Introduction to CODE and Tanner Philp

CODE is a revolutionary payments app built on the Solana blockchain, designed to make peer-to-peer (P2P) transactions and micro-payments as simple and intuitive as using cash. In this podcast episode, we dive deep into the world of CODE with Tanner Philp, the company's COO. Tanner's journey into the crypto world began in 2013 when he was assigned to give a presentation on Bitcoin for a college finance course. This serendipitous event sparked his interest in cryptocurrency and led him down a path that would eventually culminate in the creation of CODE.

Tanner's background includes working at Kik messenger, where he and his team developed a payments product within the app as a proof of concept. This experience laid the groundwork for what would eventually become CODE. After selling Kik in 2019, Tanner and his team have been focused on developing CODE, aiming to create a user-friendly crypto payment solution that could be adopted by mainstream users.

The Unique Selling Point of CODE

CODE stands out in the crowded field of crypto payment apps due to its focus on simplicity and user experience. As Tanner explains:

"Very simply, CODE is a payments app. It takes down a little bit more of self-custodial. So anyone in the world can use it and anyone who uses it has full control of their money. But as you mentioned, we've worked very hard to make a simple user experience."

The app's design philosophy is centered around making crypto transactions as intuitive as using cash. This approach has led to the development of features like digital paper cash and cash links, which allow users to send and receive money with the same ease as handing over physical bills.

The Digital Paper Cash Experience

One of CODE's most innovative features is its digital paper cash system. This feature allows users to create digital representations of cash bills in various currencies. These digital bills can be "handed" to other users in person by simply showing the bill on one's phone screen and having the recipient "grab" it with their own device.

Tanner demonstrated this feature during the podcast, sending 20,000 Colombian pesos (approximately $10 USD) to the host. The transaction was completed almost instantly, showcasing the speed and simplicity of the CODE system.

Cash Links: Asynchronous Payments Made Easy

Recognizing that not all transactions occur in person, CODE has also developed a feature called cash links. This allows users to load money into a link and send it to others through any messaging platform. The recipient can then click the link and claim the money, even if they don't have the CODE app installed.

This feature addresses one of the main challenges in P2P crypto payments: the need for both parties to have the same app or wallet. With cash links, CODE has created a more flexible and accessible payment system that can work across different platforms and devices.

The Technology Behind CODE

CODE's seamless user experience is powered by sophisticated blockchain technology. Tanner revealed that CODE operates as a Layer 2 (L2) solution on top of the Solana blockchain. This L2 system guarantees instant, private, and free transactions for users.

The technical architecture of CODE includes several key components:

1. A time lock program: This on-chain Solana program guarantees the availability of funds for any wallet interacting with the contract.

2. A scheduler (sequencer): This component manages transaction processing and ensures that funds are instantly available to recipients.

3. A treasury pool: This holds signed transactions (like checks) that can be processed at a later time.

4. A splitter contract: This on-chain program splits incoming funds into different "buckets" for enhanced privacy.

This complex system allows CODE to provide a user experience that feels as simple and instant as cash transactions, while leveraging the security and transparency of blockchain technology.

Privacy Through Obfuscation

One of the unique aspects of CODE's technology is its approach to privacy. While not providing full anonymity, CODE uses a technique called "privacy through obfuscation" to make it difficult to trace individual transactions.

Tanner explains:

"So it effectively obfuscates all of these payments so effectively I could be paying you. And I was going to be paying Bob, and all of those sign checks sit in the treasury pool or sit with the sequencer, and then at a certain point it plays it all on chain, and it can play those out in sequence."

This approach provides a basic level of privacy for users, making it harder for outside observers to track payment patterns or determine user balances.

The Challenge of Crypto Adoption

Throughout the discussion, Tanner emphasized the challenges of achieving mainstream adoption for crypto payment solutions. He pointed out that many existing P2P payment solutions, like Venmo in the US or Interac e-Transfer in Canada, already work well for most users. This creates a significant hurdle for new crypto-based solutions, as they need to offer a compelling reason for users to switch.

Tanner argues that simply offering a crypto version of existing payment solutions is not enough:

"To be really blunt, you're not really solving a problem right now. In fact, you're probably creating more of a problem. A lot of people, pretty much everyone has ways that they do peer to peer transactions today."

This insight has driven CODE's strategy to focus not just on P2P payments, but also on enabling new types of transactions that weren't possible before, such as web-based micro-payments.

The Promise of Micro-Payments

CODE sees a significant opportunity in enabling micro-payments for web content and services. Traditional payment rails are not well-suited for small transactions due to high fees and processing costs. However, blockchain technology and CODE's L2 solution make it feasible to process very small payments efficiently.

Tanner outlines their vision for micro-payments:

"We have found there's this unique opportunity, we believe, in micro payments for the web. And we have a unique perspective on that given that we built consumer app that was used by hundreds of millions of people."

The team at CODE is developing a platform that will allow web developers to easily integrate micro-payment capabilities into their sites and apps. This could enable new business models for content creators, app developers, and online services.

The Role of KIN in CODE's Ecosystem

An interesting aspect of CODE's system is its use of the KIN cryptocurrency as its underlying token. While users see balances and make transactions in familiar fiat currencies, all transactions on CODE are actually processed using KIN.

Tanner explains the rationale behind this decision:

"We wanted to use one currency. We think that's important because it should be simple for a user. I shouldn't have to say, okay, I want to send 20,000 pesos of A, B or C. I just want to send 20,000 pesos."

The use of KIN as the underlying currency allows CODE to tap into the incentive alignment and community-building aspects of cryptocurrency, while still providing a user experience that feels familiar to those accustomed to fiat currencies.

The Debate: Floating Currencies vs. Stablecoins

In the cryptocurrency world, there's an ongoing debate about the merits of floating currencies (like Bitcoin or KIN) versus stablecoins (like USDC) for payment applications. Tanner offered an interesting perspective on this debate, arguing that floating currencies might actually have less friction for P2P experiences than stablecoins.

He explains:

"I actually think USDC has more friction for P2P experience than a floating currency, say Bitcoin or KIN or something like that. And the reason is you still have all the friction of having to take USDC and get it into dollars."

This viewpoint challenges the common assumption that stablecoins are always better for payments due to their price stability. Tanner argues that the speculative aspect of floating currencies can provide additional utility to users, potentially making them more attractive for P2P transactions.

Building on Solana: The Platform of Choice for Consumer Apps

Throughout the discussion, Tanner emphasized CODE's commitment to building on the Solana blockchain. He cited Solana's high speed and low transaction costs as key factors in this decision:

"Solana in our view is the best place to build consumer products."

The team at CODE has been working with Solana since its early days, even before the launch of the mainnet. This long-standing relationship and deep familiarity with the Solana ecosystem have allowed CODE to leverage the blockchain's capabilities effectively.

The Importance of User Experience in Crypto Adoption

One of the key themes throughout the discussion was the critical importance of user experience in driving crypto adoption. Tanner emphasized that for crypto solutions to gain mainstream traction, they need to be as simple and intuitive as the traditional financial tools people are used to.

He advised other builders in the space:

"Be absolutely maniacal about user experience. And that might mean, especially it applies to any industry, but I find especially in crypto, it's going to be challenging a lot of call it orthodox views on things and be ultra focused on what the user experiences."

This focus on user experience has led CODE to make some unconventional decisions, such as encouraging users to save their wallet recovery phrases to their phone's photo gallery, rather than insisting on more secure but less convenient methods.

The Future of CODE and Web-Based Micro-Payments

Looking to the future, Tanner outlined CODE's plans to launch a web-based micro-payments platform. This platform will allow web developers to easily integrate payment capabilities into their sites, enabling new business models and revenue streams.

Tanner explains:

"We have found there's this unique opportunity, we believe, in micro payments for the web. And we have a unique perspective on that given that we built consumer app that was used by hundreds of millions of people."

This micro-payments platform could potentially revolutionize how content is monetized on the web, allowing for more granular and flexible payment models than current subscription-based systems.

The Challenge of Building Consumer Crypto Products

Throughout the discussion, Tanner shared insights from his experience building consumer-facing crypto products. He emphasized the difficulty of creating products that can achieve mainstream adoption, noting that most attempts fail to gain traction.

Tanner argues that successful consumer crypto products need to enable entirely new behaviors, rather than simply replicating existing financial tools:

"So as crypto in general, we need to be honest with ourselves and look at, okay, what are the things that are not possible with any of the traditional financial rails?"

This perspective has shaped CODE's strategy, leading them to focus on enabling new types of transactions and interactions that weren't possible before blockchain technology.

The Role of Feedback in Product Development

One of the key lessons Tanner shared from his experience building CODE is the importance of continuous user feedback. He emphasized the need to not just collect superficial feedback, but to engage in deep conversations with users to uncover their true needs and pain points.

Tanner advises:

"Talk to users often. And I'm not talking about send someone a DM. But hey, what did you think of the experience and get three lines back? Like, have a live discussion and ask questions like, okay, what did you like about the product? What did you not like about the product?"

This commitment to in-depth user feedback has allowed CODE to continuously refine and improve their product, addressing real user needs rather than building based on assumptions.

The Vision of a Decentralized Financial Ecosystem

Throughout the discussion, Tanner painted a picture of a future where decentralized financial tools could enable new forms of economic activity and collaboration. He contrasted this vision with the current dominance of centralized "super apps" in some parts of the world.

Tanner argues:

"Crypto has enabled this fundamentally new business model in paradigm that we don't need a super app. We don't need to be competing for Mindshare of users because we can all have shared alignment through a common currency."

This vision of a decentralized ecosystem, where multiple apps and services can interoperate seamlessly, stands in contrast to the more centralized models that have dominated the tech industry in recent years.

The Importance of Solving Real Problems

One of the key insights Tanner shared was the need for crypto projects to focus on solving real, tangible problems for users. He critiqued the current state of the crypto industry, suggesting that many projects are building products that are interesting to other crypto enthusiasts but fail to address the needs of mainstream users.

Tanner observes:

"If we're being really honest with ourselves as an industry, it kind of feels like it's this big hackathon across the crypto industry that we're just building products for each other and telling each other how cool that is. But if we actually tried to take that to a mainstream consumer, they're not going to use it."

This perspective underscores the importance of building products that provide clear value to users outside of the crypto ecosystem.

The Challenge of Changing User Behavior

Throughout the discussion, Tanner emphasized the difficulty of getting users to change their existing behaviors. He pointed out that even when a new product offers improvements over existing solutions, the inertia of established habits can be a significant barrier to adoption.

Tanner explains:

"Anything that's incremental, or even a copy of something else is going to be very difficult to then get some type of adoption. So it needs to be some type of a net new behavior."

This insight has shaped CODE's strategy, leading them to focus on enabling entirely new types of transactions rather than simply trying to replicate existing payment systems.

The Potential of Blockchain for Permissionless Systems

One of the exciting possibilities Tanner discussed was the potential for blockchain technology to enable new types of permissionless systems. He cited examples like Helium and Hivemapper, which allow individuals to earn rewards by contributing to decentralized networks.

Tanner argues:

"Things like helium and hive mapper, I'm actually very bullish on because you would not be able to do a permissionless system where people could start earning by contributing physical work with traditional payment rails."

These types of systems showcase the unique capabilities of blockchain technology, enabling new forms of economic activity that weren't possible with traditional financial infrastructure.

The Evolution of CODE's Product Strategy

Throughout the discussion, Tanner outlined how CODE's product strategy has evolved over time. While they started with a focus on P2P payments, they've come to see this as just the first step in a broader vision.

Tanner explains:

"We started with P2P and that's what everyone so far has seen. And we think P2P in general, like peer to peer payments, powerful and important. But as a standalone use case, we don't think P2P on its own is going to create the breakout app in crypto."

This realization has led CODE to expand their focus to include web-based micro-payments and other potential use cases that leverage their underlying technology.

The Importance of Cross-Platform Compatibility

One of the interesting points Tanner raised was the importance of cross-platform compatibility in driving adoption of new technologies. He cited the example of Kik messenger, which gained popularity by enabling communication between different smartphone platforms at a time when this was not common.

Tanner recalls:

"At the time kick got really popular because if you're on blackberry or iPhone or Android, you couldn't communicate with each other through a messenger. You was all SMS or like at the time, BBM, everyone used blackberry from IBM. So kick was now the BBM experience, but across platforms."

This historical example underscores the potential for crypto payment solutions to gain traction by enabling seamless transactions across different platforms and ecosystems.

The Role of Regulation in Shaping the Crypto Landscape

While not a central focus of the discussion, Tanner did touch on the role of regulation in shaping the development of crypto payment solutions. He noted that traditional financial rails often come with significant regulatory hurdles, which can make it difficult to roll out global payment solutions.

Tanner observes:

"Traditional rails are just not going to allow you to traditional financial rails to be specific are not going to allow you to roll out any type of global payments. There's an unbelievable amount of red tape and even the structural components of how money moves is antiquated, slow and has a lot of failure points."

This regulatory landscape has been a key driver in the development of decentralized financial solutions like CODE.

The Potential for On-Chain Communication Protocols

An interesting possibility Tanner discussed was the potential for blockchain technology to enable new forms of communication protocols. He outlined CODE's work on an on-chain messaging system that could enable push notifications and direct communication between developers and users.

Tanner explains:

"We can now build a messaging protocol. That's all on chain. So the push notification system that we're building for micro payments, that's all an on chain permissionless messaging protocol."

This development showcases how blockchain technology can be leveraged not just for financial transactions, but also for other types of data exchange and communication.

The Importance of Simplicity in Crypto User Interfaces

Throughout the discussion, Tanner emphasized the importance of simplicity in designing user interfaces for crypto applications. He argued that many crypto projects make the mistake of using technical jargon or complex interfaces that alienate mainstream users.

Tanner advises:

"We just need to get really simple and say what, what's something that a billion people want to do that they can't do today? And how can we get new clean able that was crypto?"

This focus on simplicity and accessibility has been a key principle in the development of CODE's user interface.

The Challenge of Reliable In-App Crypto Purchases

One of the interesting challenges Tanner discussed was the difficulty of enabling reliable in-app purchases of cryptocurrency. He noted that traditional payment methods often have high failure rates when used to purchase crypto, due to issues with merchant codes and fraud prevention systems.

Tanner explains:

"Basically anyone who does card payments has very high failure rates and it's not their fault. It's just the merchant codes attached to crypto get denied all the time. So you're like 50, 50 shot someone's going to get a successful payment."

This challenge highlights the ongoing friction between traditional financial systems and the emerging crypto ecosystem.

The Potential for Decentralized Push Notification Systems

An intriguing possibility Tanner discussed was the potential for blockchain technology to enable decentralized push notification systems. He outlined how CODE's on-chain messaging protocol could allow web developers to send notifications directly to users' wallets.

Tanner explains:

"Web developers don't have a way to do push notifications today, because you come to a web property, you have no way to identify user. So you have no way to get a notification on their desktop. So your best bet is maybe to get someone's email. But if someone has ever paid you as a web developer on your web platform. Now you have a direct payment channel and then we can enable on chain messaging."

This development could potentially revolutionize how web developers interact with their users, enabling more direct and personalized communication.

The Importance of Challenging Orthodox Views in Crypto

Throughout the discussion, Tanner emphasized the importance of being willing to challenge established orthodoxies in the crypto space. He argued that many common practices in crypto development, while well-intentioned, can create unnecessary friction for mainstream users.

Tanner advises:

"Be ultra focused on what the user experiences. So for us, a prime example of that is in code when you create an account, we encourage you to save your access key, which is your 12 words to your photos. And for most of crypto, that would probably feel heretical, because everything is like, write this down on a piece of paper, save it in a safe place, and don't tell anyone where it is."

This willingness to challenge established norms in service of a better user experience has been a key principle in CODE's development.

The Potential for Blockchain to Enable New Business Models

Throughout the discussion, Tanner highlighted the potential for blockchain technology to enable entirely new business models. He argued that many developers and content creators are currently unable to monetize their work effectively due to the limitations of traditional payment systems.

Tanner observes:

"And there's a lot of developers that are not monetizing today, but you've given the opportunity to monetize your micro payments, they will."

This potential to enable new forms of monetization could have far-reaching implications for the digital economy, potentially reshaping how value is created and exchanged online.

Facts + Figures

• CODE is a payments app built on the Solana blockchain, focusing on simplifying P2P transactions and micro-payments.
• Tanner Philp, COO of CODE, entered the crypto world in 2013 after being assigned to give a presentation on Bitcoin for a college finance course.
• CODE operates as a Layer 2 (L2) solution on top of the Solana blockchain, guaranteeing instant, private, and free transactions for users.
• The average transaction size on Venmo is around $70 to $80, while in Canada, the average P2P transaction is about $155.
• CODE uses the KIN cryptocurrency as its underlying token, while presenting balances and transactions to users in familiar fiat currencies.
• CODE's digital paper cash feature allows users to create digital representations of cash bills in various currencies.
• The cash links feature enables users to send money asynchronously through any messaging platform.
• CODE's technology includes a time lock program, a scheduler (sequencer), a treasury pool, and a splitter contract to ensure smooth and private transactions.
• CODE is developing a web-based micro-payments platform that will allow charges from five to 100 cents.
• The team at CODE has been working with Solana since before the launch of its mainnet.
• Traditional payment methods often have high failure rates (around 50%) when used to purchase crypto due to issues with merchant codes.
• CODE is developing an on-chain messaging protocol that could enable push notifications and direct communication between developers and users.
• The CODE team emphasizes the importance of getting constant user feedback, with team members having live conversations with real users every week.

Questions Answered

What is CODE?

CODE is a payments app built on the Solana blockchain that focuses on simplifying peer-to-peer transactions and micro-payments. It operates as a Layer 2 solution on Solana, providing instant, private, and free transactions for users. The app features innovative tools like digital paper cash and cash links, which allow users to send and receive money as easily as handing over physical cash or sending a message.

How does CODE's digital paper cash feature work?

CODE's digital paper cash feature allows users to create digital representations of cash bills in various currencies. Users can "hand" these digital bills to others in person by showing the bill on their phone screen and having the recipient "grab" it with their own device. This process mimics the simplicity of handing over physical cash, making crypto transactions more intuitive for mainstream users.

What is the cash links feature in CODE?

The cash links feature in CODE allows users to load money into a link and send it to others through any messaging platform. The recipient can then click the link and claim the money, even if they don't have the CODE app installed. This feature addresses one of the main challenges in P2P crypto payments by enabling transactions across different platforms and devices without requiring both parties to have the same app or wallet.

How does CODE ensure transaction privacy?

CODE uses a technique called "privacy through obfuscation" to make it difficult to trace individual transactions. The system splits incoming funds into different "buckets" and processes multiple transactions together, effectively mixing them. While not providing full anonymity, this approach provides a basic level of privacy for users, making it harder for outside observers to track payment patterns or determine user balances.

What cryptocurrency does CODE use for transactions?

While CODE presents balances and transactions to users in familiar fiat currencies, all transactions on the platform are actually processed using the KIN cryptocurrency. This approach allows CODE to tap into the incentive alignment and community-building aspects of cryptocurrency, while still providing a user experience that feels familiar to those accustomed to fiat currencies.

What are CODE's plans for micro-payments?

CODE is developing a web-based micro-payments platform that will allow web developers to easily integrate payment capabilities into their sites. This platform will enable charges from five to 100 cents, potentially revolutionizing how content is monetized on the web. The team sees this as a unique opportunity to enable new business models for content creators, app developers, and online services.

Why did CODE choose to build on Solana?

CODE chose to build on the Solana blockchain due to its high speed and low transaction costs, which the team believes make it the best platform for building consumer products. The CODE team has been working with Solana since its early days, even before the launch of the mainnet, giving them deep familiarity with the Solana ecosystem and allowing them to leverage its capabilities effectively.

How does CODE approach user experience design?

CODE places a strong emphasis on user experience, often challenging orthodox views in the crypto space to make their product more accessible to mainstream users. For example, they encourage users to save their wallet recovery phrases to their phone's photo gallery, rather than insisting on more secure but less convenient methods. The team also conducts regular, in-depth user feedback sessions to continuously refine and improve their product.

What challenges does CODE face in achieving mainstream adoption?

One of the main challenges CODE faces is the need to provide a compelling reason for users to switch from existing P2P payment solutions that already work well for most people. Additionally, the team recognizes the difficulty of changing established user behaviors and the need to create entirely new use cases rather than simply replicating existing financial tools. They also face technical challenges, such as enabling reliable in-app purchases of cryptocurrency, which often have high failure rates due to issues with traditional payment systems.

How does CODE envision the future of decentralized finance?

CODE envisions a future where decentralized financial tools enable new forms of economic activity and collaboration. Rather than competing for user mindshare like traditional "super apps," they see a decentralized ecosystem where multiple apps and services can interoperate seamlessly, sharing alignment through a common currency. This vision includes the potential for blockchain technology to enable new types of permissionless systems, on-chain communication protocols, and novel business models that weren't possible with traditional financial infrastructure.