Forbes Interview with Blockstream Founder: Satoshi Nakamoto's First Collaborator Reveals the Future of BTC

Original author: Steven Ehrlich, Forbes

Original translation: Luffy, Foresight News

Blockstream co-founder and CEO Dr. Adam Back is a British cryptographer and computer scientist, known for inventing Hashcash in 1997, which later became the basis of the BTC proof of work system.

As the CEO of Blockstream, Back plays a core role in developing infrastructure and scaling solutions, shaping the future of BTC finance. Blockstream's key innovations include the Liquid Network, which is the first Sidechain for BTC, aiming to achieve faster, more private transactions, as well as seamless issuance of stablecoins and tokenized real-world assets (RWA) and other digital assets. Back is well known in the encryption community because he had communicated with the anonymous BTC founder Satoshi Nakamoto before the groundbreaking White Paper was written in 2008.

In this interview, we briefly talked about some of Back's early work on BTC, most of which was related to his work at Blockstream. Blockstream has just completed a $210 million convertible bond issuance aimed at creating more functionality based on Bitcoin.

Forbes: How did you initially start working with Satoshi Nakamoto?

Adam Back: I was the first person to receive an email from Satoshi Nakamoto before BTC was launched. The conversation at that time was not very detailed. I believe he had already developed the BTC software by then, and what he did next was to write the White Paper to describe how it works. He asked about the correct way to reference Hashcash. In a later exchange, he told me that he had released the White Paper and asked if I would like to download the Source Code of BTC, around January 2009.

Forbes: Do you think it's important to find out who Satoshi Nakamoto is now?

**Back：**I think this issue is becoming less and less important because Bitcoin has a long history, it is a product of Decentralization. I think BTC is more like a discovery because it is decentralized, without a CEO or founder, which is different from some other projects. The human discovery of physical gold is a good currency, and now we have discovered a better currency: digital gold. We have experienced many dramatic changes, such as the Block size war, and the market ultimately prevailed, so even if Satoshi Nakamoto returns, it's not a big deal. If you think about it carefully, this is a quite positive outcome, the market is a manifestation of users' desire for electronic cash.

Forbes: Let's talk about Blockstream. The biggest current use of BTC is as a store of value. How do you reconcile this with the goal of making BTC a widely used payment system?

**Back：**We have made two preparations. We have one of the main implementations of Lightning, which is all about scalability and retail payments. Then we have Liquid, which is more focused on trustless transactions, smart contracts, assets, stablecoins, and securities. Although I have a background in computer science, in the mid-90s, I was a fairly enthusiastic day trader and investor, and I am eager to know what BTC technology (blockchain) can do to improve trading infrastructure.

The Mt. Gox bankruptcy and other events have taught us that we should have a technology that allows for atomic swaps in non-custodial situations. In reality, everyone entrusts custody to an exchange, which means you have to trust someone else. Liquid is doing a lot and is also used for stablecoins and retail payments. Now there's something new: cross-Lightning Wallets, and currently there are three or four teams working on this. They look like Lightning Wallets, but in fact, they are Liquid Wallets that, when you want to make a payment, use trustless transactions to swap Liquid BTC for BTC on Lightning, and vice versa.

We have built a blockchain explorer for Liquid, and now an ecosystem has formed around Liquid. A startup called SideSwap provides a trustless central order book where you can place limit orders. We have also developed our own hardware wallet to accelerate innovation. You can directly approve transactions on the hardware wallet. This is very innovative and exciting because you don't give up custody.

Regarding the issue of value storage, people have been considering inflation since the outbreak of the COVID-19 pandemic. In the short term, cryptocurrencies give people a sense of instability. However, please remember that approximately 50% of the global workforce belongs to the informal economy, receiving wages in cash without any government identification. These people cannot directly access the global economic system. This is very interesting because although Bitcoin experiences large fluctuations, its volatility is not as high as some emerging market currencies. Therefore, we see payment scenarios for BTC. Of course, some gray markets in the West also use BTC, where the industries may be legal but are not supported by banks, such as marijuana sales in certain states and countries, etc. BTC indeed serves these purposes.

Forbes: I know that the usage of the Lightning and Liquid platforms is rising, but in terms of BTC volume, this proportion is still relatively small. What is your opinion on this? What measures can be taken to accelerate the adoption of these networks? Additionally, I see that there is the same interest in stablecoins as mentioned in emerging markets. How do BTC and stablecoins compare in terms of trying to mitigate inflation risks?

**Back：**In some ways, Stable Coin is very convenient, while BTC is a bit unstable, which is the side effect of rapid adoption. For those who don't have a lot of savings and need to make retail payments every week, this may cause some trouble. Stable Coin is very popular, and there are also some Stable Coins on Liquid, the main one of which is USDT, as well as Stable Coins pegged to the Mexican peso, euro, and yen introduced by new issuers. The yen Stable Coin is somewhat special, as it is limited to Over-the-counter Trading with BTC. So far, the Market Cap is not very large, about 35 million US dollars. But this type of Wallet is still in its early stages. We are launching some projects that may be widely adopted and will enhance its use for retail payments.

We have seen issuance of other types of bonds on Liquid. One of them is a $1.5 billion note issuance by Mifiel. Several large US-listed companies provided funding for the note, which was then sent to small businesses in Mexico as loans. There are hundreds of loans, with each company or individual loan amount ranging from $25,000 to $100,000. These activities used to be recorded on paper, which was prone to errors. With this new source of funding, they have been using Liquid to track debt instruments that are transferable. When the lender issues a loan, they receive a DocuSign, and after establishing a link with the borrower, they receive another DocuSign. The issuer receives a transferable loan certificate, which can be resold to other lenders.

Forbes: Now let's talk about your recent financing. What do you think is the difference between BTC-centric companies raising funds from investors and companies raising funds through token issuance?

Back: I believe the market has undergone a transformation. Trammell Venture Partners, a venture capital firm, released an annual report that examined investment in the encryption market and the allocation of BTC funds related to other blockchain projects. Due to tokenization, venture capital firms previously heavily favored other networks and did not need to create successful products that met market demand. As long as there was liquidity, they could sell tokens. However, this situation has changed somewhat in the past year.

I also think the AltCoin market is saturated. There used to be 20,000 types of AltCoins, but now there are over 3 million, including memecoins. Another phenomenon I see is people's interest in Bitcoin Layer 2 rising. We are the oldest and largest company in this field. We also provide hardware and software Wallets for consumers, while conducting research and development in privacy technology, etc.

For us, now is a good time to expand this business. On Liquid, there is also a way to handle securities in a proper licensed manner. Several different companies are doing this, one of which is Stockr, a securities fund management company based in Luxembourg. We did something similar in 2021. One was the BTCMining note. We had a Mining Farm where we hosted many large company Mining Rigs, such as Fidelity's Mining Rig, and we garnered a lot of interest from retail investors. There are even MicroStrategy (MSTR) stocks on Liquid now. You can trade it, and it has some interesting advantages compared to trading on Interactive Brokers. For example, it can be traded 24/7.

Another unique aspect of our financing is that a large portion of the funds paid by the lead investor is actually in BTC, and we will hold onto these BTC. We did this as early as our seed round in 2021, when we raised $21 million. In a way, we are like the earliest MicroStrategy, as we have BTC on our balance sheet. Of course, now many BTC startups have also done similar things, but we have been around longer than most companies, since 2014.

**Forbes: What is the biggest risk facing BTC or Blockstream?

Back: I believe many of the initial risks associated with BTC have subsided. Our initial focus was on whether a major country or economic zone (such as Europe, China, or the United States) would ban BTC, which was highly uncertain. This created a lot of perceived regulatory risks. However, I think BTC is now well-guided. The ETF issuance means that Financial Institutions are interested in expanding and keeping these products on the market. So, I believe banks or Financial Institution lobbying groups now want to do this. And you also have other allies, with some sovereign wealth funds and countries buying BTC or BTC-related products and tools in the early stages. So, I think many risks have subsided. Additionally, many technical risks have also subsided. Of course, the scalability of blockchain remains challenging, with room for innovation and improvement on how to achieve this. The Lighting Network is very reliable for point-of-sale and peer-to-peer payments, but there is still room for improvement.