So how about we get started?
Thank you for joining us, Jameson.
Let's start with a quick intro.
I'm definitely a big name on the panel right here.
I want to get who these people are.
We'll start with Jameson and work our way down.
So I'm Jameson Lopp and I work for CASA.
And we sell these things that all in one lightning solution.
And yeah, I love guns.
Is it true that you killed Mike in space?
You did kill Mike in space?
Didn't he shoot you?
I mean, Mike?
Wait, oh, hey.
We have a, oh my god, there's a Doppler twin.
I don't know what this is.
There's two Jamesons.
You don't want to take over.
I've already been on stage multiple times.
I want to give you as much screen time as possible.
Hey, welcome.
Welcome to the panel.
It turns out there are some much more fascinating things
happening in the regulatory space
than in the permission of space.
Yeah, Larry Wall, you like that?
It's interesting to see other perspectives.
If you didn't see the Larry Wall talk,
make sure to check it out on YouTube afterwards.
So we're going to get started.
This is the Lightning Network panel.
This is the real Jameson Lopp joining us.
And let's start with the- Lies.
Well, exactly.
You have to verify.
Anyways, let's start with some quick intros.
Just take about 20 seconds.
I mean, people fairly know who you are.
So let's get to the-
Yeah, I may or may not be the CTO of a company called CASA
that focuses on private key security
and helping people run full nodes,
just in general being more sovereign unto themselves.
And Alan?
Yeah, so I'm the director of product at Blockstream,
the company that's designed to control
and destroy Bitcoin by the banks,
or at least as some people say.
So I've been at Blockstream since 2017,
been in Bitcoin space since 2011.
And John?
Yeah, I'm John.
I'm a co-founder and CTO of Openode,
one of the first Lightning payment processors out there.
And I joined Bitcoin two years ago.
So let's start off with just a little bit.
What is Lightning, what is the killer use case of it?
Why would I use Lightning as a primer?
And maybe we can just take a couple of minutes.
Yeah, well, I mean, the TLDR is that
blockchains are really crappy
at doing high volume throughput and processing
and meeting certain use cases,
such as use cases for transferring tiny amounts of value.
These blockchains,
at least the public permission list blockchains,
are creating these global flood fill networks
that are extremely inefficient and that is by design.
That's how we get a level of robustness
that has never really been seen before.
But then if you wanna start doing
even more inefficient things,
it just doesn't scale very well.
So the way that some people are trying
to approach scalability of these systems
is actually in a similar manner
to how the internet itself was scaled.
And that is by building additional layers on top of them
and those layers can provide the efficiency.
Do you wanna add anything?
Yeah, I would say the key idea is basically
the small and everyday transactions
are not worth casting to the blockchain
and you just broadcast the final settlement.
That's pretty much it.
Yeah, I guess it's worth noting too
that this was something that the idea's been around
since the beginning of Bitcoin.
On a more limited scale of just one party
to transferring between each other,
there were some broken parts of it
that didn't quite work right,
that did need some minor improvements.
And then the real benefit of Lightning
is not just having a single party
that I can transact with,
but transact through anyone throughout the network.
And I think you asked too,
it's like what is the killer application of Lightning?
I think we're all waiting to figure out what that is.
I don't think anyone in this room,
whatever you think it is, it's probably wrong.
There's a lot of things.
So I think we have to look at what does Lightning do
that we can't do otherwise.
And so we started this with the Lightning satellite service
on Blockstream.
So Blockstream has satellites that we have access to
that we stream down the Bitcoin blockchain.
And we have bandwidth that we could use that we don't.
And so what we did was we opened up a Lightning channel
that you can pay request invoices from
to broadcast any message you want from space
across the whole world.
So literally someone paid money using Lightning
to rickroll the whole world.
And I'm not gonna say rickrolling is the killer app of it,
but what this does is,
someone could have made a contract with us.
They could have agreed for a certain amount of bandwidth.
They could have done all this overhead
to set this relationship.
But instead, all we had to do is just say,
we have no idea who you are.
We have no idea what you wanna do.
Send us money and we'll give you this.
And it was cheap enough that they can take the risk.
Worst case is they pay us a little bit of money
and we don't rickroll the world.
But the reality is,
someone can send this transaction.
We can broadcast it in small chunks.
We have no idea.
There's none of that overhead of contracts and overhead.
So any underutilized service or network
where a wide number of people
where it's costly to form relationships with in contracts
or they're global and it's costly to deal with them
if there's problems,
has the potential to be the killer app for Lightning.
So at Blockstream,
I think we inspired a lot of people that had those services
and they've been coming to us and asking,
oh, I've got this.
How can I do that with Lightning?
And that's pretty exciting.
So I think we'll start to see maybe in the next year or two,
the killer apps showing up.
I have a quick question for you.
You mentioned that,
at least later too,
or maybe Lightning idea was part of the first ideas
since Bitcoin's been around.
When was the first mentions of an L2?
Because I know about Poon and Drudge
kind of putting out that white paper in 2014, I believe,
but what was the earliest kind of mentions
of a Lightning idea?
Where did that come from?
Stoshi's white paper, I believe, has it in there
with the payment, the idea of having a sequence number
and updating the channel state between people
and having a final transaction that can be broadcast.
There's some flaws in it.
Those are the early building blocks, right?
Is that payment channels
were actually first technically possible.
There was software to do payment channels
as early as I think 2011 or 2012 with Bitcoin Jay.
That was Mike Hearn, Matt Corallo that wrote that.
At the time, those were just
from one person to another person.
So I recall that payment channel technology
made a bit of a leap in 2014 or so
because there was Streamium, I recall,
was a service that came out.
It was basically video streaming
and you're paying in real time.
But there were some big limitations to that
because you would have to directly open
this on-chain transaction to the service
and then it would just update that one channel.
Lightning Network takes that basic building block
and extends it by creating a network of payment channels.
And so the trick was how do you allow
an intermediary node on the Lightning Network
to hold funds in a way that they have to
eventually send those funds forward
to your final destination?
And that basically involved a couple of new
primitives in the protocol and a lot of game theory.
And so as a result, Lightning Network is
from a rules perspective, it's a lot more complicated,
but that was necessary in order to create enough security
that you could actually end up sending money
through an arbitrary number of other nodes.
No, I agree.
I think what we see here with Lightning Network
is basically, like Lop said, a network of payment channel.
It takes the use of something that was already made before
but we didn't find quite the usefulness of it
because we would need, after all,
a direct connection with that party
or the service you want to use.
And here we can, in the network,
people nodes can route payments in a trustless way.
I would say using Bitcoin smart contracts, basically.
And you are sure that the payment is going to get there
otherwise you can claim the money back.
All right, thank you.
So I have a question for all of you
and you can give your opinions or your expertise on this.
What do you believe is the,
in terms of the entire percentage of the scale pie,
how large is the Lightning slice of Bitcoin scaling?
You can also mention some other things
that you think are prevalent with scaling
but in terms of scaling itself,
how big, how important is Lightning in those terms?
I mean, scaling is generally,
scaling is a tricky word
because there's multiple ways to scale.
You can scale up or you can scale out
and so that's one of the reasons
there's been a lot of divisiveness in the space
is because some people want to scale up
and just put more data on the blockchain
and let's continue on in a similar fashion.
Scaling out tends to be more technically complex
but what you're trying to do is find efficiency gains.
So there are a number of ways
that we're trying to find efficiency gains in Bitcoin.
One of those is by reducing the amount of data
that is going on the chain.
You can do that in a number of different ways.
Some that are coming down the line that are interesting
are like signature aggregation
so that basically you can reduce the amount
of signature data required to go onto the chain
but the way that I try to describe second layer solutions
is that you're taking a lot of activity
that sure, you could just put it on the chain
but now you're taking it off
and you're really just doing private transactions
between each other so that you are still
putting some data on the chain
like at the beginning of opening a channel
and at the end of settling
but all of the stuff in between
which nobody really cares about
except the two people that are interacting
need to actually exchange that data.
I think the question is how important
is lightning to that story?
Right now that is I think the best solution
for doing those types of payments.
There may be other layer two solutions
that pop up and are possible
and there may be new technologies that emerge
that make lightning completely irrelevant in 20 years.
We just don't know at this point
but it's a pretty big part of the story
for being able to bring Bitcoin
from what's capable of now
to what it can be capable of in the future.
Yeah, today I don't see,
I think lightning is the winning horse I would say.
We don't see yet another solution
that can compete with lightning.
So there's a ton of solutions that are possible
and it's all about trade-offs, right?
One thing that a lot of people don't like to talk about
but this is reality is that a lot of Bitcoin scaling
has happened because of custodial providers.
That's another type of off-chain transaction
but most of us find that rather detestable
because it means that we're just using trusted third parties
and making trade-offs with security
in order to get more scalability.
So it's basically Bitcoin banking 2.0
and there have been theories that
even if lightning and all the second layer solutions
completely fail, we could always just scale
using these Bitcoin banks.
It's certainly possible but it would suck
because of the security trap.
I think that would still be better alternative
because it'd be much easier to create one
than it is today with regulation.
You could create one in any environment
that you needed to and people could flock to it
without necessarily living there.
So it's a little bit better.
I hope we're not in that situation.
I hope lightning is a much better answer
but yeah, something off-chain is going to have to
be the alternative and really how much goes on lightning
and how much goes on trusted third parties
and how much goes on something like federated side chains
or merge mine side chains.
I mean those are kind of
Chalmian banking systems. Chalmian banking systems.
I mean there's lots of different trade-offs.
It's gonna move around based on usability
and what people want and what they're willing to accept
with these trade-offs.
So yeah, I think for the hardcore Bitcoin people
that are paranoid and don't trust anyone
and want to have control,
lightning's the best answer we've seen.
I think also in regards to privacy
because lightning offers a lot of privacy
that you cannot have in a custodial services obviously.
They own the data.
So it's not just about the holding our funds or not.
I think it's also about privacy.
The fact that only us know the data,
what payments we are doing.
So I think that's also important.
This would be maybe a quick response from all of you.
If Bitcoin currently decides to keep the block size
or the block weight what it currently is,
I guess theoretically with all transactions
being SegWit transactions, four megabytes
and then everyone using paid public key hash
would be maybe one megabyte.
If we keep these limits the same,
would lightning network be sufficient
for all the users that would actually
want to use Bitcoin right now?
Or would we need some other kind of scaling?
Yeah, so there's so many variables there.
It's hard to break down,
but the short answer is I think in any reasonable
number of timeframes and throughputs and whatever,
then it would be very difficult,
if not impossible to onboard billions of people.
Kind of one thing that I made a reference to before
was aggregate signatures.
Generally aggregation in general,
there are multiple paths that people are working towards
and so that's where the L2ELTOO solution
and multi-party payment channels
are another type of aggregation
where you could once again get more people
into the second layer network
with a smaller amount of data going on the chain.
My personal view, and of course this is just me
and there are plenty of people who would attack me
for saying it, is that I expect
that we will continue to try to see people
in the space making as conservative
and creative protocol changes as possible
in order to squeeze out the maximum performance
and efficiency of what is currently available.
But I would hope that on the long-term scale,
if we get to a point where there are literally
no more efficiency gains that anyone can think of
and it seems like hardware in general
is decreasing the cost of running full nodes,
that eventually it will become less contestable
that perhaps allowing a little bit more data
on the chain would be okay.
You have to get permission from Luke Best Jr. first.
Just kidding.
Alan, laugh so hard as, oh no, okay nevermind,
you laugh so hard.
It was Jameson.
No, I think the question too is should it
or could it scale to those levels?
I think the most important thing is,
I think it was Andrew Pulsar who said it is,
we can't afford to break Bitcoin.
That is the most important thing.
And so if the choices are maybe we break it
and be able to scale to everyone in the world
and everyone's grandchildren that could ever exist
versus maybe we take a little bit more conservative approach,
maybe there's a little bit more limits,
but it stays safe, we have to err on that side.
And so that means we stay within the bounds of technology.
I would be great if I could drive my car
300 miles an hour down the highway,
but I'm gonna do that, I'm gonna endanger a lot of lives
and I'm gonna kill a lot of people and it's not a good idea.
So I'm gonna stay within reason of what's actually safe.
And that's the principles we have to apply to Bitcoin.
We can't base it on projected demand
or what people are actually do.
We have to base it on what the technology actually can do.
And if there is an expansion of the block size,
I really hope that there's some way to do it in a way
that we never have to worry about this again,
because just trying to, you're going to need everyone
to agree to the change or else you're going
to cause a split.
It's just fact of the matter.
You cannot change a system as long as there's enough people
that are dead set on it and maybe it's okay
if a couple people stay on the original path and go on,
but it's a new thing at that point.
So we wanna be very certain that it has quite widespread
support, much more support than anything has ever had
up to this point that would have caused a split.
And we've had these debates, it should be settled by now.
We've seen Ethereum say we're gonna make these changes
and then we've had a couple of hardliners say no we're not
and there's a split.
We've seen even with BCH, they say they're gonna make
a change and a bunch of people say no we're gonna make
a different change, there's a split.
And so causing splits is I don't think productive
or helpful, so it's more important to make sure
it's something conservative and we don't have to face
this problem ever again.
Yeah, I agree it's way more harder to get consensus
on the first layer rather than, you don't need consensus
on the second layer solution and that's why I like it.
The fact that you can try, if you break it,
you don't break Bitcoin, you break this technology
because the Bitcoin is there, the first layer.
So I think there are rooms for improvements
on the second layer solutions before we even think about it
such as the fact like Lop was talking about,
like the fact you can aggregate all channel openings
in one single transaction.
I mean there are so many improvements that you can do
at the second layer that I think we are not,
we don't even need to think about it yet.
Who knows what technology can come up tomorrow
on another second layer technology, we never know.
I think we should first, the approach in my opinion
we should do is let's try to solve this
in the second layer solution, let's see how can optimize
this as much as we can without breaking the first level
because if we break the first level,
it's gonna be hard, it's from there, we broke it,
we broke Bitcoin and it's hard to get a consensus on that.
Thank you, so Jameson just mentioned something L2
which to be honest I'm not very familiar with
and the L2 EL TOO, I believe you mentioned
that will help with scalability on Lightning.
Can we talk about a little for people who don't know
what is L2 and anyone can take this.
That feels comfortable.
I haven't actually run it myself
so you might be more familiar.
Maybe we can talk about it.
This was an improvement to Bitcoin,
there's a white paper that was written
by two of the engineers at Blockstream
and one of the engineers at Lightning Labs.
So if anyone's unfamiliar there's kind of three
implementations of Lightning, Blockstream has done
one of them, there's another company called Lightning Labs
that does another and another company called Async
that runs another implementation.
And so if you're unfamiliar with how Lightning works
and basically it's a reactive security model
where we have a state of channels,
it's always me and you, maybe I should be.
I'll be Alice.
Yeah, we've got, you wanna be Alice?
Alice, Bob. Alice and Bob.
Carol and Dave, right?
We got the four right here.
We're ready, I have to be Carol.
All right, so you have the channel state
and if Michael publishes something incorrect,
something expired, he's the opportunity
to steal all the funds.
Now part of me when I heard that I was like this is great.
This is so much fun to just steal everyone's money
when you try to cheat, like I'm very vindictive.
So it was kind of exciting for me
and I think there's like some error message
even it's like justice has been served.
Yes.
A bug has been found. And that's great.
But then there's some realities of that
that make it not so fun.
And part of that is, let's say Michael's
backing up his wallet and he's not as informed
on Lightning as maybe he could be.
And he accidentally has an old state
and his computer dies and he goes
and pulls back his old wallet.
And now he broadcasts that state that says
this is the end.
This is the last thing I know about.
I want to close the channel.
But he actually has a newer state.
Guess who steals all the funds?
Michael didn't really try to steal
and he just didn't know that that was a history.
So that's a pretty big flaw I guess
you could say in Lightning.
And what L2 really does is it improves that situation
whereas if he broadcasts something incorrect,
the worst that can happen is now we broadcast
a newer one that says no, no, no,
this is really the right one.
So it's basically the process of you go to a judge,
you have a court case, you say look,
here's my argument for why I should get the funds.
And then there's some time for the other person
to respond with an update.
Fortunately this is better than normal court cases
because you have cryptographic proof
that there was agreement on everything.
And after some amount of time,
that basically can settle it.
So it's a much cleaner system.
You don't have to worry about as much about backups.
The other part that it benefits is
you can have the idea of what's called a watchtower.
So if I'm not connected a full node at all time
watching the blockchain,
I might not see someone try to broadcast an old state.
And if I broadcast,
so I might wanna outsource that to someone else.
And currently the way to do that,
there's a pretty heavy amount of information
that needs to be stored and updated to do that.
And this simplifies it tremendously
where a single basically claim can be
to spend multiple different versions of it.
Yeah, because in the current model
we need to save all the states, right?
So in this new model all you need is the first
and the last which we will know
which one is the correct one.
So you have a big improvement on data there.
So I think we'll see how that rolls out
because we need a new input, right?
That's right, yeah, there's gonna be some changes
that Bitcoin needed for this.
Hopefully make it in kind of a bundle
of a bunch of new updates
that are gonna be ready to go soon.
Hopefully they don't get stalled or delayed.
I don't think they break any secret ASIC technology
so they should be all right.
But yeah, this is definitely important.
And then one other thing to mention is
this is not mandatory for everyone on the network.
And so it allows for a gradual upgrade
of the network as needed.
So the people that know about L2 can use it
and the people that wanna use everything else the same
and talk to each other, they can.
Or if I don't know about L2,
I can open someone with who does
as long as they support the old model.
So it's a very elegant way of upgrading the network.
So would that require new opcodes in
in order to make L2 work?
Is that what that means or?
Yeah, there's a new signature mode
so you basically can commit instead of,
this is getting a little bit in the weeds
so I don't know how much everyone knows here.
Raise your hand if you're a technologist.
All right, so there's a couple different ways.
Whenever you spend a Bitcoin transaction,
you're basically saying go point to some output in the past
based on its transaction ID and its order.
And you're saying this is the one
I'm going to put as an input
and I'm going to sign that that's where it's coming from
and these are the rules I'm signing on the conditions
to now spend it in the future.
And so you can agree right now, currently,
you can agree to say I don't care where the money goes,
I don't care what the other inputs are.
You could say I only care about this one input
or this one output or I don't care about anything.
This is basically changes it saying
rather than linking to a specific output,
you're linking to a specific script
and you're saying I don't care what that transaction ID is,
I'll basically go to anything of those
and that's what I'm committing to.
So this is where cars a little bit of change to Bitcoin.
Hopefully I didn't mis-describe this too well
and I don't know how well you're following it, James.
I was hoping you would take this one for the team,
but he's the engineer, so I was hoping he would get it.
Well, so I do, I mean, so I think this is some of the...
I think what a lot of people learned about Lightning Network
in 2014, 15, kind of like the theory and stuff
and don't really know how it's currently being implemented.
In terms of what's available right now
in terms of watch towers and what it will take to get L2 in
and how far we are off from some of these things,
like for instance, is watch towers being used right now
just experimentally on main chain
or are we still off from that?
Maybe we can talk a little bit about something like that
and how L2 and watch towers fall in
in terms of timeline of events.
I'm not aware of them being on the production network.
I'm sure they are being used on test now.
At least on L and D, that's what I follow.
Then going into the future, so L2,
again, we need this new input for the signature type,
hash type for it.
I believe it's gonna be rolled into a change
that covers a couple of other things that James had mentioned
like tap root and snore signatures,
music that will be kind of rolled up as an upgrade
to the SegWit script version.
Never wanna promise any kind of timelines
on when code's gonna be delivered for Bitcoin
just because someone finds a problem,
it's gonna be fixed rather than trying to shove
the release out to be Q4.
But this is something I think it's getting pretty close
and then it's gonna take rolling out to the network
and it's gonna take, how is it going to be activated?
Is it gonna be another minor activated
soft forked or signaling or is it gonna be a timeline?
Flag day. Flag day.
Fuck it, do it live.
There's still debate in the community
of how we're gonna do soft forks
because that whole process got kind of a little messed up
in the last time it went out.
So I think people are gonna have to decide
how it's gonna be done even.
Yeah, I think meanwhile,
we will have the channel backups first,
which is something that I'm actually looking for
because with this problem,
the fact that we have this Justice TX
that can spend all the funds if you broadcast outside.
So there is something coming.
I think it's also coming soon.
It's already being tested as well
is the static channel backups.
So I think that will help a lot
while we do this transition first.
So I have a question that kind of leads
into another question that's relevant
to what y'all are just saying.
So first I wanna do some self diagnosis here.
How many Bitcoin do I need to lose on Lightning Network
in order to be considered wrecked?
At least one.
Okay, so let's say maybe I bought a little Raspberry Pi box
and plugged it in and did it back on my channel state.
So I'm good, it was less than one.
So I'm not wrecked, would that be?
Oh yeah, I mean I lost some a few weeks ago
while I was testing, but it was only 0.01.
So I can do that at least like another 99 times.
Nice, now you know all of Jameson's Bitcoin amounts.
Right now he just, he went live.
I think if I would have known I was gonna be on this panel
before I left for my trip, I would have brought
my reckless at, but if anyone knows the history
of reckless, basically we opened the Blockstream store
on Mainnet before, there was really much else on Mainnet
and got accused of being reckless by,
I will say an unnamed CEO of a company
that is involved in Lightning.
And people in this space that are going to be using this,
there's a little bit of recklessness just of using Bitcoin.
Anyone who's lived through the last hype cycle,
I guarantee there's been a lot more money lost that way
just by ups and downs than what's being lost
in the Lightning Network.
And you didn't see my presentation yesterday,
which was really the history of Bitcoin recklessness,
but like one of the things that I try to impart
upon people is that every time you make a transaction
on chain in Bitcoin, you're destroying your money
and recreating it, that's fairly reckless in and of itself.
Don't use Bitcoin, it's reckless.
So previous, you're kinda talking about some of the things
that need to be done in terms of improvements,
but we'll see how you answer this.
What are some of the biggest misnomers,
how people can lose money on Lightning Network
just not knowing really the tech and what people can do
to prevent some of these loss of funds?
I mean, I think it's hard to prevent the loss of funds today
because we don't have still the things,
the channel backup thing.
So I mean, you can do RAID, yes, but that's too complicated.
So but basically what happens is if you have a system,
an hard drive system failure or something,
you are basically wrecked.
That's why it's reckless.
And I wanna ask a follow up question to you real quick.
Even if you have like your 12 or 24 word seed
from that device that created, you're still wrecked
if you don't have the channel database?
Yeah, because that seed allows you to recover
the on-chain funds, not the channel funds.
So that's exactly what I was talking about.
So the static channel backups is this mechanism
that will allow you to retrieve as well the funds
from your channels.
So but it's not ready yet.
I don't know if anyone is using that on production,
but I guess no.
So I do know a clear wallet will back it up
to Google Drive for you.
But that's not like, I don't know.
I don't know if that's the right solution or whatever,
but it is a version of it, I guess.
Yeah, it needs to make sure it backs it up every time
and didn't miss anything.
So you need to double share of that.
Hopefully you're not routing money through it.
Yeah, I could just not route money.
Is it spend only?
Yeah, that's why.
So that's why it's feasible to do.
Gotcha.
So if you receive.
Well, is there anything else that you want to hit on
in terms of lightning, like who's doing the best job
in the lightning space in terms of use cases
and any things that you'd like to talk about?
We can kind of do a free form before you do Q&A.
I'm a big fan of Lightning Koala.
He's done some really cool stuff.
Did he do the pixel one too?
Satoshi's place.
Satoshi's place, so that was pretty cool.
Just paying to put a pixel somewhere.
This has been done before, but never like this,
where it's just a fraction of a penny to place a pixel.
And he's now doing things with chess, yes.
I tried to get him to do poker, but he rejected my idea.
But yeah, so that's a pretty interesting way
that you can do things.
I mean, these are a lot of cute little proof of concepts.
I think the more powerful thing is when we can really have
machine-to-machine streaming payments.
The unlocking use cases for pay-as-you-go something,
whether it's pay-as-you-go bandwidth resources
or pay-as-you-go virtual private servers
or some sort of other computation,
where we can get rid of the,
you have to pay a monthly subscription model,
which may be orders of magnitude more
than the actual usage you want.
I think that actually enables us to unlock
some new economies of scale with regard
to just economic interaction and more efficiently.
Yeah, mid-trade payments are definitely
one of the big advantages,
or one of the opportunities I see with Lightning Network.
And we can also use that on Bitcoin, mining pools.
We can pay out with Lightning.
We can pay out as much as you go.
So why do we need to send us to the blockchain
when they get paid out like small amounts of Bitcoin?
Why can't I just Lightning and stream the payments right away?
I think that's one interesting use case.
Yeah, definitely.
I'm aware of some pretty big potential use cases as well.
Unfortunately, can't share too much right now.
But I think in the next year, you'll see some things.
What's that?
Give us the roadmap.
Well, it's not the roadmap, it's...
I know, that's the Bilderbergs, yeah, no.
Rumor has it.
There's definitely been a lot of interest
from use cases I had never conceived of.
Again, the underutilized network,
the opportunity where I don't know who the customer is,
nor do I care who they are to use it.
So this is something that's, looking forward,
the quality of the kind of stuff is cool and cute now,
but this is gonna be huge.
And I think the B2B side is one that people
are kind of missing in the space of.
They're missing in the space of
where this could potentially go.
I did think of something else I did wanna go to
before we did Q&A.
I guess this is the first question,
because I'll ask it.
But in terms of implementations
of Lightning Network solutions,
I'm familiar with C Lightning or the Elements project.
I'm familiar with L and D.
There's also probably like two other ones
that are fairly popular.
There's also stuff that I think Dryja is doing
that is not even compatible with like the Bolt standard.
You have like other kind of things going on.
In terms of the landscape of this space,
do you really feel like there's gonna be like,
everyone's just gonna be on the Bolt standard,
it's gonna be like different web browsers,
or do you feel like there's gonna be,
maybe you can kind of give your take on overlay.
What do you think's gonna be popular?
What's easy to get into?
Is one good for something, one's good for another, maybe?
Well, you know, that's one of the big differences
between Bitcoin-based protocol and Lightning,
is that Lightning was actually developed
as this like joint collaborative specification.
So, you know, there were teams of developers
coming together to decide upon a specification
before they even started building the software.
So, you know, at least from that standpoint,
I think that it is gonna be pretty entrenched
in the Bolt specification.
But the really cool thing is that,
because this isn't consensus,
anybody can create their own other spec
for other second-layer networks.
And it would be great to see other specs
for other second-layer networks come out
if someone can think of some
that are substantially different.
Diversity in additional layers
is going to be a lot less contentious, I think,
than diversity in base protocols.
And that's what the MIT version is doing.
They don't follow the Bolt,
they have their own protocol, so.
I think there's advantage to try to stay together
as much as possible with getting adoption.
If there were five Lightning networks right now,
I don't think it would be anywhere near as popular
as if there's one.
This torch is going around,
it's passing through people that are using,
some are using C Lightning,
some are using, you know, Async's version,
some are using LND.
It doesn't matter.
And they're connecting and paying over networks
that are connecting with each other.
Because interoperability
and being able to connect through these routes,
you know, the bigger that network is
that's compatible,
the more successful it's going to be
and that network effect grows.
So I think it's important that people try to stay together
as much as possible,
unless there's a very strong need to, you know,
do some feature that's just not possible
or not compatible.
Did Jack pass off the torch yet?
Jack passed the torch.
To Stark?
I think he got, yeah, give it to Stark.
Is that where it's sitting right now?
No, she gave it off to a couple people,
eventually made it to Sampson,
who sent it over the satellite after being rickrolled.
And then-
Last I heard it was-
Someone's trying to get in China.
Yeah, they're trying to get to like China
or Venezuela or Iran.
It's in Laborland right now.
But the idea of that torch is you increase the amount
every single time by a little bit.
Yeah, so that eventually someone will exit scam.
And it's exit scammed once so far?
I think that person got shamed into submission.
And what is the opposite of exit?
They enter unscammed, I guess.
They were pretending to exit scam just to make everyone sweat.
Just to get publicity, gotcha.
So when this thing gets to like a whole Bitcoin,
you can send it to me.
It'll get to maybe 0.16.
But you know-
Oh, channel max, okay.
They're gonna start experiencing failures
to send well before that just due to liquidity issues.
I did have one more, I'm sorry guys.
In terms of private lightning implementations in public,
is there any idea of you losing privacy
if some of these networks kind of overlap?
That's the way I say privacy now.
Robin, Robin taught me.
But is there any idea where you can lose some privacy
or, you know, I don't really know if like,
if you run an auditorium,
hey, this is a private lightning version.
There's gonna be a public lightning version.
Do you see anything like that happening?
There's a lot of variables at play.
So one is, you know, are you using,
are your channels advertised or unadvertised?
Another one is, are you on clear net
or are you on Tor or some other privacy network?
And then in general,
like the actual lightning protocol itself
is using this form of onion routing
that is supposed to make it more difficult
for network observers to figure out where things are going.
But this is gonna become a whole other,
I guess, facet to the analysis industry.
It'll be interesting to see like if Chainalysis
and other folks manage to have much success
with trying to de-anonymize the network.
Set up a whole bunch of lightning nodes
and see if they can try to.
That one big, CIA.
Yeah, maybe.
I mean, what else would explain
why someone would be so reckless
as to put like 300 Bitcoin on a lightning network?
Yeah, and today you can still identify
a channel opening in the blockchain.
But I think that will be.
It was the two-party ECBSA.
It's gonna basically hide.
It's gonna be like a normal Bitcoin transaction.
So it will be even more difficult to track all this.
And I'm told that there are even some people
that are trying to get like memble-wimble
lightning network compatibility.
So you never know.
Maybe, you know, he was talking about interoperability.
And if we do, in fact, see a number
of different crypto networks
that get hooked into lightning network,
then you could start swapping between Bitcoin
and other privacy coins
and hopefully mix your coins so well
by basically like hopping chains
that it's practically impossible to follow that.
Hey, real quick, if you do have a question,
please come over here to Peter
so we can streamline those questions.
All right, so we'll have the first one right here.
So when you say you don't care who the customers are,
utilizing the lightning network,
if you're a business,
how do you get past the regulators
demanding that you know your customers?
Well, AMLKYC mainly is for financial services, right?
I don't, as far as I know,
if you're just like a regular business
and you're selling widgets on the internet,
then there aren't any like AMLKYC regulations
unless it's some sort of controlled substance
like fireworks or something.
In that case, you can still,
the cost of doing AMLKYC is one part of it.
You still have contract negotiation.
Where am I gonna settle this lawsuit?
How am I gonna deal with this in the real world?
Whereas if I'm getting paid as I go
and I do my minimum AMLKYC stuff,
that's good enough.
So that's another part where you're still getting a benefit
even if you have to do those steps.
Well, that will possibly open up some interesting new
legal and philosophical questions of
what happens if we build out a new economic network
where anonymous machines are engaging in illegal activities
with each other?
We're gonna throw them into like
virtual private server jail or something?
Next question over here.
Yeah, so I actually met up with Taj a couple months ago.
Last time I was at MIT.
He told me that what's lightning now
is not what he envisioned for lightning
when he wrote the paper.
I don't know what that means.
Do you guys have any idea?
Lightning, it's not lit AF enough for you.
But does anyone, has anyone looked at what he's done?
All I know is there were some improvements
over the H-time lock contracts.
So like in terms of payment routing,
I don't know if he's talking about that
or he's talking something more philosophical.
I have no idea.
Yeah, I mean the interesting thing about
kind of the formation of lightning network was
this paper basically got tossed over the fence
and I think it was Taj and Poon basically said like,
hey, here's an interesting idea
if someone wants to run with it, go.
And it wasn't until, I think Rusty was the first one
that really started working on actually implementing it
and explaining it.
And then at that point, you know, others did join.
But yeah, it was kind of, wasn't really implemented.
And the white paper is great.
It can inspire and do a lot of things.
But when you actually, you know, rubber meets the road,
sometimes you have to deviate a little bit
or things have to change.
And so I wish I knew what the specifics were
that he thinks is not in his true vision
or not correct, but you know,
sometimes you have to just alter things based on reality.
Well, I mean, maybe we'll end up with
the lightning network colon Taj's vision.
They'll be a separate network.
But you know, these public permissionless protocols,
it's actually, I think it's good when they exceed
and grow beyond the initial creator.
I would say that's even true for any open source project
is if we're trying to build things
that are going to really be multi-generational,
like global mainstream technologies,
then they should not be dictated by any single individual.
They really need to become more of this collective,
collaborative project.
And so that's why, you know, it's been kind of funny
to see so many arguments about Satoshi's vision for Bitcoin.
Who gives a fuck what Satoshi wanted?
He left the project.
If he wants to contribute,
no one can stop Satoshi from contributing.
Maybe Satoshi still is contributing,
but under some sort of other alias or pseudonym,
or perhaps they are using their real name
and we don't know who Satoshi is.
It doesn't matter.
Satoshi no longer has any more weight in this community
than any other contributor.
I think that should be the truth really
for any of these systems is that if we want them to be fair,
then we need to accept input from anyone.
Yeah, yeah.
Who gives a fuck who Satoshi is?
Yeah.
Next question right here.
Could any of you elaborate more on the B2B use cases
for Lightning Network,
especially when B2B payments are generally
significantly larger and more subject to KYC AML regulations?
Yeah, so the limit that's in Lightning right now
is a soft limit.
It will and can be broken when it's ready.
So right now, the network is in its early stages
and we don't want to have people losing money.
And so it's a nice way to do it.
You can, if you wanted to, get rid of that limit
and do whatever you wanted and be even more reckless
than people are today.
And the use case here, yes, more greater payments are there.
You can still KYC AML.
It's not incompatible with that.
You still can know who's actually paying you.
You just don't have to worry about it.
So international payments,
anything where there's kind of services
that are done internationally,
this really lights up a lot of stuff
because right now there's a lot of fraud
in many industries where you're getting paid
when you have to have interconnected services
between multiple regions.
So if some guy in Estonia wants to use my service,
he has no good way to pay me.
He doesn't want to just prepay me a lot of stuff.
I'm not going to accept his credit card payment
because there's like a 50% chargeback risk there.
He's not going to want to just wire me money
that's like for what he might pay in the future
and he may never do business with me again.
But I can collect his information.
I can verify he's a real person or he has a real company.
And that's easy.
That's the easy part of this whole thing.
So it's something where it will open up these use cases
that just weren't possible right now.
And you have these like networks of trusted third parties
where like, I'll trust Jameson,
but I don't know anyone else.
Jameson trusts a few people
and eventually makes its way around.
It kind of looks like Lightning Network
in a lot of these cases.
And you kind of have banking working like that today
with correspondent banking where it's like,
if I want to route money from the United States
to Zimbabwe, maybe that's a bad example,
but somewhere that actually is functional,
but still remote, we have to go through these layers
of correspondent banking because you have to find the people
that really trust each other because they're,
if they don't trust each other or something bad happens,
someone's out money.
And with Lightning, you're getting paid.
You know you're getting paid.
So the KYC problem I think is easy compared
to the problem of payment settlement.
From a technical standpoint,
I actually talked about this in a blog post
that I made yesterday.
It was buried in the Satoshi round table post
where I actually think that B2B payments
are incredibly important for Lightning Network
to help realize some of those efficiency gains
I was talking about.
I posted a chart that was showing sort of a fund flow
on the Bitcoin network.
And basically talked about my experience at Bitgo
where Bitgo is this non-custodial wallet
that backs a lot of enterprises.
And so Bitgo has some interesting insight
into the flow of funds between popular exchanges
and other stuff.
And we would look and try to figure out,
is there a way that we could reduce
the number of on-chain transactions
that our customers are doing with each other
because they don't even know.
They're just sending to a Bitcoin address.
Our customer A doesn't know
that they're sending it to our customer B.
They're just sending to a Bitcoin address.
And so this would happen thousands of times a day basically
of money going back and forth and back and forth
redundantly where if they had been doing it
with payment channels, especially through Lightning Network,
all of that redundancy would have been kind of
hidden under the hood and taken care of.
That's really what Lightning does
is it helps you reduce the redundancy
of just moving these values back and forth
on the public ledger.
So I think that enterprises are gonna be helpful
both for that efficiency use case
and also gonna be important for the liquidity aspect
of helping the rest of the people on the Lightning Network
to be able to manage their own channels.
But that's one of the biggest I think outstanding questions
about Lightning Network is sort of the economic implications
and liquidity management and all of that.
We get liquidity questions all the time
from our users who are running Lightning nodes.
And right now we generally have to say,
we don't know that we were trying to figure it out
and you're helping with part of the experiment.
Yes, I am. Thanks.
Did you want to comment on B2B?
Yeah, B2B you have a simple example exchanges for instance
if you wanna move the funds really quick
you can use Lightning or Liquid for instance.
So there are definitely use cases for B2B
because you couldn't move money as fast
as you do with Lightning before.
So that might be an advantage for some kind of business.
I do wanna say we are almost out of time.
I know there's a couple more people that want questions.
If we do very, very quick, concise answers
we can probably get a couple more people.
Can we try to do that real quick?
And please make your question pretty brief as well.
Thanks, I'll be brief.
From a user's perspective,
do you see any new innovative devices coming out
for a Lightning Network?
And how do you think Lightning Network can advance
the mass adoption by gaining more users to the network?
Yeah, so right now, I guess I missed the beginning part
but basically adoption, how do we make it easier to use.
Right now there's a lot of manual steps involved
in trying to figure out how do you route channels,
how do we set up liquidity, how do we make payments.
The ideal situation is you can be able to pay
your full channel capacity to anyone you want at any time.
And you do that where you don't have to manually
configure anything.
So if I'm sending something over the internet,
I don't have to know like go hop at this stop,
go stop at this stop, go hop there
and eventually you're over to the website.
It just happens.
And so I think with time, as we learn how it evolves,
these things will become more and more automatic
and more transparent to the end user.
And the ideal is you have a wallet
and it can send Bitcoin to Bitcoin address,
Lightning endpoints, invoices, whatever you want.
And you have no idea what's going on.
It just figures out whatever is best for you.
Yeah, I think that the channel concept
will be abstracted to the user later on.
And you will have like Fiat on ramps
like you have today for Bitcoin.
You can just top up with your card
and suddenly you are on the Lightning network,
be able to transact.
So yeah, I mean, we are still in the very early stage,
I would say.
We are still figuring out backup solutions, so.
And let's take the last question right here.
Do you guys have any phone apps that you would suggest
for us to download in order to open up payment channels
that you guys endorse, like Blue Wallet or like Raw TX
for the different platforms?
Blue Wallet's the custodial one, right?
Yeah.
Jameson's gonna endorse that one.
So, you know, ultimately it very well may be the case
that custodial Lightning wallets
gain more traction early on.
Custodians in general are able to abstract away complexities
a lot more easily because they control everything.
In the long run though, you know,
myself and a lot of the other hardcore,
decentralized, sovereign folks will be working
on trying to make it easier for the average person.
But I like to think that CASA's browser extension,
coupled with our node, works pretty well.
I'm a much worse shill than Jameson.
I can't, I'm so bad I can't even remember the name of it,
but there's a project we sponsored
that basically lets you have a front end for your phone
that you can use to connect to the back end.
Do you remember what it's called?
Does anyone remember?
Spark?
Spark, maybe?
I don't, I'm gonna get in trouble for not remembering this.
But yeah, that's another one that we have
that lets you connect to your own node.
It gives you that full sovereignty,
but it has something to do with it.
Does Zap have a mobile version?
No, they don't have because Netrino is not.
Yeah, okay.
I mean, but there are a couple of wallets.
I would say for iOS you have, yeah, custodial wallets.
You have Zap, which is you need to connect
to your full node though.
I don't know, if you are a tech person,
you should be able to do it fairly easy.
For Android you have more friendly,
I would say you have Eclair,
and BLW, Bitcoin Lightning Wallet,
where you can receive, I guess.
And I think that's pretty much it right now.
But is there a Lightning site that lists all these,
like Bitcoin.org does with wallets?
It's a lightning.tech or something?
I mean, there's Lnroot.com.
I think they have a lot of resources.
There are a couple of websites.
Lightninghood?
Lightninghood, I think, okay.
You'll have to add it to lop.net slash bitcoin.
There is a lightning section on lop.net
where I'm sure if you click enough links,
you'll eventually get to one of those.
Can we please get a round of applause for our panelists?
Thank you.
Thank you.
Thank you.