CEO James Andrew at Global Liquidity

Hi, my name is San Tito. This is CryptoKid Podcast. I'm going to be talking to you guys about blockchain technology and cryptocurrency on. Hello, James. Thank you for copying on the CryptoKid Podcast. James is a CEO of Global Equitily Incorporation. And why don't you give a little introduction about yourself and how you got into the space? Oh, yeah. Hi, yeah, I'm James, CEO and technical director

at Global Equitily. And I have been like full time in crypto since around 2017. I have a long background though in markets and trading. I used to do, I used to run Wall Street trading floors in the late 90s and then develop some of the first ever sort of cross exchange arbitrage automated trading systems back then. So I've always had a real deep interest in the

technology of markets and trading. And it almost felt like it almost felt like an extension of gaming growing up. You know, you play, you play your multiplayer games and then you go do automated trading. It was very kind of similar in my mind. And then I saw everything happening in crypto in 2017 with with like it just felt like a whole sort of reboot and like

a sort of a refresh of markets and like it was really exciting again. And so I ended up getting pretty deeply involved in starting this company in 2018 called Global Equitity, where in one form or another, we've been seeking to bring new types of technology and then a sort of a leveled up next generation experience. First to trading, we started out making trading interfaces, but now

we're focusing it more on what you might call just like currency exchange swaps things like that, which really is trading in the background. So we're trying to build what's almost like the Spotify of currency exchange, meaning like everything is kind of a mess out there in the pirate bay world. Spotify came along and sort of made it like clean and nice and fun. We're trying to

do the same thing with moving money around. Excellent, excellent. I'm glad to hear that. So no, you are involved with Lightning Network and that's like your primary objective with the company. What are nodes and pipelines to make Bitcoin faster? Yeah, I would say Lightning is like a key aspect of the company in terms of delivering the experience you want to deliver. Lightning Network is, I believe,

the most advanced technology for moving money that has ever been created. Of course, Bitcoin is underneath of it and is very important as the foundation, but Lightning Network builds on top of Bitcoin to sort of peer to peer network that allows nodes to connect with one another and to transact really fast and really efficiently in like a whole new almost like a parallel world to the

regular financial system. And it's been getting more and more liquid and fast, as you say, over the months, as more and more nodes have come online. And so just getting on to the Lightning Network with your own node. And making intelligent connections of your node to other nodes can is like the first step and sort of even participating and in and as you learn how to

do that, you get better at it and you get a better at processing lightning transactions. Okay, okay. Now how did engineers crack the code for the speed? What is it? I don't know, how do they crack the code for the speed? Like, what do you mean? Like, so Bitcoin takes the regular Bitcoin takes a while for the transaction to get to get by and to verify

layers. You'd call it the net even you probably heard the term you're networking stack the TCP IP stack, they call the stack because there's a whole. The whole stack of layers running in our computer. There's actually seven of them. There's your here of that. It's called the OSI layer. OSI layer model, the seven layer model. And it's a seven layer, if it's a seven layer model.

In fact, this is super important. For, I'll show a diagram of this here on my screen. I could switch over to a diagram of it that yeah here. Well, switch on my desktop. There's a, there's a diagram of the OSI seven layer model and for anyone is listening and can't see it. It's a stack of layers that starts at the bottom with layer one called the

physical layer. And then it goes to the data link. The network layer, the transport layer, the session layer, the presentation layer and the application layer. And all these layers are running in our computers and our phones at all times. For instance, when you think of TCP slash IP, the reason there's a slide. There's a more than one layer. So as we've been getting our computers to

talk on the internet, it's always been in a layered fashion and. And so what. What. What lightning does. Is it brings that model of layers to Bitcoin, right? Bitcoin is a layer, which actually is sitting on that stack on the application layer. So if you really want to blow someone's mind, let it know that Bitcoin is a layer seven protocol, not a layer one. Because it's

on that application stack that's been being built for years. So it's slow though, right? And it takes a long time for this consensus to be reached, right? But networks, computer networks around the world are actually very fast right now. You can generally. And I expect that if you send out a message onto the internet, that it will be everywhere else in the world in under half

a second. I mean, maybe around 300 milliseconds. And so computer, the computers can talk to each other real fast. So what lightning does is figures out through a really kind of interesting use of cryptography. How to enable Bitcoin to be moved in that faster way on this other layer. And the way that it just generalize. It's something like a digital cryptographically based escrow system. What's escrow

escrow is where you put money somewhere and it's held, right? You can't touch it. So like when you're doing a real estate deal, money will be put in escrow. So both parties are confident that it's there, right? And you can both neither party can just take it out without like certain ramifications. And so what lightning does. Let's say you and I both have a Bitcoin node

at home. And if I want to send you. a Bitcoin, it's going to take 10 minutes minimum, right? No matter what plus confirmations. But if we run, if we just look at the simplest lightning network, you and I could both set up a lightning that were just by connecting two instances of lightning software like L and D by lightning labs. And what that would let us

do is that would let us prove to each other that we have locked a certain amount of Bitcoin in what's called a channel. So let's say we have, you know, a one whole Bitcoin in our. In our node, we could say we could create a channel for let's say just a small amount like one tenth of a Bitcoin. And if we put that in there, what

what that means is that we can then push Bitcoin back and forth between our nodes up to the capacity of that one tenth of a Bitcoin as fast as we want up to the speed of the internet. And so it's almost like a you know how an abacus works like the beads on an abacus you've got the beads up there. The left and you can move

them to the right. That's the way lightning general works. You started up somebody puts the Bitcoin in and it's like the advocates is set up with the beads on one side. And then you could do transactions to push into the other side. Now what happens when they all get to the other side. Well, there's techniques called rebalancing so that we don't have to let we can

basically reuse that channel by sending up you could for instance send me a regular light a regular Bitcoin transaction back and we could do it over again. And so there's these whole set of techniques. Around moving money into and out of these channels. That's kind of a long answer. But does that does that answer it? Yes, especially you made it perfectly sound sense. And especially in

the fast moving world, people want fast moving results. So yeah, the way lightning network is going. I'm definitely for it and I'm enthusiastic about it. So like will this attract banks though. That's a very good question. Will it attract banks? You know what? That's sort of like the analogy that I gave before of it's on my mind right now of Spotify because I was just watching

this documentary. I actually really recommended as a documentary on Netflix about the creation of Spotify. And there's an analogy here. Do you remember? I mean, you probably old enough to remember like before Spotify when when there was like the only was everyone was using sites like pirate bay to download music. And it was like those record companies over here. And they were charged in 1899 for

CDs. And the only other thing there was was like what you call pirate bay and just file sharing and stuff like that. I kind of think like that's an analogy between banking and crypto. But the banks are like the record companies always trying to get that 1899 out of you. Right. And people are trying to use other like whatever they can to get away from having

to deal with that system by using this new technology that is that is in general. Bitcoin and crypto. It's kind of a kind of that's the analogy there. So when I think about lightning, I think about it more it's lightning is more like a streaming music service. Right. Like Spotify in a way is where the banks are still running in that old record company system. The

thing that eventually I think yes, just how remember how even five six years ago the idea that major banks would be involved in Bitcoin. Coin custody was just not a thing that was even conceivable. And now many of them are and they've had to because their clients demand it. So I do think that banks will eventually start participating. But I don't think they're going to be

the drivers. And I think that that spells big opportunity for those of us that are not stuck in that old system to really gain some ground here and sort of steak our claim in this network and in making it our network. So that's what I think is the way to do it. When the banks want to join, we'll let them in, but it will be on

the terms of the network and not on their terms, which I think is very good for us. Leverages key leverage key and that's very important. And I'm glad you brought that up. So like what are lightning bridge ATMs. Okay. Yeah. So this is something I'll just show a little bit. This is something that I am working on at my company. This is what we're doing with

all this with with with a light thing here. Let's go to open up here. Yeah. This is right here. This, this is lightning bridge. It's changed a lot since I showed it to you before. This is called lightning bridge. And this is what we are using to bridge between Bitcoin lightning and other layer ones and layer two's. And without even talking about like the guts of

it, the details of it. I'll just show you how it works. So check this out. We're going to connect our wallet here. And the idea is we want to move money using Bitcoin lightning. From our phone from an app like a cash app or walled a Satoshi that anyone can download onto another chain. We're going to connect a wallet here. I just connected my Meta mask.

And so check this out. We can see what we we're going to send from Bitcoin lightning. And we can receive all of these different things here. So this is all the different coins we can receive. Binance coin on Binance. We could receive it on our USD coin. But we'll receive a USD coin. That's USD coin on polygon right now. And so what I'm going to do

is say, how much do I want to send? I'm going to send a dollar right here like this. And which means which is kind of interesting about lightning too. You can send very small amounts of money. And so I'm going to hit send. And it's going to send a dollar or 4,966 sat right Satoshi's fractions of a Bitcoin. And we're going to receive USD C on

polygon. Do you know what polygon is? Yes. Yes. It's like a and what is polygon in your words. So polygon is like. The way to transfer money fast in the faster ways. What I've understand it. Yes. And it is what you call a layer on a theorem. There's a layers again, right. It's a layer to and the pro and that the difficult thing with that is

if you want money on polygon. You have to first get it onto a theorem and then bridge it over to this layer, which is like. It's like a real pain, but we take that whole process out. We just hit confirm. And that's it. It pulls up the QR code. And now I'm going to send send that dollar. Little more than a dollar from my phone. I'm

going to hit hit it with cash app. Which everyone has got cash up. Look, I press the button. And now look, it's sending to the other chain. And what we're doing is it is notice how fast that happened that we were able to detect it done. Now we are actually that we we have tracked that transaction. Into our lightning node. And then we have triggered a

workflow in the cloud that dispersed those funds immediately onto the onto the destination chain. And you see not see a little block there. Now we're confirming we're showing you the actual confirmations on the block on the blockchain as they come in. But if you don't want to wait for that, you can scan this little you can scan this little QR code here and see our little

robot here. If you scan that. If you are good. It what it does is it opens up a it opens up a conversation with our with our your own little robot on telegram that tells you about what's happening with your with your transaction and that your transactions finalize that is lightning bridge and lightning there to set transactions finalize in our in our telegram chat. And that

immediacy and that user experience was made possible in a large part by. Lightning because of how fast and importantly inexpensive is that is for us to receive those funds from a phone that's not even connected to my computer in like one second. And we didn't pay the credit card companies. So that is that's lightning bridge. Okay. Now does that have does that cooperate with magma lightning

marketplace to. May it's actually very interesting magma is a magma is a. Marketplace for purchasing liquidity. Okay, you're getting to this whole world now. But like okay, now if I want to make sure how that I can receive these transactions for instance into my lightning node will take a look at my lightning node here. This is my lightning node right lightning bridge. This is an index

and the way I have not personally used magma yet, but what magma is for you see all these all of these channels I have river financial. Okay, coin cracking right these are my channels that provide liquidity and I've actually established these channels with these or with these other companies so that I can process payments very well what magma is is it's an emboss emboss. It has

this magma is a really cool marketplace for purchasing channel liquidity. The reason I haven't used it myself is because I know. Where I need the liquidity from in order to process payments from cash app, but if you just were starting out with a lightning node and you wanted to get some of that liquidity on your node, you could totally use magma to buy channel liquidity. It's

talk about a rabbit hole, you know, people talk about getting into crypto and it's like it was this big rabbit hole. Once you start learning how to operate your lightning node here. This is like a thing once watching and wants to see like an inner look at what a lightning node looks like. See all remember the abacus I talked about. Look at the right all these

all these green and blue bars. That's the abacus. This is the lightning node and you learn how to keep these things balanced how to make it perform well and emboss is a tool for doing that. Okay, now are you considered a big mover in the network. I'm not yet at this point, but my my node is a small node right now it happens to be ranked

as a gold node because I have a lot of big of of because I have a lot of good connections. But look, I only have 209 million sat capacity or 2.09 bitcoins, which I just started on the lightning node recently and it would be been scaling into it. There are nodes that have hundreds of bitcoins on it, but you see they're using the reason they have

so much liquidity on their nodes is they are actually operating their node for the purpose of earning yield by routing transactions. We can talk about that how that works. I have a very particular need, which I think it actually might be more interesting to a lot of people watching the show that like what do I use it for. I'm using it to process payments. And so

to Bitcoin, it turns out, which is still quite a bit of money locked in here, right. It's like almost $40,000 of like value locked in here because of the way lightning works. How fast it is. We don't need more than that because we can reuse the channel. So much. So it's like I'm kind of learning how to use lightning in a way that's not your traditional

like hacker, you know, experimenter lightning operator. It's more like here's how you can run here's how you can learn a node that can help you process payments for your business. But I believe that we will one day be a much larger rank to notice we start scaling up. I hope you do. I hope you do without a doubt. And I believe in you so much. Your

vision is so energetic and I love it. So. What are the pros and cons of lightning web network and can it be improved. Yeah. Very good question. The I'd say the biggest con of the lightning network right now is that the only asset that it can transfer is Bitcoin. And there's a lot of other assets digital assets that people want to be paid in these days,

particularly with stable coins. I think there's a big surge and interest in these stable tokens like usdc, particularly because people realize, wait a minute, I want to get paid in something that's actually stable to the dollar, even though it doesn't go along with a lot of the sort of ideals of Bitcoin. People have practical needs. And they want to get paid in things other than Bitcoin.

And right now, the lightning network itself only transacts directly in Bitcoin. But that is going to change because there is a new protocol that everyone watching or listening should keep your ears out for. It's called tarot, T-A-R-O, like the root vegetable that has just been released in its first form by lightning labs. The company that also makes some of the most popular lightning software that allows

for the first time. The issuance of assets other than Bitcoin on the Bitcoin network and transferable on lightning. So what that means is you're going to be able to soon an implication IC. People are going to figure out how are we going to be able to get paid in the first place? We're going to represent these other tokens like stablecoins, usdc, on this new network, much

like how people wrap tokens on another network. People will wrap Bitcoin on Ethereum, which is essentially locking it. And it's this whole concept of a wrap token, but it's never been done on to Bitcoin because you couldn't do that. Now you can do that. And I think that's really exciting because lightning is the fastest way and the best way to move value. And so if all

of a sudden, you can see that the whole thing is going to be a lot more complicated. And transfer anything on lightning, I think that could be a major sort of boost for the significance of both lightning and Bitcoin in the overall, like greater, what you call a crypto world. Okay. Okay. So is that also a way that you could claim nodes? Well, it is, I'd

say claiming nodes. You mean, it's really interesting the way that it works right now. If you go out, go on the lightning bridge, lightning bridge, lightning network dot plus or amboss, and you look for a node, like you look for your name, right? And it's not there. Go claim it. You can claim that it's, it is all about anyone can claim a node, but there's no

central registry. You just have to like start using that node and hook it up. So people will recognize that it's you. So I think there's actually a really kind of like a room here, almost like when it was in the mid 90s, everyone was rushing to the city. And I think that's really interesting. And to get comms, I think if you have a company right now

and you can go create a node, and especially if you're in the Bitcoin or crypto world, you should have a lighting node. And you should connect it with others peers in the space that you might even that you might have some commerce with. And before you know what you're creating actual networks of liquidity. And so yeah, I think claiming if you can, if you haven't claimed

a node yet, go out and do it. It's really cheap to do right now. Okay. So you can only claim one or can you have multiple nodes going? You can make it. You can run as many as you want, but it's they're not going to really be significant unless they have channel liquidity. If you just create a node, it might be like this interesting thing to

get it in the directory. But no one's going to take it too seriously. If it doesn't have connections, right. So you generally, when you're starting out, want to have a node. So you can focus on building up that one node. Otherwise, you're going to be like diluting your efforts. Okay. Okay. Is the account the same for channels though? Is the question is the count the same

for channels? The cat the same as what? For channels for channels. Well, the way that it works is a node, a send a individual node like back here on my here. This is this is the this is my node, right. And the node is. One node, right. But you can see that it's got 22 channels. You say that 22 channels. And that was because I actually

22 times went into my Thunder Hub and figured out how to open a channel to another node. Cause see, all these nodes have an address see copy. You can actually go up here to like it. You could look at the all the nodes. And let's just say look at them by let's look at the top nodes. They are. Bitfinex river. Financial, a lot of these nodes,

you could just go to it, copy its address, go to your lightning node and open a channel. And add one more. It they don't even generally permission you. Sometimes they do, but generally, you don't even need to ask. You just connect. Now what you need to do though, in that case, where you're the one putting the liquidity in is you need to put Bitcoin into a

channel. So like right here, I could right now go to my go over here. To open node and hit copy over here and I can go back into Thunder Hub. Let's say we wanted to make a channel. I could hit open right here. And then I would just hit let's see. Manual here and say where do I want to open a node to. Let's say one

of the ones I already have. And then I would say how many sets. And then I hit connect and it would just do it. I hit open channel. And it would open. In a channel and all of a sudden, I would have put let's say like 10 million. That would be a tenth of a Bitcoin. And I do this all the time. 10 million. I could

open up a channel to one of these other nodes. And now guess what. Without any human intervention. I'm now able directly to send up to a 10th up to 10 million sets directly to that node. And no one. I didn't there wasn't even human intervention involved. So to get back to your question, you have as many channels on your node as you set up like that.

And you can also get channels incoming to you from various services that will open a node to you for a fraction of the Bitcoin that it takes to open a node to them. So what all said and done, I've got one node and 22 channels so far. Thank you for clearing that for me. So what is does this have something to do with the umbrella effect

to. Oh, the I think we're talking about. Is umbral the umbrella effect. Yes. Umbral pronunciation. Oh, that's all right. Umbral is umbral is something very interesting. That it's the software that became really popular over the last year plus that anyone can download and allow you to run your own lightning node. You have a Bitcoin node, a lightning node and various other sorts of decentralized apps in

it. And so what the umbral effect is that. I don't know who coined that term. It might have been it might have been max one of my investors. He wrote a he wrote a really great paper about. The lightning network last year is one of the things that got me really. So it's called why lightning why now. And he talks about the umbral effect in there.

And what it was was this idea that because this umbral software came out and made it easy for people to get on the lightning network. What you saw over the last year is hundreds or probably no thousands of nodes coming online from people many times who were downloading umbrella learning how to use it. So like on Clubhouse last year, they know the social audio app that

has been kind of really popular for Bitcoin. Over the last two years, there's a thing called plebnet on there. It's a group. And it's people that just would go into these like Clubhouse chat rooms and talk about connecting lightning channels and setting up their nodes. And so you've got this whole crew of like hundreds of people that have connected uh connected their their nodes together. Yeah,

I think this even. Is there a plebnet? Visualizer? Do we have a plebnet visualizer? Yeah. There it is. This is plebnet. See all those nodes. Yes. These are all lightning nodes. Look, and if you zoom in, you can see, look, there's the beer channel. These are different people. I'm on here somewhere, right? And so you can get a sense of. Like how many nodes are on

here? And and this is actually a financial network. And I think it's pretty cool that someone made this like visualizer to to give you a sense of like how. How rich this is. And this is a financial network. It's a liquidity network. And it's not run by the banks. So I think this is a big, big sort of next thing to be like that could be

a really big part of why Bitcoin becomes like on everyone's mind again. That's one of the yeah. And that's that leads to my to my next point. Like the reason why people got involved with Bitcoin is because they wanted to stop being banked by a third party. So they wanted to take care of their own money. Now for you, the environmentalist out there can lightning work

network improve the ecosystem. Oh, well, in terms of I think in terms of this whole issue of Bitcoin's energy consumption. Well, absolutely. So I'm not someone that apologizes for Bitcoin's energy consumption because I believe that it is worth it, given what it brings to the world. Yeah, it is also true that the more the more that we transact on lightning, the less that we rely are

relying upon main chain transactions. So I think there's a scenario where in the future for every one main chain transaction. There may be thousands of transactions on lightning. And or taro that would and if you look at it in terms of the energy cost for transaction, it means it goes way, way, way down. So yes, the answer is resounding. Yes. Okay. Okay. Now how are entrepreneurs

are going to be able to incorporate the adoption of lightning network. I think there's a couple of ways. One is that I think that anyone that is involved in I think that more and more, you're going to have situations. Where various forms of businesses will realize that if they connect their businesses with a light with a lightning channel, they can do business back and forth, send

money back and forth at a way that in a way that benefits both sides of the transaction because it cuts out the record company. To mix a matter to mix an analogy, you know, the traditional payment processor. So for example, I'll just say in the case of my business, where I have a business that is in this sort of realm of the digital economy, I now

have lightning channels connected to the exchanges that I trade with. I have a lightning channel to okay coin, a lightning channel to crack and I have lightning. Friends, channels open that let me receive payments from apps like cash app. So for me, I'm looking at it as a new kind of an infrastructure, just like back when the internet first started, you had to go get a

T one line, you know, the line or the cable modem to get on the internet. It's almost like there's a new financial internet that if you get on it, you have certain advantages. Now granted, this is more for very specific cases right now. It's not necessarily helping every kind of a business. But I think that we're what we're going to see is this is going to

get a lot more broad pretty soon that more and more businesses are going to realize that there's advantages to it. Okay, okay. Now we're coming close to the close. So what's what's global liquidity's next big move? Well, we are just about to release lightning bridge in the next, well, starting next week. So we are looking to become that what I just showed you, which is stoop

will so I even had a bug pop up when I just went by it real quick. It's because we're like right at that edge of developing. We're working out the bugs out bugs in it. We want to make it super solid. And when we get this out there, I would like lightning bridge to become what might be seen as like the Spotify. So it's like the

Spotify of moving money, right? It's just the thing that makes it super simple. It happens right away. Everything's organized and it's easy. And so that's what I'm hoping will will happen here. Okay, okay. Is there anything else you want to share before we we come to an end. I think we've covered a lot. I think it sounds really good so far. Hey, man, I'm definitely honored

for you to come on the show in. I hope you have a bodacious day or night wherever you're at. You're going to be able to do it. You're probably traveling all over the world. And I'm so bodacious as right. I'm in town. Okay. And hey, I hope to see you soon at a cryptocurrency event. I'm back and follow up on what's with the progression of your

company. Thanks a lot. Thanks for having me. No problem. Take it easy. Did you know that podcasts are a great way to grow your personal and business brand voice? Here's a street crit. We all want to feel connected to brands we buy from. What a better way to humanize a brand than through sharing your story on a podcast. Kidcaster is a podcast booking agency that specializes

in developing real human connection through podcasts appearances. If you are an expert in your field, have a unique story to share or an interesting point of view is time to explore the world of podcasting with Kit Kaster. You can expect a completely customized service from our staff of communication experts. Kit Kaster is your secret weapon and podcasting for business. Your audience is waiting to hear from

you. Go to Kit Kaster dot com slash crypto kid to apply your special offer for friends of this podcast. The link will also be in the description down below. And happy podcasting.