← The Peter McCormack Show
The Peter McCormack Show
Beginner’s Guide #13: The Lightning Network with Jack Mallers - WBD196
01:00:48
Location: Las Vegas Date: Thursday, 20th February Project: Zap & Strike Role: Founder Welcome to the Beginner's Guide to Bitcoin. Bitcoin can be intimidating for beginners. The protocol is complicated, the community can be aggressive and...
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- [00:01]
Peter McCormack
Welcome to the what Bitcoin did podcast.
- [00:07]
Jack Mallers
Hello there from Las Vegas. How are you all? Welcome to the what Bitcoin did podcast which is brought to you by the Mighty Kraken. The best place to buy, sell and trade Bitcoin. I'm your host Peter McCormack. And next up in my beginner's guide to Bitcoin, I have an interview with Jack Mallers where we introduce you to the Lightning Network. But before that I do have a message from my amazing sponsors. So first up we have BlockFi, the future of bitcoin and financial services. And with their recent announcement of their Bitcoin rewards credit card coming soon, 2020 is going to be a massive year for BlockFi. I caught up recently with their CEO Zach Prince. He was explaining it all to me and I told him come on Zach, get me a card asap. I want to play with this. This is on top of their other announcement that they've got a mobile app coming soon as well. It is going to be a great year for BlockFi. They already have two amazing market leading products. They have crypto backed loans and they have interest accounts for your Bitcoin Ether or gusd. And with another month coming to a close soon, I can't wait to get my interest. I am a customer of their interest account. I love it. I love my bitcoin working for me. If you're interested in finding out more, if you're interested in checking out blockfi, I recommend you do your own research then head over to blockfi.com, which is b, l o c k f I dot com. And also we have the mighty Kraken. As I said, they are the best place to buy, sell and trade bitcoin. Consistently rated the best and most secure cryptocurrency exchange and whatever level of your experience. Kraken has designed and built a streamlined Bitcoin exchange for newcomers and experts alike. Their platform provides world class financial stability by maintaining full reserves, healthy banking relationships and the highest standards of legal compliance. They pair their global 24 7, 365 live chat with an extensive support center to help ensure that your questions are answered and your needs are met around the clock, no matter who you are or where you are. And with Kraken Pro, their beautiful mobile first app, you can trade Bitcoin wherever you want. There is no better place to trade Bitcoin. And if you want to find out more, head over to kraken.com or download the app which is available for the iPhone and Android. Just search for Kraken Pro, which is K R A K E N P R O. Okay, so onto the show today and we're at part 13 of my beginner's Guide to Bitcoin, which get in towards the end of the series. There's three more shows to go and I've loved making it. I've loved the feedback. Everyone's telling me that they've been sending it to their friends and their family. I really appreciate this. And it's also not just for new people. I've had people telling me that it's.
- [02:33]
Peter McCormack
Been a great refresher.
- [02:34]
Jack Mallers
So I love the feedback. Thank you so much. I really do appreciate the support with this. And listen, the Beginner's Guide wouldn't be complete without a look at bitcoin scaling and layer two solutions. So I've kind of left this out of most of the series, but it's now time to introduce you to the Lightning Network. And I got my buddy on, I got the founder of Zap and Strike, Jack Mallers, to help me out with this. Like some of the other shows, it does get a bit complicated at times, but please just bear with it. There are plenty of additional resources available in the show. Notes Scaling bitcoin has been a long and acrimonious debate. And if you listen to my show with Marty Bent where we talked about the history of bitcoin, we covered some of this. It's lasted years and it led to the creation of alternative competing protocols such as Roger Vere's bitcoin cash, known as bcash. So, listen, I hope you enjoy this and as ever, if you've got any feedback, you can reach out to me. My email address is. Hello. Of what?
- [03:24]
Peter McCormack
Bitcoindid.com Jack. Yo, how you doing, man?
- [03:30]
Marty Bent
Yo, what's up, buddy?
- [03:31]
Peter McCormack
All good. We're here in Vegas for tones Unconfiscatable. Should be fun. But we're going to talk about lightning and I've been doing this beginner's guide and what I've tried to do with it is make it as simple and basic as possible. And what's been good is it's been great for new people coming into bitcoin, but it's also been a good refresher for people. But I've avoided talking about lightning so far. And the reason being is that I think throwing people into bitcoin and lightning together at the same time is a bit much.
- [03:58]
Marty Bent
I agree.
- [03:58]
Peter McCormack
Level one, bitcoin. Level two, lightning. Bit like layers, right?
- [04:02]
Marty Bent
Yeah.
- [04:03]
Peter McCormack
So, yeah, I've avoided it so far. And you Know what I really want to get out of this is people who are interested, they learn a bit, they maybe buy a bit of bitcoin, they move it around, they get used to it. But I can't do the whole series without at least mentioning lightning because people are going to hear about it. But anyone listening, really, baby steps. Get used to bitcoin first and then we'll migrate them into lightning. But I think today is the time to get people introduced to lightning. No one I'd rather do it with than you, of course, man. So, yeah, here we go. So we can't talk about lightning without talking about scaling. And people will have heard about the scaling debate. I did a show on the history of bitcoin with Marty Bent. We talked about the scaling debate. So the reason lightning exists is because there's a limit with the block size. Right. So let's break it all down. Let's not even start with what is lightning. Let's talk about why lightning exists. Okay. Yeah, it's a huge topic. So let's do the background. There was a debate about scaling bitcoin. What was that all about?
- [05:08]
Marty Bent
Yeah, I'm going to go as beginner as possible. You tell me if I'm doing a good job, bad job, thumbs up, thumbs down. So, yes, there is a block size limit. And the bitcoin blockchain can only support so much throughput. However, if I were explaining this to some of my hometown buddies who are non technical or to my parents, I would even phrase it differently in that what bitcoin accomplishes is just generally an inefficient thing. Getting consensus between a globally distributed network of peers, so random people all over the world, getting them to agree on something every single 10 minutes. Can you imagine having to text tens of thousands, hundreds of thousands of people and getting them all to agree on one thing every 10 minutes? That's generally an inefficient thing to do. And you can raise things like the size of the blocks, but that's not a scalable solution. This is always going to be. Finding global consensus with a distributed network of computers is always going to be hard. So I like to remove the blockchain part of that because it makes people think, well, bitcoin's blockchain is orange and it's a certain size. But surely the guy on Twitter who made a blue one that's bigger or a green one that's faster, well, that sounds like that blockchain doesn't have the same issue, but it's about what cryptocurrency Bitcoin is trying to achieve is global consensus, for many reasons, is generally an inefficient thing to solve.
- [06:37]
Peter McCormack
Well, let's go back a step then. Let's do a little bit, because I cover the technicals of Shinobi. We talked about how bitcoin works, but let's do a little refresher on that. Let's just do a very basic primer about how bitcoin works, how the transactions get loaded into blocks. Let's just do a quick primer on that.
- [06:52]
Marty Bent
Yeah. So bitcoin transactions are broadcasted on this network. And so to make a bitcoin transaction, it's the equivalent of picking up a megaphone and announcing to the entire world, hey, this is what I'm doing. And I have the authority to do this because this signature pans out like the equivalent of signing a check. Now, the entire world has to receive that message. And maybe you don't have a direct connection to the entire world. Maybe I tell Peter. Then Peter turns around and opens his megaphone and tells your son, and your son tells his friend, and the friend tells his mom. But eventually, this transaction gets broadcasted throughout the network and then gets in the process, it enters what's known as the mempool, and we go into a process of trying to get it included into a block. And miners prioritize these transactions based on the fee that I've announced. Like, hey, I want to send bitcoin to Peter. I'm saying this to the entire world. Can everyone verify that I'm doing this correctly, that I'm honest, that I have the right to do so? Oh, by the way, I'll pay a few cents to do it so that you prioritize me. And then miners work on proof of work, creating a valid block, and they include transactions up to a specific size. And that size exists for a lot of reasons, but. And then they mine a block, and that block gets propagated similarly. And so that's how it works. And so that's clearly, like, very, very inefficient. And raising the size of that block or whatever. What sounds trivial on Twitter is really not. And not only is it not, it's just not a very scalable solution. It's a hot fix.
- [08:28]
Peter McCormack
So as I understand it, the blocks are transacted every 10 minutes. They include about. Every 10 minutes, they include a bunch of transactions. But that block has a limit of one megabyte, right?
- [08:42]
Marty Bent
Yeah. Let's say it has a capped size. Yeah, exactly. So a bitcoin transaction, it's not measured on a per unit. It's measured in bytes. It's a size to it. So it's the equivalent of maybe one liter's worth of water per unit. Right. It's measured in size.
- [09:00]
Peter McCormack
But what we're. And I know there's a difference between the block limit and the block weight. We won't get into that right now. Let's keep it super simple that every 10 minutes, a megabyte of data can be broadcast to the entire network. And the reason the scaling debate happened is because when the first discussions happened, as I understand it, there were a bunch of people looking ahead saying, look, if bitcoin grows, if the network grows, there's a limit to how many transactions we can get in every 10 minutes. We might get to the point where these are full, and if these are full, that means people aren't going to be able to post their transactions. So a debate started, right?
- [09:36]
Marty Bent
Yeah. So even, I mean, if we want to go to. Before the 2017 scaling debate. I've been around since 2013 with my family. The problem was no one knew why bitcoin was important really, or we didn't have such a fundamental understanding that we do today. Like you can go onto TV today and watch someone talk about stock to flow and scarce hard money. You know, back in 2013, that wasn't. That didn't exist. And the beautiful thing about bitcoin is the value is in the eye of the beholder. You know, I've said this before. There's people that are in my hometown, Chicago, that work in the bitcoin space because there's never been such an easy way to make so much money as a trader. And they love bitcoin because they are becoming fabulously wealthy, which is a perfect use case. And some of your interviews, like Venezuela, El Salvador, where people are using bitcoin to enhance their chance of surviving and living a healthier, more prosperous life. And then there was a sector, you know, Silicon Valley, venture capital is how it was marketed as that thought we were going to have things like micropayments and new Internet commerce experiences and there are going to be applications and world computers and it was going to change computing and quantum and every toaster was going to have a miner. There are a lot of these ambitious things which are totally justifiable. If that's your vision of bitcoin, then it is what it is. But then what started to happen is when people understood the technical limits that didn't support some of these ambitions. So much money was backing and going into these ambitions and these projects so that they eventually were like, well, let's just raise it. If we want to be worth. We just raised our series seed round with a valuation of $5 million. And if we need to be worth $15 million by next year, we need the limits to go up. Because on my slide deck it says we can only process this much and so we need to raise those. And that was, in my opinion, sort of the origin. It was competing visions and competing theories on why bitcoin was important, which you can probably relate to today by just following Roger Ver on Twitter. Right. You can probably see that he still has a competing vision for why bitcoin is fundamentally valuable. And that, in my opinion, was what started. Started it. And it got escalated when people realized that they didn't have the authority to make any changes. Yeah.
- [11:50]
Peter McCormack
So interestingly, we were talking down in the lobby and working on a series about the scaling debate is going to come out. Going to talk about what, what happened. And a lot of people will say the scaling debate wasn't about 1, 2 megabyte block size. It was really about control of the network. And that's a very interesting point that people should be aware of that and when they research the history, they'll see it. But what we'll do for the sake of this, we'll keep it to the basics of scaling because it is an interesting debate. And as you said, people are finding different use cases. Some is spending, some is trading. Whatever the use case is, people are transacting on the network and if the blocks are full, what happens?
- [12:31]
Marty Bent
So the issue is that it's going to take a user a longer period of time to find finality in their transaction. So where their transaction is considered cleared or final, and there are trade offs that you can go about in considering that transaction final, you can just pay a lot more to basically budge everyone in line, is the, you know, equivalent analogy.
- [12:53]
Peter McCormack
It's a free market for.
- [12:54]
Marty Bent
Exactly. So I can either pay a premium to budge everyone in line or I have to wait in unknown time. I don't know who else is broadcasting transactions, what transactions are getting relayed to specific peers on the network. So I can set my, my fee at 1sat per byte, at 1 penny or less, and I can just sit and wait around. But if finality in my transaction is valuable to me, then it's going to cost a premium. And that's the problem. If you can imagine a consumer bitcoin application in 2014 trying to get people to buy coffee with it, And a user is basically given the decision, your coffee is $5. Now, you can pay a $5 equivalent fee to have that transaction be finalized in the next, hopefully 10 minutes, or you can pay a negligible fee, but you may have to sit in the coffee shop for, who knows, one hour, 10 hours, two days. And that was the trade off at the time, which obviously was an issue to some people.
- [13:54]
Peter McCormack
So I think the point you're trying to make here is that treating Bitcoin, the base chain, like a commerce layer for transactions, it's not really viable. Even when the mempool is empty, you still can be looking up to maybe an hour for a transaction to get through.
- [14:09]
Marty Bent
Correct? Yeah. So there is no certainty in finality for your transaction, which is the most important. It's never officially cleared until it is in a block and then subject to debate there, six blocks, three blocks, 100 blocks. And so, yeah, and you're correct in saying that the base layer should be isolated from these type of use cases. But I would even bring it back to again, what the base layer is. Solving Bitcoin in its purest form is this Byzantine General's problem of finding consensus. Getting people who don't trust each other, don't know each other, to agree on something every 10 minutes on average. And that will never be inefficient. We'll never be able to scale that to every use case ever. Just period. Don't care about the color of your coin, the engineers of your coin, who founded the coin. If you are trying to accomplish what Bitcoin is trying to accomplish, there's no way around this problem.
- [15:06]
Peter McCormack
Okay, so great lesson there. Don't think of Bitcoin as some everyday commerce purchase. And look, it might be fine if you're buying a house or you're buying a car, because you don't need that instant transaction. It can take an hour. And it's okay to spend 10, 20,000, maybe even $1,000 with a fee of 1, 2, 3 dollars. So the first lesson there is that stop thinking of the base chain as standard E commerce. And great, I get that and I buy that. So if we start talking about the limit of each block being up to a megabyte. We had an experience in 2017 of what happens when there are a lot of transactions. So we had a bull market. There was a lot of trading, a lot of buying and selling. The market went crazy. What happened then?
- [15:51]
Marty Bent
Bitcoin transactions got really expensive. I actually remember I'm going to butcher the year, but this happened before 2017 too. I think it was 2013. And there's a bit later, I think it was 2015, maybe. It was dark times. So Gox had gone insolvent and we had been in a brutal bear market price had gone from 1200 to. I think we were trading at like sub 250. And people were drawing charts of how the block size was getting bigger. And it was hilarious looking back on it. But at the time, I was a newbie too. And I'm looking at these charts and it looks from left to right, this number is going up and they have a big red highlight of where we're gonna hit the limit. And everyone logically would look at this and go, man, if this number keeps going up at the rate that it is, we're gonna hit the red line. And that was a thing. But, you know, looking back, I could have filled a block myself if I wanted to, right. I could have just spammed the network with a ton of dust transit. So that was hilarious looking back on it. But yeah, 2017 was a much more organic. It was out of just pure demand and a lot of speculation, liquidity markets. It was traders.
- [17:08]
Peter McCormack
Yeah. And I remember one point, I think the highest fee I ever paid, I paid a $37 fee for one transaction once.
- [17:15]
Marty Bent
So here's a great example of the free market is that traders had no problem at the time paying the premium. So, for example, let's say in 2017, an ICO raised $200 million, which is like a weekly thing. Now, these people don't know how to manage money. They need cash. So they go market sell, like 2,000 bitcoin@bitstamp. So market sell, meaning you're not setting any specific orders, you're just going to take whatever's available, crash the price and get your bitcoins directly into dollars, into cash. And so what that does is it drives the bitstamp price down because that's where they sold it. But the other exchanges are not tethered to any other price, so they are now trading higher because no one sold on their exchange. So this is what we call an arbitrage opportunity. So let's say Bitstamp is now trading at $16,000 and Coinbase is trading at $20,000. So if I can sell a Bitcoin at Coinbase and buy one at Bitstamp, I'm making $4,000 per Bitcoin. So that's pans out to a beginner. Now, how much, as a trader, would I be willing to hurry up and get bitcoins to coinbase and budge everyone in line and pay crazy high transaction fees. Personally, I would pay a $3,000 transaction fee if I knew that I was going to be able to get this arbitrage trade off. Right. Because I'm making 4,000. If my operational cost to pull it off is 3,000, I'm still netting $1,000 per Bitcoin. And so you had these people that were $37 for a Bitcoin transaction. That sounds cheap. There was so much money to be made. But to the consumer buying coffee, now you're pricing out someone's business who just closed the venture capital round. And this is just the inherent property of bitcoin. It's in the eye of the beholder. It works how it works. It solves an incredibly hard problem with very clear trade offs. But that was a real live example that traders were just pricing everyone out of the mempool because they can afford it. They were making more than they were paying. It was that simple. And they did nothing wrong.
- [19:17]
Peter McCormack
Okay, so if we consider the base chain, the bitcoin base chain as a way of moving value around, I can move value to you, you can move it to somebody else, and to move that value around, I have to bid a price to be included in the block. And the price that I bid will be dependent on how busy the network is, how many other transactions are coming in. So if people consider that, then it's quite obvious that the lower the transaction is like a coffee or even $10, $15, it's not a great way to do it. But if you're moving around thousands, tens of thousands, hundreds of thousands, millions, it's a very good protocol for that.
- [19:53]
Marty Bent
Yeah. And it comes with very distinct properties that make it more valuable than other methods that can do the same feature, because it is censorship resistant, because you can act in a private manner, because it is inherently digital, because it is inherently global, it doesn't know any borders. So there are really inherent strong value propositions to bitcoin. I mean, setting aside all of the monetary characteristics that make it such a sound money, so. Yeah, exactly. But even outside of the fee, let's revisit the block time. Even in a perfect commerce world, if the fee was a solved problem, 10 minutes for finality is still impossible. I mean, online commerce finality is instant for the, for the end consumer. And so, you know, even that within itself, I mean, I don't know what use case I would serve with, you know, free transactions online, but I have to wait a considerable amount of time. Maybe 10, maybe 20, maybe 30. I mean, it seems a little absurd. So, yeah, there's many reasons why, you know, once you come across a fundamental understanding of what's going on, it was very obvious that this wasn't going to solve everyone's problem.
- [21:03]
Peter McCormack
And I will say, anyone who listened to this, who may be a little bit lost, and they didn't listen to the show I did with Shinobi talking about how the base chain works, it's worth going back and revisiting that because it will explain how the blocks get created, it would explain how confirmations work. So if you are. Just go back to that. Okay, so look, I get it, it's a place to move value around. Not good for moving small amounts of value around. But the reason the debate happened is there are. Well, there were a group of people who considered bitcoin as a way to move any amount of value around. They considered it peer to peer cash. So that's where a lot of the debate was. But there is a fundamental reason to try and keep the block size small. Right? Why is that?
- [21:45]
Marty Bent
There's many reasons. So one is what's known as ibd, which stands for initial block download. And so if you think about the cost and effort that goes into wanting to run a full node and validate everything, which, you know, the beauty in Bitcoin is that you have that decision.
- [22:04]
Peter McCormack
I can do it, you can do.
- [22:05]
Marty Bent
It, anyone can do it. If the amount of data, if we basically allow people to DDoS to spam the network and make the amount of data that we have to maintain download and add to extraordinarily high, we want this software to run on like a home laptop, on smaller devices, ideally one day on a cell phone. And so IBD is a big one. Block propagation is a big one. So these blocks get propagated across the network. And it's very advantageous to larger miners that the bigger the data size, they get an advantage. So you're trying to like basically with the megaphone say, hey everyone, I found a new block and get incoming data. But the size of this data has to be. It has to be specific size. It can't be massive because propagating that type of data would be a huge issue and gaming mining would become much more realistic. So I'm trying to be beginner.
- [23:01]
Peter McCormack
No, no, it's fine. I'm just throwing in the reminder there for people that one of the key things about bitcoin is decentralized. And what decentralized means is that the copy of the ledger, which has every transaction exists on every computer that is running a full node. Everybody has a copy. So what you're talking about with propagation is when a new block arrives, once that exists, that has to spread across the network and that spreads by one person telling another, telling another. How long does that take? About.
- [23:30]
Marty Bent
I actually don't know off the top of my head. Block propagation numbers nowadays, I mean, there's so much work. Like Matt Corallo has done such a February network first. He's done such a good job.
- [23:40]
Jack Mallers
But it's pretty quick, right?
- [23:41]
Marty Bent
Absolutely.
- [23:43]
Peter McCormack
And if that was 2 megabytes, 5 megabytes, 20 megabytes.
- [23:46]
Marty Bent
Yeah, let's do, let's say that we set it to unlimited or something astronomically high, it would be the equivalent of, now there's enough space where maybe I can put all my YouTube videos on there and my family photos. And it didn't cost anything because the free market, there's no, there's enough room to fit everyone. Can you imagine wanting to participate in the Bitcoin network? Verify everything yourself, be your own bank and have to download and store everyone's YouTube videos, homework, Google Documents. I mean, like, everyone should be fairly familiar with like their Apple laptop and they get the notification like, you're out of space. You should sign up for our icloud storage program because this laptop only holds a specific amount of data. Can you imagine trying to store everyone in the world's data? So, yeah, and then for someone new that wants to start, we have over a decade now's worth of history with bitcoin and downloading all of that data and verifying it yourself, it would essentially price out any normal person. You would have to have a server function farm that had the computing power and the capacity to store, to be a part of this thing. And that's exactly what it's not about.
- [25:00]
Peter McCormack
So the beauty of it is Bitcoin is a very secure network, Very, very secure network for transacting and sending value around. But at the same time it makes it highly decentralized because almost anyone like this laptop here, I can keep a full copy. Whereas what you're saying is that if, you know, if the block size was unlimited and say each block was like 500 megabytes or a gigabyte, I couldn't do it on this laptop. So the idea, a lot of the people who want to keep the block size down is they want to maximize decentralization by allowing anyone to run a full node.
- [25:32]
Marty Bent
Yeah, yeah. And in my brain I'm going, I'm forking the road because there's so many things. So that's absolutely correct. Block propagation for mining is also absolutely correct. You also have to think about it. I myself use Bitcoin as a store of value and changing the rules from up under me is a huge problem. So I run many full nodes and not only am I verifying blocks and transactions, but I'm also verifying the monetary policy, that someone can't mint a block with 10 million bitcoin in it, and that everyone is following the rules and that the properties that I signed up for in 2013 are still intact. So it's, it's your ability to verify everything, transactions, the monetary policy authority to move money. That ability, that right is foundational and you don't have to go by anyone to come across that right. You can download free and open source software to gain the right to not only be your own bank, but verify a global money.
- [26:34]
Peter McCormack
And there are examples where this has gone wrong as well. So for example, Ethereum, their blocks can be quite huge, right? The whole blockchain is massive. And we've talked about Bitcoin trying to be maximally decentralized, whereas Ethereum now is hitting on a trajectory of becoming more centralized because it's very hard for people to run a full node.
- [26:53]
Marty Bent
Yeah. So I know there was some public shaming where people tried to run a full node and get through this initial block download that we're describing.
- [27:02]
Peter McCormack
Eric Wall. Eric Wall did it and I'll share his tweetstorm about that in the show Notes.
- [27:05]
Marty Bent
Yeah, the data set was so large and also the Ethereum clients sound like they're very buggy. And for all of the so called amazingly talented engineers that work on Ethereum, there sure are a lot of bugs for something worth so many billions of dollars. So it seemed like there were more than one issue. But yeah, initial block download for Ethereum is a huge problem.
- [27:28]
Jack Mallers
Next up, I talked to Jack Moore about the Lightning Network, but before that I got a message from my amazing sponsors. So for the last few weeks I've been talking about Cypher Safe. And if you want a really cool way to back up your private keys, then the newly released Cypher Wheel is super cool. And you know what? They've given me a couple to give away. So look, when I get back to the uk, I'm going to do a little competition online, put it up on Twitter and have a chance for a couple of you to win them. It is a unique way for you to store your private keys and it's machined from solid stainless steel. They went through one of Jameson Lopp's famous tests where he hammers the shit out of these devices to see if there are any weak points. And you know what? They updated their steel to 303 stainless. I don't know what the fuck that means, but it sounds badass. And if it passed one of Jameson Lopp's tests, then it must be pretty fucking cool. The cipher wheel is designed to be physically stored with a padlock and comes with a tamper evident seal so you can be aware if there have been any attempts to steal your seed words. So listen, if you bought a hardware wallet, if you're taking your bitcoin security seriously, you need to go the extra step and secure it from physical disaster with a cipher wheel seed storage device. If you want to find out more, head over to CipherSafe IO which is C Y P H E R S A F E I O Also a big shout out to Travel by Bit. They just sponsored my recent travel through South America. I was recording a bunch of video content. I was meeting bitcoiners but also looking at the protests in Santiago, Chile and I also took a visit to Venezuela, Colombia and El Salvador. There's also a trailer for that that's available on my Twitter. Just go through my feed and you'll find it. Some pretty cool stuff there. But let's talk about Travel by Bit. They are a travel website which allows you to book flights and hotels using your bitcoin and they also offer sats back on purchases up to 10%. Historically I use Expedia and Momondo. I'm always looking for the cheapest price. I've added travel by bidding and you know, on some of the routes they were even cheaper. So if you want to find out more, if you want to book with bitcoin or look for decent prices or get some stats back, head over to travelbybit.com which is t R a V E L B y B I T dot com and lastly this week, and definitely not least is Cointracker. And you know what, I've got some feedback. People are saying you've got a bitcoin show. Why the hell are you promoting a tax service? Well listen, exchanges are getting subpoenaed. If you don't pay your taxes, you are at threat from being investigated by the government. It's up to you whether you choose to pay your tax or not. I do. I don't want to deal with that shit. And Cointracker was the easiest way for me to figure it all out going through every single transaction and figuring out, look, it's a pain and they've done all this shit for you. You just connect your wallet in exchanges and it does all the difficult calculations for you. Filings work in the us, uk, Canada and Australia, and they've had over a hundred thousand users sign up to them. It is free for users who have 200 or fewer transactions in a year. And if you've got more, listen to this show, can get 10% off by using the link COINTrackerIO AWBD. They do also have an app. It's available in the Apple and Android app stores. But if you want to use the service, head over to their website, which is Cointracker IO, which is C O I N T R A C K E R IO.
- [30:38]
Peter McCormack
So we're just trying to maintain maximum decentralization, allow for fast propagation. We're just trying to allow this network to work in a decentralized way. So, look, I understand it. I get why the block size should be kept as small as possible. There were some people who disagreed. Some people wanted all transactions to be in Bitcoin. So the two competing visions, as I understand it, is to raise the block size to 4, 8 megabytes and keep loading up the blockchain with that. Or the other vision was to scale Bitcoin using Layer two technology. So this is where we're going to introduce lightning. This is where I can say to you, Jack, what is the Lightning Network?
- [31:14]
Marty Bent
Yeah, so at the time, it was hard for me to decipher on whether these people that had competing visions were being malicious, just technically illiterate, whatever it was. But for anyone fairly competent or just maybe just listening to this podcast, it's very clear that this was largely unsolvable problem at the base layer. Why is that? Is that we were broadcasting transactions to everyone that wanted to listen and having to come to consensus with everyone that wanted to listen frequently, and that it's not about the block size or the blockchain. Distributed consensus is an extremely hard problem to solve for and it results in various inefficiencies. So it was very obvious to those that had the competency that if we were going to scale Bitcoin's TPS transactions per second, we weren't going to do it in this global consensus manner. We wanted to do it in what's known as link to link, a relationship that just exists between one person and another. Because if all I had to do to send a Bitcoin transaction and acquire some form of finality is just Tell Peter about it and not everyone else in the world not have to verify and propagate and get it included into a distributed ledger. If all I had to do is say, hey, Peter, I want to send you a dollar, and then that was done, that would be infinitely more scalable. Right. And so that is the. What underpins lightning is that it is not. You don't broadcast all of this information globally. No one on Lightning stores data infinitely that anyone can append to. It is a link to link relationship rather than a broadcasted peer relationship, I guess.
- [33:02]
Peter McCormack
So we can go into a bit of the technical stuff here, and I will rein you in if it goes a bit too technical, but we can cover some of that here. We can talk about how it works. I think people will be interested. And I would say, look, as we go through this, if your mind's a bit blown, you're thinking this is a bit much, don't worry your actual user experience when you start playing with lightning, get your head around it will be fine. But just out of interest, can you talk about how technically it works?
- [33:26]
Marty Bent
Yeah. So lightning is a layer on top of Bitcoin. And so every Lightning participant is a separate peer and they run a node, and there is a separate protocol which is just simply messages defined on how these peers talk to each other. So how would I say, hey, Peter, I would like to send you a dollar that is all defined separately and lives you can visualize on top of Bitcoin instead of maybe within Bitcoin.
- [33:53]
Peter McCormack
Okay.
- [33:54]
Marty Bent
And so what we want to accomplish is that we can essentially update each other's balances in real time without having to tell everyone else about this. And so how it works is we open what's called a channel. You can think of a channel as like a ways of communicating between each other and storing our balance. And we do that on the Bitcoin blockchain. So we do make an initial transaction on the blockchain which establishes our starting balance, let's say. So I open a channel to Peter, which is a line of communication and the start of our lightning relationship. And I give myself $10 and Peter has zero. And we now have a lightning channel. And then what we do is we continually update this transaction between each other through ways of cryptographic signatures. There's ways of protecting against what's known as cheating. And for finality. And so we are able to, in real time, exchange just simple messages like, hey, I want to send you a dollar, quickly sign these contracts, and then update our balance. So now I have $9. Peter has one. Peter mows my lawn tomorrow morning. Now I have $8, Peter has two. And we're doing this just between each other, and we don't have to broadcast it globally, there's no form of consensus globally. This is a link to link relationship. It is a Jack to Peter relationship. There's no consensus. There's no block propagation. There's no distributed ledger. And so that is the inherent benefit and why it scales infinitely. You know, hopefully that's clear. It just scales infinitely better.
- [35:31]
Peter McCormack
So we just send money back and forth to each other in this channel. And they're generally referred to as sats, which is a denomination of bitcoin, but we just send it sats back and forth to each other. So I understand that. So if that works, then do I have to open up a channel with everybody? I want to send money, right?
- [35:47]
Marty Bent
Of course not. That would defeat the purpose. Right. How many times have you and I transacted in Bitcoin, Peter?
- [35:52]
Peter McCormack
Have we actually done it yet?
- [35:53]
Marty Bent
Zero.
- [35:53]
Peter McCormack
Yeah. Zero.
- [35:54]
Marty Bent
Right. If for some weekend or for some reason this weekend in Vegas, we had to, it surely would be a shame if I had to open a channel just to do it. And that may be the only transaction we ever do in our lifetime. And so, no, what Lightning accomplishes through what's called an HTLC is a. You know, I'm sure everyone has heard the term smart contract in Bitcoin. Bitcoin is programmable money. So you can define the rules and enter what you can think of as traditional contracts. And through these contracts, you can trustlessly route payments between peers. So if I wanted to pay, let's say, Tone Vase, the host of this conference, if Peter has a relationship with Tone and I have a relationship with Peter, in theory, I can pay Tone trustlessly by leveraging Peter to forward that payment. Now, there are some caveats, like Peter has to have the capacity and the coins to basically front me. But that is how it works. And so that you should be able to leverage a few healthy relationships within the Lightning Network to pay a large, vast majority of it.
- [37:00]
Peter McCormack
Okay, so I kind of get the picture of what you're saying here. And the stuff you're saying is all happening in the background. People aren't really aware of what's going on. But I think what you're saying is as more people join the Lightning Network, it becomes a lot easier to send money from one person to the other because it just routes it through various different people and it all happens in the background and nobody knows what's going on.
- [37:19]
Marty Bent
Yeah. So when Peter asked me to try and explain lightning at a beginner level, I was doing some thinking in the shower, and this is sort of my attempt and cut this out, a few things.
- [37:28]
Peter McCormack
That's fine. Leaving this in now.
- [37:31]
Marty Bent
So let's think about this. Is we have this established channel, and paying each other back and forth is trivial. I have 10, Peter has zero. So if Peter tries to send me a payment, we would reject it because Peter has zero. If I try and send Peter two, we sign these contracts and say, hey, listen, the Balance is now 8 to 2. Agree, agree, signed. And that is legally binding for all intents and purposes, right? You know, not. Not literally, but now it's legally binding that I have eight, Peter has two. Okay, now, the question then is, how do we trustlessly get money to Tone, who Peter has a separate relationship with and that I don't? Because who's to say? Like, Tone can just say, you know, I'm buying a cocktail from Tone. And Tone can accept the money and say he never received it and never give me the cocktail. Or I can give the money to Peter, say, hey, Peter, please, man. It's a long weekend in Vegas. I'm hungover. You mind paying Tone for me? And Peter can just never do it and pocket the money himself, buy his own cocktail. So the question was, how do we trustlessly do this? And so what? You know, the engineers of lightning. So, by the way, you know, the white paper was written in 2015. People have been working on this for. It's been in development for years. They came up with was, I say, tone, I would like to send you $5 for a cocktail. And I know that Peter has a $10 balance in his relationship with you, right? So you have your own channel, and you can pay tone up to 10 bucks. And I have a channel with you, and I can pay you up to 10 bucks. So I have mentally mapped in my head, I said, okay, so if I can send Peter $5, which would make our relationship 5 to 5, then Peter can send 5 to Tone, which would make his 5 to 5. This should work out perfect. And so what we do is, I say, hey, Tone, I'd like to send you $5. What tone does is he creates a secret passphrase, and he hashes it so that I don't know the actual passphrase. And he gives it to me, the hashtag, and he says, here. Here's this hash. And I create a contract with Peter. And I say, hey, Peter, here's the deal. $5 stapled to this contract. But the contract doesn't actually execute until you find the secret to this thing. You have to find the secret. And the way you get the secret is you give Tone five bucks because Tone wants my $5. And so you cannot run away with the $5 because the contract is in void. You. You can't cash that into the bank unless you get Tone secret. And you say, fuck, I thought I was going to get a free drink, but it turns out I have to get this secret. So you say, fine. Now this isn't money you can spend, right? So you have to have your own $5 to tone, and you say, fine. Hey, Tone, I have this contract. Listen, I need the secret. Supposedly it costs $5. Here's the $5. Give me the secret. And then Tone reveals the secret to you. Now you enter it on the contract I gave you, which in turn reveals the secret to me. And now I have cryptographic proof that this payment happened.
- [40:28]
Peter McCormack
Okay?
- [40:29]
Marty Bent
And Tone can never deny it, right? And this is how routing in a really simplistic way works. And so then we build simple incentives, like, Peter, I will give you $5.01 if you can fulfill this contract with Tone for $5. And so you net a penny for doing this job for me, right? And you can signal within the network how much you charge for doing this job. Some people may say, listen, I don't need money. I'm retired. This is a pain in the ass when I do it. So I charge $100 to route your smart contracts. Fuck you. Or some guy's like, I love bitcoin so much. I'm down for the cause. I don't charge anything. I take everything to the face.
- [41:12]
Peter McCormack
Another free market.
- [41:13]
Marty Bent
Yeah, hopefully that was long winded, but I thought of that one in the shower. Hopefully. That makes sense. Is Lightning uses these contracts, is that we're all writing contracts on the fly. And we're able to pass them around using these little secret passwords that we're hashing. So someone can create a password, hash it, and pass it to someone and say, yeah, if I get the money, I'll reveal the secret. But it's your job then to figure out who's going to get me the money. And then when the money's gotten the secrets revealed, then everyone wins.
- [41:44]
Peter McCormack
And the beauty of this is somebody might be listening. I've got to phone up Tone and say, tone, what's this password? You don't have to do anything. All this happens in the background automatically. It fires away. And you know what? There could be some dude out in Japan who I owe $50 to, I want to pay him via lightning. And I can make the payment and it will just whiz through all these, route like fastest shit through all these different people. And everyone's different amounts will update and add and decrease as required. And that, that will instantly, almost instantly get to that person.
- [42:15]
Marty Bent
Yeah. So let's do a real world example. So let's say there's a world where Amazon accepts lightning.
- [42:20]
Peter McCormack
Okay?
- [42:21]
Marty Bent
So me asking Amazon to create a secret and hash, it would be the equivalent of checking out. Everyone's had this experience. So I add a T shirt, I add a coffee mug, I check out. Now when I check out, that's the equivalent of me saying, hey, Amazon, I'd like to send you money. And their response is, cool, I'm going to quickly create a secret, I'm going to hash it and present it to you. And they could present it to me in various forms. The most typical is a QR code. And that's my way of digesting all the data that they want to send me. So the amount, the memo, whatever is required for their checkout process. But included in that is this hash and that. I then get to go find my own route to Amazon. Maybe I have a relationship to Amazon directly, maybe Peter does, maybe I don't have one. And then I get to pass these contracts around and say, hey, listen, wave the money in there, I'll pay you. I'm looking to get this money to Amazon and get this T shirt. And this all happens in about a second. And it's gorgeous because again, we aren't with a megaphone announcing to the entire world, hey, everyone, listen, I want to send money, verify it, mint it into a block, propagate that block. Give me some finality. That could take 10 minutes, it could take a day. All this is happening in one second. And because of these contracts, we're getting finality instantly. And so I think Lightning's killer app, quote unquote, is instant transactions. It's not a specific app or a specific use case. It's not micropayments or this and that. It's that you get to clear and have finality with physical value instantly. It's the first asset that's ever been able to to do that. And that's the killer app. At very low cost, at extremely low cost. Let's say I was trying to pay tone the $5 for the cocktail. And Peter all of a sudden gets cocky, like, man, I've routed three of Jack's payments. He's getting a little buzz. That's three cocktails for I'm five eight, one fifty. He shouldn't drink anymore. I'm raising it to $20. So if Jack wants to buy another $5 cocktail, he's gotta pay me a $20 fee. Well, what's the incentive for Jimmy Song to now open a channel to Tone and say, hey Jack, I actually now have liquidity with Tone, but I'm only charging 15. How's that? Tell Peter to suck one. And someone else says, oh, 15. I can run a lightning node on my laptop at home and I can charge 2 cents. I'm going to, I'm going to undercut these guys all day. And right, so it is a free market, it's insanely competitive. So naturally prices are, you know, unbelievably low because how trivial it is. You don't need a computer science degree, you just need to download free software and have the capital the bitcoin to allocate to peers and then you can set whatever fees you want.
- [45:00]
Peter McCormack
So dude, we're all fucking wasted now.
- [45:02]
Marty Bent
I'm blacked out. Yeah, my mom's gonna kill you.
- [45:05]
Peter McCormack
Yeah, she's gone losing that shit with me.
- [45:07]
Jack Mallers
What did you do to Jack?
- [45:09]
Peter McCormack
We trusted you, Peter. All right, so listen, I get it, I get how it works. Now let's try and explain the actual experience for the users when they first see lightning because they might be listening to this and going, what the hell? Let's talk about the actual experience and.
- [45:24]
Jack Mallers
Let'S just be aware there are bitcoin.
- [45:25]
Peter McCormack
Wallets and there are lightning wallets. Some of the lightnings are custodial, which means you trust somebody else to store the lightning for you. Some are non custodial where you are holding it. But let's talk about the. Just go with the non custodial wallet. So let's talk about that experience. So they want to test lightning out. They want to have a first play with lightning. They download a lightning wallet. What do they do to actually get some bitcoin into that wallet? What's the process?
- [45:52]
Marty Bent
I think it depends on the trade offs you want. But there are lightning wallets out there like Phoenix, where all you have to do is deposit to it like a traditional bitcoin transaction. And all of a sudden you can scan and pay these lightning QR codes.
- [46:04]
Peter McCormack
All right, so if somebody's already done a transaction, they've maybe sent it from a Coinbase or a Kraken to their bitcoin wallet, they'll have a lightning wallet. And maybe they'll just send like 0.01 of a bitcoin into this lightning one. And it will. What's actually happening here is suddenly turning them into lightning bitcoin. Talk about what happens.
- [46:22]
Marty Bent
Oh man. So it really depends on the wallet of your choice and these types of preference. Instance. So if you send it to a wallet like Blue wallet, this is a custodial wallet where the bitcoins you send them aren't necessarily the ones that you're spending. They already have bitcoins on lightning for you ready to use. And you're basically depositing bitcoin as collateral to spend out of their lightning wallet. Right.
- [46:46]
Peter McCormack
Okay.
- [46:46]
Marty Bent
Something like Phoenix or Breeze they're using. They're much more clever in that you can pay to Phoenix. They're going to open what's known as like a turbo channel and allow you to spend money instantly. But essentially you're going about the process of establishing these relationships on the lightning network or leveraging someone else's relationships. Right. You have to have, it is a separate protocol. So you have to have a ways of communicating with all these people on this network and be able to say, hey Peter, I want to send you a dollar. Hey Peter, can you forward tone a dollar? You have to have a way to talk to these people. And so that's, that's all these wallets are doing. They're just letting you talk to them.
- [47:24]
Peter McCormack
Okay. So I get myself a lightning wallet. Send a little bit of bitcoin there. One of the things we have to remember and remind people that whilst lightning is fast, that first transaction into the lightning wallet is still a bitcoin transaction. Right. So they're going to have to wait for that to confirm sometimes potentially, yeah, depending on the wallet.
- [47:40]
Marty Bent
You're right.
- [47:40]
Peter McCormack
Yeah.
- [47:41]
Marty Bent
Like Phoenix for example, allows you to accept instantly with a zero balance. And again, there's so many trade offs to the point where to a beginner I would advise you not to rack your brain on a lot of trying to understand the difference between all of this. The user experience is going to be so great.
- [47:59]
Peter McCormack
But just have a play and then start to understand the different trade offs that each wallet has.
- [48:04]
Marty Bent
I think that us as humans are going to bump into more and more QR codes as life goes on. Lightning QR codes. There's so many advantages to this as a payment rail and ways of finality and settlement. And so yeah, you'll bump into one, you should just try and pay it. Have fun.
- [48:21]
Peter McCormack
Okay.
- [48:21]
Marty Bent
Get a wallet and scan it and experience it.
- [48:24]
Peter McCormack
And one of the main differences with the experience that people have to get used to is that most bitcoin wallets exist priced in bitcoin with the decimal 1 point something, something bitcoin. But when you go into the world of lightning, everything's pretty much priced in SATs. What is that? Explain that to somebody.
- [48:40]
Marty Bent
So satoshi is a denomination of bitcoin. So one bitcoin is 100 million satoshis. And so a satoshi is just a much friendlier denomination to a wallet that's dealing in such smaller sizes. If one Bitcoin right now, let's say is exchanged at $10,000 per unit, it'd be really tough for me to say in bitcoin how much five bucks is. Whereas satoshi's is just a much friendlier denomination to say, hey can I pay you 10,000 sats instead of 0.0000001 or something.
- [49:19]
Peter McCormack
That makes sense. So for the user, if they've got a bitcoin wallet, say it's got a bitcoin in it and they send 0.01 Bitcoin into their lightning wallet. That means they're going to have a million SATs. Yeah. So it's just a denomination that's like something easy to get their head around. If somebody is new as coming into.
- [49:36]
Jack Mallers
The lightning as well, is there anything.
- [49:37]
Peter McCormack
Else you think they need to be aware of?
- [49:40]
Marty Bent
No, I think, I think you just got to try it.
- [49:43]
Peter McCormack
I do just have a play.
- [49:44]
Marty Bent
This the. Yeah, the same message that we were talking about earlier and that the value of bitcoin is in the eye of the beholder. It's very similar in lightning. You know, if you're interested in the technical, if you want to understand how your wallet works, there's so many resources available to you, but maybe you're not, maybe you don't care at all. And maybe you just want to scan a QR code because you need to play the game or buy the article or send your friend money remittance. So just have a try. It would be my, would be my suggestion. There is no outrageous risk or fear. You know, there I'm sure everyone's familiar at this point that's listening to the risk of custodial versus non custodial. Those type of trade offs still exist in lightning as they would to normal bitcoin storing on exchanges versus storing your own keys. And so that, that still scales to lightning. But outside of that, as long as you understand the trade offs, I would just, just have a try.
- [50:34]
Peter McCormack
That's very similar to the message I've had with Bitcoin all along is that.
- [50:37]
Jack Mallers
It can be very overwhelming.
- [50:38]
Peter McCormack
You can listen to all this stuff about the technicals and how it works and mining and your propagation, and you can be scared off by it. But really, once you go and buy your first bit of bitcoin and you download a wallet and you send it to yourself, you get a picture of how easy it is, and it's like a eureka moment where that transaction appears.
- [50:55]
Jack Mallers
It's very similar with lightning.
- [50:56]
Peter McCormack
But the great thing, as you said with lightning is instant finality.
- [50:59]
Marty Bent
Yep.
- [50:59]
Peter McCormack
All right, cool. So that's cool.
- [51:01]
Jack Mallers
I get it.
- [51:02]
Peter McCormack
What about some of the interest in tech that's coming with lightning? Is there any future tech that's coming?
- [51:06]
Jack Mallers
I mean, you're working on something, you.
- [51:07]
Peter McCormack
Should talk about that. But is there anything else that's coming that people should be excited by?
- [51:10]
Marty Bent
Oh, all the time. So if you take the concept of instant clearing and settlement of an asset natively, and what I mean by that is, you know, sending the United States dollar maybe from New York to California may seem instant on your app, but it's not physically moving that dollar. Right. Bitcoin is natively digital, which is an amazing thing. And we are physically clearing and considering a transaction final in real time to a physical asset. And that is an amazingly powerful killer app. And, and so how that feature of this money, bitcoin can impact people's lives. There's so many cool takes. Right? I think trading is going to be a big deal with Lightning because if we go back to that trading example earlier of I needed to get coins to Coinbase and I was paying $1,000 fees just to get there first in 10 minutes. With lightning, in theory, I can get there in less than a second. And so I think instant finality for this commodity in markets is going to be a huge deal. There's going to be a lot of demand. I think instant finality in online commerce and consumer payments is going to be a big deal. I think instant finality for remittance payments that can make remittance payments now that are generally close to free, extremely cheap compared to Western Union, and they settle instantly and they know no borders. I think all of this stuff to a beginner, everyone should be really excited that this is one of the more important enhancements and inventions in money. If we think of money as a technology, Lightning is a huge development in money as a technology. It's a really, really big deal. We've never seen a money be able to act like this. And so To a beginner, I think everyone should be generally pretty excited. How would instant finality affect your life? I have no idea. But everyone should, everyone has an opinion and so many people are working on it and so it's just generally exciting time.
- [53:02]
Peter McCormack
So if you do take an interest, it is worth going down the rabbit hole a little bit, learning a bit more about how it works in the background, getting an idea about the trade offs for the wallets and just having a plan. It's very cool. Okay, look, we can't close out this show without you talking about Strike. Yeah, Jack's been on the show. If you haven't never listened to my show before, Jack's been on. Is this your third or fourth time? I've actually lost count.
- [53:23]
Marty Bent
Oh man. I think, I think this is your fourth.
- [53:25]
Peter McCormack
Yeah, this is your fourth time. We've talked about lightning before. He was at first time Jack was on the show is when I did a series about lightning. It's up on my website. Did a whole month of shows about lightnings. Worth checking that out. We met in Boston, did our first show. But yeah, Jack's been on the show a few times but recently announced a new product. He's got lightning. Do you call it Lightning Strike or just Strike?
- [53:43]
Marty Bent
I call it Strike Strike.
- [53:44]
Peter McCormack
So talk about Strike. Explain what it is because I think it's worth hearing.
- [53:47]
Marty Bent
Yeah. So if we think about all these, the lightning network and all of these trade offs, the problem Strike was trying to solve, is trying to solve and is solving is that people are going to be bumping into these QR codes more and more. And Lightning, for all of its benefits, it's going to be part of everyone's life as time goes on. And so the question is, how does someone trivially scan the QR code or trivially be able to display one and accept a QR code? And so yes, you can download a custodial wallet, yes, you can set up a non custodial wallet. But Strike is for users that don't care to own Bitcoin. They don't want to deal with the volatility, they don't want to deal with taxes and report to the irs. They just want to pay the article. If an article costs 5 cents, they just want to be able to scan the QR code and click Pay and that's it. They don't want to go to Coinbase, they don't want to have to pay taxes on it. And so Strike allows you to link a, a bank account or a debit card, various payment methods and Scan the QR code. And so the infrastructure handles all of the conversion, the volatility, the taxes, the lightning infrastructure and paying and managing liquidity and creating these contracts we talked about and cryptographically signing them. It does all of that in the background so that you basically get to interact with this new economy online that has these features of instant finality to small, tiny micropay to global remittance. You get to participate in this economy with your bank account. And you don't need to own bitcoin. You don't need to be very geeky or have to spend time understanding trade offs. All you need is a bank account to be able to participate. And so we just really try to lower the barrier of entry.
- [55:23]
Peter McCormack
And how's it going? When can we play with it? When can I get my house in it?
- [55:26]
Marty Bent
Dude, it's great. So we have this beta and thousands of people have signed up and it gets bigger every time I refresh. So that's overwhelming for us. So right now I hand out a batch of invites every week, but now it's getting quicker twice a week. And so we're hoping to unleash the beast fully publicly before this coder. Co. Excuse me, quarter is over. So what is that, like 40 days or so?
- [55:52]
Peter McCormack
Can you bump me?
- [55:53]
Marty Bent
Yeah, of course.
- [55:54]
Peter McCormack
Put me up, let me have a play.
- [55:55]
Marty Bent
Yeah, you'd be our first out of US user. So everyone on Twitter is going to be super jealous.
- [55:59]
Jack Mallers
But yeah, yeah, like I won that.
- [56:01]
Peter McCormack
I won that. All right, cool. So that sounds amazing. Can't wait for the release of that. And also all this stuff on Lightning. Super interesting. Appreciate you coming on and doing it. But look, you know lightning better than anyone. To me anyway, you're like my person.
- [56:14]
Jack Mallers
I come to the lightning stuff.
- [56:16]
Peter McCormack
But other resources out there, like I sent people to Lop's website for resources. I know he covers lightning there as well. Are there any other places people can go and learn about lightning?
- [56:25]
Marty Bent
You know what? Yes, of course. Give it a Google. Google. Like there's a bitcoin wiki I think is great. Which I don't know if that's the actual name, but it's by David Harding, is fantastic. It's one of my introductory understandings of some of the lower level. But I can say that the, you know, one of the best commodities of bitcoin is the people. I've learned more from people than I have in bitcoin than I have in my entire life and anything else. So when Peter asked me to do this episode, I was very nervous. On how I was going to try and explain lightning to a beginner. And I hope I did a good job, but if I didn't do a good enough one, you can just hit me up. There are Slack channels like the Lightning Lab, Slack community. There's plenty of telegram groups, the Zap Slack where these people are so nice and so brilliant and so smart and they're willing to help. And so that's what I would say is if you have enough of a desire, just ask questions. It's the best way to learn.
- [57:20]
Peter McCormack
Alright, so where can people hit you up, Jack?
- [57:22]
Marty Bent
I'm just my full name everywhere online pretty much. So Jack Mallers on Twitter is the best way.
- [57:29]
Peter McCormack
All right, cool. Well, listen, look, I'm gonna say to people, if you didn't listen to my show with Shinobi before this, go back and listen to it. Look, go and listen to all of the beginner's guide shows because they're all helpful, they all lead up to this. But then also maybe after this you want to check out my Lightning series. A bunch of cool interviews there, really helpful. But same lesson as all along.
- [57:47]
Jack Mallers
Just go and download a wallet, have a play.
- [57:49]
Peter McCormack
You'll get the hang of it. By playing with it. You might screw up, you're only going to lose a couple of dollars here or there, but just go and have a play. That's the way to do it, man.
- [57:56]
Marty Bent
I agree.
- [57:56]
Peter McCormack
All right, Jack, as ever, thanks for having me, buddy. Let's go and enjoy Vegas.
- [58:00]
Marty Bent
Alright.
- [58:00]
Peter McCormack
Alright man.
- [58:04]
Jack Mallers
All right. So what did you think of that? A bit complicated at times. Look, it was for me when I first got into Bitcoin and I started looking to the Lightning Network. I was lost with it. It was very complicated, but I learned by using it. Like I've said with the base chain, just by playing with lightning, I've got the hang of it. There are some intricacies. There are custodial wallets and non custodial wallets and you need to understand what the difference between them is. But listen, if you're new to this, if you're just getting used to transacting on the base chain, then the Lightning Network may be too much of a jump right now. But it's an important scaling solution for bitcoin. So as you go down the rabbit hole, this will be something you will have to come back to. And like I said, the easiest way to learn is by using it by downloading a wallet, by sending some satoshis around and you can follow that up with some further reading. Lops always got some amazing resources on his website, but there will be more in the show notes. I also have a series about Lightning which I recorded last year. I did nine shows over the space of a month. That's up on my website. If you go to whatbitcoindid.com, there's a section for all my specials. Go in there. All the shows are there. Lightning is still relatively new, but in the past year we've seen so many UX improvements. Some of the intricacies and difficulties are being abstracted away with some really great development work. And also I love hearing from Jack. He's such a great thinker with Lightning. He's always seeing the big picture. I think this is the fourth time now he's been on the show so look, a big thanks to Jack. Definitely worth checking out his Zap wallet and also strike something new he's been working on which is very exciting. Anyway, I hope you enjoyed this. As we're getting to the end of the Beginner's Guide, if you haven't listened to them all, make sure you go back and check them out. If you've got any feedback, let me know. And if you think your friends or family would benefit from that, please fire over to them. I have bought a domain name. I think it was the beginner's guide to bitcoin.com so I'm going to put all the shows up there. I'm also thinking of a way of turning them all into like an animated narrated series, so bear with me while I work on that. But as ever, if you've got feedback, you've got questions, you can always hit me up. My email address is hellohatbitcoindid.com and I do try and reply to everyone. Also, if you like the show and you want to support it. If you think Pete, thank you. I love what you're doing with the show. There's a whole bunch of things you can do. Even just leaving me a review on itunes is super helpful, but it's all listed on my website. Just go to what bitcoindid.com click on the support section. There's a whole list of things you can do to help with the show. Anyway, I'm in Vegas. I'm here for Tone vay's Unconfiscatable Event.
- [60:22]
Peter McCormack
It's getting late.
- [60:23]
Jack Mallers
I'm going to go and get a trip drink. Hope you enjoy the show. As I keep saying, my email address is hello, what bitcoin.com. if you want anything, just hit me up.