The following is a transcription of the above video, and The Market Online has edited it for clarity.
LQWD Technologies (TSXV:LQWD) is a Bitcoin Lightning Network liquidity service provider, and it also owns 115 bitcoin used on the network.
Joining us to explain all of the ins and outs of LQWD and its investment opportunity is CEO and director Shone Anstey.
TMO: Now, first for those still wrapping their heads around Bitcoin networks and the investment opportunity in this sector, what is the Bitcoin Lightning Network?
Anstey: Right, it’s a great question. The Bitcoin Lightning Network is the ultra-fast payment layer to Bitcoin itself. And so Bitcoin, we’ve all heard of it, it’s been around for 14 years and climbing. It works extremely well. It’s very secure. You can send billions of dollars around the world and in minutes.
Where the Lightning network comes in there, it allows you to send small payments in seconds. Although in the main network handles seven transactions a second, it’s relatively slow. The Lightning Network can handle millions of transactions per second and is going to be the effective payment layer for Bitcoin itself.
TMO: The Lightning Network continues to grow year over year with big names such as Michael Saylor, Jack Dorsey and Elon Musk all stating their interests in the network. What is LQWD’s participation in that growth?
Anstey: Right, so our participation in the network is as a liquidity service provider. So we operate what they call Bitcoin Lightning network nodes. We operate 18, 19 nodes all over the world in 18 countries.
And we actually connect all kinds of other node operators and ensure that payments can route across the world and get to where they want to go. And for doing so, we take a fee, we take a clip off of every transaction that passes through our part of the network that we control.
TMO: Now with 18 global nodes, you’ve achieved a record of more than 60,000 transactions each month in the past few months. What is driving this growth?
Anstey: Well, we’re seeing a lot more adoption of the Lightning Network and integration to exchanges and wallet providers. Coinbase recently announced the integration of Lightning Network as a form of depositing and withdrawing Bitcoin off of their network.
We’re seeing other exchanges take it and other wallet providers. So just the sheer growth of the network it has that Metcalfe’s Law written all over it where the network effect is growing extremely fast.
And our goal as a company is just to simply continue to operate, build, build, build very Silicon Valley model, and capture as much market share as we can on as many other routes we can, integrate with as many wallets as we can and let the network effect carry us up faster than anything possibly could. And that’s what we’re starting to see.
TMO: And where do you see the transaction fees going on the network?
Anstey: Well, the Lightning Network fees are considered very, very low initially, and they started to climb to become more normalized. And so we look at sort of the, the Bitcoin when it first came out, the fees were considered dust. You could buy coffee, it was a fraction of a penny.
And then they climbed to become more normalized to support the network as it is. So they went up 1,300% in the first two years, another 1,200% after that. And to what they are now on a non-congested network.
So we see the same thing happening for the Lightning Network, and it’s by our estimate based upon the previous model that the Lightning Network fees will end up being between 3% and 5%. (That’s) what a main chain Bitcoin network fee would be on a non-congested network.
So it’ll still be a few pennies, but it’ll be massive amounts of volume is what we’re predicting and forecasting for the Lightning Network.
TMO: All right. And aside from your global nodes, can you explain what it means that LQWD is a liquidity service provider?
Anstey: Yes, so a liquidity service provider in the space, think of it, we call it an LSP, so a Lightning Network service provider or a liquidity service provider. It’s kind of like an ISP back in the internet days, and it can get you on the internet.
So we work with wallet providers and other companies in the space like Breez Technologies out of Israel, who is a major player. We are a liquidity provider behind that. We recently announced Bitcoin Well connecting to them, and we have other, we look to have other partnerships announced before too long.
And what happens is they’re able to draw off of our network and off of our Bitcoin and our and connect to our routing nodes to ensure that their clients always have liquidity and always have the ability to route their transactions seamlessly. The clients don’t even know what happens. It happens all behind the scenes, and we get paid a fee and percentages of all those transactions.
So, we grow as all of our customers grow.
TMO: Recently you added a partner and Amboss Technologies and previously Breez Technology. How do business partnerships improve your bottom line, and where do you plan on having more partnerships in the future?
Anstey: Absolutely. Now Amboss is a great, they have a great marketplace for purchasing liquidity and we’re helping to anchor that. We see that as a good future for us as that continues to grow.
Breez Technology out of Israel is a fantastic player. They’re one of the key players in the space. We work very closely with them, and we connect to their backend. So they have what is called an SDK, that’s a software development kit off of their wallet. And they have all kinds of companies that are starting to integrate that software development kit.
Now, what happens behind the scenes is we are the LSP and their customers will be using our liquidity and they won’t even know it. So we’re very excited to see them have this robust growth curve, and we’re continuing to work with them as we build all this stuff out here.
TMO: And just out of curiosity, let’s just talk about your name, LQWD Technologies. And right in your name you’ve got the LQWD, which is your ticker symbol. Tell me a little bit about that.
Anstey: Sure. So we are a liquidity provider, and that’s the name we playfully call it LQWD. It’s very based off our time in San Francisco from, you know, part of my career. And we’re remodeled the company off that San Francisco model where we want to have a catchy name tied to our stock symbol, and it really represents what we do.
TMO: And finally, what are the key points for investors when looking at LQWD as an investment?
Anstey: Right. So we have a 13 million shares out, a very small float. We have no debt, no convertibles a million in cash, a very small burn, 115 Bitcoin on the balance sheet. And we have a model that’s starting to take off.
We earn and we generate revenue in Bitcoin. And we’ve made some key partnerships along the way there. So we feel we’re very well-positioned for the potential upswing coming in Bitcoin that we see a bull run coming and we’re going to continue to keep our public vehicle pristine and clean and very tight and keep our capital structure at the way it should be.
You can find LQWD Technologies on the TSXV under the symbol LQWD or head to its website at lqwdtech.com for more information.
Company shares were last trading at 64 cents.
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