S9 E8: Kenichi Kurimoto & Hitomi Moriyama on Nayuta, Bitcoin & Lightning

When we talk about Bitcoin, our perspective is mostly American-centric – with some exceptions of events taking place in Europe. And yet other parts of the world are equally significant in terms of both development and adoption.

Nayuta is the perfect example of a Bitcoin and Lightning company whose contributions often get overlooked. I’ve been covering their contributions to the space since April 2019, when the news broke about Ptarmigan – a Lightning client so light and accessible that it can run on a low-powered and affordable Raspberry Pi Zero.

Later in the year, when the Japanese company launched a hybrid full node-SPV bitcoin wallet, I wrote an article for Bitcoin Magazine to explain why this is a big deal for sovereignty on the go (eventually, Nasdaq also published the piece).

And when Nayuta Core entered the testing phase in 2020, I’ve joined the project’s Telegram group to better understand how the wallet works and what it’s all about (unfortunately, my HTC Exodus 1s Android phone wasn’t of much help). I’ve also paid attention to their announcements about Nayuta Core, as I’m pretty psyched about the idea of having a fourth big Lightning Network development team to compete with Lightning Labs, Blockstream, and ACINQ.

Naturally, after having observed the work of Nayuta for longer than two years, I was happy to finally interview the company’s CEO Kenichi Kurimoto and the marketing and public relations representative Hitomi Moriyama. We spoke about their backgrounds, how they got involved into Bitcoin, what made them stick around, what Nayuta is trying to accomplish in the space, and what Bitcoin adoption looks like in Japan.

This hour-long interview marks the first double interview in the history of the Bitcoin Takeover podcast and, depending on how you count, may also be the 100th episode (whether or not we count the bonus content is another debate for another day).

Listen to Kenichi Kurimoto and Hitomi Moriyama on Apple Podcasts & Spotify!

I’m not a fan of these big tech streaming companies, but they are pretty convenient for listening on the go. However, if you are privacy-cautious, there is a better alternative: my free player that you can open in your browser. Not only that I don’t track you (though your download gets registered in my statistics), but you can also use the free Tor browser or a VPN service to listen without revealing your real IP address.

Furthermore, the free player linked above allows you to download the episode for online listening. This means that you get to dust off your old iPod Shuffle or Zune and enjoy learning about Nayuta while boarding an airplane, working out at the gym, driving home in your older non-internet connected car, or doing a short hike.

However, if you do use Apple Podcasts or Spotify then you would really help me if you subscribed and left feedback. You will receive notifications whenever new episodes get launched, and you also help me beat the nasty discovery algorithms. It’s an uphill battle in which the rules constantly change and censorship can always happen (which is why I self-host all the content on a private server).

Also, if you’re into Podcasting 2.0 then you’ll also find this episode on Sphinx, Podcast Index, and Breez wallet. Learn more about it from this article.

This episode is sponsored by Vaultoro & Wasabi Wallet

Joshua from Vaultoro is a big fan of the show and I’m happy that he sees potential in my work and supports it without caring about numbers and growth statistics. So I must thank him for his generosity and invite you to check out Vaultoro – the exchange where you can trade with honest money (bitcoin, gold, and silver). 

None of this is financial advice from me, but I’m pretty sure that the shiny rock is a better store of value than any fiat currency or “stablecoin”, so maybe it would be wise to use this commodity to preserve your purchasing power during bear markets and get back into bitcoin as soon as you’re convinced that the downwards movement are over. You can also have the gold bars delivered to your house… because you know, if it’s not in your safe then it’s stored somewhere in Switzerland where you can’t touch it whenever you please. For more information, check out Vaultoro’s website.

Also, Joshua from Vaultoro is sponsoring a Lightning Network faucet – he hopes that Bitcoin’s second layer will one day become potent and popular enough to replace the smart contract and tokenization features of Ethereum. And he also supported Giacomo Zucco’s layer 3 RGB Spectrum experimentation from 2019. So if you’d like to get 10 bits/100 sats on the Lightning Network, you’re gonna have to listen to the latest Bitcoin Takeover Radio broadcast and be the first to figure out the secret.

And if you would like to increase your network-level and transaction privacy, you should download Wasabi Wallet on your computer. It routes your connection through the Tor network to hide your IP, it downloads block filters so you validate your own transactions locally without appealing to a trusted third party, and it also connects to your own full node to boost your financial sovereignty. Extra features include advanced hardware wallet integrations, easy UTXO management, address reuse prevention, and even a lurker wife mode.

Wasabi is best known for its link-breaking CoinJoins, which are giving a hard time even to the EuroPol. Use the wallet to increase your financial sovereignty, but don’t do any illegal stuff – use your financial sovereignty with responsibility (also read the Wasabi terms of service).

Interview time stamps:

03:24 – Why did Kenichi Kurimoto join the Bitcoin space and what were his philosophical considerations?

07:44 – Why did Hitomi Moriyama stick around the Bitcoin space and what does she like about it so much?

09:20 – What is Nayuta and what does it try to accomplish?

13:00 – What happened to Nayuta’s Ptarmigan implementation of the Lightning Network?

17:50 – What is Kenichi Kurimoto’s take on decentralization and the importance of running nodes?

21:20 – Hitomi Moriyama and running Bitcoin nodes

24:45 – Why run a node and what are the recommended hardware/software configurations?

26:45 – The power draw of a Raspberry Pi node

27:26 – How can the Lightning Network improve?

33:06 – Bitcoin Layer 3 applications

36:29 – Bitcoin in Japan

41:25 – What is Nayuta working on these days and how can open source developers contribute?

44:18 – What will Bitcoin look like 10 years from now? Will Bitcoin scale? Will more people run full nodes?

46:10 – Lawrence Nahum’s ABCore, the mobile full node

48:40 – Mining from home

Transcript:

Why did you personally join the Bitcoin space? Were the reasons philosophical to some extent?

Kenichi Kurimoto: When I first learned about Bitcoin, I was an engineer, and I’m interested in the algorithm that enables the P2P value exchange technology. My first impression of bitcoin is bottom-up manner P2P money. After that, I gradually understood that bitcoin is consisted not only of technology but also of community management with some distinctive culture. As to achieve Decentralization, many people put in a lot of energy. 

 Before I start to learn Bitcoin thoroughly, I have the experience to develop a bottom-up type distributed seismometer. In 2011, there was a massive earthquake in Japan.

After the earthquake, there were numerous aftershocks. Me and my friends, who is an associate professor specializing in earthquakes, have the project of the distributed seismometer. In that project, we developed a less accurate but cheap small seismometer using a second-hand smartphone and were trying to deploy it in high density. Once we complete the installation of seismometers, we can understand the nature of earthquakes and the properties of the ground, and earthquake research would be advanced. But, the project didn’t proceed well. There are many problems for a bottom-up type project. Who prepares the budget for the bottom-up project? What is the incentive to deploy the distributed seismometer? And so on.

A few years after that project failed, I saw the article about Bitcoin. I wonder that why bitcoin spreading autonomously while my project didn’t work out. I started to serious study. Through the study, I feel that the combination of IoT and public blockchain is a huge thing. It can create an incentive to spread distributed sensors. It can free the identity from the domination of Big IT companies. And we can create a public data market where large companies have no control over it.

Unlike many Bitcoiners, I started my research with Ethereum first in 2014. I translated the Ethereum whitepaper into Japanese and made a simple smart contract with it. At that time, I think that the world state was beneficial to develop the application. After six months of study, I feel that Ethereum was difficult to be used in Production, and I start to study Bitcoin seriously. The more I learned about Bitcoin, the more I understood the importance of Decentralization and the beauty of Bitcoin’s architecture.

Bitcoin is the most secure and solid public blockchain, and it has a significant meaning for society. I believe that it will be applied to community-based activities and cross-border activities as a protocol for value exchange with a bottom-up nature.

Hitomi Moriyama: I got into this world by accident. It was just a coincidence that the company I got the job with was developing Lightning Network. So let’s talk about why I’ve remained in this industry. We can measure the quality of a society in terms of what individuals are actually able to do and be.

This means that freedom of choice and the ability to carry it out are essential in a prosperous society. With Bitcoin and public blockchains, everyone has free access to the network, right? It looks to me as if we are handing individuals a tool to expand their freedom of choice. A trustless currency is innovative. The philosophy behind it has an impact on the way people think and on social structure. It gives people the freedom of money and good quality of life.

Everyone knows about LND, fewer people know about ACINQ and c-lightning, and there’s an even smaller subset of people who are aware of Nayuta’s existence. What is Nayuta and what does it try to accomplish?

Kenichi Kurimoto: These three teams create Lightning Network protocol from scratch, so many bitcoin developers naturally respect them. Of course, we also have respect for them. Nayuta joined the development of the protocol itself, and it was enjoyable. We have a hacker culture, so we love the development of the open-source project.

Nayuta believes that Lightning Network is the basis of the next-gen internet. In my mind, LN is a protocol that has a position above TCP/IP in the OSI reference model.

Currently, everybody says that internet is broken. A handful of companies have control over information and identity. To regain the concept of the internet, I believe that self-sovereign privacy preserved micropayment public protocol is the critical technology. If we can exchange personal data to small value by the person’s own decision, We can fix the internet.

Many people say that public blockchain can fix the internet. But, few real blockchain applications achieve self-sovereignty and privacy. There still exists technology gap between protocol and such application. We need technology to bridge that gap.

We are building that kind of technology. We develop not only the protocol layer but also the application and application development environment. 

Hitomi Moriyama: Nayuta is a team well versed in Lightning Network development. We have made many attempts to adapt to society. We are currently working on a unique Lightning mobile wallet, which we plan to launch soon.

In the past, we’ve experimented with using the Lightning Network to pay for electric car charging with a major utility company, created Ptarmigan, an implementation of BOLT, and temporarily introduced Lightning payments in a bar. What Nayuta is trying to achieve is going to be best described by him, I guess.

What happened to Nayuta’s Ptarmigan implementation, which aimed to get the Lightning Network to work on devices as low-powered as a Raspberry Pi Zero?

Kenichi Kurimoto: As I mentioned before, we think Lightning Network is the basis of the next-generation internet. Because we were an IoT development team, we selected IoT for application for such technology. In IoT applications, the number of nodes is enormous, so the low-cost node is critical. We develop a small implementation of the Lightning Network node, Ptarmigan. It works on Raspberry Pi Zero. It is not high performance, but it can work with small memory and a small board. We also build an IoT prototyping board.

After we release Ptarmigan mainnet version, we had many meetings with large Japanese companies. IoT needs a large budget because it requires a large number of node hardware. We must talk to a large company.

At that time, Lightning Network is a brand new technology, and it was hard for large-company managers to understand. Japanese large company also concern about regulation. The regulation of Bitcoin is still not clear. After much discussion, we think that it was still too early to do business using Lightning network technology for IoT. We changed our strategy. Keeping the vision of Lightning Network technology and IoT, we change the target to the software-only field. Because Lightning Network is the basis of the internet, there is a lot of potential application.

We suspend the development of Ptarmigan because we can easily use other open-source node software when we develop the software-only product.

I think that the development of Ptarmigan is a good experience for us.

We can understand the logic of the protocol from the BOLT specification document. 

But, for the comprehensive understanding of protocol, we should understand not only the logic part of the protocol but also the concurrent behavior of the protocol. Developing our own node is the easiest way for us to comprehend the concurrent behavior of Lightning Network protocol because we are hackers.

When plan of IoT with Lightning Network becomes a reality, we will restart development.

To achieve our vision and propose the environment for the application of the next-gen internet, we must be familiar with the protocol itself, middle layer, and application layer. 

Our experience of developing our own node is really useful for it.

Hitomi Moriyama: This question’s going to be also best described by him, I guess.

One of the reasons why I love the Bitcoin project is that it didn’t compromise on decentralization and today every participant can store and validate the entire history of transactions. What is your view on the situation of running nodes?

Kenichi Kurimoto: I agree that Bitcoin is different from other blockchains about the seriousness of decentralization. Bitcoin is putting a lot of energy into pursuing decentralization and trustless with such a simple architecture, and I don’t think that other public blockchain with a more complex architecture will be able to achieve it.

On the other hand, when handling tokens that have an issuer, the issuer is already trusted at first, and in many applications, I feel that enterprise blockchains that can eliminate the fee are easier to use than public chains. Furthermore, I believe that non-blockchain methods may be more cost-effective.

Bitcoin has two distinctive decentralized characteristics. One is the value generation part. Another is P2P value transfer part without strong intermediary.

The combination of these two elements is the key to the success of the project.

If people want to use the former characteristic, the custodial solution is enough.

If people want to use a combination of such characteristics, a decentralized solution is needed. Full node gives us the security of a decentralized world, so it is very good to run full node.

On the other hand, custodial solutions give users an easy user experience. The custodial solution has the meaning to increase bitcoin users. The relationship between custodial and non-custodial including full node is a trade-off between security and user experience.

But, I want to say again,  we had better run full node to use the full power of Bitcoin.

The 1st version of Nayuta Core has a pruned full node on the mobile phone. But there were some difficulties combination of lnd and pruned full node at that time. We selected intermediated way. The current version of Nayuta Core does not have a full node option because we are concentrating on non-custodial stream payment. But, I heard that the current version of lnd works with pruned full node, we are considering putting it on Nayuta Core option if market needs are strong.

Hitomi Moriyama: According to some statistics, the number of Bitcoin nodes hasn’t increased very much in 2-3 years. However, there is definitely a gradual increase in the number of people around me trying out nodes. This is the impression I get from Twitter and Telegram groups. Also, according to a Twitter poll conducted by a Japanese Bitcoiner, he has 35,000 followers, and 20% of 250 people, or 50 people, are operating Lightning nodes. The number of full Bitcoin node operators is probably a bit higher.

I mentioned earlier that the number of node operators is increasing around me. A couple of months ago, I filmed a video called How to run Bitcoin and Lightning node using Umbrel. It’s had about 7,000 views around the world. BTC Sessions has 46,000 views and about the same for the Mynode video. I’d say at least that many people are interested in trying to run nodes.

Why do you tell your friends and co-workers to run their own node and what kind of hardware and implementation do you recommend?

Kenichi Kurimoto: As I mentioned before, I think that running full node everyone is ideal decentralized world. That’s reason why I recommend running full node. I know that many people does not need to run full node now, but running full node experience is very good to understand Bitcoin. I don’t recommend any specific implementation,I believe that having choices is a good thing.

Hitomi Moriyama: I encourage my friends and colleagues to run a full node because I want them to be part of a genuine Bitcoin network. However, I can’t recommend it forcefully so far because of the cost of electricity and the effort to build and keep it. However, I want them to understand that only full nodes allow them to verify transactions in a P2P environment without servers and without the trust points anywhere. Also, I want them to be a part of the decentralization. 

In answer to the question “what kind of hardware and implementation do you recommend,” it depends on people’s preferences and skills.

How do you think that the Lightning Network can improve?

Kenichi Kurimoto: Anyone familiar with IT technology can send bitcoin instantly using Lightning Network. The transaction fee is minimal so that we can send a small value, which means that we can execute micropayment. Of course, Lightning Network has a Bitcoin nature so that we can make cross-border payments easily.

How about the people who are not familiar with IT technology?

I suppose that such people can not use a decentralized Lightning Network wallet. UX of Lightning Network is a little bit difficult for such people. The custodial Lightning wallet can help such people. But we should improve the UX of the Decentralized Lightning Network wallet. That is the point that Lightning Network can improve.

The other point where Lightning Network can improve is the following.

The number of transactions on Lightning Network is increasing already. No one can count the number of the whole transaction on Lightning Network, but, for example, the game on Nayuta Core shows over 8000 transactions on the 1-day event.

On the other hand, I think that increasing the number of users on the Lightning Network will need improvement possibly. 

I’m not sure, but I feel that Lightning Network is still early days, and the number of users will increase to 10million, 100million 1000million in the future.

No one knows how the network topology will grow at that time. I don’t know 1st layer can handle a large number of Opening and closing channel transactions easily at that time. I don’t know Lightning Network can handle many nodes advertise information effectively at that time.

I will not be surprised that the lightning network needs another improvement at that time.

Anyway, Lightning Network is a bottom-up style protocol, It is pretty challenging to think in advance about when the network will grow significantly in the future.

But, we already see the current Lightning Network handle many transaction safety.

I think that the community can solve any problem.

Hitomi Moriyama: I can only answer this question from the user’s point of view, but inbound capacity is still a big issue. If you are new to the Lightning Network wallet, you may be wondering why you can’t receive money. So I’m looking forward to seeing how dual-fund works in this respect.

What is your take on Layer 3 applications that are built on top of the Lightning Network?

Kenichi Kurimoto: I think that the definition of the Layer3 application is vague.  For example, some mobile games interact with Nayuta Core. Such application is centralized except the Lightning Network layer.

Even with that types of applications, development is really difficult for engineers who are not familiar with the protocol. 

For applications that can interact between users in a decentralized way, the challenge is discovering what types of applications will get mass adoption.

Currently, many people are trying the Lightning Application, and I think it’s only a matter of time to see mass adoption.

There is a technical gap between protocol and such applications, and we are trying to fill the gaps.

Hitomi Moriyama: Recently Coindesk published an article, “The Lightning Network Is Going to Change How You Think About Bitcoin.” It was an awe-inspiring article. The author picked up Self-Sovereign Identity, decentralized virtual private networks (VPNs), messaging platforms, or even streaming videos or DJs or podcasts as Layer 3 applications. If you mean Layer 3 applications are like that, I’m catching up with the information, so I can’t give you any opinion so far. 

How would you say that the understanding of Bitcoin is different in Japan, as opposed to the United States and the rest of the world? Why does Japan need Bitcoin?

Kenichi Kurimoto: In Japan, many ordinary people trade short-term. People who are not professional traders are trading cryptocurrency. Because that volume is so large, the industry has to make decisions based on the wishes of these people. Unfortunately, many people only care about the ups and downs of the price in Japan, and not enough people are willing to learn the essential value of Bitcoin.

Bitcoin has a tendency to become more valuable when there is a significant difference between the citizens’ morals and the government and authorities’ morals.

In this sense, Japan is a country of moderate affluence, and people highly trust the government compared to other countries globally, so bitcoin itself does not currently have much value except for domestic trade.

However, since the government is printing large amounts of Japanese yen much earlier than the U.S. government, Bitcoin may have value as an inflation hedge SoV in the future.

Basically, I believe that if Bitcoin get mass adoption, there will be a huge transfer of wealth from developed countries to developing countries, and I believe that the SDGs and the story of financial inclusion will have great significance. In this sense, I think Japan has a role to play.

Hitomi Moriyama: I don’t think Bitcoin essentials are well understood in Japan. Many Japanese think it’s a speculative tool. However, in my opinion, Bitcoin works as an SoV first shortly since the Japanese government has printed large amounts of Japanese yen.

What is Nayuta working on these days and how can other contribute to the projects?

Kenichi Kurimoto: Nayuta has two teams internally, and one is Lightning network related product development team, another one works for enterprise business. In the long future, I think Nayuta will merge these two development.

Nayuta Core is non-custodial Lightning Node and wallet software, and it enables non-custodial stream payment.  

Currently, we don’t have a community-based project. We develop Nayuta Core internally.

In the initial phase, Nayuta Core had the SPV/Full node hybrid mode. 

At that time, we trid to develop lightning node with bitcoind on mobile.

But there was some issue to work lnd with pruned full node, and we select hybrid mode. 

We didn’t see vital user needs for hybrid node, and we omit that mode. The current version of Nayuta Core works as a neutrino node.

I heard that lnd works with pruned full-node now. There is the possibility to develop a full-node option in the future.

If we start to develop full-node on a mobile project, there is a chance to have a community development style.

Hitomi Moriyama: This question’s going to be also best described by him, I guess.

How do you see Bitcoin 10 years from now and how easy/ affordable do you think it’s going to be to run a node?

Kenichi Kurimoto: Ten years from now, I imagine that many bitcoin and lightning transactions are executed in daily life. As I mentioned before, I believe lightning network will become the new basis of the internet. So there will be many lightning transactions in the background, and people do not aware of it. I believe that many IoT device works with Lightning Network.

I suppose that operating full-node become more effortless in the future.

There will be much innovation about full-node.　People may be running full nodes on used smartphones.

Hitomi Moriyama: I don’t know what it will look like in ten years. However, I’m hopeful that people will regularly use Bitcoin (of course over Lightning Network) as money. At the same time, I don’t think anyone knows what will happen. So, I’m very interested in how El Salvador will use and accept Bitcoin as legal tender in this sense. Also, I agree with Kenichi’s opinion. I’m hoping there will be many lightning transactions in the background as both money and Layer 3 applications, and people do not become aware of it.

The next question is, how easy/affordable do you think it’s going to be to run a node? I’m hoping that it’s possible to run a full node on mobile with one tap and for free. If bitcoin becomes mass-adopted and more people understand the importance of running a full node, we will see more people coming into the business. I hope that new solutions will be created.

Do you also see mining becoming more decentralized, with users running their own rigs from home?

Kenichi Kurimoto: About mining, honestly, I can not imagine that we achieve true decentralized individual mining. Of course, I want it, but I can not imagine now.

But, if bitcoin is used in many countries, people will execute mining in many countries.

There is a condition that the country must have cheap and abundant renewable energy, but I believe that there will be a force that prevents any one country from having a significant share.

Hitomi Moriyama: As for home mining rigs, I only know the situation in my surroundings, but I don’t feel that way. More and more people are running individual full nodes, but I don’t see any mining rigs. Some running full nodes are sensitive to the heat and noise that the RasPi makes. Since mining rigs are even worse, I think they are unbearable unless they operate them in a garage or something.

As a side note, one of the biggest media in Japan is currently sponsored by a famous exchange. They have started promoting mining services. “All you have to do is buy a mining machine and let us do the rest!