Thread
Why #Bitcoin only.
Explaining the innovation behind the only decentralised network.
And why most companies can create more efficient products by leveraging the Bitcoin infrastructure.
Rather long 🧵, buckle up.
Explaining the innovation behind the only decentralised network.
And why most companies can create more efficient products by leveraging the Bitcoin infrastructure.
Rather long 🧵, buckle up.
The most exciting innovation is happening on #Bitcoin
Bitcoin is designed to scale over layers.
1⃣The base layer is optimised for security & decentralisation.
2⃣Additional layers are added to optimise/improve the user experience.
Why is this the correct scaling approach?
Bitcoin is designed to scale over layers.
1⃣The base layer is optimised for security & decentralisation.
2⃣Additional layers are added to optimise/improve the user experience.
Why is this the correct scaling approach?
☝️- Maintains base layer security & decentralisation
✌️- Allows for innovation to flourish on layer 2+ where all the fun can happen
New user-facing applications can be developed on L2+, where security is traded-off against experience (recall the blockchain trilemma).
✌️- Allows for innovation to flourish on layer 2+ where all the fun can happen
New user-facing applications can be developed on L2+, where security is traded-off against experience (recall the blockchain trilemma).
This is in contrast with #Crypto, looking to create “new blockchains” that have everything happening on the main chain.
It's a mistake:
👉Increases risk of base layer downtime. (Hi @solana 👋)
👉Makes the base layer poorly manageable.
👉Hard to reconcile monetary policy
It's a mistake:
👉Increases risk of base layer downtime. (Hi @solana 👋)
👉Makes the base layer poorly manageable.
👉Hard to reconcile monetary policy
Ok, this is where the exciting stuff begins.
So, we have the Bitcoin network at the top.
Below that we have different networks (L2+) @lightning ; @Liquid_BTC ; …for example.
Important note: The beauty here is that ANYONE can create a Layer 2 network.
It's open for competition.
So, we have the Bitcoin network at the top.
Below that we have different networks (L2+) @lightning ; @Liquid_BTC ; …for example.
Important note: The beauty here is that ANYONE can create a Layer 2 network.
It's open for competition.
We're first going to deep dive 🤿 into the @lightning .
Then look at Liquid.
#lightning is a L2 which tackles the “Medium of Exchange” aspect of the system.
a.Instant Peer-to-Peer payments
b.Low fees
Lightning also has possibility for Smart Contracts, more on this later 🙃
Then look at Liquid.
#lightning is a L2 which tackles the “Medium of Exchange” aspect of the system.
a.Instant Peer-to-Peer payments
b.Low fees
Lightning also has possibility for Smart Contracts, more on this later 🙃
#Lightning Crash Course
It's a side chain that acts like a tab (at a bar for example 🍺)
A bunch of transactions are recorded and settled all at once, when both sides agree: it’s pay up time.
This remove congestion on the main chain.
Only 1 on-chain transaction (settlement)
It's a side chain that acts like a tab (at a bar for example 🍺)
A bunch of transactions are recorded and settled all at once, when both sides agree: it’s pay up time.
This remove congestion on the main chain.
Only 1 on-chain transaction (settlement)
1⃣Lightning transactions happen through “Channels”.
2⃣A channels is opened between 2 sides (you and your favourite bar 😋 )
3⃣A channel is funded by adding BTC (just like you add money into your bank account)
2⃣A channels is opened between 2 sides (you and your favourite bar 😋 )
3⃣A channel is funded by adding BTC (just like you add money into your bank account)
Unlimited number of transactions can happen in the channel.
When you're done, you settle and record ONLY the final balance on-chain
You may say that it's inefficient – Imagine you have to open tabs with a million people (you have lots of friends 😛), and fund each of them.
When you're done, you settle and record ONLY the final balance on-chain
You may say that it's inefficient – Imagine you have to open tabs with a million people (you have lots of friends 😛), and fund each of them.
This is covered.
Payments can use any channel to route to the desired end point.
Romi has a channel with Ella
Ella has a channel with Miya
Romi can send a transaction to Miya going through Ella.
This is the concept of routing, it allows to scale fast.
Payments can use any channel to route to the desired end point.
Romi has a channel with Ella
Ella has a channel with Miya
Romi can send a transaction to Miya going through Ella.
This is the concept of routing, it allows to scale fast.
Important 🚨: Lightning is still early, and it is recommended not to store too much money in there.
How to use it 🤪
☝️Hold your main wallet on the main Bitcoin chain.
✌️Use Lightning as a “spend” wallet, which you top up when needed.
How to use it 🤪
☝️Hold your main wallet on the main Bitcoin chain.
✌️Use Lightning as a “spend” wallet, which you top up when needed.
Ok, so that’s #lightning, in summary:
Faster than any shitcoinnery you’ve seen in the past.⚡️
What about the user experience you may ask? 🤨
And this is the essence of this thread. A lot of innovation is now happening to improve the UX.
Faster than any shitcoinnery you’ve seen in the past.⚡️
What about the user experience you may ask? 🤨
And this is the essence of this thread. A lot of innovation is now happening to improve the UX.
Through what we’ve explained thus far, and what comes next, you will be able to understand why ALL the most exciting innovation is happening on #Bitcoin and not on some DINO chain. 😵
To understand what’s coming, first a few things:
BOLT = Basis Of Lightning Technology
It’s a term you will encounter. They're protocol upgrades to the Lightning Network.
Here, something super exciting is happening; it’s called BOLT 12
BOLT = Basis Of Lightning Technology
It’s a term you will encounter. They're protocol upgrades to the Lightning Network.
Here, something super exciting is happening; it’s called BOLT 12
Bolt 11 ⚡️
- Lightning QR codes are 1 directional – Can receive, but not send
- QR codes can only be used 1 time – Not good for retail use cases
- BTC/USD Conversion rate are fixed at the point of QR code creation
- Lightning QR codes are 1 directional – Can receive, but not send
- QR codes can only be used 1 time – Not good for retail use cases
- BTC/USD Conversion rate are fixed at the point of QR code creation
Bolt 12 ⚡️
- QR codes are bi-directional. You can send & receive.
- QR codes can be re-used. A shop can print a QR code for an apple and leave that same QR code for every customer
- Exchange rates are created at the moment of payment. Allows price volatility fix.
- QR codes are bi-directional. You can send & receive.
- QR codes can be re-used. A shop can print a QR code for an apple and leave that same QR code for every customer
- Exchange rates are created at the moment of payment. Allows price volatility fix.
With those optimised functionality it makes the Lightning network an incredibly powerful system. 💪
The above is solving invoicing problems at the protocol level.
However, there are also solutions working on this at the application level. #LNURL
The above is solving invoicing problems at the protocol level.
However, there are also solutions working on this at the application level. #LNURL
LNURL are a set of standards that make lightning more user friendly.
- LNURL Channel - HTTP standard to open channels
- LNURL Withdraw - Scan QR and receive BTC
- LNURL Auth – Login to services using a public/private key pair
- LNURL Pay – Create robust QR with added capabilities
- LNURL Channel - HTTP standard to open channels
- LNURL Withdraw - Scan QR and receive BTC
- LNURL Auth – Login to services using a public/private key pair
- LNURL Pay – Create robust QR with added capabilities
Many #Bitcoin only startups are leveraging lightning to create amazing user experiences and user-friendly products.
@Strike
@paywithmoon
@Satsback
@CoinCorner
@Breez_Tech
@GaloyMoney
@ImperviousAi
😍😍
(Many more great startups working on this. Sorry for the ones I missed)
@Strike
@paywithmoon
@Satsback
@CoinCorner
@Breez_Tech
@GaloyMoney
@ImperviousAi
😍😍
(Many more great startups working on this. Sorry for the ones I missed)
We spoke about Smart Contract on #Lightning.
Let me introduce you to Taro 🤩.
1st – What's Taproot?
It's a protocol upgrade of the #Bitcoin main chain.
Increase privacy by making it impossible to get info about the transaction (is it a lightning transaction? a multisig?....)
Let me introduce you to Taro 🤩.
1st – What's Taproot?
It's a protocol upgrade of the #Bitcoin main chain.
Increase privacy by making it impossible to get info about the transaction (is it a lightning transaction? a multisig?....)
Now, Taro
It’s a Taproot powered open protocol for issuing digital assets on the #Bitcoin blockchain that can be transfer over the lightning network.
Taro enables Bitcoin to add “Smart Contract” capabilities.
#Stablecoins
#DigitalTokens
#NFT
How exciting is that?
It’s a Taproot powered open protocol for issuing digital assets on the #Bitcoin blockchain that can be transfer over the lightning network.
Taro enables Bitcoin to add “Smart Contract” capabilities.
#Stablecoins
#DigitalTokens
#NFT
How exciting is that?
And that’s just Lightning!
Let’s have a look at @Liquid_BTC , from @Blockstream.
Must Know:
@adam3us , CEO & founder of Blockstream, is the creator of Proof of Work.
He's the most respected and knowledgeable person in this space probably
(Shout out to Chaum, Hal & Nick too 🫶)
Let’s have a look at @Liquid_BTC , from @Blockstream.
Must Know:
@adam3us , CEO & founder of Blockstream, is the creator of Proof of Work.
He's the most respected and knowledgeable person in this space probably
(Shout out to Chaum, Hal & Nick too 🫶)
@Liquid_BTC Crash Course
A Bitcoin L2 side chain with its own consensus mechanism: Federated Consensus
The value prop of Liquid is that it enables the tokenisation of Digital Assets, and makes them exchangeable on Lightning.
In pleb’s terms: Smart Contracts on Lightning. 🤩⚡️
A Bitcoin L2 side chain with its own consensus mechanism: Federated Consensus
The value prop of Liquid is that it enables the tokenisation of Digital Assets, and makes them exchangeable on Lightning.
In pleb’s terms: Smart Contracts on Lightning. 🤩⚡️
Using Liquid AMP, users can create customisable digital assets.
- Stablecoins
- Security Token Issuance
- Atomic swaps
- Marketplaces
- El Salvador Bitcoin Bond
Adam and his team are the best. Make sure you keep them on your radar. 🫶
- Stablecoins
- Security Token Issuance
- Atomic swaps
- Marketplaces
- El Salvador Bitcoin Bond
Adam and his team are the best. Make sure you keep them on your radar. 🫶
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Mark Moss @1MarkMoss
·
Nov 21, 2022
great thread