But in an interview with CCN, Ardoino said his real passion is decentralization. To that end, his latest project has nothing to do with cryptocurrency or blockchains. Instead, Bitfinex and Tether have joined forces to create Holepunch: a suite of peer-to-peer (P2P) protocols inspired by BitTorrent.
Although Bitcoin was initially conceived as a P2P payment system, Ardoino argued that in most cases, BitTorrent provides a better model for decentralization.
Of course, that’s not to say he doesn’t appreciate blockchains can be powerful tools. On the contrary, Ardoino is an avid Bitcoiner and believes Bitcoin is the most secure value transfer network in the world.
But the Tether CEO has doubts about some applications of the technology, suggesting that many latter-day crypto projects have pushed the concept too far from its original purpose
“One of the reasons for building Holepunch was to demonstrate that blockchains are, for most, useless,” he remarked.
Beyond the limited context of digital asset transactions, Ardoino observed that decentralized networks don’t need a shared database and are usually better served by free-floating open protocols like BitTorrent.
After all, while blockchains bypass the powerful intermediaries that control traditional payment rails, can this really be called P2P when each transaction requires a network of computers to achieve consensus?
“People are misappropriating or misusing the concept of peer-to-peer,” Ardoino noted. “If you want to build something truly unstoppable,” he continued, “you cannot have a global shared state [and] you cannot have single points of failure.”
For all his talk of decentralization, Ardoino acknowledged that his employers are ultimately centralized entities. However, he said both Tether and Bitfinex have diverted some of their profits toward initiatives that benefit the wider crypto community:
“Of course, we are running a centralized exchange, we are running a centralized stablecoin. But the beauty of it is that with the revenues we generate by providing services in an old-fashioned way, we’re investing a lot of them in supporting Bitcoin projects.”
Such projects include RGB, a smart contract platform for the Bitcoin Lightning Network that Tether has thrown its weight behind. Meanwhile, Bitfinex has invested in Blockstream, a Bitcoin developer that is behind a range of open infrastructure projects.
For both companies, these investments won’t lead to immediate profits. Their value is less tangible, stemming from the benefits they provide to the entire ecosystem.
This focus on the bigger picture extends to Holepunch, which Ardoino said “goes in the same direction and philosophy as Bitcoin.”
The first Holepunch-based app is the P2P communication platform Keet . Thanks to a BitTorrent-style architecture, Keet doesn’t rely on centralized servers like Telegram or WhatsApp. But unlike blockchain-based dApps, it doesn’t depend on external validators for security either.
To build Keet, Holepunch gave itself a headstart, and the protocol’s open-source debut is scheduled for February 2024.
According to Ardoino, this delay is intended to prevent the kind of free-for-all that has beset many Web3 projects. “Before you know [someone would] put a blockchain behind it and create another token,” even though doing so would “completely miss the point,” he emphasized.