The Real Bitcoin Payments with Lightning and Stablecoins - Graham Krizek

We built a team of experts inside of Lightning and Bitcoin, and we have a full-on kind of software suite to service these companies. And so if a company comes in and wants to say, hey, we want to adopt Lightning because our users are demanding it, we want the speed, the efficiency, all those things, they can basically plug in our system, which is virtually all API driven, and really just hook in our platform and instantly be able to start sending and receiving payments on Bitcoin on-chain and via the Lightning network.

Hey there, and welcome to PayPod, where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist. Thanks for being here. Bitcoin was built to change the world, but for everyday transactions, like buying a cup of coffee, it's long felt too slow, too expensive, and too complex.

Enter the Lightning Network, a game-changing layer that makes Bitcoin fast, cheap, and scalable. Joining me is Graham Krizik, founder of Voltage, a company that's building the infrastructure to make Lightning usable for real businesses and developers without needing to become crypto engineers. We dive into the evolution of Bitcoin as a payment system, why Lightning may be the key to mainstream adoption, and how stablecoins, AI, and global regulation are shaping the next wave of innovation.

So, please welcome Graham Krizik. So what are the biggest barriers holding Bitcoin back from widespread everyday use? And how does this lightning network solve the problems? Definitely.

I think there's a couple of things there from it being kind of more widely adopted. I guess there's maybe starting with the technical side of things is a lot of people that have viewed Bitcoin or have used Bitcoin in kind of the traditional on-chain version of Bitcoin, which is really great at moving like moving money globally all the you know large values all those things but the one of the challenges people hit a lot is the uh the block confirmation time so to have like complete assurance that your transaction is you know good and valid you have to wait 30 minutes to an hour i mean like that's a pretty um slow experience when you're trying to like check out at a starbucks um as well as like the fees itself like you know you have to pay a minor fee to get a transaction to the Bitcoin blockchain.

That can range wildly in terms of like what the actual value is. But you could pay a $5 fee for a $5 transaction. Who wants to pay 100% transaction fee? That's also pretty wild.

And so that's basically the reason why the Lightning Network was created in the first place is to try and solve those problems from the payment side of things, trying to actually make it easier for not only this store of value, which I think people understand that use case quite a bit, but trying to get it more used in the payment side of things. And so with Lightning, Lightning is a layer two scaling solution on top of Bitcoin. And with that, you can do transactions that's instant finality, basically settling a half of a second or less, doing that with zero fees or very, very low fees.

And so that is more in line with what people would love to see as far as their payment experience goes, is the actual very fast, very cheap payments that can go anywhere in the world without an intermediary. So that's where Lighting Network kind of solves for that and pushing it more into the mainstream, so to speak, because when Bitcoin was first created, it kind of was hard to solve those problems. And then the network is finally solving those. And then the other side of it is also on sort of like there's a lot of, I mean, regulatory stuff.

Like it has been really challenging to get your head around the regulatory side of it for the last like several years, thinking about like the regime of, you know, kind of previous administration, just being very hostile towards it. I think a lot of people were like, I'm just not going to touch this at all because I just don't know what I'm getting into. Right. Yeah.

Very, very good. And yeah. And I think that finally the tax is like, you know, you even when you spend it from a transaction perspective, you have to pay capital gains tax on that, even when you're buying a $5 cup of coffee seems a little silly. So I think with that, I think the upcoming clarity from a regulatory regulatory perspective is very positive.

And then also, if we could see some additional, more favorable tax laws, if it was like less than $250 or something for a transaction, there's like no capital gains or something like that. So I think that those are some of the things that are holding it back. But yeah, I would love to hear your opinion on how you've seen things like progressing. Well, I mean, I'm fairly new to the Lightning Network, to be honest with you.

I've been looking into it more because I've got a few different guests that are involved with it. And you're one of them. The regulatory thing is really interesting to me because I've had several people on here who talk, you know, we talk crypto and obviously, you know, like deep political discussions aside. Yeah, the Biden administration was very anti-crypto and very pro-bank, traditional bank.

It felt like, you know, I mean, I've talked to crypto people who like crypto companies who were debanked, like completely debanked. Like they got a letter in the mail saying in 30 days, we're not banking with you anymore. And just out of nowhere, they didn't do anything. It was just because the federal government said, we're not working with this industry anymore.

Your industry is flagged because you're in crypto. You know, you mentioned regulatory scrutiny. Where do you see that kind of affecting the Lightning Network as far as crypto regulation goes? Do you think that it's going to change how it's sort of like broader adoption or the way that it sort of morphs or anything like that?

Yeah, I mean, I think I think it can help it. I mean, and I guess a lot of different ways. I mean, I think one is like so just yesterday or maybe it was yesterday. The the genius act passed the Senate.

Right. He's going to Congress today or says it's coming out very soon. And so that like that stable coin regulation. And that going to help significantly for stable coins in general but stable coins are a really new thing that are coming into Lightning And so that will help just kind of pave a way for really understood like you know a path forward in terms of how people can kind of start using stable coins on Lightning as well as other chains.

But then also, as we look at more just general favorability to Bitcoin specifically, so we see with like the Bitcoin strategic reserve and things like that. Now, that's very much the strategic Reserve is very focused on the store of value side of Bitcoin, where they're holding it as that store of value, anticipating it, appreciating a value over time. I think that still helps inside of Bitcoin on the payment side, just because the US government is going... If they're holding it, they're probably okay with it just kind of more broadly.

It's not like they're going to be like, oh, you can't do that over there, but we're going to do this over here. I think... I wouldn't put anything past the US government. I am hopeful I wouldn't say that it's a guarantee I am hopeful that they would have some kind of favorability to that especially when you're comparing Bitcoin or Lightning compared to the thousands of other cryptocurrencies out there I think that they are just going to have a more favorable stance on that going forward which is just going to help that mainstream adoption Yeah, it's also kind of the it's the one even my parents know you know what I mean?

My parents have heard of Bitcoin don't know if they've heard of Ethereum but I know they've heard of Bitcoin you know what i mean so it's yeah just that almost for lack of a better term brand recognition it might help you know yeah absolutely and i think that that's where we see a lot as we've talked with our customers on like when you think about stable coins being moved on top of like lightning or bitcoin um there's that that exact thing kind of comes up in their heads as they're trying to get you know obviously the entire crypto industry is trying to kind of branch out they're trying to get these more like you know edge like fintech companies that are like kind of crypto forward or they're just getting started in the space and and bitcoin is the one that everybody knows everyone understands bitcoin they feel at least from the crypto standpoint they feel the safest with bitcoin um and being able to like run their their payments on top of it gives a lot of um assurance they feel really good about it compared to some other chains other than you know the context of fast payments and payments that we're talking about here are there other use cases that you don't think people are talking about enough for the lightning network?

Yeah, I mean, I think that there's like, there's a couple, I think one of them is like the micropayment side of things. I will say that I think that micropayments are a little bit, some people kind of over index on micropayments for lightning, thinking that it's only good for micropayments. That's definitely not the case. But when I'm talking micropayments, it's like, you know, one cent, two cents, even fractions of a cent being sent, you know, at either rapid rates or, you know, for things like if you think about going to a website, a news website, where you want to read an article and you get the big paywall of like subscribe for $5 a month and like those kinds of things.

I don't want to ever subscribe for $5 a month. So like the Washington Post or something like that. I want to read this one article and I would pay like 5 cents, 10 cents to just read this one article, right? Instead of the whole subscription.

Well, I mean, swiping your credit card or entering your credit card information for every 5 cent news article you want to read is a little silly. People probably aren't going to do that. Yeah. If you can just do that with lightning and have it be basically, you know, no transaction fees instantly sent like super fast and have that just kind of more natively built out.

I think that's a really popular use case where like even those news services would probably make more money on a situation like that than the subscription model. We all get frustrated with that, right? That's a great example because, yeah, I hate that because I'm like, I don't need, I just, I didn't even know this was a paid thing. I was on my phone on my newsfeed, didn't know it was going to send me here.

I know. Yeah. Yeah. And if it said, hey, 10 cents to read this, I'd be like, absolutely.

Here's your dime. You know, I wouldn't bind at all. But yeah, that's a great example. I love that.

I think that we see people working on that kind of thing. And so I think that that will continue to evolve and be fairly popular going forward. And then I think the other one that is like, maybe it's sort of talked about depending on what circles you're in, but the AI craze is here. It's very prominent.

One of the big things is how are AI agents going to kind of communicate on the payment side of things? How are they going to be able to pay each other for goods or services or whatever it is? And there's like a lot of people want to tout their idea or their cryptocurrency or whatever as like the solution for that. I think the problem is, is that, you know, AI agents move very, very quickly.

They move faster than we think or that we can do things. And so they need a payment mechanism that is just as fast as they can operate. And the only one that really matches that speed is the Lightning Network. And so I think that AI agents and the AI, you know, the way that AI is being incorporated more and more and like the payments being combined, lightning is going to be a very, very good solution for that because of how fast it is and it can keep up with these AI agents.

So I think that's another one that's fairly early, but we see gaining some momentum as well. Yeah, that's really, really interesting. Can you walk us through a real world example of a company using Voltage and what problem you help them solve? Yeah, absolutely.

So we work with all kinds of different companies, whether it's like exchanges, payment processors, neobanks, you know, kind of you name it, wallets. And so ultimately what we do is we are, we built a team of experts inside of Lightning and Bitcoin, and we have a full on kind of software suite to service these companies. And so if a company comes in and wants to say, hey, we want to adopt Lightning because our users are demanding it, we want the speed, the efficiency, all those things, they can basically plug in our system, which is, you know, virtually all API driven, and really just hook in our platform and instantly be able to start sending and receiving payments on Bitcoin on chain and via the lightning network.

So really what it does is it reduces the complexities of previously, say an exchange wants to incorporate lightning, they would have to hire a team, you know, three to five people that really, you know, understand lightning and Bitcoin and how this stuff works, build out the infrastructure and then hook it up into the exchange And so that would take you know a lot of money and months of time where with our platform you know we basically built all of that out You can just hook in our APIs and be up and running in a day or so and not have, you know, have a fraction of the cost as you would to hire in your own team.

So that's basically what we do at a high level. Oh, that's really cool. Yeah, yeah. Because I was actually going to ask you where the advantage is between trying to do it by yourself and working with Voltage.

And now you just answered that. It's just that it's a time suck and a money suck and you don't have to worry about that. You just because you already did it. Yeah, exactly.

And you can think about it like very similar to like Stripe. Like when Stripe came along, it was like, holy cow, how do we ever do payments before this? You had to do all these like connect, like you had to do so much work. And then Stripe's like just plug in the API and like you're just good.

That's basically the same thing we're doing on the Lightning and stable point side. That's awesome. One of the biggest challenges with things like Lightning is managing liquidity. How do you help clients solve that without needing to become kind of liquidity experts, if you will?

Yeah, like, I mean, one, like we kind of are liquidity experts. A lot of our employees here are like, have been doing this for a really long time. So they have a lot of, we have a lot of domain expertise built up around that. But what we do is we really, we basically solve that for our customers.

And that when you interface with Voltage, you don't really have to worry about the liquidity, the payment channels. Like, are my payments able to go where they need to go? So we completely handle that, whether it be a software automated tooling and then some human intervention too. And so ultimately, you can come on to Voltage, create a node or use our newer payments product and just integrate the APIs and just be able to start instantly sending and receiving payments.

So we really, it's something that we have become very, very good at, experts in. But that's something that we want to intentionally be experts in so our customers don't have to be. because it is very nuanced. It is very unique to the network.

And it's something that we don't, basically no one wants to be an expert in that, I mean, relatively speaking. And so we want to take on that burden for our customers. Yeah, only psychos. Psychos want to get into that.

Yeah, yeah. What are some of the security challenges that come with running Lightning infrastructure? And how do you balance that trust, reliability with decentralization? yeah uh it's i mean yes like so at the end of the day you know lightning is still bitcoin and so bitcoin is um has very unique security properties both on like the positive side as well as you know you're it's kind of like a target as well um if you're touching bitcoin at all so there's a lot of considerations to make there and it's something that we have like on our infrastructure we have like our sock two type two um certification so we take security very seriously from like just the how we run the business and how we operate our infrastructure as well as there's a lot of like really unique considerations that we built into the platform itself, like enabling like a couple of different signing architectures where you can like run kind of like your private keys, like in your own, on your own hardware and your own data center or inside of voltage.

And also being able to do more as far as like IP whitelisting, restricting, like who can access the APIs and things like that. So ultimately we've taken security very seriously because of like, it is Bitcoin and it's kind of like security is built into the protocol itself, but also anything you're building on top needs to take it as a kind of a first-class citizen. So we've done a lot to really build out a strong security posture and also offering that into our clients as well and kind of advising them on like, we can secure our side, but there's also the other side in the exchanges environment or whatever it is and trying to help them in securing their side as well.

What trends, you mentioned AI, What trends or technologies do you think will shape the next phase of lightning development? Is it AI? I think AI will definitely be one of them. I think AI is a little bit like several months out before it's like kind of really starting to ramp up.

I think that stable coins, like stable coins are just, you know, maybe to take a step back a little bit. Stable coins are a very, you know, very popular use case of crypto in general today. For sure. They started on Bitcoin.

They moved into other chains because Bitcoin wasn't able to really service stablecoins from the smart contract standpoint and all those things back in the day. And now with a new protocol called Taproot Assets, you can do stablecoin issuance on top of Bitcoin again. And you can do it with the Lightning Network. And so we're seeing that as a big shift.

We're seeing a huge amount of demand for the stablecoins coming into Bitcoin and Lightning for the trust and the security that Bitcoin offers, like we kind of talked about a little bit ago. But then also being able to leverage what I mentioned earlier of like half second settlement with like zero fees, that being able to move a stable coin in that environment is incredibly attractive. That's something that a lot of people are interested in. And so we see that as really being a big next step for the network.

And we see, you know, Tether announced support for the Lightning Network earlier this year. And so we're gonna see a lot more liquidity coming into the network, a lot more activity, a lot more integrators. And so I think that that's going to be the nearest, you know, kind of next step that really takes it to the next level. Yeah, I think stable coins is one of those things that like the average person that can wrap their head around a little easier to about how like understanding how they work.

There's still people that's like, I don't understand why Bitcoin has any value. I don't know where it comes from. I think stable coins is a little bit more. I don't know how we how our brains already work.

yeah i completely agree and that's like as i've talked with my parents or my my in-laws or anyone and i'm like you know trying to explain bitcoin i was like yeah i don't know this just doesn't make a lot of sense it just doesn't for me and then i'm like okay now there's a thing called stable coins and it's just dollars with the same technology like oh i would do that like that i guess really good yeah yep and so it's like it does it clicks so much easier and then there's also like you know places in like you know um places that are harder to get like access to dollars in And so what you know like third world countries or whatever it is where it just harder to get access to actual US dollars And this kind of flips that on its head where it actually fairly easy to get dollars And so there a lot of there a lot of not only the the mental complexity of understanding a stable coin, but also the, the access that people are still trying to live their lives where, you know, maybe they invest a little bit in Bitcoin, but they still need to pay like their bills, like, you know, every single day.

And doing that via stable coin is a much more practical means. Yeah, it helps for, I've talked to people, you know, have freelancers in other countries and things like that. And what a great way to pay them in that currency so that they can get the dollar. There has been some people that have mentioned that maybe the governments of whatever countries they're in don't love it.

They don't like it as much as using their own currency, but it is a really good use case for stable coins. Piggybacking on this, there's still big philosophical divides in the Bitcoin world. I'm always amazed when I talk to people like... I've talked to some really, really smart freaking people who love Bitcoin.

And I've talked to some really smart freaking people who hate Bitcoin, think that it's fool's gold. You know, it makes it so interesting. Where do you think Lightning fits into the broader ecosystem? Will it unify the community?

Will it bring us all together? Will it fracture it further? What do you think? That is a great question.

It really depends on who you're talking to, just like you kind of mentioned. And like inside of like the kind of Bitcoin ecosystem of like the really hardcore people, I would say. It's a little like it's kind of you get a lot of different opinions on lightning and when where it falls, because there's like, ultimately, there's like, you know, 20 different ideas for how to scale Bitcoin and how to solve kind of these similar things. And so most people that have kind of a problem with lightning are usually have what they think is a better idea or a different way of solving it or whatever it is.

But Lightning is like the most used, largest L2 on top of Bitcoin. So until something else comes along to kind of like disprove that, I think that Lightning is like is very obviously the winner as far as like, you know, scaling Bitcoin. But then I do think kind of like from the broader standpoint of like, you know, crypto industry in general or just traditional finance, whatever it is, just kind of like zooming out. I do think that it helps a significant amount in the story of Bitcoin because of kind of what I mentioned earlier of like the Bitcoin was originally created.

as this globally decentralized payment network. And then that's the thing that I hear a lot about about people that aren't as interested in Bitcoin is that like, well, it kind of sucks at payments because of the things that I mentioned at the beginning of our interview here. But as Lightning is starting to solve those where it's like, okay, you can actually solve this like the payments use case super, super well and still get like the store of value properties. I think it helps the narrative.

It helps the story. And I think Bitcoin is as an image problem sometimes of being like the pet rock of like, well, it's just it's just this thing. It's just like a gold or something. And like some people are like, well, I don't even care about gold.

And it's like, yeah, like I get that. But I think it brings it more into the it makes it a little bit more feasible and usable in that way. So I do think that it helps along those stores where it will it will ultimately unite more than it divides. Yeah.

Yeah. The education part of it, the understanding, the seeing the use cases, the figuring out. Yeah, I can see that. That makes sense.

How long have you been building in the Bitcoin space? I have been, gosh, it's like 13 years now. About 2012 was when I got started into Bitcoin. Wow, that's a long time now.

I mean, in the scheme of things, it's changed quite a bit since you started. Yes, I mean, it's changed quite a bit. I mean, when I was getting into Bitcoin, it was back when like the faucet websites were around where you could like go to a website and like click a button and get like five Bitcoin. And that was just like, you know, maybe like five, 10 cents back then.

And now it's like, you know, $500,000. It's quite a bit different. Did you save some? No, I mean, like not really.

Because when I first got into Bitcoin, like I was fascinated by it from the tech perspective of like this, you know, decentralized network. You can send payments anywhere. I kind of like had no, like I was just so fascinated with like getting my hands dirty in it. I had no thought of like, this will one day be $1,000, $10,000, $100,000.

I was like, the day that it went over $20, I was like, this hobby is getting too expensive. I might have to stop this because I can't afford this like rising price of Bitcoin. So I didn't really have that much forethought into the economic properties of it. I was just so fascinated by the technology.

What would you say is one lesson you've learned from working in Bitcoin for as long as you have that might surprise people who aren't familiar with the industry? That aren't familiar with the industry. I mean, I think that ultimately, I think that there's a lot of evolution happening inside of Bitcoin, inside of the ecosystem. I think that going back to my Pet Rock comment, I think that there's a lot of people that still think that like Bitcoin, what Bitcoin is, is very stagnant.

Like it is what it is and it's not going to change. There are some properties that are like never going to change about Bitcoin. There's also a lot of evolution happening, like things like, you know, building on Lightning, like developing out even protocol enhancements to Lightning, a bunch of other like L2s or ideas and all these different things. And so I think that there's a lot that people think that Bitcoin is kind of stagnant in that regard.

But, you know, being in the ecosystem for a long time and continuing to build in it, there's actually an incredible amount of innovation still happening inside of Bitcoin. And there's a still a lot to be discovered. There's still a lot to be created. And so I think that that's something that I think catches some people off guard.

Yeah, that's an exciting time for people doing what you do. Yeah, I mean, absolutely. I mean, we're, we, we love what we do and there's still a long way to go. There's still a lot more to build and we're really excited to be doing it.

It's awesome. All right. Well, Graham, Graham Krizak, thank you so much for joining me. Appreciate your time.

The company is Voltage. I'd love to have you back again sometime. Yeah. Thanks for having me on.

I appreciate it. Thank you.