Jul 21, 2021
The Interledger Foundation community is comprised of a multitude of diverse voices, from a wide range of backgrounds. From artists, to programmers, to financial inclusion advocates, we are proud to be part of a variety of interesting and important projects that impact the lives of millions the world over.
It took the hard work and dedication of many individuals to get us this far, and this blog will introduce you to one of the people integral in helping us reach this point. Stefan Thomas is the co-creator of the Interledger Protocol, the technology behind all the great work and accomplishments we’re seeing across our community. He is also Chairperson of the Interledger Foundation and Founder and CEO of Coil. Read on to learn more about his journey in creating the Interledger Protocol and his insights on the Foundation’s work.
Tell us a little about your background and what spurred you to create the Interledger Protocol. What problem did you see that you wanted to address?
Early in my web development career, I was working as a freelancer and kept running into problems with making and receiving payments across my group of subcontractors and clients. On the receiving end, I ran into issues when clients were late to pay me and my accounts were overdrawn. I actually lost my bank account and found myself unbanked for a period, before I could find a bank who would give me a second chance. If this could happen to me – someone who would not otherwise be considered underserved or underprivileged – it was easy to imagine how a large portion of the world is being negatively impacted by the status quo financial system. On the payments end, I often tell a story about a talented designer I worked with who was based in Pakistan. One day, the company we used to pay him decided to halt services in that country. Other payment options carried much higher fees, which meant this designer was no longer competitive and as a result lost out on work, all for reasons completely beyond his control.
That stuck with me. In 2010, I stumbled upon Bitcoin and was initially very excited by the technology. I started working on it full-time as an unpaid contributor / open-source developer and wrote my own Bitcoin implementation called BitcoinJS, which is still in use today (although I no longer manage it). In 2012, I joined “OpenCoin,” which later became Ripple Labs. At this point I started learning more about blockchain in general and began realizing that blockchains are difficult to improve because they are so tightly coupled – every change needs to be implemented by a huge number of stakeholders. My deep involvement in Bitcoin and Ripple gave me an appreciation for the strengths and weaknesses of blockchain, including the difficulty in upgrading such systems to keep up with new technologies. This in large part influenced the decision NOT to make Interledger a blockchain. Instead, we looked to the internet for inspiration on how to create a massive global interoperability system that can still remain flexible and evolve as new technologies become available. And thus, Interledger was born - a protocol for routing packets of money just like the internet routes packets of data.
The main problem I saw that I wanted to address is that we have very little interoperability in payments. For example, losing your bank account (or not having one to begin with) is manageable if your mobile money wallet allows you to pay anyone, anywhere. But the reality is that many purchases still require a credit card, and you can only get a credit card with a bank account. This is where the friction starts to compound. The high cost in payments is also a factor of the lack of competition, which again is because of a lack of interoperability. Creating a competitor to a major credit card network isn’t feasible as it would require signing up a huge number of merchants around the world. By contrast, I can start my own internet provider with relative ease and give my customers access to every website worldwide. It’s not hard to see why those dynamics have dramatically driven down the cost of communication, and we think the same thing is possible for payments.
Why is Interledger Foundation’s mission of financial inclusion important to you?
This ties back to the first question. For the millions of people who have information access via the internet but lack payment access, it is like looking through a window but being unable to touch anything you see. For example, imagine having a business idea but being unable to launch it because you lack a bank account. This strikes me as an incredibly frustrating situation, especially because hurdles like this are fixable; they don’t need to exist. As we’ve gone further on the Interledger Foundation journey, it’s become increasingly obvious just how broad the Foundation’s impact could be and how much potential there is to help promote financial inclusion in different ways.
How will a universal payments network and web monetization build more equitable and creative opportunities for the web?
We're living in a world where platforms have become very large and powerful, but if we think back a bit to the days of Napster and BitTorrent, it looked like protocols were going to win. They showed incredible growth and were very popular for a while. And yet, they ultimately failed because there was no good way for artists to get paid. Instead, we saw the rise of centralized platforms, like Spotify and Netflix, which were able to charge fees and sell advertising space. Unfortunately, as these platforms grow and consolidate, they become insanely powerful, so there is a growing awareness that this simply will not work as a long-term solution. To be clear, I believe that platforms play an important role, but there’s always a need for more than one entity, more than one option for communicating and sharing online. It’s possible to create some powerful alternatives to big platforms with protocols that actually compensate artists, and I believe the Interledger Protocol has a significant role to play in making that happen.
What excites you most about the Interledger Foundation?
First of all, I’m very impressed with the Interledger Foundation’s staff and management. We have a great team of people in place who are really driving the Foundation in ways that the board could not have imagined. We originally envisioned it as a legal home for the Interledger trademark and other intellectual property, but it has already become so much more than that. Today, it's a venue for the Interledger community to get together, it is administrating the $100m Grant for the Web program, it's been a huge advocate for Interledger tech, and it has taken on an ambitious mission around financial inclusion. The Foundation has the flexibility to be doing good in the world by tackling problems with an Interledger Protocol mindset. If we're successful, Interledger will improve the experience people have with the financial system in general – which affects all of us. But it would especially help those who currently experience the highest amount of friction and cost, which tragically are the people who are least able to afford it. I think that is a worthwhile cause and one I'm personally very excited to work towards.
What can the Interledger Foundation achieve as an organization moving forward? What do you hope the Foundation will achieve?
I think the most important thing the Interledger Foundation can do is bring people together and play an integral role in building a community of trust, a place where people can work together to solve some of our tough financial inclusion challenges.
The Foundation also has a critical role to play in providing essential support functions for furthering the live Interledger network, such as keeping an official list of Interledger network participants, facilitating peering relationships, and hosting standards discussions. We obviously don't want the Foundation to become a single point of failure, but when I look at the growth of the internet, I think having organizations like IETF and ICANN that provide supporting functions has been crucial. I hope and expect to see great advancements in these areas as we continue to mature as a Foundation.
What other types of companies/organizations might benefit from joining the Interledger Foundation?
I think there are two broad categories of companies who should consider supporting the Foundation. The first group is anyone who wants to see the social and structural changes that the Interledger Foundation is trying to drive in the areas of payments and financial inclusion. The second group is comprised of those who use the Interledger Protocol and are dependent on it – applications that are built on it, platforms that are built on it, payment providers who are using it for their customers, etc. As the Foundation develops, we may even see two different branches start to emerge, one that’s more of a charitable organization working with the first group, and one that is an industry association focused on the second.
Finally, is there anything else you’d like to add?
I’d just like to say that I’m so grateful to all those in our wider community who are joining us on this journey. I've already invested a decade of my life into this project, whose success depends almost entirely on the support of others who believe in the same vision. Because of that, I'm humbled and thankful for everyone in the community who has contributed to the project. A contribution can be as simple as mentioning Interledger on social media - every little bit helps. And when I look at the grantees and others in the community starting companies and projects, I could not be more optimistic and excited about what’s next.