Bitcoin and lightning with Jose Lemus CEO of IBEX Mercado

Bitcoin is close to becoming worthless.

Let's go!

Now, what's the Bitcoin? Bitcoin's like rat poison. Yeah. Oh. The greatest scam in history. Let's get it. Bitcoin will go to fucking zero.

Yeah.

All right, you ungovernable misfits. I'm your host, Max. Everybody knows that Bitcoin is useless, worthless, and doomed to fail. But what if everyone's wrong? What if it's the system that is doomed to fail?

Join me as I speak to some of the brightest people in the space and deliver to the deepest, darkest depths of the Bitcoin rabbit hole.

Welcome back. I had the pleasure of sitting down with Jose, the CEO, and founder of IBEX Mercado. It was really good to get to know him a little bit and understand what makes him tick, why he started this, and why he's so passionate about getting Bitcoin and the Lightning Network out to everyone on the planet.

We cover loads of different topics and Jose's backstory. I won't go into it now 'cause you're gonna listen anyway, but I do wanna say to you, if you've been screaming sats, if you've been buying the merch, or you've been sharing these episodes with friends and family, I really seriously appreciate it.

If you're listening but haven't yet checked out the website, I suggest you go and have a look. It's ungovernable misfits.com. We have documentaries, articles, clothing, and much more. Before we dive in, I just wanna say thank you to my sponsors.

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- I'll say, can you hear me? - Yes, hello, how are you? - Yeah, really good. - You want me to turn down my mic or anything? - It's coming through okay, it could be slightly clearer. Actually, it sounds like there's less background noise now, I think it's better.

- Yeah, I tried to get this in my apartment where it's a lot less hectic, but I didn't know I needed a laptop and I don't use a laptop anymore. I had to come to the office to steal one. - Okay, no worries, no worries.

Yeah, I should have said actually, this software is a bit funny, it won't work on any phone, but what's good about it is when it cuts out with internet or problems like, you know, often we have, then it records on both sides, so we still get it clear.

So yeah, it's the best bit of software I've found. But anyway, really nice to have you on the show. Thanks for coming on. - Thanks for having me. - I've been admiring what you guys have been doing from afar for a while and yeah, it's really impressive.

So I look forward to sort of hearing the journey and you know, we all know where you guys are now and what's going on, but I was really looking forward to sort of digging in a little bit to why you're doing what you're doing because not many people take on something like this and push the space forward like this.

So I feel like this comes from a place of passion. - Absolutely, thank you. Thank you very much for those words. I'm getting a warning here. Just wanted to mention this before we start. - It's okay.

It does that. I don't know why, but I think it's fine. - Okay. And then no, I basically made a switch over to a tablet because it forces me to not do any work. It sounds weird. No, it doesn't because I'm very much like, I tend to go like, I want to do stuff myself and I might have thought that I cannot really do stuff

myself anymore because I got to be more like in a space where, you know, I have to give guidance and let other people do it because I have to see so much, right? So to make myself not do any work, I switch it over to a tablet where the most I can do is like check Slack and send emails and Monday, right?

- It's hard to let go of the reins. I imagine that's very difficult if you've built something from the ground up. - Well, it's interesting, right? Because the thing is that you have an idea of what you want in your head, right?

And it's a lot easier if you can do it to just do it than to tell somebody like, I would say, Max, let's say you do illustrations and I say, Max, I want an illustration with Bitcoin and a palm tree and this and that for Miami, right?

But I have an idea in my head. So if I can handle illustrator or illustration, it's easier for me to just do it than to tell you, you know, this is one and one. And then you go out, you do it.

And then I say, no, you need to fix this, this, this, and it's just a longer process. - Oh, yeah, definitely. I find the same thing. It's just, you know, there's only so many hours in the day and you have to do what only you can do, I guess, at the end of the day.

It's hard, it's really hard. - You have to cut down, you know, it's, but anyway, that's my story of why I don't have a laptop anymore. (both laughing) - Well, it's good advice, it's good advice to step away.

- The other thing I find with so many people, especially in the Bitcoin space, where there is this passion that runs through and it's not just, oh, I'm doing this because it's a job and it puts food on the table and a roof over my head.

A lot of people here, it's like, we're doing this because there's a belief that this can change the world. There's a belief that this can make the world dramatically better for the generations after us.

And so it's very difficult then to switch off. And I've spoken to so many people with this podcast who really legitimately can't switch themselves off. And after a certain amount of years, it does start to cause problems because you have to sleep, you have to spend time with the family, you have to exercise,

you have to look after yourself so you can continue and it's really hard to get that balance. - Yeah, well, do you know what happened to me? And I was talking to my guys around the office about this is that I can't watch movies anymore.

And so Netflix or anything, because what we're doing day to day is just so much more interesting than any other thing that I just lost interest and I get bored. So now I try to start a series and try to start a movie after, I don't know, five, 10 minutes, I'm turning it off.

- It's unreal what's happening, especially the last couple of years where things have really felt like they're speeding up a lot. And I don't know, it kind of feels like, I'm sure there will be movies made about what's going on at the moment and 99% of the world is asleep to it.

They're not paying attention, they're not seeing what is happening but it's fascinating and the stories, the characters and yeah, the energy that's flowing through this space is just remarkable.

Were you at Miami this year or did you miss that one? - No, I was there. We were actually the official payment sponsors for the Miami-22 conference. - Yeah, I knew you sponsored it, I didn't know whether you would be working or partying or a mix of both.

- Working, working, well, actually both, you know, it was a lot of just four hour and night sleeps. So a couple of just going to bed at, I don't know, 2 a.m., waking up at six, seven, and rain sand repeat.

- It was quite something. The turnout, I must say, I was pretty jealous. I particularly wanted to go to that open source stage and see what was going on there but I just tuned in here from England and listened while I walked the dog.

That was as good as I could get. (laughs) - Yeah, no, it was, it was really, it was really good, I thought. You know, a lot of interesting stuff happening, a lot of, like you said, it also felt a little bit different from what I hear.

I wasn't there yet, last year, but this year it felt a lot more like you're used to, you know, from a trade show standpoint. It was a lot more, I would say, professional. There were a lot of, you know, industry people there, you know, going to actually do business.

There was the celebration part of it, but a lot of it was also, you know, people building stuff, right? And showing what they built and either trying to get some backing or trying to find customers or trying to create partnerships.

So yeah, I think it's the maturing of an industry, right? It certainly feels that way. It's in the big boy territory now. It's like, you know, it's legal tender in El Salvador. People are starting to take note.

It's becoming more widespread and adopted. It feels by the day. And like you said, yeah, there are changes happening. I still find the most interesting stuff that I come across tends to be open source stuff where things are really on the bleeding edge, but at the same time, there's this big meme banking the unbanked.

And that just doesn't happen without real infrastructure going in along with the education. And I think, you know, it was a meme before and now we're literally seeing it happen in front of our eyes.

And I know you guys have been right at the forefront of that. So maybe we take a step back before we go forward. I'd love to know how you came into this. Were you sort of already involved in finance in some way?

Or like, how did this whole journey start for you? - Well, I guess I started the my whole journey without even knowing I had started it, right? I've always been fascinated by money. And let's call money as a tool, not as, you know, I want to get money, I want to make more money.

Yeah, you always want to do that. But that was not the interesting part of money for me. It was just, you know, how it works. I wanted to really understand money, why it exists, how it works, you know, what does it enable, why does it move the way it moves, right?

And that happened to me around, I guess the 90s, you know, or pretty much all my life, just fascinated with it. Then a couple of things happened, I think, throughout my life, that kind of prepped me for Bitcoin.

One is I went through a period of high inflation here in Guatemala. I'm not sure if everybody's aware, but Guatemala, you know, during the 80s, where I was just starting to, you know, become aware of the world, I was, you know, we went from $1, you know, parity with the USD.

So one to one exchange rate to one to two, and that happened within a year, really. And then it went to three, and then it went to four, and then it went to five, six, seven, within a very short amount of time, right?

And you heard stories, you weren't involved in that book, but, you know, I remember my parents talking with friends and, you know, a particular, you know, conversation that stuck with me was how one couple, you know, a married couple was really heartbroken because they had been saving for down payment on the house.

And they said, listen, we were saving for a down payment, and we ended up buying a set of furniture. That's what it turned into. You know, and it's really until you feel it, until you see the effects firsthand of what it does to, you know, people.

That high inflation, you don't really think about it, right? I posted a tweet yesterday, actually. Let me pull it up, and this is kind of like what I'm talking about here. Give me a sec. - Just while you're searching for that.

Yeah, I mean, it is hard to imagine, to be honest. I don't think that the majority of my listeners in UK, Europe, US, yes, we have inflation. Yeah, certainly the less well-off get hit the hardest, and things really can be difficult.

But, you know, when you're saying, like, going from one to one to one to seven, it is actually hard to imagine what that does to a family, what that does to someone's hopes and dreams. And you can see why something like Bitcoin, once someone wraps their head around it, is just literally a lifesaver.

Like, that literally will save lives, and it's just incredible that we have this tech. It's so exciting. - It really is, and so here's the tweet. I found the story on the internet, and he says this, I'll read it, skip the headline.

My grocery bill is kind of getting despite buying the exact same thing every week. In the last one and a half years, after buying the exact same things every week, my total bill has risen at least 25%, closer to 40% for some products.

I mentioned it to some people, and nobody knows what I'm talking about. And you know what hasn't gone up 30%, my effing wage. I'm literally getting poorer for living the exact same way. I feel like I'm losing my mind.

And that's the story here, right? You know, I used to say that Bitcoin is a nice city. It's a nice to have in the first world, but in the third world, it's a necessity for us, for Guatemala's, but I really think that it's starting to become a necessity worldwide.

So that was the first event that I think kind of primed me for Bitcoin. The second event is in, you know, when I was starting out in, you know, my professional career or not professional career, but you know, entrepreneurship and doing stuff.

The company I had with a good friend of mine, we were on the wrong end of bankruptcy. So I don't know how many people can say that elsewhere. But it's not that common. - And when you say bankruptcy, I assume you mean the actual bank went under, not the company that you were running?

- Yeah, bank, bank run, the bank went under and we lost pretty much all the capital that we had at that time in cash for the company. - Shit. - Everything. - That was your first, your first business?

- Yeah. - That was my first business and, you know, so when I read the Satoshi Nakamoto's white paper in 2012, 'cause that's when I ran into it, just, you know, randomly surfing the net, I got it immediately.

So for me, Bitcoin, I didn't even care if it accrued value or not, just having something that people can't print and that I can actually hold and be responsible for, you had me at hello, right?

- Yeah. - So that's, you know, 2012 was when I really looked into it. I was dumb enough that I downloaded the core client but never really got interested in mining. I tried to just buy it and at that point in time, I think empty gocks was the only exchange that existed really.

I tried to send money to Japan, but because I'm from Guatemala and the money came from Guatemala, they kept bouncing my wire. So I never could buy Bitcoin being from Guatemala. There weren't really any places.

I was like the first user in local Bitcoin's here in Guatemala. There was nobody else. And then I, you know, I was really interested. I talked to everybody, I knew about it about this Bitcoin thing, but, you know, didn't really push it any further.

I had other stuff going on as well. But then in 2017 was when I really got into it, I, you know, me and my brother were very close and we like to talk about these big things. And I called him, I was sitting in the Netherlands at that point and I called him up and I said, "Hey Juan, do you remember, you know, this Bitcoin thing?"

I think it's gonna take off. So we bought some, you know, next day we lost 50%. And then we started reading a lot and started buying more until I just looked at what I had in cash at that point in time.

And just went on all in, just decided to move every, you know, any cash that I didn't need. So every savings that I had, I moved into Bitcoin. And then I ran out of cash and I talked to my brother again and I said, "Listen, we put pretty much all our money into this, but I don't think it's enough.

I wanna do more. I wanna dedicate our time and energy and effort into making, you know, or helping Bitcoin chances of success because this is too important to not be involved in, not, you know, try as hard as we can to make it a success."

So that's really where IBEX was born. - Yeah, so I mean, your journey was you realized how important Bitcoin was and then you wanted some desperately, even that was a problem because of the shitty banking system that we currently have.

You weren't even able to buy what you knew was good. And then once you could, the hook was in and you couldn't get enough of it, which is very relatable. Is that something then you had to drag your brother along with or was he immediately hooks like you?

- No, he was right alongside me on this. - That's awesome. - Yeah, we were reading the same stuff. We were involved in the block size wars. We were very, well, I don't know if we were active in the farms, but we were very actively discussing it.

We set up a, you know, a node to vote on the block size wars and everything. I think I don't know that we had the whole picture of Bitcoin at that point in time yet, but we had maybe 80%, not 85.

And then the interesting thing is people joke here around the office that I never checked Bitcoin's price. They're amazing, they're like, let's say, do you know where Bitcoin is at today?

I'm like, no, not really. Even though it's my business, right? But to me, that's the least interesting part of Bitcoin. The least interesting part is the price. And I also feel like Bitcoin already won.

People just don't know it, know it yet. - Exactly, I mean, when you're checking the price, you are checking the perceived value in relation to a currency that will eventually be dead or should be.

And you're not measuring the percentage of the network that actually matters. And that is all that matters. That's when you know someone has really grasped this, is like, people don't look at the price anymore, it doesn't matter, it's, have I got more sets than I did yesterday?

Is my security set up better than it was yesterday? What's happening in the open source space? Like what tools are available? That's what's interesting. But I think the cool thing about the price is, I mean, it can allow people time.

And so like what I've noticed with a lot of people is without having the price spiking over the time that they hold it, and this being just such an amazing savings technology, people then wouldn't be able to get out of that fiat lifestyle, you know?

And it can be so freeing. That is something that's amazing. And it's so good for the marketing as well. Like over the years, you know, you tell your friends and family and they laugh at you and they wait five years and they're like, oh, maybe I shouldn't have laughed.

And they wait another couple of years, and the same happens. And you sort of stop having to even say anything because the price talks, the money talks, and I guess that's what it's useful for.

But I totally get you. The price is irrelevant, especially if you don't plan on selling and plan on using this network and growing this network. It's like, so what? (laughs) - Yeah, it really doesn't, it's, like you said, it's a nice tool to engage people and stuff, but other than that, you know, it's, for me,

it's a little bit different, right? Because we're, well, I don't know if you know this, but we started off as an OTC company. Here in Guatemala, we tried to make it easy for people in Central America to buy Bitcoin, right?

With local currency and stuff. So that's what we did, but now we've pivoted into more of an infrastructure company. We do lightning as a service. So this means we provide institutions and with the ability, if they want to incorporate lightning capabilities into their product services,

into their ecosystem, we help them do that. Because lightning is not really super straightforward to use, unlike, let's say, Bitcoin. Bitcoin is the base layer is super straightforward. Lightning is not, right?

To you run your own channel properly, you have to be, you know, very capable technically to do it in a safe way. And in a way that's reliable too, right? Because you have to be constantly managing it.

You have to have also capital intensive, which a lot of people I don't think realize, right? If I want to receive lightning payments, I have to have inbound liquidity. That means that either somebody already sent me Bitcoin or I did a loop in, right?

Where I sent myself Bitcoin. It's a weird concept to grasp, but that's the only way I can get payments. And if I want to pay out, I have to already have, like, prepaid my channel. And that channel has to have good enough connections that it finds a route to whoever I'm paying.

So, you know, it's doable, but it's not super straightforward. And if you're running a business, it's not really a headache you want, right? It would be kind of like, you know, you're running your own email server, which, you know, makes sense if you're Hillary Clinton, but otherwise, do you really want to do it?

Probably not. - Yeah, I mean, absolutely. I mean, it's not the most simple process at all. And then, you know, channel backups and keeping these things online. And like you said, I think you have to be interested in the technology to tinker around, to get used to it and play with it.

And like you say, you know, businesses have got other stuff on their minds. This is not a hobby for them. And so, that's what I was saying before, is like, you know, having the infrastructure put there and done properly and managed for them is going to be so important.

And I think it speaks for itself. The power of the Lightning Network is mind-blowing. The way that it changes international payments, payments remittances and just general payments is amazing.

But how are you expressing that to these businesses? Who aren't, you know, nerdy Bitcoin people who love lurking on Twitter and talking about this stuff? They're just business owners. Like, how do you approach them and how has it received?

- Well, previously the approach was easy because we started off in El Salvador. So it was like, listen, you have to accept Bitcoin. So, what really are your options? And we're able to give you dollars in filling for Bitcoin here.

So the sale there wasn't that big. The other places we reached out to really sell were in Miami for Q1. And that sale was a little bit different, but it was basically, listen, this is a huge PR opportunity for you guys.

You know, this Bitcoin conference is gonna be here. We'll, you know, promote your businesses, sign up, right? But now the sales pitch is a little bit different, especially after the conference.

One of the things that I think I'm really happy that we did the conference is because it really galvanized in my head why this technology is important. And basically why we win. And the thing is, let me backtrack here a little bit.

So this all makes sense. So the first part is Bitcoin is teaching us about money in real time. And that is just awesome, right? Because it makes everybody question, you know, what money really is.

And basically money is a battery for human energy. I think Sailor said something like that. If I'm not, you know, I'm maybe paraphrasing here. But that really is what it is, right? And that's what it does.

And it's really interesting battery because it can be freely, you know, moved around the world, you know, at a global scale. So anyway, the other thing that, you know, it's teaching us it's how something becomes money.

You know, it has to go through phases. And the first phase is the store of value phase, right? Before you can be money, you have to be a store of value. And that happened for Bitcoin in layer one.

And the next step for something to become money is that it has to be a medium of transaction. And that's lightning. That's happening in layer two, which is really interesting to me. You know, how you need different layers for the different functionalities.

And then to become a unit of account, I'm guessing we're gonna need a third layer where we do, you know, financial instruments. And we can talk about that a little bit later if you want, but that's in the future.

But right now we're in the transactional layer. So Bitcoin already proved itself as a superior store of value, as a superior, you know, savings technology, if you will, on layer one. And now Bitcoin is proving itself as a pure medium of transaction on the layer two.

And so right now, my sales pitch to companies and technology, you know, and financial institutions is this, is, you know, lightning is important, not because it's another way to pay for a cup of coffee.

Lightning is important because it allows for cross-border cross-currency micro-transactions. And that is something that is just not doable with current payment technology. You cannot do it.

So it's not about, you know, doing what you already do. It's that we can do that, but it's about this whole new world that opens up when you have no lower bound limit to your transactions.

The reason this is important is because people don't really think about this, but we're living in paradigms, you know, constantly, right? So everything we do is limited by the technology we have.

And in this sense, payments technology dictates the type of commerce that is available to humans, right? And so for example, let's say if we could only do cash transactions, even if we had all of the technology we have right now, if we had to go to cash transactions only, how would this look?

You know, it'd be very different than what it looks like right now, right? You know, we'd have to post it or send a carrier pigeon or something like that. - Face to face, right? - Yeah. - And it slows down.

And so the products and services that you'll be able to acquire slow down as well, right? And so what we're sitting in front of right now is a new world of payment options where you're no longer constricted by the payment size.

And this will enable, you know, a host of opportunities that we cannot even imagine right now. So let's say low-hanging fruit. For me, the subscription model is broken. I cannot subscribe to a new service.

I'm up to like five or six between Hulu, Spotify, Netflix, you know, office, Amazon, HBO Max. I don't know, I got a couple more now. And when I read a newspaper article online now or try to, it pops up like to continue reading this article, subscribe to the New York Times for, I don't know,

$5.99 or whatever it is. I'm not gonna do it. I'm just not. I'm subscriptioned out. But you know what I will do? I will pay you five cents. I will probably pay you 10 cents to read your article, right?

But you couldn't do it beforehand. Not if you still wanted to have a widely usable money, right?

Yeah, it changes things so massively the way we interact with these services. It just makes so much more sense and it's so much more fluid. It's just we have these barriers before and they're just falling down in front of us if you're thinking and sad.

I mean, I have it with this podcast. As soon as this goes live, I'll have people streaming me sats every minute that they listen to this podcast. I get sats into my wallet and it's literally, it's incredible.

It is world changing when you really think of the implications. Yeah, and you know, that's just the tip of the iceberg. You know, we're doing either micro payments for an article or payment streaming for a podcast or a video even, you can do that.

You can also, but then looking forward, you know, you've got things like like addresses, split payments technology. And what those type of technologies will enable like, and this is not something that's in the future.

This is now. So this queue to all our customers, we're actually running, we're rolling out NFT capability because QR codes are really inefficient in certain lightning conditions, right? So you don't want to depend on QR codes.

Plus it's just easier to tap on stuff. Then we're also rolling out the lightning addresses and split payments, which enable really cool things down the line, you know, it, you know, automatic, you know, tipping.

So this is a really cool application, you know, for payment splitting. So right now, how tipping works in the service industry is everything goes into a common pool. And then every week or every two weeks or every paycheck, you know, the new restaurant disinverses, the tipping, you know, percentage according to whatever role

you had, you know, if you were a waiter, you get X amount of tips. If you were, you know, the cook, you'd get X amount, line, bar back, bar tender, everybody, right? Gets money from a common pool, but they get it, you know, every paycheck.

Now, this is suboptimal because I remember when my sister was waitressing and it was still very much cash based, the nights that they made the most in tips were also the nights that they were the busiest.

So they were getting slammed, right? And the cool thing was that because they were getting tips in real time, they didn't mind it. They actually got excited because yes, they were, you know, super busy, but they were making bank, right?

So they were like, I'm up to 500 bucks. I'm up to 300, you know, I'm up to 700 bucks, whatever the case may be in a night. And it got really exciting for the whole crew at the restaurant, but now that doesn't happen.

Now you only have the pressure of, I'm really, really effing busy, right? And so, but with, if you had lightning technology, you know, as soon as the payment was received, everybody in the restaurant could, you know, get a ping on their cell phone and start seeing like their balance going up, going up, going up.

And it gets that, you know, excitement back into them. And this is just like one industry, one application, but it's the kind of thing that this starts to bring back. - I love that. It's so cool.

And so when you think about these products and these services that you roll out, how are you thinking about it? Is it you sort of see what's possible on lightning and then you're working out like, okay, who's this going to be useful for?

And I'll roll that out. Or is some of it kind of led by people coming to you like saying, oh, do you know what? This would be amazing if this is possible. And then you guys are trying to work it out that way.

Like how are you pushing forward and adding these services? - Well, right now, we have an R and E report. Department headed by my brother. And we basically just tried to think of the world we would like to live in.

And thankfully, our team here is diverse enough and you know, our backgrounds are really, really diverse. And you know, we have people that have investment backgrounds. We have people that come from banking.

We have people that come from entrepreneurship, like myself that know the pain points that companies face no day-to-day operations. And you know, it's really interesting because we're not really built for retail.

We're very much beat to be. And companies, unless you've run one or been like at a high level in one to see the pains they go through, it's not something that, you know, the general population is aware of, right?

And companies do things that to the general public seem stupid, but that makes sense to them, right? Which is back to the email server, part of the conversation, right? Like any company or anybody right now can run their own email server.

Why don't you, why don't you even want to run your own server infrastructure, right? And it's because it's not your business. And so other things that companies do, they pay a lot of money for software that there are open source alternatives for.

But why do they do this? They don't do this because of what the software does. They do this because of the support the software has, right? And that is something that, you know, most people have a hard time, you know, wrapping their head around and they don't understand why for a company, it's cheap to, you know,

spend $5,000, $10,000 on a piece of software. It's because of what it enables. - And so if you talk me through, say you have a business, let's say you're dealing with a business who's never accepted a Lightning Payman doesn't have any interaction with Bitcoin currently.

Let's say that, just for example, they sell shares, right? Or they're a sofa company. What hoops have you got to get them to jump through to make it work with you guys? Like what have they actually got to do other than saying, I want to work with you, can you make it happen?

Was it feel like for a business? - Depends on what part of the world they are, right? In some places, it's more, let's say we work a lot more how they're used to. In other places, it's a lot more complicated, just regarding the POS integration, which is why, let's say in some countries,

it's easier to go to the POS provider and say, listen, integrate this and roll this out to all your customers. And in other places, it's actually viable to go and say, listen, we have this IBEX pay solution, which is our, you know, payment terminal, Lightning payment terminal.

And they are already set up and used to having to take, you know, the information from their point of sale or what is their handheld credit card processing device and putting it into their accounting software.

You know, so it depends on how seamless or not is the credit card ecosystem integrated into your accounting software. That's the barrier there, right? Because technologically, it's not hard.

The hard part is just a lot of POS systems are black boxes, right? - Yeah, and regulation wise, like, for example, if this business says, okay, I have a point of sale terminal and you guys have just made it possible for me to accept Lightning 'cause you've gone straight to the point of sale rather than to the business.

And they say, okay, well, now it's possible. And then a customer walks in and they've got their own Lightning wallet with Sats on it. How much of an issue is that with regulators? - I'm sorry.

- For example, if it's available for a business to accept Lightning and it's in store, and then let's say a customer walks in, let's say it's me and I walk in and I have a Lightning wallet and I wanna go and pay, how much of an issue is that with regulators?

Because obviously if it is a self-hosted wallet and it's backed by their own node over tour and obviously they're then using it as cash, my thinking is that regulators are not gonna like this.

I mean, at the end of the day, fuck them. I think it's completely ridiculous that they think that way, but do you not have issues with it where they're saying, no, we don't wanna allow that.

We want everything to be tracked. We want to have no your customer. We want to be able to trace these funds. Are you coming up against obstacles in some countries more than others? Let's say, for example, you know, Europe is rather difficult for a lot of this stuff now.

- Yeah. Well, for one, we're registered everywhere we work in, right? Or most places where we want to deliver cash. Because there is a difference between you having to deliver cash and you not having to deliver cash where you can be just a technology company, right?

So for example, we make our technology pretty much available worldwide where you can just like, if you're staying in Bitcoin, right? If you want to get fiat at the end of the day and use Bitcoin as let's say payments rails,

kind of like a credit card or a Visa MasterCard, then we do bump a lot into regulation where, you know, there are places we cannot operate. And then the other part is that, for example, if you're staying in Bitcoin, there's not an easy way or a really straightforward way

for us to know where you're located. So we don't really provide our service to Chinese people, right? But if a Chinese people is working through a VPN or a tour or whatever, we don't know if we, you know, somebody in China is using this technology or not.

And we ask, you know, we ask for some information, but if we don't have to give you, let's say, dollars at the end of the day, we're really more like a sophisticated wallet than we are, you know, a payment process or something like that.

It's like, does wallet of Satoshi have, you know, regulation issues?

Yeah, I'm just, I guess what I'm thinking is like long term, if I was a business and I had the opportunity to accept lightning and I start to realize that suddenly my fees go down dramatically by using the lightning network rather than, you know, Visa or MasterCard or whatever else, the legacy stuff,

I start to think, well, okay, that actually makes a massive difference to my bottom line. And so as a business owner, I'm thinking, well, this is what I would prefer to use. And then as a customer, I'm thinking, well, I actually like having some privacy.

I don't like the idea of 1984 becoming a reality. I would like to be able to use my own lightning wallet and I'd like to be able to buy what I want without everyone tracking me. And so my thinking is the incentives are there for both the business owner and for the customer to want to use lightning.

And then my question really is like, with these regulators and these legacy massive companies who are going to start losing money, losing control, my thought is they're not going to like it very much and they're going to push back hard.

And I think we're starting to see it in Europe, in the UK and some other places where they're starting to be a little bit difficult. Like how do you see that playing out and how do you battle that?

Or is that just in my imagination and maybe I'm more worried than I need to be? - No, I think it's valid concern. And it's something we, you know, grapple with every day, being in the space and providing a service is we have to go through all of that.

So for example, there are places like, if we know you're from New York, we won't give you, you know, our technology right now. We're working on ways to work around it. But so for right now, we don't want to deal with the hassle.

It's just too much of a pain, right? But I don't know if you remember this. It kind of sounds to me a lot like the flag boys. Do you know about the flag boys? - I'm not sure, it rings a bell, but I can't actually think what it is.

- Okay, so during the Industrial Revolution, Britain was actually at the forefront of automobile. - Ah, sorry, it's now ticked. And they had to run in front with a flag in front of the car, right?

- Max, are you there? - Are you there? I think we lost each other. I think we lost each other. Yeah, so the flag boys, so that is really-- - So they're running from-- - Yeah, and you know what happened to that story, right?

The US basically took the ball and ran with it, right? - Yes. - So, you know, imagine doing that with money. I'd say, well, then places that are less concerned about that, like Latin America and Africa, are probably gonna take the ball and run with it.

The business is not going away. It's about, you know, what position do you wanna play in, right? Which, to be honest, I'm not even like, is it necessarily a bad thing that Europe and the US drop the ball if they are so inclined because they want to over-regulate stuff and keep control of their citizens?

While it just gives an opportunity to, you know, the more current underdeveloped countries to catch up and maybe even surpass them, you know, financially, because you really mess with money at your own risk.

- Yeah, I think that's a really good point. They can leapfrog and yeah, maybe it's a good thing. Maybe that's the way it's gonna go. I mean, it certainly feels like Europe is gonna go that way and a few others, like it feels that they are, they're trying to protect their power and whether they realize it or not,

they're gonna lose it if they don't play ball. It's just the way Bitcoin is set up, that incentive structure. And it's a shame for citizens to have their rights taken and to not be able to use this amazing technology, but you're right, you know, these developing countries will use it, so that's very exciting.

- Yeah, and you can probably already see this playing at a smaller scale right now. You can see the battle between Miami and New York and nobody's calling it a battle, but that's what it is.

And at this point, New York has lost. Why did they lose? They lost because of their bit license. So, you know, Miami is, you know, sitting there, open arms saying, we love innovation. We love, you know, what the guys over here in crypto land and Bitcoin and all those guys, what they're doing.

So come down here, you know, the regulatory weather is nice and let's make Miami the financial center of the world for the next hundred years. And thank you very much, New York and everything that's going on in Miami, you know, is New York money behind it.

- Yeah, it's so interesting to watch that play out. And I guess over time, it's just gonna become like a walking, talking advert of like, this is what you should be doing as the innovation and the money pours in and gets sucked out of New York.

- Yeah. And so for example, imagine this. We're, you know, a growing company, right? And we have an option right now because we have to pick and choose where we go to next. And where we go to next probably, you know, investor dollars are gonna float because we're spending investor dollars, right?

And we have the chance right now of, let's say, I am our next expansion, please. And we figure, okay, what's Europe like? Well, I met with some consultants from Germany during the conference and I told them, listen, the problem with Europe is that A, Europe is not Europe.

Europe is UK, Germany, Netherlands, Switzerland, Spain, Italy, Portugal, France. I don't know, Scandinavia and countries, whatever. And everybody has their own role different way of how they wanna do stuff, right?

And everybody has their own regulation. And so it's a headache for a company to say, we're going into Europe. That's a misnomer. You have to say, we're going into Germany, we're going into UK, we're going into Ireland, which is different.

We're going to, you know, all these places. And it becomes really expensive, really fast, just on the lawyer part of it, right? And then opposite to that, we have, well, there's Nigeria where you can do whatever you want.

Where am I going? Where am I going to take our investors money to? Yeah, it makes sense. And I guess you have a customer base over there who were probably desperate for Bitcoin, whereas in Europe, maybe they don't think they need it as much, although I think they do.

It makes total sense. Yeah, and that's how you shoot yourself in the foot, right? Hmm, yeah, definitely. I guess it's kind of like you see in the mining industry where the miners go wherever you have the cheapest energy and it's almost the same.

It's like wherever people are being fucked over the most, wherever things are lagging behind, wherever they need to leapfrog businesses like yours and others will go and they'll start using Bitcoin.

I think, you know, a lot of people certainly in Europe, they just kind of see it as an investment. They don't really grasp that this is a network and what it can change and how important it is because they don't feel it.

I guess that's where you go to someone in Nigeria and they're like, yes, yes, please. Yeah, that and also, you know, people, I think are like missing the boat on how important micro payments and nano payments are and how revolutionary they will be for commerce.

They don't understand why you would want to pay just one cent and have it settle. And I think people are sleeping on it quite frankly. Some are not, some are not. I have to say, I did speak with a couple of bankers at the conference that automatically got it and it's really interesting.

Imagine. No, no, sorry, go on. No, no, no. I'd rather you ask the question. No, I was just going to say, what's your thoughts? Like, I totally agree with you, micro and nano payments are the future.

But as we, as we see Bitcoin become adopted more widely and as inevitably then you see the value go up with it. Do you see that we'll get to a point where you effectively are splitting Sats?

And how do you see that happening? Like, do you actually have technology that you're thinking about now where let's just say, for example, this gets widely adopted throughout the world and you get to a point where you've got a million to $10 million Bitcoin and then you know, you want to make a half a cent transaction

then you're no longer actually dealing with Satoshi's. And so then it's like, well, would we then be splitting and how so? Well, we're already doing that every day because in the Lightning Network you actually transact in military Satoshi's.

So it's already happening. So, so I don't see that as an issue. I really don't, I already live in a world where we have dollar priority with Bitcoin and you know. Yeah, okay. So there's no, there's no issue going forward in terms of those splits where the value sort of makes it difficult.

Yeah, and in that case, then you just see money flowing like water, the friction is gone. And yeah, I think even for people who are thinking about it and it's something I've thought about a lot, it's just like, I still can't imagine where this goes.

And it does make me very excited to see what it unlocks. I mean, the closest thing I've seen that I thought was really cool was like, I was playing with Zebedee and some of their games the other day and messing around, earning SATs as I was playing Mario Kart.

And I was like, this is pretty cool. I imagine this is gonna become more and more used by people around the world. And you know, I know that there are some people who are literally earning doing that.

And so just little things where you think, oh, that's a bit of a game, a bit of a toy, like can genuinely change someone's life the other side of the world. So yeah, mind-blowing stuff. - Yep.

And so what I was gonna say is, you know that meme that's going around that says you'll own nothing and you'll be happy? - Yeah, our good friend, Klaus Schwab. - Yeah. Well, I'm thinking more in a world where you'll only own Bitcoin and you'll be happy.

(laughing) - True. - Yeah, 'cause really that's the only thing you can rent pretty much everything. And if you only have to own your Bitcoin, it doesn't matter. And the other thing that I was thinking about with the micro payments and nano payments.

Let's say you're able to sell your newspaper article for two cents, right? - They say they're unreasonable to think if it's online that six million people might read the article. - Nope. - And that's $120,000 right there.

Add two cents. So the math makes sense. The economic incentive is there. They just don't see it yet. - And that barrier to entry's gone 'cause everyone, especially if there's no friction to doing it.

If it's just like, if you have it set in your browser or if I wanna read something and it comes up with a paywall, if the paywall is less than five cents, just pay it. I can't be bothered to click okay, just do it.

Then it actually disappears. It just goes into the background and you can make this whole browsing experience incredible at the same time where someone can earn real money for producing real quality content.

And yeah, I think it's just so hard to wrap your head around. That's the thing, it's so different. What gets me really excited is imagine then the quality of work that this will incentivize.

We're back in a world where journalistic integrity is a thing, where it's just not ghost writers and PR releases and that kind of stuff. - Yeah, quality work gets rewarded and you get rid of those middle men.

And yeah, it's so exciting to think of these things. And I guess with artists and anyone who at the moment, a lot of the time, they're being sucked dry. And it's all, like you said, it's all about your PR.

It's all about your marketing. It's not about the quality of the product often. And learning about how these algorithms work and trying to get boosted to the top of Google or whatever else it is, it's like, you could see real quality come back.

And I guess that's that Bitcoin standard rather than the fiat standard. You see real quality again. - Exactly. And then the other thing that we've not touched about upon yet, which gets me really excited and where I think this really becomes interesting, right?

Is because of the game theory that's gonna happen between, let's say, big corporations and the state. Because here's the thing that disenables. So I wish I could show you our tech right now, right?

But I'll show it to you sometime. But anyway, when I say we enable cross border across currency micro payments, think like a multinational, right? So if you are not enable, you know, our tech basically using Bitcoin as a payments rails, you can have your, you can always be

in the base currency you like. So for example, if you're a US company, if you're a US multinational and you implement lighting technology into your services, you can always be in USD. It doesn't matter if you're in Argentina, Nigeria, Zimbabwe, I don't know, Spain,

you know, Turk. And that really changes stuff because right now as a multinational, you're assuming, you know, a couple of things. You're assuming currency risk that you would otherwise like to avoid.

You're assuming jurisdictional risk that you would otherwise like to avoid. You're assuming transfer costs that start to get high. And then you're also assuming, you know, the capital cost of maintaining liquidity pools all over the world.

But if you have this technology, your currency risk goes to zero because you're always in your base currency, your jurisdictional risk goes to zero because you're out of that jurisdiction, the moment the sale is done.

Not an hour after, I mean, the moment the sale is done. Then your transfer costs, money transfer costs goes to zero or tends to zero because you're already elsewhere, right? And then your requirements, your capital pool requirements tend to zero because you need way less capital committed

in any one jurisdiction. So it's a no-brainer for them, really. And it's gonna be like this. Like this is Pandora's box, right? You catch out of that. - You can't see someone understanding that.

Once they understand that, there's just such a huge incentive to use the better technology. It's like, it's like you say, like why would you ride a horse when you have a car? It's the same thing.

Like it is more than that. It's better than that. It's just, it's so far ahead and it takes so much risk away from them that you'd be crazy not to use it. When you sort of have conversations like this with people, like some of the banks or some of these companies, do you sometimes see their little faces light up

and this big smile go across their face and a light bulb ping and then go, fuck, this is gonna change things. Do you ever see that? And do people like pick it up straight away very quickly?

Some do, some don't. The ones that do, let's say, the business owners that do, they just get pissed off. Because they're a sick of banks as you and me. And they're pissed off. Like, you're telling me I can do this, this, this and this and I can save millions of dollars and I'm gonna, yeah.

These cannot get here fast enough, right? And then some bankers that I talk to, some get it, some don't. The ones that get it are very excited about how do we get our board to move on this faster?

And then some other banks are like, no, no, that's play stuff, right? That's not real. What we do is real. But, you know, I think it's kind of like the same reception the internet got with the telco companies similar.

And so, you know, some do, some don't, but what's really gonna make it real for these guys is, you know, the first time a competitor for starts using this technology and they're gonna be like, okay, if I'm not keeping pace, I'm out of business because this guy's gonna do things, I'm not gonna be able to.

And then it's where the kind of gold rush phase happens. - Yeah, it's like blockbuster Netflix, isn't it? And if they don't move, if they don't change, they will die. They have to come back and say, oh, say, please, please, you know, that thing you were telling me about, let's do it, help us, please.

- Yeah, yeah, and then the problem there is that there is gonna be limited bandwidth, right? So for example, even taking you into account, let's say all of our competitors, everybody that's working in Lightning.

And I put competitors here in quotes because we're more collaborators than competitors, although, you know, somebody, you know, some see it differently. But the thing is that, let's say we got all the Fortune 500, just the Fortune 500 companies knocking tomorrow on our door.

Like we want to implement this. There's not enough bandwidth. Like even with everybody in the Lightning space. - Because of liquidity you may know. - No, no, because if you gotta build out the solution, right?

You gotta develop, you have manpower hours that you have to, okay, what's it? You know, to have this in my app, it takes time, right? Roll out takes time, are we? And once you cap, let's say you can have like, work for the next five years lined up, but it's the next five years.

And the guy that moves first, has such a huge competitive advantage. That, you know, if you're on the tail end of that wait list, what's your business? You have no business. - It's beautiful.

I love the way that, all the way through Bitcoin and all the industries around it, it is just incentive models all the way down. It's just like, you are gonna have to sit down. You are gonna have to participate.

And the ones who have the bollocks to move first are gonna be the winners. And the ones who are trying to blockade things and protect their old businesses that are shitty and old and don't help the users, they're gonna die.

I don't think that would ever happen without Bitcoin. Like the financial system was like the one thing that didn't get shaken up because of the internet. It's gonna be so exciting to see and some of these smug faces aren't gonna be so smug.

- Yep. And then the other interesting thing here is that for a bank, I put this technology, and I told this to a banker over the conference. I said, I put this technology in your app. Do you realize you're immediately not a regional bank, not a nationwide bank, but you're a global bank.

The next day, if you don't have to cash out people, let's say with, you know, with physical cash, you're good to go. You can be offering services, banking services to people from Guatemala to Timbuktu, and it doesn't matter.

And you're global. - How do they react when you tell them that? - Well, their eyes just opened then. - And so like the only thing presumably that is holding this stuff back is A, like you said, bandwidth.

And B, I assume regulation. Is there any other big things that are sat in the way, or like if you had the bandwidth and you had the regulators just go look green light, just fucking go. Let's innovate.

Are you off to the races, or is there anything else? - There's still a couple of things that need to be get an ironed out on the tech side. So for example, right now, any node has a theoretical limit

of 400 transactions per second, which is really, really low. And then you have to solve for how do you scale that? Into an infrastructure that can handle 40,000 transactions per second. What about an infrastructure that needs to handle 400,000 transactions per second?

Because we're not talking here about, you know, just the sliver of the credit card transactions, right? We're talking about if we're going nano, if we're going micro, we're gonna have to be able to do at least a hundred times, or if not a thousand times, more transactions than the current system.

So how do you scale that? And so that's basically since we launched in a sun road in September 2021, that's basically what we've been working on here, on having a scalable infrastructure, having a high availability infrastructure.

How do you turn from, you know, something that had a 70% success rate, which were lightning was at in June last year to, you know, something that has a 99% success rate or availability. And that's the kind of things we work at here at IBEX.

I think, so by Q4 this year on our roadmap, we'll be able to do SLAs, which is the other piece that you need to work at an institutional level. So we will be doing SLAs, we will be fully insured.

We want to work with not regulators, but with security standards people to do, but to have a security standard for lightning as well, which is important when, again, you're talking with institutions.

Give me a sec here.

- Sorry about that, somebody barged here in my office. This is exactly why I want it to be in my apartment. (laughing) - No problem, it's normally, it's cool. It's normally my dog rolling in here and snorting in the middle of interviews.

So we've avoided that this time. But I think this has been incredible. It's been very eye-opening to see quite how much you guys have got on your plate, and it's really cool as well to see that a big business like this is thinking very much along the same lines as a pleblight me.

It's clear that the principles are there, which is really important. It's clear that you actually care about this network going forward and making sure that we push things forward in the right way.

So I think it's a good time to wrap it up, but I'd like to just say a huge respect for what you're doing, and thank you for taking the time to come into the show. - No, thank you for the invite.

It's always exciting for me to talk more philosophically about the business and not so much being stuck in the day to day. Sometimes you kind of lose track. So yeah, and the other thing that's interesting about this business, and I tell my guys all the time, is that because there's a silver source, which is great.

I think it's great. Our only competitive advantage is to always be delivering more value than the next guy. And what does this mean? We have to have the right tech faster than anybody else.

And the moment we don't, that's the moment we go away and it's as it should be, really. So our job here is to be constantly on the leading edge of the technology with the right tools. And this is also, because we're basically building a new world here, or a new way of doing things, if you will,

we have to be able to be really imaginative with what we come out with. And so we sit and I say to them, listen, we got a dream of the world we would like and then we make that happen. - Being the change you want to see in the world, I like that.

- Yeah. - Awesome. Well, yeah, once again, a real pleasure speaking to you. I'd love to see how things progress over the coming months and years, and hopefully get a chance to catch up with you again.

But yeah, I hope you enjoy the rest of your day and wish you every success. - Well, thanks a lot. I really appreciate what you're doing. I love that you're getting sat streaming into your podcast and it's been really good talking with you.

So yeah, let's feel free to put something on the books for, I don't know, six months for now and we can kind of catch up. And I'll let you know when we're at. - I look forward to it.