The Blockchain and Us: Interview Elizabeth Stark, Lightning Network

Transcript

[Music] for example in the US it takes me 3 days to send funds to a friend you know to pay him back for dinner that why can I send them an instant email an instant animated gif but 3 days to send them you know $30 so I think we're going to radically see the transformation and the digitization of the way that we transact and the way that humans and machines Share [Music] value my name is Elizabeth Stark I am co-founder in CEO of a company called lightning we're building a protocol called lightning Network that is scaling Bitcoin and blockchains uh by using a layer two of transactions uh that can enable instant high volume and extremely

low fee transactions that are still decentralized on blockchains so I have a background at the intersection of blond technology and one of the areas that I've been really interested in for a very long time is open source decentralized protocols and I was teaching at Stanford back in 2010 and a teaching assistant for the class sent me an article um she said oh there's this really cool thing it's open source money and I I remember thinking open source money Isn't that cool but it'll probably never work what I really should have done was bought a lot of Bitcoin back then um but no it was one of these things where I said oh this is an interesting concept I need to learn more so I started reading and learning all about it and there's a

point at which it's almost like you can't stop it just gets so interesting and you're so fascinated by it and you just want to learn more and more and more and even by the way to this day it's it's there there are new developments you know there are new ways of solving problems new approaches and it's it's very exciting to be in this world the way that Bitcoin works is that every full node on the network knows about every other transaction because what is a blockchain well it is a distributed public Ledger of all transactions that have ever occurred so naturally if I spend you know $5 buying a coffee and then millions of people are doing this you know every day it can be quite inefficient for everybody in the

world to know but every time I've spent you know five euros five Franks $5 dollar to buy a coffee every 10 minutes there's a new block with all of the transactions if you try to confirm your transaction prior to the 10 minutes um there's a risk of your funds being what's called double spent and you don't want that you want to know that your funds are not um effectively going to be spend again that's the nature and that's the real importance of what public decentralized blockchain solves if I spend it once it cannot be resent what about a world in which you have machines um that want to pay other machines or maybe I want to pay a few cents every time I read an article or browse a video well it makes no sense to pay 1 cent and pay a fee that's you know

10x that so the technology behind lightning can solve for all of these because it enables this technology that's instant high volume and low fee the goal is to really bring in the new generation of technology for Bitcoin and blockchains where you have the second layer on top of Bitcoin where you don't have to go to the blockchain every time you transact uh effectively what we're doing is we are um deferring the broadcasting of transactions to the blockchain but doing so in a decentralized manner where a variety of participants can then send transactions to each other it can then be instantly cleared and then if there's ever an issue if somebody you know tries to steal your money or if they go offline

you're always secured by the underlying blockchain itself so the security of the blockchain is still securing you when you are transacting with this technology we've learned a lot of lessons along the way um there are a lot of experiments that failed uh and there are a lot of security lessons that we've learned that we continue to learn as well uh one area that I'm particularly passionate about is that of user experience right now the technology is not very user friendly it's not super easy to use so one of our hopes with building out the lightning protocol and the technology is um because you can instantly send funds and you can abstract you know there's a concept in lightning called payment channels where you open a payment Channel you go to the

blockchain takes 10 minutes and you're on Lightning then you can send between participants so I can be connected to one person who's connected to another and then I can send funds to the other participants on the network without being directly connected the cool thing is by the way the way the intermediate nodes cannot steal your funds it's still decentralized there's not counterparty risk in the way that we've had it previously in the financial system but that's all to say that this complexity all the technical details can be abstracted away from the user within the software the software can do it automatically and the user can just know oh okay I just sent you know a dollar a Euro a Frank five cents uh why right now is it so easy for me to send say an animated gif uh an email you know a text

message but I can't just send a small amount of value the internet doesn't allow for that yet in any userfriendly way so one of my hopes is that the technology behind lightning can enable that both for humans but then also for machines uh why is it you know machines don't really have the capacity to hold value right now um why is it the machines just cannot transact machines don't have bank accounts uh given an age where we'll have more and more machines performing more tasks our technology can enable that as well people often say that necessity is the mother of invention but I like to say that necessity is also the mother of adoption because if there's a real use case that people you know need a

technology for well they'll start using it and right now we've seen in a lot of countries around the world where there are major currency inflation issues or where people are struggling or where the government's may be trying to either take away cash or it's very hard to obtain a bank account um the use cases for a technology like Bitcoin are becoming greater and I think we'll only see more of that as the technology and the usability developed such that the average user can use it and by the way users might not even know that they're using the technology I think there are a lot of parallels with the early days of the internet um you know of course success is in no way guaranteed uh one day we may look back on this and say oh it

wasn't that great you know but if you ask me I think there's undoubtedly a hugee amount of progress that has already been made and there's something here I find it hard to believe that I'm going to look back in 10 or 20 years and say oh none of this ended up happening because we're really seeing a new way of transacting value on the internet