Tag: Lightning Speed

Lightning Speed 004: What’s The Lightning Development Initiative?

by NEWSBTC

There’s no denying that 2021 was the Lightning Network’s year. What does the future hold, though? If the objective is to onboard the next billion people, the network needs work and fine-tuning. To grab the bull by the horns, The Human Rights Foundation and Strike set up three 1 BTC bounties. 

The bounties will go to the first person or team to develop an anonymous Lightning tip jar, a tokenless way to peg BTC to dollars, or a privacy-focused wallet that supports some kind of Chaumian e-cash feature. In a Twitter Spaces conversation about the program, they named it The Lightning Development Initiative. 

A catchy name that we’ll use from now on to refer to all of this. This fourth edition of Lightning Speed is all about the future. Let’s explore the three ideas and the new information that we have about each of them.

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The Lightning Development Initiative In Twitter Spaces

Among the speakers were Strike’s Jack Mallers, The Human Rights Foundation’s Alex Gladstein, Bitcoin Magazine’s Christian Keroles AKA CK Snarks, and Tales From The Crypt’s Matt Odell. It took place December 29th and Bitcoin Magazine hosted it. A Twitter user named Gigi summarized it for us.

Bounty #1: An Anonymous Tip Jar

In our sister site Bitcoinist’s report, they described the challenge as follows:

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“Can you create a Lightning tip jar that doesn’t reveal any information about the parties involved? That’s the first task. How to receive completely anonymous donations. According to Bitcoin Mag, the “goal is to enable anyone to use free and open-source software (FOSS) to print a QR code that can be used for receiving Lightning payments privately. Importantly, “The QR code should not reveal the public key or IP address of the user.” 

In the Lightning Development Initiative’s report, we learned that this has to do with the two competing protocols, Bolt12 and lnurl. Jack Mallers “pointed out the absolute need for interoperability on LN and that even though lnurl might not be “optimal” right now, the market will eventually decide what open standard they prefer to use. He thinks that currently UX is a major focus for the LN community and we should make peace with the fact that there will be competition between solutions.”

Mallers put forth another interesting idea, “contrary to the Bitcoin main chain, we can somewhat afford to f**k up on the Lightning Network. As long as the Bitcoin monetary policy is not threatened then we can freely fiddle on top of the protocol via Lightning.”

BTCUSD price chart for 01/14/2021 - TradingView

BTC price chart for 01/14/2022 on Bitfinex | Source: BTC/USD on TradingView.com

Bounty #2: Stablecoin On Lightning Without A Token

Bitcoinist described this one as:

“The second challenge seems to be even more difficult, at least on a conceptual level. The HRF and Strike want a wallet that enables “anyone to “peg” an amount of bitcoin to U.S. dollars without needing an exchange or another token.” That’s right, without a centralized entity. And relying only on sats and bitcoin.”

Gigi summarizes why the world needs this:

“The goal is to allow people to access dollars without a single point of failure. Further down the line, as Bitcoin becomes less volatile, these people can use btc, but until then there’s massive demand for holding value in dollars. The tether market cap is proof of this.”

Bounty #3: A Chaumian E-Cash Feature

First of all, Investopedia defines Chaumian e-cash as:

“eCash was a digital-based system that facilitated the transfer of funds anonymously. A pioneer in cryptocurrency, its goal was to secure the privacy of individuals that use the Internet for micropayments. eCash was created by Dr. David Chaum under his company, DigiCash, in 1990.“

So, once again, anonymity is the priority. As Alex Gladstein put it when announcing the bounties, they’re “for the first open-source, non-custodial, non-KYC Lightning wallets to ship features requested by dissidents worldwide.” Also, take into consideration the words of security expert Brian Trollz’s words, “Bitcoin without privacy is nothing but a surveillance system.”

What does Gigi have for us on this topic? “We need a sort of Chaumian e-cash, extremely easy to use for the Plebs and accessible. Maybe the solution is a federated  one, making it harder to regulate.” He then quotes Jack Mallers again, “There’s going to be a singular standard for the internet of money (Bitcoin). Many will compete on top of BTC so we need “interoperability to the standard.”

Conclusion: The Future Is Bright

Developers, teams, companies, anyone can earn the Lighting Development Initiative’s bounties. The non-profit OpenSats will serve as the judge. They are all open for the whole year. If by the end of 2022 no one has claimed them, the money will go to the Human Rights Foundation’s Bitcoin Development Fund on January 1st. Which is fair. Especially considering they gave 425 million Sats to these worthy organizations and individuals.

For more information and details read Bitcoinist’s original report.

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Lightning Speed: Taproot And The Lightning Network, A Match Made In Heaven

by NEWSBTC

A little more than two months ago, Taproot went live. What does the biggest update to the Bitcoin network in years bring to the table? How can it help the increasingly popular Lightning Network? That’s exactly what the article we’re about to summarize is about. It starts by informing us that “Bitcoin even has a scripting language,” and that it’s called Script.

Related Reading | Number Of Bitcoin Lightning Network Nodes Jumps 23% In Three Months

But before we get into that, what is Taproot?

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“Taproot is a combination of three Bitcoin Improvement Proposals (BIPs) that enhance this scripting infrastructure: BIP340 – Schnorr, BIP341- Taproot and BIP342 – Tapscript. The key of Taproot that unlocks all the others is the introduction of Schnorr Signatures, which allow for key and signature aggregation. This means that multiple parties are able combine their keys to a single public key, thereby allowing them to sign a single message.”

It’s important to know that Taproot won’t allow “fully expressive” or “Turing complete” contracts like in Ethereum and all its related chains. Nor are those kinds of contracts a priority for the Bitcoin network, as our sister site Bitcoinist points out. Also, to curb our expectations, let’s read what Tales From The Crypt podcast’s host Marty Bent warned us about in his newsletter:

“It is important to understand that these benefits aren’t going to be immediate. They are going to come to market slowly over time as the software gets implemented into wallets and other services. Many are expecting Taproot to get activated over the weekend and all its potential benefits to be realized immediately. This is simply not the case and it is important that this fact is understood.”

Ok, let’s get into the meat and potatoes.

How Does Taproot Help The Lightning Network?

First of all, every Lightning channel consists of “2 of 2 multisigs”. So, a first benefit of being “able combine their keys to a single public key” is that “we have lighter transactions and therefore cheaper channel openings”. Not only that but “signature aggregation also offers enhanced privacy since its contents are indistinguishable from a single-signature transaction.”

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To clear up how does this benefit privacy, let’s quote the Binance Academy:

“Spending Bitcoin using Taproot could make a transaction in a Lightning Network channel, a peer-to-peer transaction, or a sophisticated smart contract become indistinguishable. Anyone monitoring one of these transactions would see nothing but a peer-to-peer transaction. It’s worth noting, though, that this doesn’t change the fact that the wallets of the initial sender and final recipient will be exposed.”

However, this is not quite true… yet. The Voltage article clarifies, “Does this mean that lightning channels are now unidentifiable on the blockchain? Well, the answer is ‘yes’ for private channels and ‘not quite yet’ for public channels.”

BTCUSD price chart for 01/04/2021 - TradingView

BTC price chart for 01/04/2021 on Gemini | Source: BTC/USD on TradingView.com

Private And Public Lightning Network Channels

What’s the problem? Well, the network doesn’t announce the creation of private channels. The public ones, on the other hand:

“Unfortunately, even if we do hide the channel openings on the blockchain, the current specification of the lightning protocol requires nodes to broadcast the details of the funding transactions when announcing their channels.

This might seem counterintuitive at first, but it’s also an elegant way to prevent nodes spamming the network with fake channels.”

Related Reading | How Big Is Bitcoin’s Lightning Network? The Answer Will Surprise You

Also, let’s take into account that surveillance firm Chainalysis already announced a Lightning Network-related service. We should assume there are “sybil nodes surveilling the network”. And that “With enough hostile nodes” a bad actor could paint “a fairly detailed picture of the flow of funds”. Well, Taproot has an elegant solution for that:

“Taproot’s introduction of Schnorr signatures paves the way for a type of smart contract called Point Time Locked Contracts (PTLCs). PTLCs operate in the same manner as HTLCs by allowing payments to be identified by nodes, but PTLCs come with a handy feature of being able to randomize its identifier with each hop thereby making it impossible for nodes to correlate the traffic of sending and receiving nodes.”

Understand that “Taproot is a door that opens many other doors”. It’s a new toolkit with which developers all over the world will create new features and improvements. The info this article contains is just the beginning, the low-hanging fruit that we can see from our advantage point. Remember what Marty Bent said, “these benefits aren’t going to be immediate.” The Taproot-enabled stage of Bitcoin is just starting.

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Lightning Speed: Eight Mind-blowing Facts About The Lightning Network

by NEWSBTC

Welcome to “Lightning Speed,” a new section in which NewsBTC will explore the possibilities that Bitcoin’s Lightning Network opens. In this first edition, we will focus on Peter St Onge’s “The Lightning Network is About to Change the World” article. According to his bio, the academic “holds a Ph.D. in Economics from George Mason University, and a B.A. in Economics and Political Science from McGill University.” Make of that what you will. 

St Onge was at the Free State Project’s annual Porcfest in New Hampshire when he had an epiphany. “The Lightning Network is now moving Bitcoin exponentially closer to becoming a true universal medium of exchange that is controlled by the people, not by governments.” That’s right. Bitcoin already won the store of value race, but, with the Lightning Network, it becomes the apex medium of exchange. What does this mean for the world?

Lightning At The Porcfest

Before we blow minds, let’s explore the Free State Project’s Porcfest real quick. St Onge sets the stage:

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“As we enjoyed the mild New Hampshire summer, people wandered over to buy $2 sodas with Bitcoin, paying instantly and with zero transaction fee. I watched patient bitcoiners onboard Lightning newbies, taking them from zero to a Lightning wallet full of fresh hot sats in literally 5 minutes. It was the iconic “buy a coffee with Bitcoin” on steroids.”

This was before everybody and their grandmothers went to Bitcoin Beach to test the Lightning Network first hand. Watching the transaction’s speed and comfort, St Onge knew. This was “Confirmation that the Bitcoin developer ecosystem has now built the holy grail: Bitcoin as a true medium of exchange. One where transfers are instant, essentially free, and as easy to use as the simplest app on your phone.”

St Onge’s Four Insights About The LN As A Medium Of Exchange

  • The fees are really that cheap. St Onge recalls, “our sats party replicated what’s now going on across the world. Just last week at El Salvador’s now-famous Bitcoin Beach, 20,000 near-instant transactions went around with aggregate fees of $4.98. One-fortieth of a penny per transaction.” 

  • Traditional banking can’t compete. “For perspective, that’s about 500 times cheaper than the credit card fee on a $5 cappucino, and it’s at least 4,000 times cheaper than the average credit card transaction fee.”

  • It gets better. The fees are not correlated to the transaction’s total amount. “Note, 1/40 of a penny would cover essentially any amount — you could buy a house with Lightning for 1/40 penny.” 

  • The Lightning Network doesn’t sleep. “It transfers instantly, 24/7 including holidays, and is able to leap national borders and regulatory gatekeepers with zero effort.”

BTCUSD price chart for 12/04/2021 - TradingView

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BTC price chart for 12/04/2021 on Tradestation | Source: BTC/USD on TradingView.com

St Onge’s Four Insights About The Lightning Network’s Growth & Potential

  • The network is growing exponentially. “Lightning Network statistics have exploded since May, with network capacity now expanding by an annualized 635%. As these new Lightning apps onboard millions of people, they then pass along and train newbies by word-of-mouth, creating exponential growth that can very quickly go from irrelevant to dominant.” 

  • The project has been years in the making. “The original Lightning Network White Paper came out in 2015, and after heady growth through 2019, the Network was essentially moribund these past 2 years.”

  • Most altcoins are no longer needed. “First, it knocks the legs out of competing “medium of exchange” (MOE) coins like Dogecoin, Bcash, Ripple, Litecoin, or their many knock-offs.” 

  • This is just the beginning. “Just as the internet needed user-friendly interfaces (web browsers) before it could really change the world, Bitcoin needed user-friendly interfaces to grow beyond money and towards being the base layer — the “rails” — for decentralized services built on Bitcoin alone.”

The Lightning Network is changing the world already. NewsBTC created “Lightning Speed” because of that fact, a feature about the possibilities that Bitcoin’s Lightning Network opens.

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