← The Digital Executive
The Digital Executive
Viktor Ihnatiuk on Reinventing Stablecoin Payments on Bitcoin | Ep 1209
00:20:54
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- [00:00]
Grainger Announcer
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- [00:28]
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- [01:09]
Podcast Host Brian
Welcome to Corusant Technologies, home of the Digital Executive Podcast. Do you work in emerging tech? Working on something innovative? Maybe an entrepreneur? Apply to be a guest at www.corazant.com brand. Welcome to the Digital Executive. Today's guest is Victor Inayuk. Victor Inayuk is a Bitcoin and Web3 engineer with over 12 years of experience building core infrastructure, protocol tooling and privacy preserving distributed systems. A serial entrepreneur, he has founded and scaled multiple successful ventures across the crypto industry. Victor is currently the co founder and CEO of utexo, a Bitcoin native stablecoin settlement network backed by Tether. Utexo enables private compliant USD payments with fixed costs. Powered by the lightning network and RGB. Previously, Victor scaled Boosty Labs into the leading European Web3 development house during the team to 150 plus engineers and partnering with major industry players including Coinbase, Ledger, consensus, moonplay and blockchain.com well good afternoon Victor. Welcome to the show. Thank you.
- [02:18]
Victor Inayuk
How are you?
- [02:19]
Podcast Host Brian
Great. Nice to have you my friend. I appreciate it and making the time. I know you're in Europe currently to make the time. Today I'm in Kansas City so I appreciate that. I know it's hard to make calendars meet, but you've traversed the globe from Ukraine to Dubai to Europe. You're all over the place which is amazing and I just appreciate again you making that effort to jump on calendars.
- [02:40]
Victor Inayuk
So Victor, if we could.
- [02:41]
Podcast Host Brian
I'm going to jump into your first question. You've spent over a decade building Bitcoin and Web3 infrastructure, founding multiple ventures along the way. What key Experiences shaped your path from engineer to serial entrepreneur and CEO of utexo.
- [02:57]
Victor Inayuk
Yeah, sure. So, yeah, after being in lots of different roles for over a decade, well, actually like I, I was mainly entertaining entrepreneur since the beginning, but my entrepreneurship career was shifting between being more on the product side, being more. A little bit on the engineering side, being more on the leadership side. So right now I appreciate that after building so many different companies and hiring so many great people across all my companies, I believe we have around 250 people employed across all companies that I co founded in the past. So UTEX is my new journey and I appreciate that finally I can focus more on where my biggest strengths are. It's leadership, communication and strategy. So this over last decade I learned that like this, this strength can accelerate any project I'm touching. And UTEX is a new thing that, that, that we are boosting now. Yeah. So something is this amazing and I
- [04:03]
Podcast Host Brian
really appreciate you highlighting your past experiences. Obviously you're a serial entrepreneur, you've got some strong leadership skills and you built a great team and a great culture. And I've heard nothing but positive things about it. So I'm excited to jump into the next question. Victor, at utexo, you're building a bitcoin native stablecoin settlement network backed by Tether. What gap in the current crypto payments landscape were you determined to solve?
- [04:26]
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- [04:56]
Victor Inayuk
games actually lots of different gaps. So let's start from my first advantage or advantages of UTEX versus to other blockchains where USDT and other stablecoins are represented. So I started in bitcoin back in 2015 and I believe one of my first bitcoin meetups that I ever attended was in 2015 or 16 in Kyiv in Ukraine that was hosted by Lightning Webs and Elizabeth Stark was in Kiev. And I heard about this Lightning technology for payments and since then I've been very excited about this. I didn't actually quite understand why it's needed back then because back then bitcoin was so small and community was so small. And Lightning was already building something to scale Bitcoin to be compatible on scalability and transaction speed. Execution time was within MasterCard. So it was like, well let's just adopt Bitcoin first and then do lightning. And so then I came back to this technology back in 2021 when I understand that well, blockchain technology is well adopted. People use it a lot, especially stablecoins. But there's still a couple of problems on all these chains such as block time and transaction fees. Every blockchain have a one problem, it's a blockchains. Blockchain is a chain of blocks. And chain of blocks require you to have this kind of item called block. And block will always have block time and block size, which means blockchains will always be limited in terms of scaling. While the only way to make to remove those limits is not do a blockchain but do a centralized system. So that's what Lightning is actually is Lightning use blockchain as settlement layer, as anchoring layer while do all transactions and all executions off chain. But this off chain execution is not a typical backend which can be corrupted by a person who operates this backend. But it's a backend with a very interesting implementation of cryptography primitives that helps to users and owners of this Lightning nodes. Lightning channels to be 100% sure that money will not disappear and rules of the transaction flow will be executed by all parties equally. So this is a big innovation in payments because if you can create a trustless environment off chain, you can achieve any amount of scalability. So imagine that Lightning can process transactions with a speed of. Well with the speed of light obviously because it's Lightning. But speaking about numbers, it could be something between 50 and 100 milliseconds which is wow, it's like asters and visa, mastercard. Well, you need to have a certain setups to achieve the speed, but at least it's possible. And also Lightning is quite scalable in terms of capacity of transactions that you can do per second. Well, Solana for example can do 65,000 transactions per second. And everyone considers Solana as a super fast protocol. Well, there's like more faster protocols like Monad for example, but that has I don't know, maybe 200 or even more thousand transactions that they can process per second. But Lightning can process infinite amount of transactions. It could be 1 billion transactions per second if you want. Again all based on the setup but. But it's possible. So when I found about this, when I found that stablecoins been well Adopted when I found that Stripe is building Tempo because they believe in in Stablecoin payments. When I saw that MasterCard proceeding a lot in that direction and lots of other companies, I was like, wow. So all those guys finally realized that Stablecoins and crypto in general is very good technology for payments, but they still didn't understand that blockchain has limitation. So that's where I found a big opportunity to leverage all my previous skills and knowledge around Bitcoin, Bitcoin Lightning. And it was a great time when I realized this because it was exactly the same time when maybe a year after, when Tether found me and was like, oh, Victor, we heard that you do a lot in Lightning and had my own venture fund, venture studio. And we were investing in the bitcoin Lightning companies and we invested in two back then and two of them being already quite famous in the small community. And Tether heard about us and they're like, oh, we want to do a venture studio with you. But on RGB protocol and, and RGB, I heard about RGB back in 2018, I guess because the guy who been the biggest developer of RGB onboarded him to bitcoin back in 2015. But I was like, oh, why RGB is still not showing up? Like why by the development took so long. So when I understood that actually there is some help needed to push it and Tether offered a joint venture idea of bringing RGB to Mainnet. I obviously took this opportunity because, well, it's hard to refuse partnership with the biggest crypto company ever. And especially when they want you to help to bring USDT back home. Because originally in 2014, USDT been issued on a bitcoin blockchain with Omniware. Then they moved to Ethereum and Tron in 2018 or 2018 kind of organically because Omnilayer and Bitcoin generally was quite slow. And they sought to move USDT over Omnia to Lightning, but the technology was quite bad. That's why they decided to invest in RGB and support the teams who were building this. But those teams sadly were moving so slow. So that's why now we have hundreds of billions of USDT on Ethereum and Tron and almost zero, or actually zero on Bitcoin. So. So yeah, so I, I was like, oh wow. So I can actually finally solve this problem, bring Bitcoin back home, but also bring USDT back home to Bitcoin and make this the best USDT because it will be the fastest, the cheapest and also the most private while still compliant. So yeah, while I understood this opportunity, I started to work hard and it gave some results. Back in July last year we finally launched RGB to mainnet me Federico Tanga from Tether and Jaco Mazucco who was original founder of RGB started RGB Protocol Association. Then I came up with idea of UTEX as a global settlement layer for USDT and Bitcoin and that's how we slowly transitioned our joint venture with Tether and Fulgur from 2023 and the companies that now called Utex. And yeah, this was quite a journey. And yeah, I'm super excited what we do because I think it will change the world of stablecoin payments forever and in a way that most of other big payment companies even don't understand now because they still live in a paradigm that blockchain is a great technology for payments. While I would say that blockchain is a great technology for settlements of off chain state. So that's I think will be a future and I'm so proud that we do it.
- [12:45]
Podcast Host Brian
Thank you so much. Lots of unpack there. I appreciate the backstory Victor, but the key thing that I took away, obviously you were an early adopter of blockchain and bitcoin crypto and then you were very interested in lightning payments obviously. Right? It's going to become a game changer for stablecoin payments. But we all know blockchain's pretty cool. But there are some limitations. Obviously you talked about the blockchain time, the block size, but with the Lightning network the speed and scalability is just amazing. And we know that and talk to many of your peers on this podcast about the speed of lightning. So thank you and Victor, privacy and compliance are often framed as opposing forces in crypto. How do you approach designing systems that protect user privacy while remaining aligned with regulatory realities?
- [13:31]
Victor Inayuk
Yeah, it's a great question. Actually RGB use technology called client side validation which means that only sender and receiver of transaction know the final state of a transaction. Everyone else sees that some transaction happens if you want to use RGB over Bitcoin, if you use RGB over Lightning, it's even more private because lightning post transactions only when they do rebalancing. So it means that like inside of the off chain environment the privacy even more private. However, the beauty of Bitcoin is that Bitcoin is a peer to peer cash system as an opposite to all other blockchains. What does it mean? So cash is a paper bills and every paper bill are unique because they have its own numbers. And I know someone can inscribe something on a paper bill the same way bitcoin works with the thing called utxo. Utxo is kind of a digital representation of a bill on a bitcoin. And utxo can be one satoshi or 1 million satoshi or even one bitcoin. So this is like a utxos can be of a different size. And every time when you send a transaction on bitcoin on the back end, it's actually not like on ethereum. On Ethereum, if you send 100 USDT to a person who has let's say 500 USDT on his balance and then this person will decide to send you 100 USDT back, it will be not the same USDT, it will be just 100 USDT from the balance of 600 USDT from from a sender wallet. While in bitcoin, if you send let's say one bitcoin to another person and you have utxo that has two bitcoins on it, the transaction works. Next you send two bitcoin to another person and another person sends you a change. And this change is a split of your UTXO into two pieces. So receiver will get one bitcoin out of your original utxo and will create a new UTXO that will represent a change of one bitcoin that you will get back. So because of this, every ETXO are unique. And because every ETXO are unique, you can inscribe whatever you want on top of this utxo. That's how isshing of USDT works on bitcoin. RGB protocol allows you to inscribe on a specific bitcoin utxo. Usually it will be small UTXOs because it doesn't make sense to inscribe 100 USDT balance on ETXO that has one Bitcoin. But once you inscribe a specific USDT balance on a unique UTXO and this like a usdt will be sent to someone else. Someone else will not get utxo but will get kind of just like a balance change. But UTXO that's associated with this like a new balance update will still be unique. Long story short, because every UTXO are unique, privacy is possible only for general audience. But if there is a hack or some malicious activity or something that should be reported where USDT should be blocked, tether will maintain a blacklist server that will mark a specific UTXO as suspicious. So none of the exchanges, none of the Wallets, none of the legal operators will never touch it. So that's how you can maintain privacy but still be compliant if in case this USDT will be used for some suspicious activities. This is the beauty of Bitcoin where UTXOs are could be used to give a privacy but not compromise the legal requirements of society.
- [17:33]
Podcast Host Brian
Thank you, really appreciate that. And just to break it down real quick, the benefits of UTXO has that unique tracking and privacy capabilities. Obviously privacy is key. While everybody can see that a transaction happened, really the sender receiver can only see the transaction details which I thought was unique, but I didn't know this. You talked about that tether blacklist for suspicious activity with transactions and again limiting those possibilities of fraud and loss of funds. So again, I appreciate that. And Victor, the last question of the day, if you could briefly share as we look ahead, how do you see Bitcoin's role evolving over the next decade from a store of value to a full financial sediment layer? What breakthroughs will unlock mainstream adoption?
- [18:20]
Victor Inayuk
I think similar use cases like we build a new tax will help Bitcoin get its adoption at a very higher level because once text will show that Bitcoin can actually be used for payments. And I believe payments is the biggest use case of a future of Bitcoin. I believe second biggest will be trading. It will create lots of utility for those UTXOs to inscribe on them something and then use as a representation of a currency that been issued on Bitcoin. And once people will understand that scalability technology for Bitcoin such as lightning technologies like RGB could be served. Yeah, same in like in the same direction as typical token issuance platforms on Ethereum or you know, Solana. They could start slowly to move back to Bitcoin. And once it will happen, the utilization of Bitcoin's UTXO will increase a lot. Which means that utility of Bitcoin will will be a little bit recreated. Right now the main utility of Bitcoin is kind of a digital gold, people just buying it and hodling it. While there is also some additional synthetic derivative activities happening With Bitcoin like ETFs, different loan products and things like this. But on a programmable level, Bitcoin is still an asset. However, Bitcoin can be kind of a monetary system. And imagine like a gold standard when people were doing gold coins and gold was gold. But every country has its own currencies and different nominals of those currencies. So this could happen a little bit Similar could happen to Bitcoin if tax with tether will execute right or not if but when we'll execute and bring adoption for a payment use case first and then hopefully other companies will follow our example and hopefully big trading theorems or I don't know exchanges will realize oh wow actually it's so quick so we can build also HFT use cases and if you can build HFT grade exchange on top of a trustless solution such as Lightning then which will be also cheap to use than why you need a centralized solution. So maybe Binance or Okex will move to a similar technology like we do in UTXO for their operations. Once it will happen it will be just a Cambrian explosion of use cases for Bitcoin and UTXO usage which will grow a lot Bitcoin in price.
- [20:57]
Podcast Host Brian
Thank you, really appreciate that. And you're right for adoption payments as you said trading is a big one but payments are probably the biggest use case for future bitcoin adoption. And how do we get there? You talked about with the help of Lightning rgb it'll be a much easier for bitcoin use and adoption. And again I love how you broke apart and unpacked some of the work that you're doing to again keep privacy but keep the transaction safe secure. And I just really love that you really went in depth today on coin transactions and the blockchain. So I appreciate that for my audience especially. And Victor, it was such a pleasure having you on today and I look forward to speaking with you real soon.
- [21:39]
Victor Inayuk
Yeah thank you Brian. I appreciate for hosting me and yeah try to cover a lot on the technology side because I think we need to educate people about the beauty of bitcoin because people just think that bitcoin is just something slow and very old, which is kind of true. But bitcoin has something else that people need to discover just to understand its power and finally come back to building on bitcoin. So that's why I would love to be evangelist as okay in a way I was back in 2015 when I did first Ukrainian Bitcoin conference. So probably coming back to this role again but in a different head.
- [22:15]
Podcast Host Brian
Thanks again. Bye for now.
- [22:25]
Grainger Announcer
If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner offering the products you need all in one place, from H Vac and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win call 1-800-GRAINGER visit grainger.com or just stop by Grainger for the ones who get it done.