juraj on Nostr: Over at the bird app, Seth For Privacy asked why we don't all work on lightning and ...
Over at the bird app, Seth For Privacy (npub1tr4…2y5g) asked why we don't all work on lightning and play with ecash. I think this answer might be interesting for many:
1.) Not everyone wants to work on LN. One of the important parts of Bitcoin is people often do things just because they are fun or they don't were not done yet. This is the most important reason. Bitcoin is a decentralized movement and people play and tinker with various ideas.
2.) Both Fedi and especially Cashu are also improving lightning, they are tightly integrated. You can pay and receive lightning invoices without having a channel yourself. You can use a mint even to route lightning payments!
3.) They are both custodial, but it's decentralized forest of custodians. While custody might be dangerous in some jurisdictions, it is completely unregulated in others. So it's good that millions of custodians around the world can flourish in the future just by installing open source software and still have some nice properties:
- an uncle Jim custodian without sticking his nose into transactions, he does not know which nephew is more successful, does not know about balances
- in many jurisdictions, the need for license is only for entrepreneurs. If someone does not offer the service on an open market and does not collect fees, they don't need license for example. So you can provide the user experience of a custodial wallet, free transactions within the mint without being harassed for offering this service to your family
- especially Fedi can be part of scaling solution. Imagine one utxo costs 500$ to send. If 20 families have shares custody of the utxo for lightning, it's basically a channel factory. 25$ per family (10$ per person) is quite ok. And they have to only trust that more than half don't cheat. Which is very safe assumption in many communities. Other people would either pay 500$ or use custodians. Here, privacy is also preserved.
4.) you can do many things that you just can't do with lightning.
- Sender and receiver do not have to be online at the same time. So podcasters can have lightning address that sends them ecash notes over nostr as listeners stream and they can claim it over lightning as they become online. Or my toy project - sending SATs over LoRA long distance radio, allowing to store the notes on a propagation node using the Reticulum stack:
https://youtu.be/HAX8GFn5uCI?si=h4ohHX0ZtiTU1Xj_
- with some preparation, you can do safe completely offline transactions
- you can pay for API calls (age of AI, here we go) by just including an ecash note in request headers, there's no back and forth like with lightning
- the paying device (wallet) can be super dumb. It needs to be able to send strings and do very basic arithmetic (to pick the right notes). No digital signatures are needed, everything is presigned, so payment really is "here's a string"
5.) many things are easier. For example calle 👁️⚡👁️ (npub12rv…85vg) from Cashu project is working on dollar balances. Contrary to USDT on Tron, you can send it over lightning and it has ecash anonymity properties. There are many ways to do it and I hope more can be tried. You can have tokens based on conditions, which enables prediction markets, value stabilization, etc. All with tradeable and transferable balances (you basically create a pair of ecash notes, one or the other is valid based on a condition).
I have written a paper with Rene Pickardt on how to do this on lightning:
https://hackmd.io/@lpQxZaCeTG6OJZI3awxQPQ/LN-DLC
Then Get10101 (npub1c40…ttqy) implemented a similar idea in DLC channels. With ecash, a lot of complexity just disappears, because it is theoretically not limited to Bitcoin script
6.) we don't know what we'll need in the future. Betting on one solution is not a good idea. Given the tight integration with Lightning, it's only good we can experiment and we'll see what works in the future
7.) ecash tech was used in privacy tools. Not sure about Samourai, but Wasabi coordinator is basically a per coinjoin ecash mint, so the coordinator does not know the link between inputs and outputs. So tinkering with this tech is a good idea. Fedi can be used as a coinjoin in this way, but don't tell the feds!
1.) Not everyone wants to work on LN. One of the important parts of Bitcoin is people often do things just because they are fun or they don't were not done yet. This is the most important reason. Bitcoin is a decentralized movement and people play and tinker with various ideas.
2.) Both Fedi and especially Cashu are also improving lightning, they are tightly integrated. You can pay and receive lightning invoices without having a channel yourself. You can use a mint even to route lightning payments!
3.) They are both custodial, but it's decentralized forest of custodians. While custody might be dangerous in some jurisdictions, it is completely unregulated in others. So it's good that millions of custodians around the world can flourish in the future just by installing open source software and still have some nice properties:
- an uncle Jim custodian without sticking his nose into transactions, he does not know which nephew is more successful, does not know about balances
- in many jurisdictions, the need for license is only for entrepreneurs. If someone does not offer the service on an open market and does not collect fees, they don't need license for example. So you can provide the user experience of a custodial wallet, free transactions within the mint without being harassed for offering this service to your family
- especially Fedi can be part of scaling solution. Imagine one utxo costs 500$ to send. If 20 families have shares custody of the utxo for lightning, it's basically a channel factory. 25$ per family (10$ per person) is quite ok. And they have to only trust that more than half don't cheat. Which is very safe assumption in many communities. Other people would either pay 500$ or use custodians. Here, privacy is also preserved.
4.) you can do many things that you just can't do with lightning.
- Sender and receiver do not have to be online at the same time. So podcasters can have lightning address that sends them ecash notes over nostr as listeners stream and they can claim it over lightning as they become online. Or my toy project - sending SATs over LoRA long distance radio, allowing to store the notes on a propagation node using the Reticulum stack:
https://youtu.be/HAX8GFn5uCI?si=h4ohHX0ZtiTU1Xj_
- with some preparation, you can do safe completely offline transactions
- you can pay for API calls (age of AI, here we go) by just including an ecash note in request headers, there's no back and forth like with lightning
- the paying device (wallet) can be super dumb. It needs to be able to send strings and do very basic arithmetic (to pick the right notes). No digital signatures are needed, everything is presigned, so payment really is "here's a string"
5.) many things are easier. For example calle 👁️⚡👁️ (npub12rv…85vg) from Cashu project is working on dollar balances. Contrary to USDT on Tron, you can send it over lightning and it has ecash anonymity properties. There are many ways to do it and I hope more can be tried. You can have tokens based on conditions, which enables prediction markets, value stabilization, etc. All with tradeable and transferable balances (you basically create a pair of ecash notes, one or the other is valid based on a condition).
I have written a paper with Rene Pickardt on how to do this on lightning:
https://hackmd.io/@lpQxZaCeTG6OJZI3awxQPQ/LN-DLC
Then Get10101 (npub1c40…ttqy) implemented a similar idea in DLC channels. With ecash, a lot of complexity just disappears, because it is theoretically not limited to Bitcoin script
6.) we don't know what we'll need in the future. Betting on one solution is not a good idea. Given the tight integration with Lightning, it's only good we can experiment and we'll see what works in the future
7.) ecash tech was used in privacy tools. Not sure about Samourai, but Wasabi coordinator is basically a per coinjoin ecash mint, so the coordinator does not know the link between inputs and outputs. So tinkering with this tech is a good idea. Fedi can be used as a coinjoin in this way, but don't tell the feds!