's like a pretty like easy like transition for end users to go from fiat to bitcoin. Like okay, all that changed now is the value, you know, like we're, we're on, we were doing USD, now we're doing btc. Easy enough, I don't have to think too hard about it, you know, and because we support Lightning as well, you can go directly to whichever app you'd like for a very low fees. You can even just pay like a, you know, like a paynim or whatever. Right. Like just an email address looking thing. Which is awesome, you know, for your end users trying to make this as grandma friendly as possible.
- [18:23]
A
Nice. And who, who's the average customer for Magnolia? Because the customer after the customer is like anybody product facing, you know, a wallet or a loan product. But who are your biggest customers that are leveraging this?
- [18:36]
B
Yeah, basically like wallets and applications not fold, but like fold. Right. Can't talk about anyone in the pipeline just yet. We're going to announce next week and so we can talk about people, then we'll announce like one by one. But like people who have like very large bases of folks who either often convert fiat to bitcoin, like dca, or people who have like really kind of interesting bespoke like use cases for this kind of tool. Like, you know, Legos folks, right? That's pretty public. Those, those are the folks who like typically use this. And our target audience here is pretty much anyone, any app that you use, any website that you use to interact with bitcoin, right? So like ideally every single one of these applications, especially if it's non custodial, should be like, you know, a turnstile for you to convert precorners. You know, like those folks shouldn't have, shouldn't be like only for the hardcore bitcoin. They should be for, you know, like grandma too. Like I feel like it's like almost a failure for a company to have to say, hey, go to Coinbase and come back to me, you know, that that's, that, that shouldn't, that shouldn't exist. You know, those people should be able to funnel just about anyone that they can through their, through their site.
- [19:54]
A
Yep, totally. Yeah. You take a loan somewhere, then you have to go funnel the money somewhere else to get back into fiat.
- [20:01]
B
So complicated.
- [20:02]
A
Am I right to assume here that you, you're abstracting away some of the complexity here? Like we just mentioned, one more step of going to an exchange and it's all done through the API for the application developers. They can make really clean interfaces for their users. But doing all this stuff, KYC is in the background, right? So that's the first question and then is there a role here where if you're non custodial, can you start to get away from kyc or what's the kind of blend here of doing actual freedom money with freedom loans that touch fiat.
- [20:38]
B
So the KYC here is a lot lighter than what you might expect for other providers. And the reason why is because we're not dealing with chargeback risk. So, you know, here's the thing with kyc, right? The thing everyone doesn't want to talk about is there's two reasons to have kyc. Everyone blames like the governments, right, because of something called the Bank Secrecy act, which is, you know, for sure atrocious and uses the banking sector as an economic weapon. And all that is true, but all that does, all the requirements there are, is you have to be sure that you're not helping to facilitate money laundering, right? So as long as we know who the Individual is that, that's pretty much good enough, right? Along with some other like, you know, checks here and there. But the other part of it, the other part of KYC is the fraud component. Dude, fraud is crazy, man. I feel like in bitcoin and crypto we do not shame fraudsters enough. They have made all of our lives hell, you know, and part of that is if we get a credit card, I'm not even kidding. Sometimes it's like, you know, a toss up on if it's a valid credit card or not. You know, if this user faker or not, right. If it's a high flow, like, you know, like point of view or like point in the system where like, like coinbase or something, you get, you get crazy. Like you, you see crazy things like mules, for example, if you're familiar with mules. Are you familiar with that term? Dude? All right. It's basically, it's like people who have been tricked or are being paid to. Like, it's people who are being paid. Mules are specifically people who are getting paid to, to take like the credentials of someone else that are stolen and then swap it out themselves, right? So, and you get like, so you know, if they have like a stolen, let's just say Chase account, they log in with the Chase cow. They look somewhat similar. Whatever, they help transfer $2,000, they get to keep 500 of it, you know, and they send off the 50 hundred somewhere else. That's called a mule. So you know, when that person reports, hey, my bank account is stolen, whatever, the, the whole chain of events ends at the mule. The mule gets hit, you know, or arrested or whatever it is that happens to them. That's a mule. That, that, that is a huge problem that everyone has to deal with. And typically like an institution like ourselves who has to like, you know, bite the bullets or a business that has to bite the bullet on that, you know, the money isn't just free, the fraudsters have it now and they're in Cambodia or something. You know, an alternative one that I've seen before is. Have you heard of pig butchering?
- [22:57]
A
No.
- [22:57]
B
The pig butchering scams are. Dude, they're heartbreaking. Those are heartbreaking because like what, what it is, is you'll meet like, you'll see someone who open up an account. It's like their first account, it's real. It's a real individual who matches their face and they're trying to withdraw 60, 100K, you know, and like, you know, you do a quick little like, you know, Search on this person. This is not like, you know, Tim Draper, you know, this is not like, like this is, they're, they're emptying their 401k right now. That's what's happening, you know, and so at the customer service level, you actually get on a call with them, you know, because you're like, hey, what is happening here? You know, and from, from a customer point of view, this sucks because like, you know, what is this person, like, what is this company doing right now? They're getting in my way of accessing my money, you know, and that sucks. But on the other side of it, when you actually get on the call with someone who is a victim of pig butchering, what, what you actually, what you find out is happening is this individual has been befriended online because they responded to one of those, you know, thousands of scam SMSs that all of us get on telegram or whatever. They respond and they develop a relationship with this other like, person. And over the course of like a six month relationship or whatever, they grow very emotionally attached. And then something happens in that DM chat where the, where the, you know, the scammer basically just says, like, hey, I'm in a lot of trouble, you know, I really need help. They've got a gun to my head. Can you like, you know, send 100,000. You know, it's called a pig butchering scam because you spend time to fatten up your pig from a piglet. It's time to, you know, to get your bacon essentially. It's. And like you are on a call with this person who's like, typically an elderly person, right? And you're trying to explain to them like, dude, I'm so sorry, but like, you know, the love of your life right now is a fraudster in Cambodia, you know, and it's, it's just a terrible thing to try and explain to someone. And it sucks too, because I've done a lot of research on this because, you know, like, you get curious like, who are these people who have no heart? These people are actually victims themselves. They're typically like, effectively slaves of these, like, crime syndicates in Cambodia and Vietnam, sometimes even China. And they do have a gun to their head if they fail to get like a certain amount of like quota, you know. So like, everyone here really is a victim. It's like the saddest thing in the world in my opinion. Like, the only real solution here is if, you know, like countries get off their ass and actually like start, you know, start like, you know, persecuting this stuff. But you know, these crime syndicates have deep connections in these countries and they're oftentimes corrected by like various like you know, corrupt government officials. And so there's basically no touching them. And so, you know, at the end of the day like fraud sucks, you know, like, because this is all stuff you see with fraud. But it's all only really a huge problem in situations where there is an identity to be stolen, right? So in situations where we're doing like, you know, like chargeback, like accounting instruments that have like a chargeback window that's only where this is like a problem, right? So an ach, like push where someone pushes us money. This, there's no issue with this in the slightest. That's not a chargebackable event. It's fine, you know, and plus like we have like a settlement time. Anyone? Ach. Anyway, so if anything happened, there's like a window for something to basically flag us, right? That's why there's a three day window, you know, and so like all this goes into the back end here, right? People don't really realize this, but especially like, you know, in bitcoin, especially with the non custodial people, we, we are tech enthusiasts who are very, very like savvy to a lot of these things, you know, but like, you know, your grandma and grandma are nuts, you know, and they're the people who are using crypto at this point. I just onboarded my mom, you know, like a couple of weeks ago into like Robinhood and for the first time. And she, she, you know, has asked me all sorts of crazy questions, you know, but we got her in and she, she's happy that we set her up with the dca. And I told her, just leave it alone mom, don't touch it. Okay? Yeah, you know, she's happy.
- [27:04]
A
Dude, that's first of all, that's insane. But it makes sense. Like, well, there's money to be made, people will try and do it. And if they can hide behind tech and you know, a mule, for example, I mean as I think about it from I've, I've had friends who've done similar things. Not with financial stuff, but other meal related things. And yeah, they take their cut. They take that risk. It's definitely true. So like in crypto there's very much like a no crying in the casino mentality. Code is code. And so if you get hacked, it's mostly seen as like a skill issue and not like an abuse issue. And I can definitely see it's kind of Similar to like surveillance and privacy, which is, there's always a tension there. And, and like, you know, if, if, if I have a kid and they get kidnapped, you best believe I don't want any privacy. I want all the phones turned on and all the ATMs thing like I want to find them now. And technically you could, but it would break some of the amendments. So there, there's always this, this, this tension. And I could see it here with fraud and kyc. So I guess the one question and, and privacy is a big topic now in crypto, like everyone's saying that's going to be the next narrative is ZK privacy. Whatevers from your stance, what is practical here? So when you have these networks, especially if they have fast finality, which is one of the benefits to delayed finality, what does a good balance here look like in your opinion?
- [28:36]
B
Yeah, so the fraud aspect is always going to be a thing. That's always going to be a thing. We're never going to get away from that. So there's always going to be some level of kyc. But you know, there is a real problem with KYC that's not really well addressed. I think everyone pretty much talks about it. It's that we're basically circulating a lot of what's called pii, like you know, personal Identity Identifiable information. And we're circulating that around systems that aren't the most secure, like your SSN and stuff like that. And so that leads your SN in caches that can be, you know, breached especially in the age of AI. Maybe it's a little bit more easy these days at a lot of firms. And so like to your point, people are talking about like ways to perform like you know, some form of ZK something in order to get like KYC systems that don't rely on such a like flimsy authentication process. And that is really interesting. You know, genuinely, that is really, really interesting. Because the problem here isn't that you know, we want like private like transactions. The problem here is that we just don't want people to get into our stuff, right? But if we want some level of remediation, right? And I think most people are okay with the middle ground of like someone somewhere can reverse the thing in a worst case scenario, right? But that someone somewhere is trusted. It's not everyone. And until that horrible moment comes, all the other excess information flying around the air is just completely safe and private. You know, I think generally people agree that that's like a decent middle ground, at least for the masses you know, so this private, this private mechanism of performing KYC is really interesting and there are a couple ways of doing this I haven't really seen people talk about, but I do understand why it'd be difficult. Right? So like the number one, the number one issue, right, is like, what is, what is going to be your passports? You know, that's, that's the number one problem. SSN is garbage. We all, everyone knows about this up until a certain, you know, year. I think a decade or two ago, they were actually sequential and I think I fall into that, you know, that age range. So, you know, I can change one digital mine and that's a valid, that's a valid SSN for someone else. It's terrible. But something that would be really interesting is what if our passport was set up on everyone's phone individually and tied pretty strongly to something like, you know, like a biometric, like face ID or something along those lines, you know, and. Okay, okay, cool. So we've got an app, hopefully instead of an app, it's some level of integrated into, you know, your, your operating system, just like biometrics currently are. Okay, cool. It's signed off by these mega corporations, you know, iOS or Apple and Google. Fine, but what if we use something like that to actually, like, you know, verify that, hey, I am an individual, okay? This company says that I am the individual I say I am. You don't need to, you know, see a proof of it, right? But I am this person. So it's pseudo, anonymous. You can tie all these transactions back to me, but you don't know who I am just yet. You just don't know who I am. But it does work. Right now, someone at the end of the line does know who I am. And it probably doesn't even have to be Google or Apple, right? It can also be the ISPs themselves. So remember, telecom is a very regulated thing in this country. You know, for most contract lines there is, you have to like hand over a valid ID or passport in order to get that set up. And that can be like the end all, you know, like connection of. Okay, who is this person actually, like on this, on this phone, you know, which is interesting, right, because a really common, a really common format in compliance is this like dispersed liability concept where every node of a chain does one thing. And so if that one thing fails, it's not the end of the world, right? And if, you know, a horrible thing happens and multiple things fail, it still should not be the end of the world. So as much Separation of concerns here as possible really does kind of fit that model pretty well. And I think that would be fascinating. That seems like a really good solution here to this problem.
- [32:34]
A
Interesting. Interesting. Yeah. I love talking to you because it's like the, the thinking is pretty logical and clear. But if I think about a maxi focus, all they hear is Worldcoin and this, this and that versus meet the people where they are. This is good considering all the things versus 12 word seed phrase. Grandma gets hacked for all her things and it's game over and they're never going to use it again.
- [33:05]
B
And on that point it's so funny because I also like when, when thinking of worldcorn that sounds like so unappealing to me, right? If not downright like get that outta my face. Don't even, like I don't even wanna see it right now cause it might see me. But it's so funny cause like I definitely have FaceTime, like Face ID set up on my phone. Like I, I definitely, right. And I, I love using it. If there's an option in an app to not use a PIN and use Face id, I'll go for that every single time. It really does come down to like the marketing, right? This giant globe that just like scans my iris and I get paid for it. Like for some reason that just turns me off, you know, this, it's not now it's a transactional thing, you know, but now it feels like I've sold my ID for something, right. And I don't, I don't think I like that personally. So it's so funny you bring up worldcoin because that is kind of what I'm talking about, isn't it?
- [33:49]
A
Yeah, yeah, no, it's funny. No, but it's like. And I haven't deep dived into worldcoin but like the devil's in the details on these things. And it's for some reason I'm thinking of Apple Pay which is like okay, you attach your credit card to Apple Pay but what they do in the back end and you have face scan so you're putting your face into some database but hopefully it's secure. But then the benefit to you is one, good ux, but two, every Apple Pay scan is a new code. So like if a supplier gets hacked they don't have your SSN or they don't have your credit card numbers. They have that one initial thing and it's isolated there. So like that limits so much of the fraud if they can, as you said with like most times when these. When these big databases get hacked, they get your entire thing. And now they know my name, when I was born, my mom, my Social Security number. And like, they can go open a bank account, but if that was shielded in some way, you. You reduce the attack surface so much.
- [34:50]
B
Dude, I cannot wait until we implement Apple Pay. In the magnolia we're working on right now. It's actually kind of an intense thing to. To get. To get set up. But Apple Pay really did revolutionize, like, web commerce. You know, it really. It was awesome. You know, I cannot wait till we get that in.
- [35:06]
A
Hell yeah. Hell yeah. Okay, one. Let's touch on one nerdy thing, which is the DLCs. And so it seems like the big. For people that don't know, DLCs are a way to do. They're called discrete log contracts. They're like predetermined outcomes for typically a loan. But it's just a script that. Based on these parameters and some kind of Oracle. So watching for what's going on, it can determine where the paths go. And very cool tech. There was always a trust assumption on the Oracle. So who's the kind of computer God above determining what is true in this thing? And it sounds like you guys have worked on some pretty cool tech that limits a lot of the trust in that. So talk about that.
- [35:51]
B
Yeah. So I think you broke down DLC Oracle as relatively well. So the big problem in the space wasn't that there was some magic secret sauce that someone had figured out. It was really just a question of who can do this effectively. Now, what it is we're trying to do on our warpath is we're trying to set up a bank as a service, integrate all these different financial tools. That means we have to be audited and have all this paperwork done and effectively have a lot of like, insurance compliance sets us up pretty well. But that also means that we're also a pretty good candidate to actually just run like an Oracle for other people. Right. We're a neutral third party. We're well vetted. You know, if Uncle Sam thinks we're getting up to move money, then, you know, that's at least some level of credibility. Right. We're at MSB as well, and so that lets us run this Oracle. So what does this Oracle really doing? All we're doing is we're monitoring a couple different events, and we're just saying, hey, this happened. And the DLC magic part that's existed since Peter Dryja. I can never pronounce his name. I'm not Peter Either. Oh my gosh. Tads. Tads Dryja. Yeah, I mixed Peter Todd and Tads Dryja. Super bitcoin God. But Taj, the thing he did was he came up with this way to basically mix three parties in to a transaction. Your lender, your counterparty, and then the third price oracle. The lender and the counterparty sign the transaction together. But it's still not a valid transaction. Not until this specific like, you know, all the different like parameters are attested to. True. By a price oracle who has the third key. Right. But the third key isn't directly used. They just, you know, submit a public attestation and then once that attestation is submitted now you can have the last bit of information needed to turn on that pre signed transaction for whatever that specific outcome is. You know, and so like the event that the result of this is you can have a genuinely like, like decentralized like loan system where someone doesn't have to run, you know, a third party like multi sig setup. And the problem with multisig here is that that that third individual can conclude with someone else to sign the information. Right. The problem is we can't collude with the lender, the guy that we have a service contract with. Right. Because if we collude with the lender then that leaks like private information in a very specific way that breaks into our oracle. So we could technically collude with the lender for one contract, but then we sacrifice the entire business and also every single other loan that we've ever done. You know, that doesn't make any sense. So there's no reason why we'd ever do that. And so the result of the scheme is it's relatively trustless. I wouldn't say it's like fully trustless. I think the way to go fully trustless in the scheme is to have multiple different oracles here involved. Right. Right now I think this space has not evolved so much to have too many different price oracles. Right now I think I'm the only one that I know of and most people just run their own price Oracle in house. Right. And you know, that's the way that the industry's gone. So we're trying to like actually bring the market something that I think a lot of people just need, you know, interesting.
- [39:08]
A
I don't want to get too in the weeds and like lose the audience completely. But when you say we can collude on the contract level, so that sounds like it's a single loan level. But then at the kind of like company or like broad level, it reveals something that's. That's bad. Say, say more on that.
- [39:25]
B
Yeah, that's like the whole bee's knees. Right. Basically we use a single private key for all these different transactions. We're not selling the transaction directly. It's not that kind of key. We use it to do other things. But the specific magic here is that if you accidentally publish two different events for the same transaction, you give away the private key fully. Right. And that's why you are very heavily incentivized to only push out one attestation. And that also applies for if you had two oracles. Then the idea is if we lie about something that happens, then the second oracle will publish the true super true event and then we lose out too. Right. Private key is also. I'm not entirely sure what happens in that situation, but I'm pretty sure your private key is shown off in some way, shape or form. Uh, and just.
- [40:18]
A
Yeah, and just, just so I understand. So the. I could see why it massively incentivizes you to be a good actor. Uh, roger that. The, the big risk here is if something bad happens, either malicious or malfunction, I don't know, the. The private key gets revealed, they say it's the same private key. So then if that gets revealed, someone could go include with downstream loans and technically can start to like put those on chain.
- [40:46]
B
I don't think like so remember the transaction are pre signed so not like anyone can just take the money and run but oh, it's gonna go to
- [40:52]
A
one place or the other. Yeah, yeah, yeah, yeah.
- [40:53]
B
I think in this case it'll be like to the, the like the person who's taking out the loan. Right. So they get the money. So it's really bad for everyone if this happens, you know.
- [41:02]
A
Interesting.
- [41:03]
B
We really don't want that to happen especially for like the lender. Right. Because they're out there. Cash and the money that I plant over.
- [41:08]
A
Got it. Okay. I want to touch on stablecoins which is related to loans and on the bottom of your current website you have stablecoins Coming soon I think is one of the tickers and that's been a hot topic. I mean I think I remember 2022 veg or Bitcoin. Miami Taro was initially announced which then became Taproot assets, which is still not really here. It's coming soon. Soon forever. Hopefully. Close Spark has stable coins, there's some meta protocols that have some stable coins, but there is nothing that's like super close to Bitcoin. That's effectively live today. So like when you guys say coming soon, what does stablecoins on Magnolia look like?
- [41:52]
B
Yeah, so actually the website is out of dates. I'm shipping a new one like I think tomorrow or the next day we have it set up here. I just have to like you know, go through a copy. But we do support stablecoins now, USDT and usdc. And so what that means is we support it in two different ways. One, we support it for direct conversions from fiat to stablecoins and then bitcoin to stablecoins as well. Our conversions support it and it also means that we support it for our price Oracle. So if our lender is dispersing a loan in a stablecoin we can monitor that stablecoin for like repayments essentially and tell people like hey, this person has repaid back their loan. I test that outcome. Or tell people this, this loan was not repaid, it's probably due for liquidation. You know, letting people know. Right. That's what I mean by, by we support stablecoins now and actually like it turns out. Yeah, I think we've already talked about this. People are really interested in using the stablecoins a fiat route specifically for lending which is interesting.
- [42:55]
A
Yeah, I think, I mean that's the biggest UX that still it drives me crazy that crypto has taken so long to do this which is just a simple thing like ach and like going back to my bank account should be in all crypto wallets and like all applications in my mind I get why they don't because like having a magnolia across the board to like abstracted away is you're still duct taping seven services to go do it properly but, but like that's what we want. I want to be able to go have my BTC in self custody, take a part of it to go into some loan if I want and I can scan the landscape for the best lending rates. It ends up in my bank of America account and I can go do things that better my life with it and not just like be Ebony's or Scrooge forever.
- [43:39]
B
Yeah, yeah. I mean you really could do that. Someone I think like some people are like building like aggregator like apps like for you to just be able to shop around for different like loan rates. And I know we're talking to one folk like one person who was planning to integrate us literally for that reason. Right. So they can just like take loan out, get the stablecoin from wherever it is and then be able to disperse it directly back to their end user, which is, I think, a really good value add when a lot of these folks don't support that functionality.
- [44:08]
A
Yep, yep. One other thing, and this goes back to, like, you guys building. So practically you mentioned that you support bitcoin, obviously, and stablecoins, as we mentioned, but you also support runes and descriptions, and you're bringing on more support for L2s. So again, that's heresy for some bitcoiners, but it's practical as a builder because it's like maybe they have runes in their wallet and they want to make sure that's segmented out from their btc, for example. How do you guys think about what to support when there's so much. There's many meta protocols and there's many layer twos and there's many sidechains with different levels of traction. So how do you think about where to build? With kind of finite resources?
- [44:51]
B
Yeah, I mean, really what it comes down to, like, my job is to sniff out what people want, you know, like, really, I think we talked about, like, security at the company or like, security, like, especially with AI and stuff. The result of that is I don't have any production keys on my machine because I have to get on video calls with so many people every single day. Right. And it can be any kind of video call and there are zoom scams out there. But to answer your question, I just ask people, like, what are they trying to do? Have you considered this? Does this work for you? Oh, it does. Awesome, right? It doesn't. Why not? You know, like the. The era of tech that I grew up in was like the mid 2010s, right? Which was like, specifically that, like when data was the everything. Right. So you just focused on getting a lot of data, whatever. It was asking a lot of questions. And I remember this really important tidbit that I learned doing, I guess, products like back in the mid-2010 for like, you know, the first startup I did was after you ask five, you know, good people, like their opinions on a bunch of things, you really start to see like a plateau and the difference of answers, you really, you really lose a lot of granularity. And so after you have like five, you know, these people have to be like the right target audience. But after you have five, like, it really does taper off and you get a pretty good understanding of where the industry's at. And that, that is absolutely held true to. To what we've seen too. And so as a result, you know, we, we constantly support things, but we also like, quietly deprecate things because we're not seeing enough demand for it. Okay, that's fine. Time to, like, you know, switch and put the resources somewhere else. Right. We've got places to be right now as far as, like, our timeline and our roadmap going. So that's the direction we go in this near customer.
- [46:35]
A
Okay. What's coming on the pipeline maybe in the next six or 12 months through that lens.
- [46:43]
B
Dude. Okay, so we're launching next week. I'm very excited to launch. We're launching. The number one thing we heard from the other one was, okay, that's cool. You guys support a bunch of these states, but we need all of them. We need specifically, like, the big ones. And there's a big four, Right. California, Texas, Florida, and New York. Most people still can't support one or two of those. Okay. We figured out a way to go to market in all of those along with the other, you know, 46 states. Cool. What's next now? Well, now what we're hearing from people is like, dude, all 50 states is awesome. What about Europe? You know, like, Europe, Native Europe. Like, native Euro transfers, not swift would be killer. You know, we're trying to compete here and the US Both. That's what we're working on next. You know, we're really excited about, like, coming to Europe in every country we can under Micah. That's a big push. Okay, so what happens after that? Right now, I have things I'm excited about. I, as a builder, want to do Apple Pay, you know, but if Apple pay isn't what people are asking for, if they're asking for another feature or another, like, you know, thing that I'm going to follow what they ask for. Right. But I look forward to the day when I can offer Apple Pay, you know, I do.
- [47:55]
A
Heck, yeah. Heck, yeah. And that's huge. Does that mean being able to support all these different states? Like, one of the things that still kind of. I don't know how to understand it is, like, some projects conserve the US and then some of them will geofence. And I never quite understand if that's like, something technical or if it's their lawyer's overly conservative and they're just listening to him. So does support like this mean that for most apps that support Magnolia and, like, use Bitcoin, they could do more things, not have to geofence, you know, or block out New York and stuff like that?
- [48:31]
B
Yes, exactly. And it also means, like, more money saved. Because when I was at Swan, this is a huge problem. That we always had like Swan was not able to operate in old states, you know, all the US states. So really often we would put out like a campaign, you know, to Instagram or whatever else. And unfortunately there's just a lot of people who consume Instagram ads, right. For Swan's content in Texas, which Swan was not able to go to. And so like that's just money lighting directly on fire. You know, you're advertising to like an audience that can't utilize you. And so the result of this is like, you know, advertising networks aren't really set up on a state by state basis. You know, they'll try their best, but they're not, they're not set up for this. You know, this just means that more, more of you people directly convert. You know, you're not spending money on someone who would like to convert but isn't able to. So it just means more money saved. It's just reducing the complexity for people. Right. Of course this has other trade offs for us. Right. We're not able to like operate entirely on our own licenses. We have a couple, but we're not able to run entirely on our own licenses. We have to have a lot more conversations with our banking partners on their compliance protocols. Right. But it seems like for our business partners, that's what they want to see. You know, they want to see, they want to be able to onboard people in every state and then worry about all the convenience features next. So that's the way we've gone. Right. If it means that later we start turning off states in favor of our own infrastructure so we can give people like better features in those states and start like transitioning it over, that's what we'll do, you know, and that's, you know, I hope, I look forward to that day. That's how we'll get Apple pay, likely, but only until people start asking for it.
- [50:06]
A
Very cool, very cool. That's exciting. One question on compliance that just popped in my head is treasury companies have been a big topic this year or so and they have pretty strict mandates on what they can and can't do with the bitcoin. And a lot of that's going to have to change through regulation. If they want to say, come on chain. Anything you can call out from that space that you know of, like is legislation changing in this way? Do you think they'll ever come on chain in size? There's such big globs of money there and all the protocols are trying to pitch institutions and I wonder if there's A forever disconnect there that might just exist or if I'm missing something.
- [50:47]
B
Well, I mean, you're right, there's a lot of money there. But the problem is that if it becomes even somewhat comparative to the traditional financial market, then there's little incentive to stick with the traditional financial market.
- [51:00]
A
Right.
- [51:01]
B
That's like specifically what the big like Hubla is with Clarity. And the reason why it's getting stuck up is because currently there exists some pretty good holes that people are taking advantage of to offer significantly above rates, like, you know, returns for investors. Right. With very safe underlying vehicles. I'm talking about, if you're not aware, if your listeners are not aware. I'm talking about the whole like stablecoin bank thing where people, where they're offering like interest rate loans or I'm sorry, interest rates based on like US Bonds, treasury bonds, and they're able to offer really, really solid rates on that. The thing is, those are the exact same like mechanisms that banks use to give you like savings on your, or savings return on your deposits. And so because it's the same underlying device, the safety is the exact same. So there's not too much reason for people to deposit their money in these small community banks, like compared to just putting their money in a crypto startup that's just using T bills underneath. And so right now there's a huge pushback by a lot of these small banking players who are basically trying to say, like, hey, if you guys let this go on and don't snip this loophole in the bud with the Clarity act, we're going to go out of business. And that's a really big fight right now. And I guess the more meta level of that is if crypto in any way, shape or form becomes, what's the word? If it can genuinely compete with traditional finance with the same risk levels, it's pretty clear which way it's going to go. And so right now we're in the regulatory fight of okay, this stuff is good, maybe a little too good. How do we, how do we slow it down forever now? You know, that's really where things are. But what's interesting is it's not, it's not the big players on Wall street that are doing this. You know, like, it's not the big banks that are, that are trying to shut this down. It really is the smaller guys, which, which is interesting. You know, does that mean the, the bigger folks are ready to play ball and you know, kind of take over crypto for, for their own like purposes maybe that's, that's probably what I would do if I was, you know, Mr. Morgan. Right. But these guys can't, they can't compete, you know, they can't compete.
- [53:18]
A
I didn't, I didn't know it was like that. But it does make sense. Do you have any pulse? I mean there's this kind of like creative destruction mentality in crypto where it's like, you know, let the, let the best man win. Innovate, innovate, innovate. And it's sometimes doesn't quite look at the collateral damage of some of these things and I'm kind of conflicted on which one is true. Sometimes I see a similar thing with housing supply is the best way to reduce housing costs. It's also the best way to tank the current mortgage market and the price of homes. So there's a tension there of why you don't want to overbuild and not have everyone be underwater with loans. Those are just real risks. And so I guess like, do you think that they have some, is it just self preservation or is there like some real knock on effects that could be happening if like, you know, the regional banking market actually does collapse and it's just like JP Morgan in crypto?
- [54:16]
B
Well, the thing is the regional banking market's already like pretty fractured. So like something that's been going on for the last decade has been the consolidation of smaller banks. This has been going on for quite some time. I still remember when I was a little kid, I think it was wegovia bank was like the cornerstone in my block and in Mississippi. Right. But then we go via got taken over by, I can't remember, it's like First Union or something. Right. So they changed out the names and then eventually, you know, First Union got bought out by Wells Fargo and so just like the same bank, like location had changed hands like three or four different times during my childhood. You know that that's all been going on and now we're kind of at the tail end of it where there's not a ton of them left. The, the, the small banks that are left, they're not really midsize. If you look at their total deposits, it's nothing astounding. You know, you actually seen a lot of these small banks do really, really interesting things to try and like get out of this like very, you know, bottom tier position. So like for example, if you look at the backing bank behind like fold, I don't know if it's still the same bank, but it Might be a different one now. It's like Sutton Bank. I've never heard of Sutton Bank. You know, you look it up, it's like a small bank in like Kansas or something with like four branches, you know, but like, you know, they're, they're in a position where they might as well wise up to like having an API on their bank accounts because they have, you know, a license. Right. And they can sell that for way better than appealing to the local Tanzanian population.
- [55:47]
A
Right.
- [55:47]
B
But that's, that's the position that mostly small banks are in there. They have to take these huge leaps of faith. Like one of our partners, not going to disclose which one, also is in a very much same position. They don't really have that many, like depositors, you know, they're kind of like, you know, declining on their user base because their user base is very old. And so they're making like a pretty big like, stab into like crypto right now. And so they're trying to figure out ways to like, work with crypto players in a way that they understand in order to like, get on top right now. But for a lot of these small banks, it's either, you know, like figure out a way out or get eaten, you know, and this pushback is very much in the, like, hey, please don't accelerate this demise that we're like feeling because we're feeling a lot of pressure already from existing market forces. So it is for us, survival for them.
- [56:32]
A
Interesting. All right, I want to close on some AI questions, but before I take a left turn to that, any closing thoughts or topics you want to discuss on the Magnolia stack or anything we kind of touched on?
- [56:48]
B
No, I think we talked about all the, all the important parts. We're simple like something like, I don't know, something I'm like working on and I'd love to hear people's thoughts on this, but we're working on like a way to like a, like a pricing tier that allows for people to basically like vibe code like our API directly into their application. That way they can just get a full fledged, like banking like solution directly, whatever it is. They're vicod, obviously, for reasons this can't be too, you know, like open ended and we can like, you know, streamline the KYB to be like, as realistic as possible. But if anyone's really interested in that, I'd love to talk to them, like get more market research on that to understand, like, you know, how we can help them, how they like to use it and what setup would Be if they're using it on like an iOS device or like on their computer or like, you know, they're gonna like yell at claudebot, you know, for like a little bit and like have it like Ralph Wiggum or whatever, you know, over the course of like a day or something.
- [57:40]
A
That's super cool. That's super cool. Yeah. I'm loving the. There's so much vibe coding stuff coming out. I think I saw money devkit is trying to make it as easy as possible. Just like taking their API docs vibe code and you could be accepting lightning payments. Super quick. Replit has lightning integrations natively which is super dope. And actually a bitcoin dev that went to base 58. Cody Lowe, who was working at Fedi for a while is now like one of their top sales guys at Replit. So like cool kind of first full circle moment, which is dope. But yeah, on the AI question to kind of close this out, vibe coding is a hot topic when we're talking about money. I always have this kind of like tension of like, you know, spinning up a website's okay, cool or like a dashboard for like tracking your fat loss is cool. But when you start spinning up wallets and dealing with money, the bar for quality is so much higher. So as you're running a company, how are you guys feeling about. AI is amazing and can do most things trending towards 100% and we just kind of check the edges versus you need to be really watching. And I'm sure it depends on the silo but how do you guys view that and how are you guys using AI currently?
- [58:56]
B
Yeah, so the way our tech team uses AI from the rest of us is very different. Right. Like, so the rest of us, we basically have like some version of cloudbot, right. Like running like Inter machines and you know, we're using it to like find leads or you know, like find investors or you know, like think like, you know, redo our website or whatever it is, right, like you know, our splash page and that's like pretty open ended. We still have to be careful to make sure that it never has any access to anything that could be like, like PII or Kyb or anything like that. So it's just like, you know, being careful about where you run it and being careful about what it has access to. Our dev team, completely different, right? So the way how we set this up is all of our devs except for our CTO are really pro AI, right? Our CTO is like, I love him so much. He's like the most. If you know, if you know. Oh, my gosh, the guy from Silicon Valley, Guilfoyle, right, With the long hair, who just talks like, deadpan, really smart, big glasses, you know, but like kind of an anarchist, you know, who's ready to, like, you know, take down the entire system, like, left, right, front and center. That's my ctm, okay? He does not trust anything that he doesn't, like, interact with directly. If you ask him, like, what he's doing at any moment outside of work, it's like the craziest tech thing, I think. Like, he sent me a video the other day where in order to, like, wake up earlier, he bought a. A cement mixer, took the motor out, and then like, bolted it to his bed frame and attached that to his alarm app so that now at whatever time he sets his alarm, the cement mixer shakes his whole bed, you know, to get him to wake up. Like, he just did this offhandedly because I think, like, in a meeting a couple days prior, I joked about, hey, what if you just did that? You know, a couple days later? He just delivers on it, like, dude, yeah, that's him. So I think like, like, AI is awesome. It does help you go fast. But having like, an uncompromising, like, final check, you know, sanity check of like, why are we doing this? You know, is paramount. And I gotta say, like, even myself, he knows front end dev significantly better than I do, and I'm. I'm our like, chief splash page architect at this point. So every now and then he just like, you know, looks at it and he's just like, dude, you were doing things in the craziest way possible. And I'm like, thanks, Zach. You know, like, I wouldn't, I really wouldn't go if it wasn't for you. I've always, I've been a backend dev my entire trade, you know, so I wouldn't know. But like, yeah, it's all about balance is really what it comes down to. It's all about balance.
- [61:23]
A
Interesting. All right, last question. Kind of a, Kind of a haha. Funny one is what's. You spent a lot of time in lightning and now you spent a lot of time in compliance. Shit. What is genuinely harder? The complexity of lightning dev or dealing with regulation and compliance?
- [61:38]
B
Oh, that's. That's a good one. That's a good one. It's. They're almost inverse, right? In interesting ways. So enlightening. The problems are harder, right? And so, like, you have to, you know, and to a certain degree, there's less checks. And so you have to be sure that what you're doing is like, as safe as possible. You're the final check. You have to make sure your tests are good and that you've, you know, really thought through this whole scheme. You do kind of feel, like, alone that way. But when you go and talk to other people or like, you know, explain to them what you're doing, people get really excited about what it is you're doing. Even if you think it's dumb, right? Or like, you think that you're. That you have done something very simple that anyone could do. People get really excited for you. And that's awesome. The entire opposite is true in compliance, right? Like the, like the thing in compliance, it's technically all very easy. There's just a lot of it, you know, but you're digging into, like, a lot of the same. Like, okay, there's a schema that someone else has described. I have to follow it, make sure we follow it, you know, and it's all kind of dispersed, right? Like, there's not one lightning.com, you know, like, for compliance. Same thing with compliance. There's not one compliance.
- [62:42]
A
Com.
- [62:43]
B
You've got to understand the different rules and regulations that apply to you and the rulings on top that apply to you. It's all a whole thing. And then, you know, even though it's not hard, there's a. There's a lot of surface area, but they're like, why do I care about this? Like, genuinely, why do I care? And so it becomes. It becomes a honing of the storytelling skills, you know, like, why don't. Like, at a certain point for me, it was. The answer was, would you care if you had a gun to your head? Because compliance is how they is, is what that is. You're complying, you know, and if you don't comply, the trigger gets pulled, you know, that got people interested. Okay, like, why is the trigger getting pulled, you know? Well, that's, that's. They don't call it compliance for no reason, dude. Yeah, yeah, yeah. Not in plain sight, really. And so, like, yeah, like the, the Binance guy got the trigger pulled on him, right? And I think fundamentally it was because they just allowed people to VPN into finance and that was really what it was. They weren't trying hard enough to stop that. But yeah, gotta take it seriously.
- [63:45]
A
Interesting. Okay, great answer to simple question. But, dude, thank you for this rip. This has been fantastic for anybody curious. And I'm definitely going to link to drop me that vibe code stuff because I want to get people playing around with that stuff. That'd be super cool. But yeah, people. If you want to learn more, check out the description below. Magnolia Financial is the website new landing page coming soon. So if you listen to this right now it will already be live. But yeah. Harsha, always good to chat man. Thanks for coming on.
- [64:22]
B
Thanks for having me. Till next time Jacob.