Secure Private Messaging and The Future of Global Payments

Hey everyone, welcome to this episode of the Optimism Show. We have— today we have Shane Mac, the founder of XMTP, and as you might have heard, the largest decentralized messaging protocol. Welcome, Shane.

Hey Chris, it's great to be here. Thanks for having me.

It's an absolute pleasure having you here today. And I know, like, actually have some amazing and exciting things that you're working on XMTP recently. So would love to hear from your side, before we get into the actual details and breaking down some things that you're working on, like, what are you most excited to be working on in XMTP right now? And the most recent developments in general?

Yeah, it's a great question. You know, to start, XMTP is an open and secure messaging network, and I think one of the most exciting things we're working on right now, we just got our testnet launched, and so now we have nodes running around the world, and it feels like people are starting to realize why a decentralized and secure messaging network is needed in the world when we see centralization starting to break down. And so all of a sudden when an app gets banned in Iran or Discord gets banned in Turkey, or the UK changes the laws around privacy to our iMessage, we're starting to see these little signs all over the world where the ability to protect our privacy and be able to ensure that we can have private communication with anyone in the world and not be at the, um, like the, the decision of any country, any company, or any founder changing the rules on how they feel about encryption and privacy. Uh, it's starting to be clear why decentralization matters and why encryption is not enough for this next phase of privacy and security and the internet. Uh, and really why decentralization and the ability to know that there are nodes and servers basically running around the world, and there's no country where more than, say, 50% of the servers run. So if the kind of country ever changes the laws around encryption or privacy, the network itself can still run and never actually be at risk of shutting down and is fully censorship resistant. So I think it's just a really cool moment where we've been working on this for years. And we're starting to see signs that the next layer of the internet needs to be decentralized. And so for me, getting XMTP testnet nodes launched around the world, the partners that are running the network are so excited to be running it and driving towards mainnet is just an incredible kind of feat and group effort from the community to the team, to the partners, to the node operators. And I think we're starting to see from a global kind of macro perspective why it really matters.

Yeah, I mean, practically having this decentralized protocol could really change up how things are done in general when it comes to the messaging, the messaging landscape, and especially after the, the recent developments with what happened with Telegram and what is going on with the other messaging apps. I'm really curious, like, when it comes especially to the privacy, security, and regulations, and now that you have deployed this, uh, this Node network, what, what happens if, for example, regulators demand backdoors of XMTP? Like, I would love, uh, I would love for, like, the, the general, more mainstream audience to understand the power of, uh, decentralization in, in that sense of the word. And why it's, uh, like why XMTP is practically superior to the current centralized messaging apps we have out there.

For sure. And I think it's important to be clear that we are actually wanting to create an environment where it's easier and better to work with regulators around the world. And the way you do that is you separate out the application layer from the protocol layer. Today, the app, say WhatsApp, also runs their own servers. Same with Apple, same with Telegram. And those are all different for, is the founder in control of that server, like Telegram? Is it a company like Apple, et cetera? And even if their best intentions are protect our privacy, when you run the server that also runs the app, and I as a user have to use your device, your app, your identity, your encryption, and your servers, If the law changes or you are forced to do something, you have to do it. I think what we're trying to do is create an environment by which builders and developers and app developers can work closer with the actual regulators and the local laws to build whatever is legal in their general locale. So an example is this: XMTP is a network. Has no backdoor. There is no key to the network. The way that it works is your private key of the user is the only thing that can get the messages out for your private key, and that is your decryption key to get your messages and decrypt them. But it's not based on the application. Today I always say whoever owns the encryption key actually owns the entire door. And so if you don't own the, If you don't know how you decrypt your messages, the application owns your decryption key. And if you can only use one app to decrypt your messages, then by the way, you're locked into that app and someone else owns the key. And if someone else owns the key, who knows who they're giving it to. In this world, you own the key. And because there's multiple apps built on XMTP, if you don't trust an app, you can take that key and go to a different app and all your messages show up. And that ownership and control is the thing that is different, because you need world-class encryption. We actually work with MLS, which is an IETF standard, um, and Apple just adopted it with RCS, and there's other major, major projects adopting MLS globally. And we're one of the first decentralized versions of MLS. And what decentralization brings is user control and ownership back to The end user to us to be able to own and control our communication like we can own and control our money. And what's really happening is then say we build an app in the United States, we need to adhere to United States laws. But if that app gets shut down, say in France, well, because the network is an open network that any builder and developer can plug into around the world, someone can build an app for France. That adheres to their local laws. And all of a sudden what you have is local apps, global network. And so the ability for builders and developers to build applications all over the world and still be connected at a global network with best-in-class privacy and security and encryption on the XMTP network, but the ability for the app developers and builders to work closer with regulators, follow the laws better, and if they get shut down in France for whatever reason, another developer can pop up, work closer with them, and actually plug back into the XMTV network. And because I own my decryption key, I can just go to that new application and all my messages show up. Today, if you're in WhatsApp and WhatsApp gets shut down, you can't go to iMessage or Telegram or Signal and have any messages pop up. That's the problem. And so I think you have to separate out the app layer from the protocol layer. The protocol itself, I don't have a key. There's no backdoor to the whole thing. So there's just technically no way in. The only thing it does is takes a user's decryption key to get your messages out of the network. And that's the only thing that the network's doing as a global transport layer. And then the application layer, you need to adhere to your local laws. You need to adhere to the regulations of where you're building. And I think it's going to allow for this huge boom of application developers to be able to plug into a global network, uh, and all work together in a seamless way where the users also have control.

Also, also, from what I, from what I understand from that, it, uh, like XMTP in general, by being so open, it also provides use cases to developers that have not been previously available in any way shape or form. And really curious on that, like, actually two-sided question. First, I'd love to hear, like, what are some unique use cases or some awesome projects that are currently either utilizing XMTP, or you've seen, like, just use XMTP as an ex— in an experimental form to create something that we have not seen out there. And my second question, which is more towards, like, mainstream adoption, is practically, what are your thoughts on users right now? Because everyone has kind of, like a lot of people, I wouldn't say everyone, but like a lot of people have kind of accepted the fact that they are giving up their privacy to these giant companies or to these centralized companies to get that ease of use. Of their apps. So what is either XMTP doing to challenge that or to circumnavigate that? Or maybe even what are some completely different perspectives that I might not be considering in that regard?

There's a few questions there. So the first one around messaging on XMTP being more open for builders, I think this is one of the most important things that is completely different. Messaging has been closed for the last 15 years. As a builder and developer, I can't go build on top of iMessage. I can't go build on top of WhatsApp. Group messaging are little group economies. I always say XMTP is a messaging economy, not just a messaging network. And that actually is the biggest opportunity for builders everywhere in the world because messaging has been closed by these big companies. It's never been opened up. It's killed all innovation. And builders haven't been able to do anything on top of the single most used use case in the world, in, in the whole world. iMessage, WhatsApp, all these messaging apps are where we all spend our days all the time. And those groups and those conversations are gold. There are so many use cases that I would love to plug an agent into. Now with the AI boom, how can I plug an agent into a group conversation? How can I have a group of 10 friends actually having fun. So, you know, I bet I'd win tonight in a pickleball match, you know, Chris versus Shane, $10. Everyone in the group can then just vote on the thing. It resolves at the end and everyone has a fun little prediction market that's a friendly wager. We should be able to do that. I watch people play DraftKings here in the United States and one person's sending Venmo requests, they're group chatting on iMessage, then they're coming back to the DraftKings app and then he is trying to ask people for money and he's doing a parlay and one person's the person that made the account on that can all come into just a conversation with friends. And you're bringing together secure group messaging with secure global money. And what's changing here, and I think the most powerful use case, which you asked, is actually the ability to now send money to anyone in the world instantly for free across borders with the same key as which you're having a conversation. And bringing that all together is what WhatsApp can't do, it's what Telegram can't do, it's what iMessage can't do. I can't even pay someone in Canada on Venmo or Apple Pay, right? You can't even cross that. But communication is global, group chats are global, WhatsApp is the largest app in the world because of that. But global money was never built in native. Now we had— have a global native financial rail on top of global secure messaging in the same app and same protocol now, which is XMTP. And I think that for developers and builders to have an open platform to go build agents for money, for games, for sports, for anything— hell, an HOA. I watch these people manage, you know, they have 10 homes on a block and they're all in a group chat. They're trying to have a shared treasury. They're trying to pay each other or trying to keep track of There's so many use cases now that groups are open. And the thing is, you can't be shut off. You know, this week, 3 developers sent me screenshots of their Telegram account getting frozen because they're kind of competing with Telegram's business model. You're just building on top of quicksand. So WhatsApp's not open. iMessage isn't open. Telegram acts like they're open, but it's controlled by one single founder who can just cut you off and freeze your account. So we need a new foundation for builders and developers to be able to combine global secure messaging with global money into what I think is the largest messaging economy. And every single group chat is like a micro economy. And that ability to now have that surface area to build is the largest, I think, builder and developer surface area in this next wave. And it also aligns perfectly to the agent and AI boom happening because now you have what everyone uses every day, messaging, with a new technology, AI, that also can access our money and allow us to do things we could never do before. It's not even about crypto, it's just about making amazing applications and do they make my life better? Oh, and are they easy to use with all the superpowers that come with it? And we are literally right on right on the cusp of a complete change here because I have apps on my phone right now. The new Coinbase app I'm using, uh, we're building an app called Convos, which is like a decentralized Signal. And what, what we did with XMTP is it's Passkey at the core now. And what this allows is you actually get the most privacy and security and a better UX that's ease of use. And so I'm logging into an app, creating an account, and all I do is Face ID, Passkey. I have an app that literally has signal-level security, but it's not tied to my phone number, a username, a single global identifier. I don't have to log in with the two-factor auth of the phone number that can also be exploited. And all these messaging apps are built on the phone number is the login. Which is really a global identifier. And I think, you know, to create something that is simpler, better, and more secure is now here. And so from an ease of use and a consumer application and moving into the next era here, I think we are here. I have them on my phone and it's time to build because there's a whole new foundation that no one has to learn anything. About what, you know, owning your own identity means, what a passkey means, what a private key means, what a public key— none of that shit. Just nothing. It feels exactly like the old internet, except it comes with the ownership and the powers of the new internet. And that's what we needed to do. It took us a fucking long time to get here. I'll say longer than I thought it would, but we're here. It is better and it is happening.

Thank you.