WBD483 Audio Transcription

Innovating on Bitcoin with Steve Lee

Interview date: Friday 1st April

Note: the following is a transcription of my interview with Steve Lee. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Steve Lee is Lead at Spiral, a subsidiary of Block. In this interview, we discuss how Spiral is enabling lightning integration, Block’s aim to create an open Bitcoin mining ecosystem, a vision of zero cost decentralized Bitcoin mining, and inspiring open-source Bitcoin projects.

“If it’s too hard to manage your own keys, which even today it is too hard for people, that we wind up in a world in which just a few global custodians hold all the keys and that’s unlikely to result in the Bitcoin that we know and love and want to see for the world; so it’s very important that a sizable percentage of Bitcoin users are controlling their own keys.”

— Steve Lee

Interview Transcription

Peter McCormack: Hi, Steve.

Steve Lee: Peter.

Peter McCormack: Finally.

Steve Lee: Absolutely.

Peter McCormack: You just reminded me that we met here about three years ago.

Steve Lee: Yeah, at a dinner here in San Francisco.

Peter McCormack: Well, listen, it's great to finally get you on the podcast.  There is a lot to talk about, because in that collection of companies you're a part of, there's a lot happening.

Steve Lee: Yeah, absolutely.

Peter McCormack: We're seeing a lot of announcements.  So, one of the things me and Danny were talking about beforehand was trying to understand the structure of it all, because you have Cash App, Spiral, Block, TIDAL is in there.  How would you explain this as a structure of companies?  I know you're specifically at Spiral, which was Square Crypto; how do you explain it as a structure and what's the mission here?

Steve Lee: Sure.  Yeah, so I'm Steve Lee, I lead Spiral, formerly known as Square Crypto, which is part of Block, formerly known as Square.  So now, Block is the overall company.  Square still exists and it's the Square that most people know, point-of-sale terminals that you might see at a café or millions of other merchants; that's unchanged.  There's Cash App, which is another very large business that your listeners are going to know; that's unchanged.

Then, there are several new business units.  One is TIDAL.  About a year ago, I think it was, the company acquired TIDAL for music.  Another new business unit, as of I think the summer, is TBD, which Mike Brock leads, and we can talk a little bit about that as well.

Peter McCormack: Is that actually called TBD, or is it waiting for a name?

Steve Lee: It's literally called TBD and I am unaware of any -- I think it's always going to be TBD!  A lot of fun puns.

Peter McCormack: Did that come out of the fact that you couldn't come up with a name, so on a form or on a thing, it was TBD, so they just stuck with it?

Steve Lee: I'm not sure of the actual genesis story, but knowing Mike and Jack, yeah!

Peter McCormack: That's probably it!

Steve Lee: Then, the fifth block is Spiral, which is what I lead, which has been around for two and a half years now.  We're a unique organisation, because we don't work on any Block products or businesses, we're really team Bitcoin.  We focus on open-source development for Bitcoin and we just produce public goods, not only helping Block, but we help other companies and other open-source projects in the space.

Peter McCormack: Essentially a non-profit?

Steve Lee: Essentially a non-profit.  We generate no revenue, have no plans to generate revenue, and really our primary thrust is around improving the developer experience with better development tools, just to enable builders all over the world.

Peter McCormack: Almost like, this is Block's contribution to open-source development?  Some people fund it, you have a unit.

Steve Lee: Exactly.  Parallels would be somewhat similar to Chaincode Labs --

Peter McCormack: Yeah, Brink.

Steve Lee: -- Blockstream, Brink.  Blockstream is an example of a company that's done a lot of open-source contribution.  But yeah, I think the strategy for the company is not only just to give back, but already just this week, Cash App announced Lightning services, which is super-exciting.

Peter McCormack: Yeah, I saw that.

Steve Lee: And, it uses LDK Lightning Development Kit, which is the primary project that our team at Spiral works on.

Peter McCormack: How big is the team at Spiral?

Steve Lee: Right now, we have four developers, a couple of other PMs that do a similar type of work as me, and then one creative person.  And we're hiring three more engineers, so any listeners looking for an engineering job in open-source Bitcoin, we're hiring.

Peter McCormack: Reach out to Steve Lee.  Where does Conor Okus fit into all this?

Steve Lee: He's one of the PMs.  So, he's a software engineer, I mean he has software engineering experience, but on our team he's in a PM role, which is really kind of like a quarterback, like a decentralised PM, because we're not -- we fulfil a coordination role in the ecosystem with a light-touch decentralised spirit and fashion.

Peter McCormack: Conor and I have become friends over the last four weeks.

Steve Lee: Yeah, I think I put the two of you together.

Peter McCormack: You did, yeah.  You said, "Conor's an ex-footballer, football fan, interested in your project", and I went down to London, went down with my son to watch a football match, I can't even remember who we went to see, I think it was Liverpool/Tottenham, and I met him in a café beforehand, him and his mate.  And I didn't realise, he played football.

Steve Lee: He actually played professional football, yeah.

Peter McCormack: He's now signed for Real Bedford, he's going to be paid in Bitcoin.

Steve Lee: It's pretty awesome.

Peter McCormack: He hasn't played yet!

Steve Lee: So, he's going to get paid in Bitcoin from two different jobs.

Peter McCormack: He is.

Steve Lee: A lot of people are wondering when are people going to start getting paid in Bitcoin.  Conor will be paid two different jobs.

Peter McCormack: If he starts playing.  He keeps whinging about his fitness, and he keeps sending me this one YouTube video of this goal he scored, and I'm wondering if that's the only thing he's ever done!  It's okay, Conor, I love you, man.

Steve Lee: Is he worried about the younger players?

Peter McCormack: Yeah, but I can't really rag on him for age, because I'm a lot older than him.  Great guy, though, so thank you for introducing me.  Where does TIDAL fit into all this?  That's the bit we can't figure out.  Well, we thought it might be that it's a great way to tap into the youth and culture to bring them into Bitcoin maybe, but we can't figure it out.  Or, is it just bought because it's fun?

Steve Lee: Yeah, well first of all I should say, I can't speak -- I actually don't even know!  So, I don't know, so I can only speculate along with you.  I guess what I can say, I think it matters to the company about economic empowerment.  That is the mission statement of the company, it's always been, which is one reason why Bitcoin's such a natural fit for the company, because Bitcoin's special properties are around economic empowerment.

With TIDAL, I think with artists, there's definitely interest in the company in helping economic empowerment of artists and breaking down some of the historical challenges, so I think that's probably part of the thinking.  And then, I think NFTs could be potentially interesting for that as well.

Peter McCormack: We'll come back to NFTs.  So, do you see there's a chance that Lightning may be integrated into TIDAL to support creatives and artists?

Steve Lee: We'll see.

Peter McCormack: That's a yes!

Steve Lee: Honestly, I don't know.  I mean first, let's just get it working, the bread and butter, Cash App, as well as one thing we should talk about is Block's hardware wallet and the non-custodial software wallet that will come along with that.  I mean, I think those are clearly starting points for Lightning.

Peter McCormack: What's really interesting is Bitcoin itself very much started out as command line, it's for nerds to be able to move digital information around.  I played with, back when I looked at Monero, was it called a CLI?  You'll know, you're a nerd!

Steve Lee: Command-line interface.

Peter McCormack: Yeah.  I played with one of those, I had no idea what I was doing, and somehow I didn't lose the Monero I'd bought.  But over time, we've got these better products and better interfaces, and then the suite of companies here just levels up.  This is a Silicon Valley-based group of companies with a suite of products that feel like the kind of products you would expect from coming out of this area, and it helps take this to mainstream users, without having to be nerdy to understand the intricacies of Bitcoin.

Steve Lee: I think that's true, but I also think it doesn't require large tech companies to deliver better experiences like that as well.  I'll give one example.  Speaking of CLIs, three years ago, I think it was, Lightning Joule was a project by Will O'Beirne, where you could do one-click Bitcoin payments over Lightning in a browser, so it made for a cool demo.  The challenge though, of course, was you had to install LND, or a Lightning node, on your laptop, use the CLI, get it configured, figure out which nodes to peer with and connect with them.  You had to do all that upfront work just to be able to one-click payment in the browser.

We're now moving to a future where with Lightning Development Kit, the project that my team works on, you can actually run Lightning Node in the browser, and there's an alpha version of that working right now.  But that will enable just way easier onboarding for new users.  You still get the one-click payments of Bitcoin in the browser, but the wallet can be embedded inside the browser itself.  There's small projects, upstart projects, such as Impervious, that are enabling that, so it doesn't require the Googles and Facebooks of the world to do that.

Peter McCormack: For those people who don't understand, just try and explain what the Development Kit is, because not everyone will be a techy or have worked in the tech space.  I mean, I understand, but…

Steve Lee: Yeah.  So, Lightning Network, as a technology, enables users to have instant payments low fees, etc; scales Bitcoin to a lot more people.  The Lightning Development Kit is intended for developers, not for end users, but it enables them to create new wallets, new applications, that have Lightning enabled, and with 10X less effort than they've had to do in the past.  So, I think a big challenge in the space now is it's really, really hard to build Bitcoin application, the developer user experience is poor.

So, our hope is that we can make it far, far easier.  And so, what the end users will see are more choices and better user experiences in their wallet.

Peter McCormack: And, how do you decide what to build in the Development Kit; is it you, you as a team, do you brainstorm ideas?

Steve Lee: A couple of things.  Part of it is just driven by the Lightning spec itself, which is consensus driven among a bunch of developers from different parts of the ecosystem.  But also, myself and others have reached out to over 50 wallets and wallet developers to ask them what are their needs, sort of typical product management.  And that helps drive a lot of prioritisation as well.

Peter McCormack: So, one of the things, and I mean I've mentioned this to you before, and I'm not ever going to ask you to speak for Jack, but there's been lots of announcements over this last year or so, and watching his dedication to Bitcoin's been fascinating, and seeing these companies build up has been absolutely fascinating.  It's great that somebody so high profile is really dedicated to the Bitcoin cause.  But I want to talk about some of those announcements, because there's being a proponent of Bitcoin, and then there's being real skin in the game to actually help develop out the ecosystem.

One of those things was the hardware wallet, which I don't know anything about, but I'm super-excited about, because I'm imaging this is going to be something not only that's technically very cool, but will feel and look like a consumer product, more so than maybe some of the other wallets.  How much can you talk about the hardware wallet, and why develop another one, because Coldcard is pretty good, you have to be quite techy; Ledger's very useful, but obviously supports a bunch of other assets; Blockstream have a hardware wallet; Trezor has a wallet; and there's other new players; what is it new that this product will be bringing?

Steve Lee: Well, I'd say really high level, we're still really early in creating great product experiences.  I've used Trezors and Ledgers and Coldcards and all three are great products.  They've all demonstrated big improvements over five, six, seven, eight years, but I think there's a lot to improve even more so; because even today, an experience where a customer has to write down 24 words and then figure out what to do with it, that sort of opens up the Pandora's Box of -- it doesn't really create peace of mind for customers.  Like, "What do I do with this?  Do I put it in a safe, a bank closet?  Do I split it up in multiple locations?"  It just opens up all these questions.  

With the Block hardware wallet, it's framed as a hardware wallet, but it also has a software wallet that comes along with it, and the current product thinking, not a final decision, but that it would be 2-of-3 multisig wallet, which some of your listeners, or most listeners, are probably familiar with.  But most wallets don't come out of the box by default, or even required to be 2 of 3, and that's the thinking with this wallet.

Peter McCormack: And there will be some people listening who won't understand what multisig is.  Just give a quick introduction.

Steve Lee: Sure.  So, the user benefits: number one, you don't need to write down 24 words when you're setting up your hardware wallet.  So, the onboarding experience, when you buy this new hardware wallet and set it up, it should be much, much simpler.  If you happen to lose your hardware wallet, you have not lost your Bitcoin, because there's three different private keys that are securing your Bitcoin, not just one. 

So, if you do lose your hardware wallet, or it malfunctions somehow, you have two other keys that you can recover from.  The other two keys would be stored, one on your phone and one in the cloud with Block, so with a third party.  So you still have control as the customer of your Bitcoin, because you have two of the three keys, and two of the three need to be used to spend your Bitcoin.

Peter McCormack: And if you did lose one key, you would be able to rotate that out with the other two?

Steve Lee: Correct.  And then, that configuration has a nice property that you could have one wallet that is both your savings and your spending wallet.  So, from your phone, your experience making payments, like Lightning payments, from the wallet would be very similar to Cash App or Venmo, sort of a one-click experience.  You don't even have to know about keys, multisig, any of these technical details.  But under the hood, one key on your phone and one key in the cloud is signing the transaction for the payment.  But you as a user, you just click a button, maybe do a touch ID or a face ID to confirm it, and that's it.

But if someone were to access your phone, they can't drain your savings account, because the Block server actually puts a limit on spending with those two keys.  The only way you can spend all your savings is if you go get your hardware wallet out of your safe or bank safety deposit box, or some less accessible but more secure location.  So, it's a beautiful mix of, you still get all the benefits of self-sovereignty, you're in control of your Bitcoin; Block or no third party is.  You get the security of this hardware wallet that's tucked away and you're not carrying around with you; but you get the ease of use for payments, as you've come to expect from any kind of mobile app on your phone.

Peter McCormack: Would it be a single -- would it still be essentially two wallets, though?

Steve Lee: Just a single wallet.

Peter McCormack: It just controls the spend, so maybe there's like a, what, would it be a daily limit, or something like that, to be decided?

Steve Lee: Yeah, to be decided, but you can imagine many different things.  I mean, it could be that there would be defaults, and maybe the user can override it, who knows.  I mean, that team will figure that out.

Peter McCormack: But say if you have $10 million of Bitcoin in your wallet, but you have a daily spend limit of $2,000, but if you had to go and buy something big like a house and you needed to spend $1 million of Bitcoin, you would have to go and get that hardware wallet to sign that one?

Steve Lee: That's correct.

Peter McCormack: Okay, that would make me think of one thing, just as somebody who, I use Casa, for example; they're multisig.  You still have, if someone gets into it, the ability to maybe see, even if they can't spend, they can see the balance.

Steve Lee: Because it's multisig?

Peter McCormack: No, because the wallet will have a balance.  So, you might not be able to spend without the hardware wallet, but it should the balance.

Steve Lee: Oh, I see, if someone accesses your phone.

Peter McCormack: Yeah.  So, one of the things, the benefits say for two wallets that I have, of having Casa and then a separate one, is I actually withdraw from Casa into the separate one, and the separate one never has a particularly high balance.

Steve Lee: Yeah, I mean that's a good point, although that's a detail that could be resolved.  It could be a hidden balance within the app.  You may have to go through multiple steps to view it.  Maybe even as a user, maybe there could be an option to disable viewing that number from your phone.  I think that's an important issue that needs to be addressed, but I think it could be addressed, even if under the hood, it's a single wallet.  Because, the customer might not even actually know there's only one wallet under the hood, they might even perceive it as two wallets. 

But I think it's important to have a single wallet under the hood, because it allows Bitcoin to scale better.  It's a problem if each person has to have multiple wallets.  I mean, it's a problem for both them as an individual, because they're managing two different wallets, and under the hood, UTXOs and things like that; but from a network overall system perspective, it also scales better if there's just one wallet per person.

Peter McCormack: But it's quite neat, because one of the things, when you try and explain multisig to people, it's like, yeah, with a single signature, you have one private key; but if you have a multisig, you have to have two of three and already, they're like, "What are you on about?"  This is like, you send small amounts from your phone, and the larger amounts you plug in your wallet.  You don't really need to explain those things.

Steve Lee: Yeah, the hope is that it's a very simple setup process for this hardware wallet.  You just tuck it away in a safe or a secure spot and don't have to really think about it for a while.  Then, your Bitcoin experience on your phone feels like a very simple single-sig experience.  But again, as an end user, you don't have to really think about multisig or keys or anything like that when you're using that app on your phone.

Peter McCormack: And if you lost your phone, you can get a new phone and you can restore from the cloud and the hardware.

Steve Lee: Yeah, again, there's a product detail to be decided, but at least in theory, the key that's on the phone could be automatically backed up in the cloud, so you get the benefit of that extra backup; but again, with limited security costs, because even if someone accessed that key in the cloud, they'd only have one of the three keys.

Peter McCormack: It sounds like a great product.

Steve Lee: Yeah, so I think there's clear opportunity for innovation in the space to create way better non-custodial wallet experiences for mainstream users, and I think this product could potentially do that.  But just the general design framework, anyone could build that out.  I think it's promising.  I think one thing you want to talk about today is decentralisation and maybe what are some of the centralisation pressures.

Well, certainly one in Bitcoin is, if it's too hard to manage your own keys, which even today, it is too hard for people, that we wind up in a world in which only a few global custodians hold all the keys, and that's unlikely to result in the Bitcoin that we know and love and want to see for the world.  So, it's very important that a sizeable percentage of Bitcoin users are controlling their own keys.

Peter McCormack: We already have large custodians: Coinbase custody something like 1 million Bitcoin, and we know a lot of other people are; but do we know if better wallets will really change that, or are these perhaps institutional buyers who just don't even want to manage their private keys?

Steve Lee: Well, there's lots of different types of customers.

Peter McCormack: Of course.

Steve Lee: Institutional buyers is one.  They might be one of the hardest customers to convert to non-custodial, because they have other considerations.  I mean, first of all, they typically have a larger amount of Bitcoin, but they might have some other regulatory or various policy issues where they need to do that, use a verified, certified custodian.  But there's lot of other types.  I mean, the hope is that people all around the world, not just wealthy investors, have Bitcoin and use Bitcoin.

Here's what I know.  If the experience is not good enough, then very few people are going to do this.  It's only hobbyists and technical people, so we have to make the user experience much better for mainstream adoption.  Will they adopt it then?  I'm optimistic, I think so, because I think the question will flip from, "Why should I do that?  I'm used to a bank, I'm used to trusting someone else, so why should I go to this hassle to do it this other way; what is the benefit?"; the question will flip to, "Why wouldn't I, because it's basically just as easy?"

That can just become the default experience for a lot of people, so I think we'll see that flippening, if you will, in the future.

Peter McCormack: Do you know much about how Lightning will be integrated?  There are wallets such as BlueWallet, which separates basechain and Lightning; Muun Wallet, which I haven't actually properly used myself.

Steve Lee: Things get really complicated at that point.  There's a desire from the Block non-custodial wallet team to support Lightning.  Spiral, my team, our primary project again is LDK, we work on Lightning all the time, and again we don't just work with the Block wallet team, we work with Phoenix and Muun and all the different Lightning wallets and companies in the space.  There's a lot of different technical design options for how to deliver a Lightning wallet, they all have trade-offs.

What Spiral really tries to push for is the most extreme, meaning the hardest to do, but one that preserves privacy, that enables mobile phone wallets that don't depend on trusted servers; that's what we're pushing for.  And it does have the most barriers and challenges, but we're optimistic that that can be done.

Peter McCormack: I still don't understand what the Muun Wallet is doing, because I don't understand how it's making the decision, and you as a user understands, what fees you are going to pay; because whether it moves via Lightning or basechain, it's an entirely different set of trade-offs on fees.

Steve Lee: Well, you're not alone, I can't explain it either, so I don't know!  I could speak to it at a high level, and then Breez and Phoenix are two other sort of best-in-class Lightning wallets, and best in class in terms of their user experience is quite good.  All three of them, at a high level, do some type of automatic channel management.  So, for people not familiar with Lightning Network, your wallet connects to other Lightning nodes in the network, and that's how your payments are routed to other people.

Without automatic channel management, you as the user have to figure out which nodes to connect to, you have to set up those connections, manage how much the amount of the liquidity, how much amounts are in each channel; it's a huge burden.  If you're operating a node in the network to try to earn revenue, like a routing node, then it's reasonable to expect that type of hands-on management.  If you're just a normal person wanting to receive some Bitcoin, spend some Bitcoin, then that's too much.

So, Breez, Phoenix and Muun all have created much better user experiences that do that for you.  I think they all approach it slightly different ways.  The term is Lightning Service Provider, is what they're doing.

Peter McCormack: And this is probably a tough question to answer, but how mature or immature is the Lightning Network at the moment?  My experience using BlueWallet is great, but it's custodial.

Steve Lee: Well, it's custodial for now.  But BlueWallet actually was the first project to adopt Lightning Development Kit, LDK.

Peter McCormack: Really?

Steve Lee: Yeah.  So, they've done all the technical work to integrate LDK, they have alpha version of BlueWallet for both iPhone and Android, which did change their Lightning wallet from custodial to non-custodial.  It's not yet available publicly, and I don't know exactly the reasons why not yet, but I think LSP that I mentioned a few minutes ago might be a reason why they're still trying to figure out plans around that.

But yeah, where is Lightning Network overall?  I'd still say alpha stage, early days, whatever, third inning of a baseball game; it's still really early.  But you can look back at the past three years and see tremendous growth.  I mean, Cash App launching with Lightning Network is fantastic.  It has tens of millions of users and it's great to have a big brand and big service supporting Lightning Network.  Through conversations I've had with many other big companies in the space, and smaller projects, I think we're just going to see more and more Lightning adoption this year, next year, and the network itself will grow and make payments faster, the success rate of a payment.

I mean already, I think, a few years ago, maybe you'd have a one-in-four chance of your payment actually going through.  Now, it's still not where it needs to be, but it's tremendously better, it's more like nine times out of ten, the payment goes through.  And over time, we're going to get it to 99%, and also fast, consistently fast.

Peter McCormack: What are the reasons that payments would fail right now?  Is it mainly capacity; is it struggling to find a route?

Steve Lee: Yeah, so struggling to find a route is one.  It's because, the route is constructed by the person paying.  So, if I'm paying you, my software on my end has to figure out the route how to get it to you.  And what I don't know at the time is what the current capacity levels are of each payment channel to get to you.  So, I only know the total capacity, not the actual balance.  And because of that, I can try and route and it might fail, because the actual balances are too small.  So, learning more about the real-time nature of the network graph is really important for payment success.

Another big challenge is on mobile phones.  A big technical challenge is receiving money over Lightning Network over mobile phones, because unlike on-chain Bitcoin with Lightning Network, the receiver has to sign the transaction with their private key, which means that people need to be online.  What does that actually mean?  Well, if your phone's in your pocket, you're not online, because the way that operating systems work, you actually need your wallet app in the foreground, you need to be actively using it as a user to receive the payment, and it creates a really bad user experience, because most people have their phone in their pocket when they might receive money, and they can't actually receive the money then.

Peter McCormack: So, I have an account with OpenNode for my store and I can always receive payments, because it goes into my OpenNode wallet; and then I can withdraw to our wallet.  Is it always going to require that almost middleman service that's always on?

Steve Lee: There are a variety of solutions, none of them are perfect or immediate.  That's one, have some kind of middleman receive your payments.  I've seen some proposals where you're limiting the trust so that they could only steal the funds you've temporarily received, and once you come back online, open the wallet app in your phone, then you'd no longer be at risk of them stealing the funds.  That's probably the most realistic near-term solution, and maybe there's options around using multisig for that, so you'd have multiple entities trying to receive for a user that they'd actually need to collude.  That's one approach.

Another is for iOS and the Android to change their policies.  Already, they have certain categories of apps, such as Voice over IP apps, which are guaranteed a certain amount of background tasking on the phone.  So, even if your phone's in your pocket, if you call me, it's guaranteed that app's going to get some time on the CPU to actually wake up and receive the phone call.  It would be possible that Bitcoin wallets could receive such considerations.  So, it's not actually a technical restraint, it's a policy restraint.

Peter McCormack: Okay.

Steve Lee: And then long term, hopefully, Apple, Google, Samsung, big companies like that, Bitcoin becomes important enough to their customers that they're forced to modify their phones to accommodate a much better Bitcoin wallet and receiving experience.

Peter McCormack: Well, one of the first steps would be to integrate within their own wallets.

Steve Lee: Yeah, that would be great.  I mean, there's very obvious integration points in, like, Google Chrome browser and Android OS and iOS and Apple Pay, etc.  Those feel like medium- to long-term kind of integrations, but the sooner the better.  Although, getting back to a theme of centralisation, decentralisation, we definitely would want them to be doing that, but it's also a little scary, the choke points they represent, both with app stores, the OS and the phones themselves; very few players in that space.

Peter McCormack: Right, okay.  And would they care about decentralisation enough?  Would they potentially be custodial wallets?  Would they follow best practice?

Steve Lee: It's hard to say.  I mean in general, the app stores allow most apps.  I mean, there's certainly examples of where they've denied apps.

Peter McCormack: No, I mean if Apple was to integrate Lightning into Apple Pay, would they build their own infrastructure?

Steve Lee: I mean, a lot of different ways they could go.  If they went with what they've done with the app store, just their own software development kit, they've tried to promote as many apps as possible on the phone, millions of different apps; so hopefully, they'd go with the approach where they're not the one-all, be-all wallet, but they would foster innovation and allow dozens or hundreds of different wallets in their app store, which seems to be their overall strategy, so I think that's what they'd do.

Peter McCormack: Do you think it's inevitable that Apple and/or Google moves into accepting Bitcoin as a means of payment?

Steve Lee: Well, I believe in Bitcoin long term so I think, yes, it's inevitable.  I worked at Google for nine years and know the company well, and know a lot of folks there still.  There's recent interest in Web3 blockchain stuff at Google.

Peter McCormack: Urgh!

Steve Lee: But yeah, hopefully that helps seed some interest in Bitcoin as well.

Peter McCormack: That reminds me, let me just go back a step, because you brought up NFTs.  Years ago, I interviewed Fluffypony and I said to him, "There are Bitcoin maxis; and there are Bitcoin maxis, but Monero's okay".  We seem to have that with NFTs as well.  Some bitcoiners, they're cool with it, it's okay; some people are like, "It's fucking gross".  I feel a little bit in the middle, Steve.  I feel like there's some cool stuff that can probably be done with them, but it's awash with lots of stupidity and endless different series of jpegs, which I understand nothing about. 

But there does seem to be some interesting things that can be done with NFTs in terms of, I don't know, tickets to events that you could easily -- like, if I had a concert I was going to tonight and I couldn't go and I could send you the NFT and you could go.  There's also some ideas around multiple people attached to an NFT so payments can be split.  I'm not immediately writing off NFTs, I'm ignoring the whole Bored Apes and Yacht and yellow bananas, or whatever stupid sets are coming; but I am open to the idea there's some cool stuff that can be done with NFTs.  What is your interest in that area?

Steve Lee: Yeah, you put me on the hotspot here!  I'm not a hater at all of NFTs.  I mean, quick context of how I got into this space.  2013, I read the Bitcoin whitepaper and got it to that degree, but didn't really get into the space yet.  Fast-forward four years to 2017, I'd already quit Google, didn't have a job, so I had a lot of time on my hands.  Interestingly, Ethereum brought me into the fold.

Peter McCormack: I didn't know that.

Steve Lee: Yeah.  I don't know, I guess the Silicon Valley techy guy in me, the world's super-computer, whatever, was attractive to me.  But I spent 2017 studying Bitcoin and Ethereum and many, many other projects and coins, and I emerged from that with deep conviction on Bitcoin that I didn't have previously, and just a better understanding of money and a lot of things that people who go down the Bitcoin rabbit hole do. 

I went through that in 2017, and so part of that exploration, even in 2017, NFTs and DAOs and DeFi were all concepts and being talked about, also including giving users their data back, which I guess maybe is part of the Web3 themes; so, instead of storing it with Google and big cloud companies, you control your data.  I agree that I think they're all interesting concepts and people's lives will be better in the future if they all come to fruition and can actually be realised, so that's never changed.  I just personally focused on Bitcoin, because I thought that that was by far the most impactful thing compared to any of these other cryptocurrency projects, like 1,000X more important for the world.

I'm also very driven by making Bitcoin a great currency people can use.  I completely believe in the store-of-value narrative, digital gold, but if that's all I believed in, I would just be an investor and then move on and work on other things in my life.  But I think actually delivering peer-to-peer money, as stated in the original whitepaper, I'm driven by that.  So, I'm really excited to have this opportunity at Spiral and Block, because that's consistent with what the organisation believes as well. 

So, yeah, I think NFTs are interesting.  I'm mainly sceptical about a lot of the underlying platforms supporting them.  I also have questioned how much decentralisation is really needed for NFTs.  Most NFTs are tied to some kind of real-world concept, either be it something physical, like real estate, or copyright of some legal context we have, so not this like…

Bitcoin's beautiful, because it's fully described within the protocol and doesn't need to be tied to anything in the real world, where NFTs often do.  So, I kind of feel like a less decentralised solution would be better for NFTs, and then you wouldn't be paying $200 gas fees to mint your NFT either.  We could always make it more accessible to people.  $200 gas fees for an NFT is the opposite of economic empowerment for people.

Peter McCormack: Because, if you are creating the new best form of money, which essentially is routing around government money, it is important to be decentralised, because you are taking power away from the state, and therefore it's a threat to the state, they might want to switch it off.  But if you're creating NFTs, they aren't really a threat to the state, we're not routing round anything.  What we're actually doing is just creating useful technology.  And one of the useful things about that technology is there's an asset that can move digitally from one person to another. 

Therefore, it's really about how you move those assets, because a record in an SQL database isn't the same as owning something within a wallet.

Steve Lee: I think so.  I guess what I feel strongly about is Bitcoin does need extreme levels of decentralisation and security, because it's trying to be a new form of money, which there's not that many forms of money, and it's a super exciting form of money.  NFTs, I have a question, I question, "Do they need Bitcoin, or even Ethereum level of decentralisation?"  Maybe.  Also, NFTs, there's lots of different types of NFTs.  Maybe some need more than others, so maybe there are different smart contract platforms that can each be successful with different use cases, who knows?

But for my own time and Spiral's time, we focus on Bitcoin, because we just think it's a much bigger idea, and that's not to disparage other use cases and other projects.  It's just Bitcoin is a unique event in our life, I think.

Peter McCormack: A unique event in our life.

Danny Knowles: I've got a bit of a question here. 

Steve Lee: Sure.

Danny Knowles: You said that when you got into this space, it was through Ethereum, and you then landed on Bitcoin.  But what I want to know is, in Silicon Valley, it seems that everyone always goes to the shitcoins first, and you see that now with Avalanche and Solana and all that sort of stuff; why do you think that is?  Why don't you think people end up with Bitcoin in Silicon Valley?

Steve Lee: Why do they start with the other coins, or why do they not end up with Bitcoin?

Danny Knowles: Well, they seem to start with other coins and stay with other coins.

Peter McCormack: Or start with Bitcoin and end up with other coins.

Steve Lee: I mean, you had Dan Held on your show and he spoke to this.  I listened to that whole one or two episodes he had and agree with everything he said.  I've been here 20 years in the Bay Area, and that matches my experience.  I think there's just pattern matching you develop in the Bay Area and Big Tech companies, and venture capital firms and entrepreneurs pattern matching of innovation and moving fast.

Peter McCormack: Break shit.

Steve Lee: And, it's just the opposite of almost everything that Bitcoin is.  Also, there is no pattern matching for us in terms of inventing a new form of money, because that only happens in century scales, not every few years like the typical tech cycle.  So, I don't think the wisdom and experience of people in Big Tech doesn't completely apply to Bitcoin, because there is no pattern matching for them on this new form of money, so there's less emphasis on the credibility of the monetary policy, and more of the economics and finance side of Bitcoin versus innovation and tech side.

Peter McCormack: I love that idea though, this unique event in our lifetime, or unique event in multiple generations, that I feel very lucky to work on this.  I mean, mine's just asking questions, but you're getting in there building.  But it almost sounds like you feel honoured, or lucky, or just…?

Steve Lee: Yeah, I do.  I mean, some of my friends wonder why I don't get into Web3, DeFi, start my own coin or whatever.

Peter McCormack: Go and work for Chris Dixon!

Steve Lee: I feel honoured to be able to work on something that I truly think is going to impact billions of people eventually and be really positive in their life.  So, I don't get caught up in the daily price movements.  I'm focused on -- I'm on the technical side of things, I'm focused on how do we improve the software and the design user experience, but really anything around Bitcoin, how do we make it more accessible to more people.

Peter McCormack: Danny and I have this ongoing debate that's been going on for three years now, about the name of the show, because it's a strong brand, What Bitcoin Did, it's a really strong brand.  But many times, we've thought of just changing the name just to my name, not as an ego thing, but as a trying to reach out to wider guests and talk about wider topics.  And sometimes we make the decision to do it, and usually within a week, we reverse that decision, because we feel if Bitcoin delivers on the promise that we hope it does, that we would be foolish to give up that position at the forefront of this thing and get to talk to all the people.

But what's been really interesting in this last two weeks is that another reason we've thought about it is like, "Can I really make another 150 shows this year about Bitcoin?  Have we not talked about everything?"  But actually, there's all these new ideas coming out, or these what I would call, unintended consequences from Satoshi, that are super-fascinating to talk about.

We just interviewed someone called Troy Cross, I don't know if you know Troy, but he's a philosopher, and he wanted to talk about the environmental impact of Bitcoin, and how you as an individual could reduce that.  It was like, "Okay, that's kind of interesting".  His idea was, if you look at the cost, the cost of Bitcoin is maintenance.  Bitcoin has its price because you hodl it, and therefore if you're hodling a certain amount of Bitcoin, if you were to mine that percentage and you were to choose, say, greener mining options, that would help trend Bitcoin mining to a greener position.  I was like, "Okay, sounds kind of interesting".

But what came out of this was he said, "What you actually do here is you flip the narrative, you flip ESG", because what you're actually saying is, when someone like Senator Warren says, "Bitcoin is bad for the environment", you actually flip it and you say, "By mining more Bitcoin, and actually wanting to increase mining, it's better for the environment; because if we're pushing people to offset via green Bitcoin mining, you can actually offset via mining which will lead to infrastructure and build-out of more renewable energy sources". 

You don't have to have a response to that, you might do.  But the idea that Bitcoin mining is actually environmentally, it can be, with gas flaring and supporting the infrastructure for greener energy, it's just this whole unintended consequence that's come out of mining.  And for us it's like, "Shit, this thing just keeps getting bigger".

Steve Lee: I mean, I fully agree with Bitcoin mining being friendly to the environment versus a negative.  I really think it's the opposite of what the current narrative is.  And that's maybe a good segue, we can talk a little bit about Block getting into mining and what the potential there is.

Peter McCormack: Please.  Is it ASIC development, is it as simple as that?

Steve Lee: I think it's a bit bigger than that.  Let's break it down.  I think one concern in mining today is that there are only a couple of big manufacturers of Bitcoin ASICs, the chips themselves.  They're concentrated in the same country, so there's geographic risk, there's risk that there are only two companies.  So, in terms of centralisation risks and pressures, that's one area that's alarming.  So, anyone in the world that comes along and produces their own designs and produces their own ASIC chips is a good thing, a healthy thing, for Bitcoin, just to have more competition.

So, Block has announced that it's doing its own chip, but also Blockstream has.

Peter McCormack: Chip?

Steve Lee: Yeah, its own mining chip.  I'll get to other potential things too.

Peter McCormack: Okay, yeah.

Steve Lee: And actually, most people probably don't know, most Big Tech companies are just software companies, but Block, from its beginning, has always been hardware.  I mean, the original company had a little credit card reader that you held near your phone, then obviously tens of millions of payment terminals have been produced and sold.  So, the company knows hardware and the company knows ASICs.  For over six years, the company has custom-designed their own ASICs that go in their payment terminals.  So, Block/Square already has a team of ASIC experts and designers.  So, this didn't come out of leftfield.

Peter McCormack: Hold on, you're going to have to go back a second, because some people will associate the term "ASIC" as a Bitcoin-specific term, specific to Bitcoin miners, but that's clearly not the case.

Steve Lee: Yeah, so it stands for Application Specific Integrated Circuit.  It's really just, if you have -- the kinds of computers that are in your phone or your laptop are general CPUs, Central Processing Units, that can handle all kinds of different applications.  If you have one particular application that you only care about and you really want to hyper-optimise, you can create silicon that only does that, but does it really as efficiently as possible, and that's what ASICs are.  For Bitcoin mining, the SHA-256 algorithm, which is part of the protocol for mining, that's what Bitcoin mining ASICs are, but ASICs is a general term.

Peter McCormack: That makes it more interesting, because I hadn't made the link between the Square terminals and the team and the understanding and the background to be able to make the chips.

Steve Lee: Yeah, so this wasn't just because Jack likes Bitcoin, we're going to do it; we actually have experts at the company who have a long track record of creating basic chips, and relationships at foundries, and just knowing how to build hardware.  So, part of this is creating chips.  But it's not like Blockstream announced a chip.

Peter McCormack: Didn't they buy a company?

Steve Lee: Yeah, they bought an Israeli company, Spondoolies, or something like that.  I don't know how to pronounce it!  And then, it's reported that Intel's creating a mining chip as well.  So, all of this is good news.  The more companies producing chips, the better.

Now, the vision for the Block mining effort, not just to build chips, but actually create an open ecosystem for mining, and I think this is actually the big idea; because, the existing chip makers, they don't even sell their chip.  They put their chip in their own mining rig designs, and then they sell the mining rigs.  That's very limiting, because I've spoken to many companies in the mining space who know their customers really well, they have certain application ideas of mining rigs, and they know how they want to design a mining rig, but they can't do it because there's no supplier of chips.  They can only take these off-the-shelf closed mining rigs.

So, Block intend to sell the mining chips directly, and presumably, I don't know about Intel and Blockstream and others, but hopefully there's more suppliers of chips that will sell the chips directly, and that's going to help the entire ecosystem out, and provide data sheets, which really provides information that describes a chip.  A current problem in the space, there's a company called Brains, who works on really smart firmware to make the mining rigs high performance.  They have to reverse engineer the chips from Bitmain and other manufacturers, because there's no open data sheet.  So, they're constantly trying to figure out how those chips work when they change, because it breaks their firmware. 

It's not the makings of a really growing ecosystem; that's the makings of just one or two companies owning the space.  So, I think by having an open ecosystem where you sell the chips, you have open data sheets, any kind of mining rig designed to have all the other components that go into a mining rig, those are open and shared, I think that's going to foster -- hopefully, this isn't just a great business for Block, but it produces dozens or hundreds of other start-ups and other companies to flourish.

Peter McCormack: Fascinating!  So, my assumption was that you guys would be producing the entire unit, similar to Bitmain; I'd be buying the Block ASICs or whatever, and I would plug that in and start mining.  But that would take us from two to three, whereas this takes us from two to potentially hundreds.

Steve Lee: There's also interest from Block to produce mining rigs themselves.

Peter McCormack: Fine, but if you're selling the chips…?

Steve Lee: But in addition, yeah.  So, I'd say success if not Block producing a mining rig and only doing that and selling it well, success would be not only Block doing that, but dozens or hundreds of other companies as well.

Peter McCormack: Yeah, that would massively increase the decentralisation of mining rigs.

Steve Lee: Absolutely.  There'd be more suppliers, there'd be more choice.  There'd be more --

Peter McCormack: Competition.

Steve Lee: There'd be more competition, there'd be more types of mining.  And the most extreme version, which we should talk about, is home mining; that's the dream.

Peter McCormack: That's the goal, right.

Steve Lee: That's the long-term dream, and I'm now completely convinced it is going to happen, on like an eight-plus-year timeframe.

Danny Knowles: Before we move onto that, can I ask this question?

Steve Lee: Yeah.

Danny Knowles: Where will the chips be manufactured; do you know that yet?  Because, that seems also something that needs to be --

Steve Lee: I don't know that, but I can say there's a recognition of the geographic risk.  So hopefully, the answer is that it's not dependent on one particular country, or at least one country, China, that's currently manufacturing all the other chips.  So, that's a priority for the project and the team.  But there are certainly challenges to do that and have high quality and availability and still low cost.  So, there's a lot of variables when producing hardware, but that's definitely a priority.

Peter McCormack: Where are Square's chips; do we know where they -- are they all manufactured out of China, or do they use foundries here?

Steve Lee: I don't work in that team, so I don't --

Peter McCormack: You don't know, yeah.

Steve Lee: Well, I may know, but I don't know if it's public or not.

Peter McCormack: Yeah, okay, that's fair.

Steve Lee: But I mean, it's not a surprise.  I mean actually, speaking of centralisation risks, there's only a couple of ASIC manufacturers, but there are also just a few foundries around the world as well.

Peter McCormack: Yeah, and I was told it takes like ten years to build a foundry.

Steve Lee: It takes a long time and a lot of money.  I mean, the good news is that there's a lot of recent announcements for US-based foundries, Intel, TSMC, etc; that's great news. 

Peter McCormack: At a time where Chinese jets are circling Taiwan, I think that's not surprising; required and necessary.

Steve Lee: That's a huge concern.

Peter McCormack: That's fascinating, that's completely opened up what Block is doing here that I was completely unaware of.  Yeah, that's fascinating.

Steve Lee: And I can say from dozens of conversations with people who know a lot more about mining than me, that are in the space, been doing it for years, they're very excited about this open ecosystem.  I think it will be great for their businesses, so I think it's going to be a win for Bitcoin, decentralisation, but a win for a lot of companies in the space as well.

Peter McCormack: Do we know what kind of timeline we're talking about here?

Steve Lee: I mean, it's not going to happen next month.  To design, create and manufacture a new chip is on the scale of a few years.  So, yeah, I doubt there's going to be something this year.  But it's definitely funded, we're hiring for that team, and hopefully they execute.

Peter McCormack: And also, fascinating that Intel are looking at this.

Steve Lee: Absolutely.  Getting back to home mining, even before getting there, you brought up ESG and environment a few minutes ago.  I'm now convinced that solar and wind can be effective sources of energy for mining, whereas previously I didn't have the strongest answer and I wasn't really hearing from anyone else either, because of the economics.  Because, if you have energy sources, even if they're cheap, or even literally if they cost zero, if they cost you nothing, it's just surplus energy; if it's only available 30% or 40% of the time, you're competing against 24/7 global miners.  So, if you can only mine 40% of the time and you're competing against people who buy the same equipment as you, you're going to get competed out.

I mean, in today's mining environment, the profit margins are so large that you could plug it in the wall here in San Francisco and still probably profit.  But at equilibrium, the total profits converge towards zero.  So, how does it work out economically?  So, the big unlock for me and I think a few others recently, this past fall, is if you think about large 24/7 industrial miners, they buy the latest and greatest equipment and then after some period of time, let's say three, four or five years, that equipment is no longer economic for them. 

So, what do they do with it?  Well, if there's no other market or no other type of miner, they would throw it away, or they basically have e-waste.  They might even have to pay money to get rid of the equipment.  So, at the very least it would zero dollars; it might even be negative dollars, they might have to pay someone to take the equipment.

Let's say you have a large solar farm or windfarm, if your surplus energy costs are zero and you can get old mining equipment, even if it's not the latest and greatest and most efficient, and get it for zero dollars, or even negative dollars, you're going to be able to compete then with 24/7 miners, because you have no investment.  Your only costs are the relatively minor operational costs.  The two big cost factors would be zero: energy and the capex for the equipment.

So, clearly a market will develop for that equipment.  It won't be zero dollars, people will pay for it.  And the people, they'll be intermittent energy sources, such as solar and windfarms.  And then you can take that down to the scale of an individual home, where you might have solar panels at home.  I have solar panels at home here in California, and currently PG&E, I think, is forced by the government to pay me money to take my excess energy.

Peter McCormack: Put it into the grid.

Steve Lee: But they don't even need it for the grid.  When I'm producing a surplus, at noon or 1.00pm --

Peter McCormack: Everyone is.

Steve Lee: -- everyone is, and that doesn't match the demand.  The demand is at 5.00pm, 6.00pm, 7.00pm, 8.00pm.  So, they're only paying me because the government is forcing them too; that's not a sustainable solution.  So, as the market forces prevail, there'll be a bunch of solar owners that have excess energy and have no use for it. 

If they can imagine a mining box that addresses noise factors, addresses heat factors, maybe even turns the heat produce into something productive at home, heating your swimming pool or your home or something like that, and is turnkey, you just plug it in at it works; and it's using not the latest generation mining chip, but actually may be four years old, but is sold at a much lower price point, then it's economically viable, and you'll be able to get a payback period that's realistic for that equipment.

Peter McCormack: That's fascinating.

Steve Lee: So, I do think that's going to happen in the next decade, all the way to the home miner.

Peter McCormack: And the manufacturers of the solar panels that go on the roofs maybe incentivised to build this into their business.

Steve Lee: Yeah, you can imagine all kinds of distribution paths and companies that -- again, you mentioned earlier about Bitcoin touching on more and more things over time.  Already we're seeing how it touches on public utilities and energy companies, but yeah, all of a sudden, totally different companies will be incentivised to integrate this so it can be part of their business model.

Another exciting thing about that, so there's the potential to improve decentralisation of the ASIC chips, the mining rigs, the number of people mining.  I mean, imagine a world where millions, tens of millions, a hundred million people around the world who have off-the-grid solar and they are mining, that's a beautiful world.

Peter McCormack: Well, it adds to the conversation we had with Troy.

Danny Knowles: Definitely.

Steve Lee: So, there's the hardware side, but there's all of the software side.  So, today we have mining pools and miners, and the mining pools are the ones that run the Bitcoin Core full nodes.  The pools are the ones that select transactions.  One thing that drives me nuts about the term "mining", and what most people new to Bitcoin think about mining is that it's only intended to create new Bitcoin, you're digging and mining Bitcoin.  But the primary purpose of mining and the one that will last forever is transaction selection, and actually basically fulfilling the duties of a central bank, providing settlement and transactions.  Minting of new Bitcoins is super-important as well, and that's a critical part, but it goes away over time.

The problem with mining today is that the only actors in the ecosystem that can select transactions are these handful of mining pools, so that's a form of centralisation.  We haven't seen any problems with it to date, but it could potentially be a problem, either collusion or government intervention, or even a hacker.  I mean, a hacker could hack into three or four pools and be able to censor transactions. 

So, a change that Matt Corallo on my team worked with some blokes at Slush Pool on -- Matt came up with a better hash several years ago, and then the folks at Slush Pool came up with Stratum V2.  They put their heads together, came up with something they all like, and Spiral's funding development of Stratum V2.  So, Slush Pool has their own implementation, we're funding an open-source version that's independent of Slush Pool that can work for any pool or any miner in the space.

That's super-powerful, because the two key attributes of it: it improves security -- so, the Stratum mining protocol is the interface between pools and miners, and Stratum V2 improved security of that, and decentralisation, because it allows miners to do transaction selection and run a Bitcoin Core full node.  So, if we fast-forward to this future in ten years, where everyone's mining at home, you'll actually be able to participate in transaction selection as well.  And any kind of future debate or war over changes to Bitcoin, anyone doing home mining will be able to participate in that by choosing which software, which version of Bitcoin they're running.

Peter McCormack: Wow!  Okay.  I'm going to embarrass you a bit.  Somebody told me recently, they said, "Steve Lee is the most important person in Bitcoin".  Truthfully, somebody told me that the other day.  I was like, "Really?  I mean, Steve's a great guy, but tell me more".  They said, "He is in the middle of all the most exciting developments happening in Bitcoin right now, all the projects in the infrastructure, he's right in the middle".  I mean, you'd probably be embarrassed by somebody telling me that, but it is, these are fascinating!

Steve Lee: Well, I do work hard, and I think I have the right attitude and spirit for Bitcoin, so hopefully that -- I joke with friends about when we see other long-time bitcoiners introduce their own coin or shill some other coin, or whatever, I'm always like, "When's the day that's going to happen to the rest of us?"

Peter McCormack: Steve, you're not going to do that.

Steve Lee: I don't think I'll do that.

Peter McCormack: I think, for some people it hasn't happened, it wouldn't happen.  We've had our chance, we could have done WBDCoin, or whatever, like some other podcast did and made loads of money.

Steve Lee: Yeah, and I respect you guys for that for staying true to it for four years now, or however long it's been.

Peter McCormack: Well, we don't need to.  We're very fortunate to get to do this, to sit down with people like yourself, and Troy earlier.  We're super-fortunate, we don't want to fuck that up.  Okay, tell me about TBD; I was about to say, "Tell me about WBD"!  Tell me about TBD.

Steve Lee: So, it's a new business unit announced last summer.  Mike Brock runs it, who's been at Square for a long time, or I guess now, Block.  It's a little bit TBD!  I mean, I'll speak to what they have announced and published.  I mean, they published a white paper, I think it was November timeframe, for a decentralised exchange, but different that what the topic du jour is for DEXs.  It's not like Uniswap, or those types of DEXs, which popular DEXs today are just for cryptocurrency tokens to exchange between one another.  But they don't handle fiat to crypto, or back.

The intention of the white paper that TBD published is actually the bridge between fiat world and Bitcoin and other cryptocurrencies, and trying to make it better, both improve decentralisation so that the only solutions are not just heavily-regulated companies, like Coinbase and Block; but also make it better for wallet developers.  Imagine a Phoenix or Muun or Breez Wallet that you can download and you can actually acquire Bitcoin within the wallet itself.  Some wallets do that, is it MoonPay?  There are several different start-ups that are doing quite well by facilitating that, but that's a single solution that gets tightly integrated into that wallet.

The idea with tbDEX, which is the name of that protocol that was published, is that there could be an infinite number of liquidity providers that connect to your wallet.  So, as a user, you would download the wallet and out of the box, be able to buy Bitcoin and be able to select from different providers.  Some of those providers might be very large companies, like banks and Coinbases and Blocks of the world; it could be smaller start-ups from random places around the Earth; and it could be individuals, it could run the gamut.

Part of that protocol does have identity and KYC aspects, but the KYC is a variable.  So, if you're an American institution that's being regulated, you're obligated to collect a certain amount of information.  The protocol will support that, but it doesn't require it.  So, if you're willing to provide liquidity with no KYC, the protocol allows for that, and depending on which jurisdiction you're in, that may or may not be illegal.  Even if it's legal, you still have to deal with fraud and other risks, but at least the protocol is neutral towards that, and hopefully allows the free market to flourish.

Peter McCormack: And, how is the fiat represented in that DEX; will it require a stablecoin?

Steve Lee: TBD!  I actually don't know the answer.

Peter McCormack: TBD, yeah, because that's the only bit I don't understand about this.

Steve Lee: Yeah, so I think the promise of that is super-exciting; the exact details are still being worked out, I think, and I don't really know what the timeframes are.  And even the group itself, I mean obviously they can be successful at that.  That alone is tremendously powerful and important for the whole ecosystem, but there's enough latitude with that group that they can do other things as well around the space.

Peter McCormack: It's fascinating.  It feels like all the key aspects of what bring together the Bitcoin experience and make Bitcoin work, from mining to wallets to acquiring to supporting the development, you guys are involved in everything now.  You've got an ideal way of supporting this, it's fascinating.  I think the work's incredible, I really do, and I'm really excited to see where we are in four years.  You and I are sat here in four years having this conversation, perhaps we're looking at the wallet and we're looking at a chip and we're able to use the DEX and just see how much further this has taken us.

Also, I wonder what other companies will start to look at this group of companies and see, "Well, hold on a second, we need to be in there, we need to be doing something similar".  It's fascinating.

Steve Lee: Well, I hope that my group, Spiral, inspires other large companies to invest in open source and copy what we're doing, because there are both near-term and long-term benefits to doing so, and I think the evidence is there that it's been really successful for Block.  And then, as far as what Block's doing and the strategy around Bitcoin, I would love to see that adopted by Stripe and Facebook and Google and lots of other Big Tech companies.  It's a big hurdle, I think, as a big company to overcome that and see the vision, but hopefully Block continues to be successful with that and it becomes more and more obvious to other companies.

Peter McCormack: Yeah, I've got a feeling Facebook is going to go more down the, I hate to say Web3, Web3 route.  It just feels like that's what the metaverse will do and maybe it will support sats.  But Google, I've got no idea; Stripe, it makes sense for them to be considering Bitcoin, they're a payments company.  I mean, we've just launched a store and we're taking payments in Bitcoin and fiat and it's only natural for us.  The number of companies who are going to do that is only going to increase.  But yeah, fascinating, great work, Steve.  Did we miss any part, apart from Eye of Satoshi?

Steve Lee: I think this is good for an episode.

Peter McCormack: Yeah, thank you so much.  If people want to find out more about Spiral, maybe they want to come and work with you, where should they go?

Steve Lee: So, our website is spiral.xyz and from there, you can learn about our team, our projects.  We didn't really talk too much about Spiral, but we fund over 2,000 developers in the space with grants, plus the full-time team I mentioned earlier.  So, we fund a lot of great work.  So, yeah, come to our website, see who we fund, what we do, and you can apply both for a full-time job working on LDK, or for a grant, which gives you more options to work on other parts of Bitcoin as well.

Peter McCormack: Are you funding, is it CoinSwap?

Steve Lee: We are, yeah.  So, I think we're the only funders of the CoinSwap project by Chris Belcher.  We fund four Bitcoin Core developers, we fund the BDK, the Bitcoin Development Kit, we initiated and fund the Bitcoin Design Community, we fund several of the Lightning Infrastructure projects, mempool.space, we fund a lot of great -- and I'm apologising, I'm missing a few others too that we fund.  Oh, the Summer of Bitcoin, which is super-exciting.  I don't know if someone's talked about that on your show before?

Peter McCormack: No.

Steve Lee: So, I'd say the biggest bottleneck to getting developers working on Bitcoin is not money; I mean, money's always welcome, but it's not money, it's actually finding talent who has an idea what they want to work on Bitcoin.  Summer of Bitcoin is a programme started by a gentleman in India, who last year reached out to five Indian universities and said, "Hey, do you want an internship working on an open-source Bitcoin project?" and they got 3,000 or 4,000 applicants, an overwhelming response.

So, this guy and some folks at Chaincode Labs worked together to sift through all those applications and came up with, I think it was a little over 50 interns, and then Spiral funded both that person who was leading it and a small, like $2,500 stipend for the students.  And they got matched up with a dozen or so open-source projects, like LND and Bitcoin Core and many other projects, and did some great work. 

This year, they're going global, they're going bigger, they'll have more interns; it's not just India, it's global, and I think it's phenomenal to get people's feet wet in the space.

Peter McCormack: Amazing, well listen, this is just incredible.  If you want to ever come back on and talk about these projects, you can.  Or, if anyone within the team wants to come and talk about who's running one of these divisions, you have an open use of this platform to talk about it, and I'm glad we finally did this, Steve, it's been long overdue and I appreciate your time.

Steve Lee: Thanks so much, Peter.

Peter McCormack: Thanks for coming on.