B (3:29)

Do you think if you launched it in the current regulatory and administrative environment that it would have been different or do you still think that the size of Meta would have been prohibitive?

C (3:39)

I don't know. I mean, look, if you look at even the latest draft of the genius bill, there's a section in there that is clearly designed for companies like Meta not to do it. And so I think it's just a matter of scale. Swift Correspondent Banking, JP Morgan Global Money Movement Platform, Citi Global Money Movement Platform moves tens of trillions of dollars a day. And so stablecoins are for now barely making a dent. It's growing, but there's no real systemic threat to the unit of accounts that are controlled by the central banks of all of the major countries. And I think building infrastructure on top of Bitcoin, which is truly neutral digital money, is the way to go. And then you can actually use stablecoins on top of bitcoin if you're actually performing a dollar to dollar transaction or for places where people would rather have a fake dollar account, so to speak, dollar bank account because they can't have the real thing in all kinds of different parts of the world, then stablecoins are very, very useful. And we can use that on top of Bitcoin as well.

B (4:50)

Now interestingly, we've seen stablecoins explode. Obviously you could argue that beyond bitcoin it's been the killer use case for crypto and for blockchain technology, but we haven't seen it on bitcoin. Why is that?

C (5:01)

Well, I think there are a series of limitations. So Bitcoin as we all know is, is not very programmable, it's not very easy to build on for developers. It doesn't have smart contracts as such. It was really, really hard to do. And so we've been building on lightning for the last three years and there were attempts, or there are attempts to actually issue stablecoins on top of lightning. We reached a conclusion that that was not going to work because of the channel setup of Lightning. Lightning is a channel based payment system. If you want stablecoins to actually exist on top of Lightning, every party that transacts with another needs to configure specific channels for the specific stablecoin that they're about to move. You need to provision liquidity in all of these channels. It splits the liquidity in many, many channels. So it's not capital efficient. It's not actually competitive with other fast networks like Solana or Base or other non bitcoin types of networks. And so we kind of realized that. And about a month ago, not even a month ago, we launched Spark, which is a brand new Bitcoin L2 that we're very excited about. But obviously not only we are very excited about. Many builders and developers around the world are very excited about because it takes the best from Lightning, which is real time cheap fast transactions. But it works for self custody wallets, which Lightning doesn't really work well with. And it enables native issuance of stablecoins on top of Bitcoin for the first time with lots of great attributes. Notably you don't have to pay gas fees with a foreign asset because you pay it in the asset you're transmitting. So this is the way we believe.

B (6:59)

Is this a base layer for multiple stablecoins or do you think that it will be a single stablecoin like a tether or a circle? Or will you actually have a migration of those to spark?

C (7:10)

The way we look at things is that we want all of the best stablecoins on top of the network. We are very much asset agnostic. The only thing we care about is that the network that moves the value is Bitcoin. That's the only thing we care about. However people want to get paid or pay, they should be able to do it on top of the network. And that's how Bitcoin wins is by being asset agnostic. You want to move US dollars, not stablecoin. You want to move US dollars from your bank account to someone in Mexico receiving Mexican peso in real time on top of Bitcoin, you can do that. You want to send stablecoins to a self custody wallet in the other side of the world in real time, you can do that too. And, and we make it all interoperable with one another. So asset agnostic, build an open money grid on top of Bitcoin that settles in real time 24, 7 at a very low cost, supports all the assets, connects with all of the domestic real time payment systems in the world. That's basically what we're doing at lightspark.

B (8:11)

And there's no concern that stablecoins have proliferated so much on other networks, they've become so popular that stablecoins on bitcoin can't catch up?

C (8:19)

No, look, I think people assume that a stablecoin is both a digital version of the dollar and a network, and it's only the former. And so right now, I feel like, like I said before, tens of trillions of dollars move internationally every day, and we're barely making a dent with that with stablecoins right now. So it's all the hype in crypto, like in payments, we're just barely starting to eat into that volume that's currently basically controlled by the major banks around the world. The jury's still out as to which network is going to be the winning network to transport money around the world. And I'm 100% confident it will be bitcoin. It's just a matter of time and a matter of us removing all of the things that have held bitcoin behind and back because it couldn't do the things that other networks could do.

B (9:16)

Your perspective is obviously extremely valuable since you ran PayPal. Are those incumbents going to adopt this technology as it becomes more popular, or do you think it's going to eat their lunch?

C (9:27)

I think it depends. That's their choice. But we're already seeing it happen. It's like we have this payment system, payment network on top of Bitcoin with universal money addresses, or UMAs, that Nubank. And now other participants like Revolut and many, many others are onboarding on. And so if you're a digital bank and if you're ahead of the curve and you're actually adopting these new technologies, you can really compete with all kinds of different wallets that are emerging. But if you decide to just hold the fort for as long as you possibly can, it's the typical innovator's dilemma. And you'll just start falling behind, become blockbuster. Yeah.

B (10:12)

Which I think that's inevitable for most of them. But it does seem like Visa, MasterCard, PayPal, at least, are cognizant of this and are trying things.

C (10:20)

Oh, for sure. And, you know, PayPal has a stablecoin PyUSD that they're pushing. Definitely. You know, Visa and MasterCard are trying to move to use their capabilities to make those capabilities compatible with crypto and stablecoins. And I think that's the way to.

B (10:39)

Go for the average end user. Do you think that they'll care deeply that it's built on bitcoin. One of my things I'm the most shocked about consistently is when I look at the stats and always see that most of the tether is on Tron. Tron is one of the most hated networks, certainly among bitcoin maxis and many others. That that's not even worth debating. But that's what people are using because in some country where obviously stablecoins are popular, their friend says, download this wallet, I'm gonna send you money. I don't think they even know that it's Tron or Care. But how do you get them to care that it's a stablecoin on bitcoin?

C (11:16)

So first of all, I think that people care about bitcoin the asset, forget the network. And they care about bitcoin the asset, not in a payments use case. They care about it because they want to stack sats and continue to be on that train of appreciation that we've all been enjoying for a while. I think that's a very powerful thing. So the combination of using fiat stablecoins for payments on top of bitcoin and having rewards and all kinds of different things paid in sats, that's something that I really believe people care about and more people than we think actually care about. And now as far as the network is concerned, if we're just looking at money transmission, it is our job to make bitcoin the most efficient transmission layer for money. And that's certainly what we've set out to do, but were joined by many people building alongside with us. And if you make it the most efficient network, then money is like a little bit like water. It'll choose the path of least resistance. It'll go there. And I think we're very close to being there.

B (12:20)

So it can actually be faster and cheaper than the other networks.

C (12:23)

Yes, it is. Like if you're moving a stablecoin on top of spark right now, it is cheaper and it settles faster and your you have less trust because you can have unilateral exits to Bitcoin L1. So it borrows all of the trust of Bitcoin L1 and solves all of the limitations of Bitcoin L1 at the same time.

B (12:45)

So you get all of the security of the base layer. Yep, it's pretty astounding. Obviously we've seen a number of the other stablecoin issuers have to deal with different regulatory environments, but also rollbacks of illicit transactions and all of those things will that exist with effectively any Stablecoin because of the regulatory or legislative environment, is that what determines it or is it dependent on the base layer? Obviously people point to Ethereum, they say you can just roll it back, you could just take the transaction back.

C (13:17)

So look, this is exactly why we need to build on Bitcoin. Because Bitcoin itself is the network that has the least amount of human interference and and possibilities of humans actually messing it up. Everything else has the possibility of being messed up or interfered by humans. And I think that's the key thing. Now as far as stablecoins are concerned. Stablecoins are all centralized fully. So it really depends which stablecoin, how do they manage the reserves, how do they manage their compliance programs? And then it matters. Who are the endpoints on the network, who is transacting on the network, what is their compliance standard? But all of that doesn't matter. The Internet is not at fault when something actually happens on top of the Internet. And it will be the same with Bitcoin. It depends what you do on top of it. Who are the actors, what are they doing with it, how do they behave? And that's why you want to be asset agnostic. You want a network that can move all forms of value 24, 7 at a low cost in real time and has the most reach possible and the most depth of liquidity. Also with many fiat currencies like stablecoins are all hyped up right now. But like if you're in Brazil you want Brazil in reals for the most part. If you're in Mexico you want Mexican peso, if you're in Europe you want Euros and you know, then USD. Stablecoins are useful for many, many countries, but not in these regions. So I think it's important to have a network that also can convert into fiat at the last mile. For people who want that.

B (14:53)

Do you think that we'll see popular peso backed stablecoins and euro backed stablecoins people?

C (14:58)

I don't think it matters. I think the only currency that will have successful stablecoins is dollars. Anyone else that's trying to do euro stablecoins or peso stablecoin or anything else, it's just like people want dollars.

B (15:14)

Yeah, you're in an interesting place where you're threading the needle between bitcoin maximalism and hyper dollarization. Have you had pushback as a result of that? Because obviously there's certain part of the bitcoin community that thinks stablecoins are just fiat which is the reason they're buying bitcoin in the first place?

C (15:30)

Yeah, I mean, look, I feel like stablecoins are just a way to digitalize or digitize dollars. That's it. What matters to me is that it's built on Bitcoin, that people have an escape valve to Bitcoin that's actually built into the system so that we can keep everyone else honest in the process. I think that's one of the values of bitcoin and that's what we're building.

B (15:59)

Are there any things that you see from the Genius act or the Stable act or anything that's coming through Congress and the Senate right now that concerns you, maybe unintended consequences or something that perhaps is being thrown in there? I wouldn't say sinister like intentionally, but something that could be prohibitive to these being successful in the future. I mean, you even talked about the fact that it still wouldn't be very easy for Meta to launch a stablecoin with the current legislation.

C (16:28)

Yeah, look, I think at the end of the day we need clarity and this bill is really important for everyone in the industry because it's actually going to make stablecoins real money. Now it's like a unit of a stablecoin and a unit of a dollar are going to be money. And that means that every regulated financial institution will be able to interact with those assets, will be able to build products around them, will be able to legitimately use those. And I think that's really the critical step that is needed for us to unlock all of the value that's ahead.

B (17:05)

Do you think then that we will see thousands and thousands of private StableCoins? We have JP Morgan coin and Goldman Sachs coin and BlackRock coin. Or do you think that some existing or future stablecoin will sort of become the main unit of account or the main stablecoin that's used?

C (17:23)

Well, look, I think the real question is what problem you're trying to solve with a stablecoin. Right. And so there are different problems you can solve. There's problems of giving people all around the world that can't have a real US based bank account denominated in US dollars to have a US dollar balance. That's one thing I think for that, I think USDT is clearly way ahead of everyone else on that front. They were early, they have amazing reach and liquidity. Then you have institutional use cases that are both in the US with USDC and others that are going to issue. But I think if you're a depositor of a balance in dollars, you're going to be hard Pressed not to want to issue a stablecoin. It extends the economics of your deposits, when those deposits have left your, your walls. And I think just for that reason, you're going to have many, many stablecoins being issued by all kinds of depositors around the world. And then it's going to be a question of like, how do you orchestrate all of that across so many different networks, so many different pools of liquidity, et cetera? I think that's what Stripe saw in Bridge, which is doing an excellent job at orchestrating across all of these stablecoins and networks. But what we really care about is, okay, great, you have all of these stablecoins. Now what is the most efficient network that is the most decentralized, that those stablecoins can actually exist on? And can we build it on top of Bitcoin, which we believe spark is that. But that's the mission, because the worst case scenario for me is that you have stablecoins, you have thousands of stablecoins on dozens of different chains. All of those stablecoins are fully centralized, all of the chains are not sufficiently decentralized. And so you're basically recreating the existing financial system fully centralized in the same way that it is just with new players, just replace the names. And so that, to me, is not the Internet of money. And what we all want, I think, is an Internet of money that has sufficient decentralization and that behaves like an Internet of money. And the only way you can do that is by building on bitcoin.

B (19:38)

I think you answered my next question. But as these become more popular, is that the systemic risk or. I was going to ask, is there a systemic risk to having this many stablecoins and the market becoming so big? Is that what it is is effectively creating existing problems of the financial system?

C (19:55)

Well, yeah, especially if you have humans controlling all of it in a super centralized way. And I think at the end of the day, what you want is like something that really behaves like the Internet, where money is just a content type that can travel on it in an efficient manner and we can unlock a few points of global GDP for the entire world. If money can go where it needs to be at any given point in time, and you want that network to truly be neutral, to truly be decentralized, to not be opinionated as to what you can or cannot do with your money. And the only network that really fits the bill for that, if you think about it, and if you think about it even deeply for a long time, the only network that is neutral enough and that's decentralized enough to fit the bill is Bitcoin.

B (20:41)

Earlier you mentioned that one of the reasons to build on Bitcoin was rewards and sats and all these interesting things you could do. Can you talk more about that? Because that wasn't even on my radar.

C (20:50)

Yeah, look, I think that the reality is if you think of today rewards and all kinds of different ways that people can accumulate all kinds of value across all of the different entities that they interact with, their credit card issuer, their airline company, gaming companies or gaming experiences that they have. I think that if you ask an increasing number of people would want to get those in sats and start to stack sats. And so how do you do that in a really secure, fast, self custodial way? You can really do that really well. You spin up a bunch of, you know, spark wallets on top of Bitcoin, you drop sats everywhere when you actually trigger an event. And I think this is a really great way to create self custodial wallets to billions of people around the world now that you actually technically can and you know, get people to care more about Bitcoin, the asset and the network, not only just a, you know, transmission layer that to your point, they won't care about.

B (21:53)

It's interesting that you built on Lightning for so long and it didn't work well.

C (21:58)

No, Lightning works great.

B (21:59)

It didn't work for your purpose.

C (22:00)

No, no. So let me be clear. Lightning is great for custodial endpoints. So we power Coinbase's lightning implementation and 15% of the transactions that are moving in and out of Coinbase on Bitcoin use this implementation of Lightning. If you're an exchange, if you're a bank and you're trying to move Bitcoin in a completely trustless way with another custodian, Lightning is fantastic if you want to actually interact with self custodial wallets or if you want to issue stablecoins. It won't work is our conclusion after having worked on Lightning for now three years. And so we really like it for the full trustless implementation of, of a layer on top of Bitcoin that has zero new trust assumption. And that's why we made Spark fully backward compatible with Lightning. So you can be on Coinbase, send on Lightning a transaction to a Spark wallet without even knowing it's a spark wallet and it'll work seamlessly. And so that's why those two things we feel are actually good networks to build on.

B (23:10)

It seems like you have impeccable timing for the launch of Spark, where in a bitcoin bull market, clearly. But there's also been a Cambrian explosion of building on Bitcoin that didn't exist before, obviously. I think Taproot contributed to that with runes and ordinals and people trying things and it feels like they're bringing everything that was tried on other chains sort of as a test net back to Bitcoin. But we're probably now going to see hundreds of layer twos being built on Bitcoin, right?

C (23:37)

Maybe it's hard, like building on Bitcoin is hard solving problems that we solved with Spark in terms of trying to really avoid new trust assumptions to the maximum extent possible without new opcodes on Bitcoin core having unilateral exits to L1, enabling the support of tokens and stablecoins and all kinds of different assets to be issued on top of Bitcoin for the first time. Those things are actually really, really hard. And that's why it took us so long to figure it out, because finding the right balance of being developer friendly and also be maximally trustless is actually pretty challenging. But I think what we're seeing, this thing is not even a month old since we launched mainnet, but what we're seeing is the developer energy that's building on Spark right now is absolutely incredible. And it really, really exceeded my expectations by an order of magnitude. It's like insane. And so to your point, there's a lot of pent up energy of developers of builders that have been wanting to build on bitcoin and couldn't build on bitcoin because of the limitations of the underlying network. And now that you free that up, the only reason that all of these people built on other chains is because bitcoin couldn't do it. And in some ways it's been a good thing because bitcoin has been able to actually stay stable and secure for the longest time and establish itself as the true king of crypto, or if we can call it even, crypto. And so it's now fully accepted by all of these institutions around the world. It's resisted all of the assaults that it has. And so now we're in a place where we can actually really start to build on top of all of that liquidity, all of that security, all of that neutrality for the first time. So maybe it needed that time.

B (25:41)

Yeah. Brock Pierce, for as eccentric as he is, I was having a conversation with him about it and he said, you don't need to be first if you're the biggest.

C (25:47)

Yeah.

B (25:48)

Just wait for everybody else to fail and then bring the good ideas over. I thought that that was pretty prophetic. I think that's actually what's happening. I know you got to get on stage with Senator Haggerty and Congressman Emmer, I think. Interesting. After this conversation. So the final question is when do you think? What's the timeline for seeing a meaningful competitive stablecoin on Bitcoin?

C (26:09)

I think it's going to happen within the next couple of months, if not sooner, very fast.

B (26:15)

I'll take it. Thank you so much.

C (26:16)

Thank you.

B (26:18)

Let's do.