This is epicenter. Bitcoin, episode 131 with
guests, Stefan, Thomas, and Evan Schwartz.
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Hi, welcome to episode a Bitcoin, the show, which talks
about the Technologies, projects, and people driving
decentralisation and the global cryptocurrency Revolution.
My name is Sebastian quechua, and my name is Brian Feldman
crane. We're here today with Stefan
Tomas and Evan Schwartz. Stefan many listeners are
probably knows. He's been on the show before
he's the CTO of repo. Evan is a software developer a
triple apps, and they are also the co-creators of the intellect
or protocol intelligence very exciting because they're trying
to tackle one of to believe really hard problems which is
interoperability when you have 100 new project, coming up with
your own blockchain and people trying to integrate that into
all kinds of other systems. It's just becomes a bigger and
bigger problem. So we're glad that they're,
they're trying to tackle that and we're excited to speak about
that project today. So thanks so much for joining
us. Guys, thank you.
So yeah even actually I we've been we've been sort of
harassing you guys to come on for.
I don't know how long 6 months perhaps and no no I'm excited
that it's finally working out and I think Avenue also gave a
talk, I'd meet up in Berlin about this.
No. And you also gave, you should
also add, I think there was maybe a year before or maybe
even longer than that a workshop on code use once.
So can you talk briefly just sort of where those into logic
come from. And how does that relate to to
code? Use your?
So when we were working on the code use projects, one of the
project. One of the things that really
came out of that was like starting to think Beyond a
blockchain and thinking, thinking beyond having one
cryptocurrency that everything sort of tied to we didn't want
everyone to have to use extra P or Bitcoin or just one specific
cryptocurrency to pay for Cody has contracts.
And we also wanted the Contracts to then be able to trigger
payments without having to integrate with, you know, 10
different types of blockchains. And so it's really join that
time that we started to think about interoperability and like,
how do you make it so that the user can pay with one thing and
Dakota's host can accept another thing and have it still work.
And it also have sort of a standard protocol to kick off
payments into control where money is, no matter what kind of
Legend you're talking about, could be, you know, blockchain
the centralized Ledger Etc. And so that's where this sort of
key sort of core. It's probably came from for us
and I'll just add that a lot of like today.
If you want to make payments most Payment Systems in the
world work fine. As long as you want to send a
payment to someone else who's on that same payment system.
So if I'm in Europe and want to send a payment using Sefa works,
well if I have Bitcoin and you have Bitcoin works, well, if I
have PayPal and you have PayPal probably works.
Well, the problem comes in. If I have one of those and you
have a different one, We have no match and maybe there's no way
for we don't want to get another account.
We'd like to, when we talk about the decide, this vision of the
internet of value. What we see is an experience
worth much more like, how the internet actually works, where I
have whatever money or whatever, I'm on, whatever Network I want
and I can send money to you. So that's a lot of where the, in
the interoperability goal comes from.
But wasn't this originally kind of also the idea of Ripple that
you can sort of thing, connecting to all kinds of
different things. Send you know, people can issue
assets on Whipple and then everything kind of moves
smoothly as well. Okay was even the idea of a
Bitcoin. I mean if you think about it
without the, that was one of the promises of Bitcoin is that you
can use Bitcoin to send money anywhere around the world
without having used Banks and and that in Bitcoin provides a
layer of interoperability all those people I guess was did
make the step that you say, okay, you can issue a US dollar
on Ripple or something like that.
Yeah, this this obviously, you know, really speaks to me the
way that you're putting it because that has been really my
journey. In terms of the goals always
been the same. It's been two to make, you know,
the movement of money as frictionless as information, but
that was the reason I got into Bitcoin.
And what I noticed with in Bitcoin, was that why you needed
support for different currency? So I joined Ripple.
And then I noticed with ripple that yes, you know, we have
different currencies, but you still have sort of this issue
that you're all have to be connected to one Ledger.
It doesn't address how to move the money from um, that ledger
to all the other systems out there, just never going to be
one Ledger that all data is stored on all, you know, all
transactions happen on and the reason is not even scalability.
I think we could solve scalability with with sharding
and with other cool Concepts. But the problem is that there's
a sort of scalability of functionality, as sort of, you
know, diversity, in terms of the use cases, where you can't have
one system that really perfectly serves.
Each use case is the same system It's going.
Micro payments going to be good for moving, billions of dollars
is the same system that that's really decentralized.
Good for someone who wants like the lowest latency possible,
probably not. So it's probably good to have
some layer on top that allows a little bit of diversity in terms
of the ledgers and still makes it possible to transact.
As without thinking about the difference of Ledger and
thinking about, I have to go from this network to this
network. And what we've also seen is that
because there's so much that goes into the design of a
specific Ledger and there's so many decisions Ins that are
made, and often there's some Compares economic interests in
people using your Ledger. What do you end up?
Having is someone's, let's say I come up with a ledger that's
going to be the Ledger for interoperability.
It has all the best features Etc.
So I I go to you and I say here come get on my ledger and then
but your you already have the Ledger that you're using and you
say no you should get on my ledger, not the other way
around. And then you're at an impasse
you end up with a very Action System where everyone is saying
my ledger is the best one for interoperability but you don't
end up with interoperability because everyone stays in their
own camps. And so what we saw the need for
was something that could bridge that that allows everybody to
use, whatever The Ledger they want.
And it doesn't matter. And we can still get that
payment experience. We're looking for So what's
what's interesting here is that you use this term Ledger is a
ledger, an accurate description for all these different systems
that hold value because I've always kind of heard Ledger in
the context of blockchains, right?
We speak about of distributed Ledger's, but does it make sense
to speak of Ledger's and when you speak about PayPal and all
these other systems that you want to be interoperable here,
In general, the term Ledger just refers to back in the day,
really back in the day and in some places still a ledger is
just a book with accounts and balances and it records changes
to those. And ultimately what you care
about is like I have this account, how much of the thing
that I'm tracking, does that one own?
And you can see everything from, we use that as a, kind of
general term because every every one of these different
cryptocurrencies banks pay A pallet cetera.
Are they all operate, Ledger's? Maybe it's possible that they
don't think of them set that as being their primary function,
they may think of themselves as a payment Network, for example.
But underlying all of that you have some listing of accounts
and balances. And that's what we talk about.
When we mean, when we say Ledger and one should also add write
that into Ledger itself is actually not a lecture, right,
correct? Yeah.
There's no Ledger built-in. It's, it's purely a protocol for
interoperability person. Protocol suite for
interoperability between different Ledger's.
I think also interesting to point out and perhaps what when
people initially think of these things?
I think of a network and internally other is not a
network even it's it's a protocol at clearly at the base
layer, what a protocol is it allows people to organize around
the same way to communicate. Yeah.
So there's actually a pretty close analog between inter
Ledger and the internet. That's also part of why we chose
the name. So for example on intellegent
there is a way A to address different Ledger's that address
accounts in different Ledger's. Just like the Internet Protocol.
IP has IP addresses to address host on different networks.
There's also other similarities. So for example, on into the
protocol Suite, you have TCP and you have UDP, which are what's
called transport, protocols and so they take care of things like
retries and we transmissions and so there's an equivalent
intelligence. Well, so it's just a parallel in
terms of internet is not a network.
It is just something that ties different networks together.
There is minimal way possible. That's a really key point
because when so, a lot of different cryptocurrencies have
have been called at different times, protocols for money and a
key thing to understand about that is that all of these
cryptocurrencies Bitcoin, Ripple Etc.
Have protocols that they use to communicate with one another.
But the really key point is that in order for me to use the
Bitcoin protocol usefully, I have to be connected.
Two to the one true Bitcoin Network.
There's not really any purpose for you and I to use the Bitcoin
protocol with one another, if we're not both talking about the
exact same network because then basically what you're talking
about is a fork or an altcoin or, you know, a different chain
and that's not, that's not Bitcoin.
That's your other thing. And so while they do have
protocols, in order to use them usefully with both Bitcoin and
ripple, you have to be connected to the network of specific
validators Etc. Whereas Within To Ledger.
It's really just a way for different networks to peer with
one another. So there's no, there is no one
enter Ledger in the same way that there's no real.
There isn't really one internet. It's just it's a network of
telecommunications networks. And what we talked about it as
one thing, but it's really an abstract concept that just made
up of this network of Networks. Yeah, and then me what's
interesting in the literature that you written in the white
paper, is that you reference, these are seized from the late
80s that describe the Internet Protocol and describe.
Yeah, IP, and it's really fascinating to me that I mean,
these these, these ideas have been around for so long and we
can get into this later. But it seems to me that inter
Ledger itself. The fact that it's happening
Eating now and of course, like you guys are in the Bitcoin
world and ecosystem, and what have you?
But I mean intellegent could have existed a long time ago.
Even before Bitcoin, there's nothing that I don't think.
Anyway, that Bitcoin brought anything new to the table that
made into Ledger and here, at least possible.
So it's sort of fascinating that it's happening.
Now like 25 years after the web was created and know whatever
how long after the internet was created and it took so long to
get here. When All these principles have
been around for for quite some time it's a really good
observation. I gave some guest lecturers
recently for for some students. And one thing that that I told
them is that, I think the biggest contribution that the
Bitcoins really made is that it's brought a lot of really
smart people into the space of Finance where, you know, a lot
of them might have not even thought of themselves as
Financial Engineers, anything like that or something that that
would be something they could ever have an impact on and think
Bitcoin. If everybody sort of this
realization that no, you can have a huge impact by working in
this space and by working on these Technologies.
And so I think that's a really powerful contribution and I
think that's why these types of efforts are happening.
Now it also got a lot of financial networks to say oh hey
we should probably look at this new technology that's coming out
and what you know what everyone nowadays is it what are we doing
about blockchains? And I that that's also a really
big thing to get existing existing Financial players To
come along and say, Yeah, we actually we like that Vision
that you're pitching. How can we be part of it?
The doors are all open right now.
Yeah. I think what Bitcoin May might
have brought all sorts of this change in mindset, then this
idea that you can innovate without permission, and in this
financial space, which is highly regulated, and sort of, you
know, cordoned off. So let's, let's talk about it
into larger, the architecture, can you give us a description of
what are the different layers of the architecture?
Sure of the protocol. So we use a model with hardly
four layers. And the four layers are at The
Ledger layer, the inter Ledger layer, the transport layer, and
the application layer from bottom to top.
So, the bottom layer to Ledger layer is basically where you
find The Ledger protocols. This is where you find the
Bitcoin protocol. The Ripple protocol, you know,
ISO 20000 22, which is with a lot of banks use.
So this is where you find sort of the nuts and bolts of making
Money movements making transfers on individual ledgers.
The next layer is the inter Ledger layer and on the
intelligent layer, what you find is basically the header, the
information that is necessary to associate a transfer with what's
supposed to happen on another Ledger afterwards.
So if you see an intellectual transfer on one Ledger, a
connector can look at that header.
And look at that into Ledger layer data and knows what to do
with that transfer going forward.
Now with that, you have sort of this this graph of nodes
Ledger's and connectors. And the next thing you need to
do is you need to actually send something across that without
without dropping the money or things falling apart halfway.
And so for that, we have a transport layer and so just like
TCP takes care of retries. We have a transport protocol
called UTP Universal transport protocol, which basically takes
care of retries and takes care of putting money in escrow such
that it can't. Get lost on the way.
And then finally, you have an application layer.
And so on the TCP IP site on the internet side, you would find
the HTTP there. You'd find smtps.
There's lots of different application layer protocols.
This probably the layer where there's the most diversity.
And so we think with intelligent could be very similar where
there are sort of a, you know, a bread-and-butter standard
protocol which we haven't designed to Edge which is the
equivalent to http. But then there's lots of other
ones that are for specific use cases.
So for example, within Ripple, we have one called payment
service protocol, that is proprietary, that is completely
just used within Ripple. That's an application layer
protocol. That builds on the open, I'll be
protocols. Let's take a short break to talk
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So, talking about the first one, The Ledger layer as sort of Did
the fundamental I guess it would it be correct to say The Ledger
layer is really kind of a set of requirements that different
Ledger's have to fulfill in order to be part of
intellectual. There's a couple different
different ways you can look at it.
So The Ledger layer is the Estefan was saying the protocols
that individual ledgers use. So the Bitcoin protocol for
example. And so here we in we put out
this architecture document and in there.
One of the things that talks about is different, light levels
of functionality that an individual Ledger might use in
order to support inter Ledger best.
So the absolute minimum is, you have some protocol for
expressing transfers from one account to another That's like,
really that the absolute minimum and having a, having a way to
either have a unique identifier or a memo, some kind of memo
attached to that transfer is, is on, is like, on the lower lower
end of functionality. So if you have basic transfers
from one account to another, with some data attached, to be
able to say this is that transfer we talked about.
So what would an example of this me?
That's a step up payment where you have an idea.
Band, and, you know, you stand in the mound, and then, you can
also send some text with the payment.
Yeah, exactly. Exactly.
Today we're kind of in that phase where, like, when you talk
about set by as a ledger with into Ledger, like the first
thing that comes to my mind is as fast as sepa isn't as
efficient as set by is, is it really that kind of, you know,
legit, I could participate in its alleged transaction and
something that's really put that in context.
For me recently is like looking at some old videos when people
are first experimenting with internet, protocols, And they
were also using a lot of not-so-great networks.
You know, you can kind of think of that phone receiver that you
putting on to the thing and then it makes a noise in the phone
receiver, picks it up, right? That that sort of old school
stuff and so that's kind of the phase that we're in right now.
Yeah, you could make an intellect, your payment over
set, but we also imagine that interest going to put a lot of
pressure on Ledger's to get a lot faster, a lot more efficient
and the true intelligent Vision won't be realized until Ledger's
have sort of. Yeah I just have caught up with
it essentially. That's where I can.
I can speak a little bit more to what some of those requirements
would look like. So Stephane mention things like
speed and like, latency and scalability.
So that's that's one piece of it.
That a lot of letters right now are not very scalable and so
that would sort of limit the throughput.
Obviously, another part of it is when Stefano was talking about
the different transport protocol.
So the way the universal transport protocol works is
specifically what it's trying to address is we have the way into
a ledger works. Is you have Ledger's and you
have connector sitting in between them and a connector, is
some party that has an account on both Ledger's.
And what you want to do is I want to send my money to a
connector that shares a ledger with me and I want them to pass
it on the print. The immediate problem you run
into when you're talking about that is what happens if they
steal it or lose it. And so that was the first thing
that that we had to address with inter Ledger.
And that's what the universal in the white paper.
It's called Universal mode. Now, we're calling it, The
Universal transport. Also what that is all about, is
I don't actually want to just send the money to, let's say,
Stephane is the connector and he may be trustworthy, maybe not
but there's, there's some other people behind him as well.
And so I really only, I want, one of two things.
I either want a guarantee that I want a guarantee that either I
will get a signed receipt from my final recipient saying.
Yep. I got the money or I want my
money back and so that's the guarantee.
That the universal transport protocol has that either, you
have your money, either, you keep your money or you get a
signed receipt. And so, the way that works
briefly is basically, with escrow where instead of sending
the money directly to Stefan, because he might run away with
it or steal it, what I'm going to do is put it in escrow on my
ledger and so with Bitcoin you'd use hash time lock with other
things you could use as a dedicated sort of escrow thing.
But the key point is that The Ledger itself is providing the
escrow. So I tried Money in escrow and
it only comes out if Stefan can deliver me that
cryptographically signed receipt from the recipient.
And so we set up this chain of escrows and so, everybody's
putting money in escrow all the way down the chain.
Then the recipients. He's oh, there's money in escrow
for me, just pending my signing this receipt, they sign the
receipt and that trickles back all the way along the chain.
Okay? So I think in one of your talks,
you described it as The escrow goes from.
So if you have like payments going from left to right, yes,
Crow comes back right to left. Can you perhaps give some more
detail as to how the connectors are sending money back and forth
in the escrow like a net transaction.
And by the way, so what they're for people, who are listening,
who want to get, Better sort of visual understanding what this
looks like you can go to slideshare.net /, general ledger
and there's some slides there and I'll put the link in the
show notes as well that sort of illustrate what this looks like.
Yeah, I would say that, you know it, you can dive as deep as you
want. If you really want to get the
defense and the Really expected explanation of this protocol, I
would refer you to the white paper which is on intellegent
org. But I'll try to give sort of a
very high level description based on what evidence already
said. So, If I'm a connector and kind
of keeping with that same example, everyone's to send
money, I'm the first connector. I don't just want to put money
on into escrow on some other Ledger until I know that Evans
actually committed to this payment.
So I'm waiting for him to put money in escrow first and that's
why the money that the escrow is kind of going from left to right
and then the execution well the recipient is the one who
generates that receipts. So clearly the receipt has to
come back from right to left and so that's why you kind of see
that like left-to-right preparation, right?
Left execution, right? So Stefan has the connector,
doesn't trust me as the sender, but he's not going to do
anything. I ask until he sees money, but
the thing he does trust, is there some Ledger that shared
between us? Let's say that's the Bitcoin
Ledger and so he trusts the Bitcoin Ledger, I trust the
Bitcoin Ledger, if he sees that there's a transfer set up for
with money on the Bitcoin Ledger for him and that could be.
We can get into exactly how that would work.
But there's money sitting there that's committed to this
specific. Transaction.
Then he's like, okay, I don't trust Evan, but I do trust
Bitcoin. And so I'm going to take that
and I'm going to go and set up a transfer corresponding transfer
on a later ledger. So, and what I'm interested, as
the connector is that the two conditions are the same because
again, I trusted to Ledger's on either side of me.
And so if the two conditions are exactly the same, I know that
whenever the right hand side transfer is going to be
fulfilled, I can take that fulfillment that signature and
pass it on to the left hand side Ledger.
ER, and will be valid there as well.
So in many ways, it's very similar to sort of the hash lock
Concept in lightning. If you're familiar with that and
one should probably add that, this is actually a really
brilliant cryptographic little neat little trick, right?
Because it allows you to do these things.
And I trust this way even though those Ledger's may be very
different and it's sort of, you know, simple Works universally
and it's not, it's not very intuitive, right?
It doesn't it doesn't make sense.
I think if one just sort of explains why this will work
Work. So I think to to kind of really
understand it when needs to like sort of really walk through it.
Yeah. What you just mentioned the
trust this point in one way to look at this is if Bitcoin and
all of these cryptocurrencies have brought away so that you
can make an individual Ledger trustless.
What what inter Ledger does is make it so that you can try, you
don't have to trust a connector, that's some party.
That's relaying money between different Ledger's.
Right. Okay.
So as long as your yeah, we because because you're within
that payment network, if that pain that occur provides an
escrow, then you trust that payment network, not exact
connector. Okay.
So, coming back on this idea of connectors, you've compared them
to relay nodes on, on the Internet Protocol.
What would they be analogous to what?
They'd be analogous to an ISP or like an organization like level
3? How can we compare our
connectors to existing internet infrastructure?
Participants so there's one role in the Internet Protocol.
That's a very, very close analog and that role used to be called
the gateway today. We most most usually call it the
router and it's basically a system which is on two networks.
It's usually a lower level number of high-level Network or
on the Tier 1 level, it sort of connecting to two isps networks
together and it basically knows, How to take a packet that's
coming in on one network and figure out which of the other
networks that it's connected to to, to forward it on.
And so the the gateways and the routers are responsible for the
routing. And one thing that's really
powerful about that is that it means that the sender and the
recipient will receive are not responsible rounding.
It means that the ledgers are the networks themselves.
Are not responsible for the routing and at me keeps them all
very simple. And so the the complexity within
the internet protocols is very much sort of concentrated into
Routers and even their like it's concentrated in the largest
routers, the routers that are actually used at the tier one
providers and so your home router can also be pretty
simple. And what that does is it means
that the only people have to upgrade the protocol regularly
for it to work. Well are people who are going to
have companies, they're going to be very invested in it, they're
going to be competing with each other to be on the latest
version. And so it tends to be a thing
that gets upgraded very easily. And so you can have your Or your
laptop, you can have your phone. Stay pretty much the same and
still benefit from these improvements.
So, you would compared to sort of the Tier 1 internet routing,
like, companies that do writing, like, I don't know, like
companies that do like level 3. For example, I'm not, I don't
really remember all the names of the companies, so, so they're
not the only ones to do Rowdy, right?
Like, they do routing on the large scale, but then you have a
home router and you do routing on a small scale and you could
make sort of a mesh router and routing a different way.
That's really all all up to you. You can create your own routing
protocol if you want, but I think most of the complexity is
concentrated among those larger, I see.
Okay, so you could have for instance, some lower-level
connectors that maybe do like connecting sepa to PayPal and
then you may have some smaller connectors that are connecting
some obscure cryptocurrency to some other obscure
cryptocurrency at some. And so, you have different
levels there and depending on how big the network is that
you're trying to send payments to To you may stay on that lower
level Network, where there's a lot of traffic and a lot of
volume. But, you know, if you want to
get into something like some little payment, survive service
provider in China, for example, that you may have to go through
some smaller connector router and find a route to it.
Exactly. Yeah.
So the connectors are like routers and just like there's
various degrees of routers and various complexities same thing.
We expect to see with the connectors So what kind of
companies are going to be running this like will we see
companies like Google, in the end running those big, the big
more complex, routing things or isps or will this be a more of a
financial service thing? May banks will do that?
Or is it more like in Bitcoin way sort of a independent
entities that may be anonymous in some location?
Like, what's that going to look like?
It's A funny because it's kind of like the first person to
discover is gold in California. Trying to imagine, like, who's
going to be rich off of this? Well, whoever is there first,
you know, like whoever can capitalize on that opportunity
to quickest. So, it could be Banks because
they already have some of the Regulatory and compliance of
background to do this, but the kind of more slow-moving.
So maybe it's more like payments companies like venmo Square.
Google Apple could be those guys that could be Bitcoin, startups
could be that Bitcoin exchanges are just the only ones that
Adopt a protocol like this. And so they just grow to be, you
know, very large Network providers, whoever it is.
We think it's a huge opportunity and so it's just a matter of
like, who's going to be there first.
And speaking of exchanges, you know, if at some point Enter
Ledger becomes like as big as the internet and like
everybody's using enter Ledger all payment platforms and
payment service providers have integrated all the conditions to
be fully supported and we just have this network of payments
between different types of ledgers.
What does that mean for you know things like exchanges that
traditionally Serve that role or even the stock market.
Like if I can just send money to myself from one payment Network
to another than doesn't that whole infrastructure of, you
know, third-party exchanges, sort of crumble.
So I think that that exchanges are essentially connectors,
right? They are connected to more than
one ledger so we could be a Bitcoin Ledger and sepa, and
they provide liquidity between those two Ledger's and and their
customers provide liquidity. Between those two letters.
And so one of the primary models that we see the connectors could
work is by being exchanges by having people trading and then
using some of that equality to facilitate payments.
So what will be different then in a world where those exchanges
are talking to their customers to inter lodger rather than what
we have now? So if you just want to compare
exchanges today with with how connectors work and enter,
Ledger's primarily I think the difference would be the degree
of automation. So if I want to use an exchange
today, I actually need to go on one network and like manually
type in a bunch of things in order to send a payment.
Them and they may have maybe have custom instructions to say,
you know, include this transaction ID or send to this
Bitcoin address or something like that.
They have custom instructions to be able to correlate, an
incoming transfer from me to that, but I need to go and
actually type that in myself and then they will go and we'll have
some process for doing that. On the other Ledger, what info
Ledger does is standardizes that way of doing it so that you can
automate more of this so that you could see even See it as
like a standardized protocol between exchanges so that I can
talk to each of my exchanges on different networks in the same
way which just makes it a lot easier to route a lot more
payments through them. And so, one way you could see it
is that exchanges, we need to be very competitive because they
could having a standardized protocol in some ways, makes
them more interchangeable, but what the way I would look at it
is that you also make it a lot more useful.
Because if I could, you know, If I can pay with Bitcoin really
for anything and not just to people who accept Bitcoin, then
I'm purely competing and Bitcoin is really competing on the
strength of it as at self as a ledger as opposed to needing to
go and get all the network effects of getting.
Lots of people to accept it and and use it for everything and so
you could have exchanges and Ledger's be both more
competitive but also be used for a lot more because it if you can
automate things, it makes it a lot.
Lot easier to wrap payments to them.
I want to stay on that point really quick because it's an
extremely important Point. Like, you think of the internet
as this extremely frictionless system that you don't really
have to worry about it. Like I don't worry which which
path my messages take because it pretty much works and one of the
reasons for that isn't necessarily that it the
protocols are so amazing or so special.
But because of the competitive environment that the internet
creates, if I'm a network that drops, a bunch of packets all
the time, people are not going to Up here with me and it will
automatically find the routes that are the best.
And so for compared to the financial Network like today if
I want to get money from Bitcoin Litecoin and someone wants to
provide that service, they have to actually have a brand, I have
to kind of trust them a little bit and I have to figure out
that they exist, I have to find them.
So we have to be marketing branding, all these things.
And so there are companies out there already that are
connectors, this shaped of connecting different
cryptocurrencies, there's companies that are connecting,
let's say, PayPal to and pay son and you can Them.
So, they are out there, but they have to have all this overhead
of being a branded. And having customer service all
that kind of stuff, where's really?
It should be automated and it should be something that that is
just competitive. So if I can offer a better rate,
I should be able to just put that in the system and have
traffic go through me immediately.
Right. So before you mention that, this
was a big opportunity to become such a connector, I mean, if
there's no Grand involved, really if it's a, so, isn't this
just kind of like a race to the bottom and we'll be done at cost
or why do you think there's such an opportunity here?
So there are in the internet again.
Speaking speaking, from that model, if you are the best
connector you will grow. And once you have economies of
scale, you will be permanently cheaper than your Editor.
So I mean it's not the kind of opportunity like being a
correspondent bank today where you literally can you know, have
a cost basis of one or two basis points and charge people 20.
I don't think that'll be like that because there's too much
competition for that but you can definitely capture the margin of
the economies of scale. And so if you get to be very
large, you can make a lot of money with that.
The other thing I really want to highlight though is if you
compare this to the development of the internet and looked at
just this Scope the scale of how many for example, payments are
being sent. Today, we very much expect that
the volume of payments sent will explode in the similar way, to
how much information is being sent exploded on the internet
because if you can dramatically reduce the cost of sending an
individual message to the point where you don't really think
about it and then if you have that interoperability so that
you also don't have to think about.
Like if I want to send you money, today we have this whole
negotiation about, you know, do you have the same You have a
pallet - have PayPal you accept Bitcoin.
Are you don't accept Bitcoin then now and like we have this
whole manual negotiation, which just means, we don't use.
We don't use it a lot. I think the statistic is like,
people in the u.s. spend 2.1 payments per day.
I have no idea how many packets. I'm I'm sending across the
internet today because I don't care if it doesn't it, you know,
I'm thinking on a different scale.
I'm thinking about my cell phone's data plan, which is like
huge numbers of Packets. And so this fully expect that to
happen with payments as well because if you can automate all
of this and then stop thinking about it where, you know, I'm
just going to build payments. This other thing that I'm doing
where you never would have thought of doing that before
because you have to do sign ups, you have to do all of this kind
of overhead. It wouldn't be worth it to build
payments into all the, all of these things.
But if you get that interoperability right, then you
can build payments into a lot more stuff.
So, we fully expect the volume to just explode with something
like this. Yeah, absolutely.
I totally see that. So this thing you mentioned
economies of scale regarding connectors is there some kind of
centralization risk here that you say like, well that gives
you undue power to those entities if they become massive.
Yeah, so I mean we obviously get that question a lot.
And so, having been in the quote-unquote, the
centralization industry for almost six years now, it's given
me a lot of time to think about that and thinking back and At
what the sensation, the centralization really means is,
it means that you have the choice, you have the ability to
go with whatever provider gives you the best option.
It's almost like more about competitiveness than it is about
what the actual physical topology is.
So think about something like something like Bitcoin, Bitcoin
isn't centralized just because there is a there's one network
Bitcoin. This is a decentralized network
underneath and so the reason for that is because anyone can I'm a
minor. And so, for something like inter
Ledger, if anyone can become a connector, then even if the
connector is very large, it doesn't mean that they have this
power over you. It's not like Facebook where, if
I, if I leave all my, my contacts are gone, right?
If I switch to different connector, I just get the new
rate and that's it. And so, if anyone out there can
offer better rate, they can become the new new big connector
that really puts a check on, on even a monopolist.
Like you can have it in competition.
Really doesn't matter how many players you have, only how hard
it would become. It would be for someone else to
enter the market and undercut them, it's actually a good
thing. If you have some very large
players that are able to take advantage of economies of scale
just as long as they don't become able to keep other people
out of the market. Yeah I know that make sense are
there some other attack vectors? Like could, could they abuse
connectors and pews abuse their position in some other way?
And potentially, you know, steal money from people?
I mean so that the protocol kind of keeps keeps A from, from the
connector pretty much like, as we mentioned, there's escrow
connect to can't really steal anything.
There's certainly the ability for people to do s each other.
One of the things that's actually kind of interesting
about intelligent is that it's both a way to send payments, but
we also can use into ledger to prevent the US attacks against
inter Ledger, right. You can actually make certain
requests that are expensive to process cost something and so
that's that's that's true for any kind of distributed system
that you can use incentives to solve a lot of these type of
attack vectors. So I mean I can't predict the
future but certainly if I play it out in my head I can't think
of any way that a very large connector would be able to just
outright Sable the competition because it is just a protocol
because I can set up a path, however, I want.
So it soon as someone misbehaves to a certain extent, it'll be
worth it for people to, to make sure they route around them.
I want to just highlight what that point that you made because
I think it's a really cool one that When you talk about denial
of service attacks today, there's a lot of different ways
that people address denial-of-service attacks but
fundamentally where the problem arguably comes from is that when
you make a request to a server you're asking it to do some work
for you but you're not giving it anything and in exchange and so
the servers have to try really hard to figure out who's doing
it legitimately and who's not. But with if you could just send
these little tiny payments in this gets back to what I was
saying about. I think the Volume of payments
will explode. It's like if you just made some
very, very tiny payment to every server that you talk to in the
world, it would be a completely negligible cost to you but that
would completely cut out denial of service attacks.
Not only in so we can we can talk about that in a general
sense. If I'm operating some service
with an API service, I could use into Ledger along with that to
cut down on denial service. What's the fun was saying is
that we can also use that very feature within enter ledger to
cut down. Down on denial-of-service
attacks against inter Ledger itself because after all the
connectors and things are just servants are just internet
internet services that are similar to other ones and just
just add that. And so we're going on for a long
time but it's something that's very exciting for us.
Is a lot of distributed systems have these incentive problems
and so a lot of the people come to us at looking for Solutions.
Our people are working on mesh networks, on distributed file.
And that kind of stuff where they're trying to figure out how
to, you know, pay for the utility people.
Add to the system in a decentralized way and I think
intelligence is a great solution for those types of protocols.
And so, I'm excited about what intelligent can do for the
decentralized future. Where, you know, I've almost
gotten a little bit, you know, disillusioned with this idea of
like, okay, we're going to have this like decentralized Ledger,
really huge Ledger, but there's still going to be some people
kind of control that the kind of setting the rules if they're
kind of defining. In the protocol but insulin
should really lets you get away from that.
And so it allows you to build decentralized systems that are I
guess more the centralized or decentralized in a more real
sense, right? Because there's no, not even a
group of developers that kind of controls the whole thing.
Yeah, it's decentralized it, it's I would call it the
centralized but I would call it distributed and having more
freedom to choose. I guess, whereas, with something
like Bitcoin, you're sort of stuck with one system, you
mentioned economic incentives, coming to sort of, you know,
this is very interesting. And, you know, theoretically,
it's very will and and but if you know, somewhere down the
line, we expect companies to start using inter Ledger and
making their Ledger's cryptographically So enter
integrated cryptographic escrow into their services.
What is the incentive for a company like PayPal where, you
know, their interest is to have as many users as possible and to
be using their service. If you're creating really easy
avenues for interoperability and for in perhaps you know using
other services that might be better.
What is the incentive there to, you know for parent companies to
Come around this protocol. Yeah.
So that's actually kind of an interesting question that I was
struggling with this well and I kind of looked at the history of
the internet for some inspiration.
And when you think about the history of especially the web
where you kind of had this transition from the days of the
online service providers, to online services networks, where
you had AOL CompuServe Cheney, which were all sort of closed
networks. And they were competing on the
number of services that were on each Network just like PayPal.
Repeating on the number of users and Merchants that are on their
on their Ledger. And so what happened?
Was that some of the smaller guys not necessarily the number
one, number two, but maybe the number three, four and five saw
the interoperability that the web provided as a way to expand
the services that they could offer at the if we expand the
content that you could get through their Network and so
that gives them a way to compete with some of the larger ones on
the reach and it eventually it gets to a point where this sort
of open protocol has enough content on it that if you're not
on it. It's a pretty, major omission
and so if you're one of the largest guys to start, getting
that request from your customers saying like why aren't you on
that? I, you know, like this is the
biggest set of content out there.
Why can't I access that through AOL?
That's crazy. And so AOL the way that they
responded to that was the eventually added that support
and they thought about it as well, we're going to connect to
that, but we're still going to have all the extra AOL services
and people going to Value those x-ray of all services.
And so, they are going to stay on a well.
But what happened long-term was was Is the internet.
Just became like one Global Market.
And so, the most successful companies were the ones that
stop worrying about the size of their Network and stop worrying
about the added value that they could provide, and rather just
try to be as efficient as possible.
Try to provide the best customer access to this to the internet
itself. That's real interesting.
I really love these internet and allergies with with enter larger
because I think the they really tie into how networks develop.
So tell us what, where's the, where's the project at?
Right now what have you accomplished?
Maybe talk about some of the efforts going on with the w3c to
try to bring this as some sort of standard level dry.
So we came out with the white paper last Oh, brr, so that's
available on into Ledger dot org.
That's kind of the technical defensive it we've been working
on, putting out more documentation, things like that.
We have the there's an open source reference implementation,
that's under heavy development. That you can find that on GitHub
github.com into Ledger and then a lot of the develop kind of
core development is going on. There's at the the w3c is the
web is one of the web standards organizations and we have a
community group there that's focused on Agent.
So that's where a lot of the discussions and Technical
development is happening. So you can, if you're interested
in tracking the progress you can find us on.
We have unintelligible dot-org. It says a bunch of different
ways you can find us. There's mailing list, IRC,
things like that. But the Main Avenue is to join
the community group. That's where a lot of the
development is happening. And what's?
What kind of remains to be done? Like what, where do you see
intellectual at year from now? Two year for two years from now?
Like how long do you think this is the option is going to take
and how does it have to happen? so I would say the the first
thing the most low level thing that we had to achieve was the
prettiest specification for how Ledger's Express and validate
the escrow the reason why that's the most fundamental thing is
because all the ledgers have to validate the escrow in the same
way for going back to that example, where I'm a connector,
if the Ledger on the left of me, let's say Bitcoin Village on the
right of me validate different types, of cryptographic
conditions of escrow conditions, then When I can't, I can't
possibly take a payment between them and so, it's really key
that those cryptographic conditions are as standardized
now. Obviously there are
cryptographic standards already so for example Bitcoin or in
implements sha-256. So one thing that we did was
just sort of adopt some of the standards that are already most
widely used so that as many existing ledgers as possible
including Bitcoin was other cryptocurrencies.
And ripple, of course all already support.
Intellectual as is without any changes.
The next thing though was to sort of plan for the future and
we wanted, for example to have distributed systems,
decentralized systems, be able to sign things that then trigger
intelligent payments. And so for that, we needed the
ability to express signatures with multiple signers, standard
multisig. And so we kind of came up with a
spec for that. So that's the first part.
The second part was to work on routing and so, the conditions
being pretty much Final, I think that we're still looking for
input, of course, but we have a working spec for that.
The second part being routing. So we need to figure out how the
routing tables at the connectors, actually get
populated. And so that's the thing that
were most actively working on right now.
We just added it to a reference implementation, the way that we
think it should work initially. Obviously, that's going to be
something that's gonna be a lot of innovation over decades, I
think on this, but we have a working sort of model right now,
so you can take the Friends information today and make
payments if you use descriptive conditions and use that routing.
And so the next part for us is kind of to make a lot more easy
interfaces and kind of clients and other things that make it
easy for people to use the system as well as make it easier
to run some of scalable Ledger scalable connectors and so on,
we might ought to a lot of optimization kind of trying to
make it faster, trying to reduce the latency of payments but
really the two key pieces were the conditions in the routing.
We're just getting to a point. Now we're both of those are
starting to stabilize a little bit.
Yeah. So the point that it's at is
that if people are interested in trying it out you can go and
look at the code and download it.
We have it. There's a demo that that kind of
shows off a lot of this functionality that's all working
and and there there are some of the internal details that are
still being worked on. But as defined was explaining
before, one of the goals with this project is to make it so
that the interface to using inter Ledger can stay the same.
And the internals of it can keep getting better and better over
time. So we're trying to make it as
easy as possible for developers who I kind of think of it as
there's two classes of developers that might be
interested in this one may be really interested in the
technical details and understanding the routing
protocols and everything about how this works internally.
And so for that kind of person I would say to get involved in the
community group to read the white paper.
Look at some of the routing docks that are going to be
coming out shortly. And really dive into that and
definitely looking for people who are interested in that I
would say there's another group of people who don't care how all
this works internally. They just basically just want to
use payments in their other thing that they're building and
so for that audience, we're trying to have really good
documentation and very simple interfaces to use this so that
you don't have to understand all of the details of how this works
similar to how I don't understand all of the details
about how the internet works, but I can still use That and
even if the internet Protocols are in for the routing,
protocols and whatnot are being constantly upgraded, I'm still,
I still just have basically the same interface to use use the
internet. So just to boil that all down
for someone who's watching kind of thinking about.
Okay? How do I get involved in this?
The best thing right now is to go to intellectual dot org and
go to the w3c community group and join that and sort of start
participating on the mailing list and IRC Channel.
And then we are very aware that our website is severely lacking
right now so we are working on On a better one.
The kind of brings all the different documentation that we
have and all different specs and everything into one place by.
Now, that stuff is kind of all spread all over the place.
So expect a better website in the next couple weeks.
Next, couple months today's magic word is Bell's bella0021
less stock, Bitcoin.com to sign in enter the magic word and
claim your part of the listener award.
So, just one last question, on on this thing here.
Like, what is the adopt? Is there any adoption happening
in terms of like businesses or Banks or maybe payments
companies or like working with you guys on integrating that and
you have plans on sort of actively trying to get this
adopted? Yeah.
So right now what we're mostly interested in is like people can
help us figure out About the technology rights to individual
developers. Individual contributors who
either have some background with designing protocols or simply
just have the free time to Decay to a project like this, which is
already. You know, a lot of people aren't
that lucky, you know. So I think the right now we have
a number of contributors some coming more from a community
background. So for example, there's that
somebody who's been working on mesh networks and sort of
looking at intelligent for that, there's someone who works for
well-known payment startup and he's kind of providing Some
input on the protocol, he's worked on, I think TLS before.
So yes some background in that and that's based on
cryptography. And so on, there's a scribe the
guys behind Big Chain DB who've been very very involved and kind
of helping us every step of the way they have one of the most
scalable Ledger's. And so they have an interest in
interoperability because you know it's going to make their
Ledger look really good compared to all the other ones.
You know. Whoever has the best Ledger's
has the most interest in interoperability I think and so
yeah they've been some. Lee contributors.
We're definitely eager to grow that.
Now that we've had a little bit more to show, it's always a
little bit hard to, you know, advertise too much when you're
still just writing the initial specs and still just writing
digital stuff down. But yeah, we're at the point
where we're hoping that more people will get interested.
So we fled before we talk about Ripple and wrap up.
So Evan, you brought opted to use case of micro payments.
He mentioned it a few times. Like why is that such a good fit
with intellectual and like, why is that going to be so
important? Yeah.
So right now, there's a lot of different people are talking
about micro payments and won't one of the I think the drawbacks
with a lot of the a lot of the non integer solutions for micro
payments is that in the same way with regular payments, if you I
have to, for example, one currency or one Ledger, you have
the limitation of you need to get everybody to use your one
Ledger and we've already talked about the reasons why we think
it's more powerful, if you have interoperability between these
and it's more interchangeable. And so, when talking about
micropayment, use cases, if you had a system that had all of the
benefits that people talk about of micro payments, but let made
it so that I can accept dollars and you can pay with Bitcoins or
whatever combination. Nation of those things, that's
much more powerful than having to go and sign up for a thing, a
different thing than what you already have.
So that's one of the reasons I think it's a really good use
case for it, as well as because enter legit, because there's no
network and there's no scalability problems to enter
Ledger because it's not a thing in and of itself, it's just a
protocol between different networks.
You could use enter Ledger for an unlimited number of micro
payments which was one of the Big issues to address with micro
payments. And obviously, you need the
ledgers to support that, but if you have say dedicated,
micropayment Ledger's that are really, really scalable and can
can handle that kind of volume then it becomes a non-issue to
send lots and lots of micro payments through and actually I
have one more thing to that which is a lot of people talk
about including micro payments in other standards.
And so that's everything from talking about HTTP micro
payments to a project that I've been working.
Working on recently as trying to include micro payments in
Torrance and what I would say is that if your micro payment
solution is tied to one specific currency or one specific Ledger,
you're going to run into a problem because you run into
that same issue of you come and say, oh I have the, you know,
the best micropayment solution and you have to use PayPal.
And then someone else is like, no, no, no.
I have the best micro payment solution, and but you have to
use Bitcoin and everybody will cut your end up with a Some
different systems like that. Again, you have no
interoperability between them and your kind of suck.
Because the way that standards work is that you in order to
build something like payments into other standards, whether
it's BitTorrent or HTTP or other things, it has to be truly
neutral where there's no party that gains from using that and
so you can't tie it to a specific thing and so I think
it's much more powerful if you're interested in micro
payments to think about what you could do with something like
enter Ledger. ER where you can express
payments in a generic way that can use any underlying ledger to
carry them out. So that's why we talk about
micro payments. So, you guys are doing all this
work on inter Ledger, you know, as as part of your job, a
triple, why is Ripple investing so much in this Vise is such an
important project for ripple of Ripple apps?
Yeah. So so Ripple, we are now 125
people about four or five of, those are working on into Ledger
and just to put things in perspective.
And the reason we do that is because intelligence used to
purple Zone It's kind of like how you know a company that
that's using a database internally might open source
that database the way that we've open sourced, triple D, you know
it's kind of something that is very foundational and we built a
lot of, you know, value-added proprietary stuff on top of
that. But we with interoperability is
kind of pointless to keep that in house, you know?
Like what's the point of having hdp if you're going to make a
closed source. So for us it's just a way of
Open Source open sourcing that protocol and Also, it helps us a
little bit in terms of, you know, why should Banks upgrade?
Why should Banks upgrade their infrastructure?
And a lot of especially the largest banks are pretty
comfortable right now because the system sucks for their
customers, but their customers have no other alternative.
And so the way that I described earlier, you know, intelligent
makes it so that if someone has a better path that the even goes
around some of the big hubs of liquidity and is a little bit,
cheaper intellectual be able to take off the bench of those
paths. So it basically gives the
smaller players Way to make their systems more interoperable
and different, make themselves more efficient, as an
alternative to some of the big hubs that are out there.
And that of course, makes the big hubs one to upgrade, and
that's where we're Ripple provides products.
And so, it also creates a little bit more demand for our
solution. So also at that Inn in general,
ripples Vision has always been talking about the internet of
value concept, where it says easy to move money as
information and connecting lots of different currencies.
And previously, the setup has been focused on Tan, the Ripple
consensus Ledger. But, you know, we've discussed
endlessly now the problems with trying to attract everyone to
one Ledger and so the vision of ripple from the beginning was to
create this internet of value. And we think this is a really
good way of doing this, as well as there's also, lots of
interesting use cases outside of the ones that Ripple as a
company are, are interested in that are more focused on Bank
Banks using this. So we want to get a lots of
other people who have other use cases that Interested in to use
this as well. I want to quickly mention
something that you brought up the Ripple consensus Ledger and
I'm sure there's a lot of people out there that sort of have a
question like What Becomes of that?
What's the future of this lecture with the future effects
are P. So we think that that that
that's Ledger is going to continue to be the The Ledger
for xrp and we believe that xrp will be an attractive currency
that to use as a bridge currency.
So, whenever you're going through a multi currency
transaction, a Currency exchange because it's very inefficient to
create markets between all possible pairs that tend to be
Bridge currencies, that emerge. And so Ripple, you know, we'll
try our best to position X RP as as a bridge currency, not the
only one, of course, but as one of the better ones, and so from
our perspective, it's always been something that people know
what the current city use Bitcoin.
And so it's been frustrating for us having, you know, let's say,
you know, higher transaction processing or lower latency and
so on and not having it. Be used because people weren't
weren't aware of it or weren't using it.
And so intellectual, hoping we're hoping that it actually
creates a bigger market for X of P because, you know, if it's the
cheap as if it's the fastest which we believe it is, it'll
have an advantage over other systems that are slower.
So, you mean because once you have into Ledger widely adopted,
if I want to send US dollars to your account, I'll have to hop
through something. And then you can because ripples
going to it's going to be easy to ride through anything.
Then ripples Ledger. And xrp might become one of
those routing stations where the actual currency exchange takes
place. Yeah.
So I said earlier that it He's very attractive to, you know,
try to scale up your Ledger and try to become a very efficient
hub for liquidity. And so we certainly want to play
that game. We certainly want to compete for
that for that Revenue. So weather will be successful.
I don't know, there's nothing just to be totally clear, but
all the conspiracy theories to rest like there's nothing in it.
Alleged that would particularly Advantage xrp.
But we are. We are thinking that it is the
best Ledger out there right now. It's the best decentralized.
Ager. And so as that it should it
should do really well in the system.
Okay cool. Well thanks so much guys, thanks
for coming on and it will be very exciting.
I think to see how intellectual progresses and how it's going to
be adopted, how companies are going to use it and what the
reception will be thanks for having us.
And yeah, of course we will have links to the white paper, to
some of the presentations. They've done to the working
group and all of those in the show notes, so listeners, who
want to dive deeper or get involved, you know, you'll know
where to go. So we're project.
LTE network is lots of shows, you can find on.
Let's all pick on.com and we put out new episodes every Monday,
you can subscribe to it on your favorite podcast app or watch
the videos on youtube.com. Episode of Bitcoin and well
thanks so much and we look forward to seeing you next week.
Episode of Bitcoin and well thanks so much and we look
forward to seeing you next week.