If you examine the historical statistics of Bitcoin's Lightning Network (LN)—including node count, channel count, and total channel capacity—you will notice a decline since the first quarter of 2022. Over the past two years, it appears that LN is not only stagnating but also contracting significantly.
This contraction is surprising, especially considering the seeming all-time high popularity of LN by other metrics. A recent report by River highlighted a 12-fold increase in LN transactions in the last approximately two years. Most progressive exchanges support LN, and the others are planning to implement it soon. Nostr, a prominent decentralized social network, is entirely powered by Lightning. Moreover, merchants are reporting growth in LN payments.
So, what is happening? How can there be such a discrepancy between usage and node growth? Is LN still the future of payments on Bitcoin? Let me explain how I interpret the statistics of nodes and channel counts and why they might be misleading.
Lightning Network Channel Count and Capacity by Mempool.Space
Overexcitement in 2021
It's clear that 2021 saw massive growth, primarily driven by Umbrel's sudden popularity. Umbrel simplified running both Bitcoin and Lightning nodes on inexpensive hardware, offering a graphical user interface (GUI) over the command line and promising complete self-sovereignty. Thousands began running nodes and opening channels. However, the initial excitement faced technical challenges when Umbrel introduced multiple apps in their app store, overwhelming the underpowered devices. Long-term operation of Raspberry Pi computers occasionally proved unreliable. A small percentage of nodes failed, deterring many users from keeping their bitcoins on such devices, resulting in many Umbrel nodes going offline.
Disillusion with Routing Earnings
Many enthusiasts began running nodes and opening channels in 2021, hoping to earn significant fees from routing, despite no guarantees of high earnings from operating a Lightning node. While a few operators do earn significant income from their nodes, it generally requires managing many well-selected channels. Some operators, unable to turn a profit, also began shutting down their nodes starting in 2022.
High On-Chain Fees
Bitcoin's on-chain fees have risen sharply recently. In the early days of Lightning, channels could be opened for as little as 1 sat/vB; now, the cost often exceeds 20 sat/vB. Coupled with the increase in Bitcoin's value, channel openings have become expensive, costing around $10, compared to just cents earlier. This increase makes experimentation costly, deterring new users from opening many channels.
Network Optimization
Post-2022, many professional node operators and companies have optimized their approaches to running Lightning nodes, resulting in fewer but larger channels opened to strategically important nodes. Some U.S. companies are also regulated to open channels only with other U.S. companies, contributing to fewer channels overall.
Experimentation by Companies
In early 2022, the substantial inorganic growth in nodes and channels resulted from companies experimenting with creating nodes for their customers en masse. This approach proved costly and inefficient, leading to the closure of many of these nodes.
Private LN Networks
The statistics reflect only publicly visible nodes and channels. Anecdotally, we know that many channels are opened privately. Private channels offer advantages such as enhanced privacy and avoidance of channel "draining" through rebalancing, which is crucial for large companies needing reliable capacity on one side to serve customers. However, receiving payments in private channels can be cumbersome, requiring hints in the invoice. The private segment of the Lightning Network could be expanding rapidly, but this growth is not reflected in public statistics.
The Value of Bitcoin Increased
In recent years, the value of Bitcoin has significantly increased, meaning the existing channel capacity can carry more value in dollar terms. Consequently, there is less urgency to increase capacity. If the value of Satoshis continues to rise, the current network could meet future users' needs without adding significantly more Bitcoin to channels.
LN is Still Too Hard
Despite the ease of setting up and operating an LN node with services like Umbrel, Voltage, and natively with LND or CLN, understanding the fundamental concepts of channels and liquidity remains challenging. We need more education and better software and services to include more people.
Custodial LN is Easy
Lightning is primarily built for microtransactions, ranging from fractions of a cent to several dollars. The use cases include tipping, paying for content, and purchasing services. Consequently, many people prefer not to manage a substantial amount of value in their Lightning wallets, allowing custodial services to offer wallets (ex. Speed Wallet) that simplify node and channel management, enabling instant receipt and sending of any amount of Satoshis. However, these custodial wallets are straightforward to set up and use, but they also mean you do not control your keys or run your node, thus your node will not appear in statistics.
What the Future Holds
Lightning is clearly a highly beneficial technology that offers numerous advantages to Bitcoin users: it natively uses Satoshis as the unit of account, it is fast, inexpensive, secure, and easy to use, supporting technologies like the Lightning Address. Lightning-related tools will continue to improve, the number of enthusiasts will grow, and more companies will offer a broader range of products to cover all use cases. The usage of LN will generally increase, but despite this, we may see further erosion of node count in the next year or so due to the reasons mentioned above. At some point, the node count is expected to begin increasing again, at a steady, sustainable rate. However, just like today, a large percentage of LN users will continue to choose custodial wallets for their everyday needs.
We launched a much requested feature Today. Previously, on Liquidity Swaps you could rate the node that was committed to open a channel to you. Now, you can also rate the node you opened a channel to, since they also have a committment to keep the channel open till the end of the agreement. You can rate nodes for the time of the agreement plus a week after the swap concluded.
Navigating the Bitcoin Lightning Network can sometimes leave newcomers puzzled with questions such as "I opened a channel a few weeks ago, and now I don't have any sats on it. Where did my sats go?" or "I opened a channel some time ago, and there was 1 million sats in it. I closed it today, but I didn't get my 1 million sats back. Where is my money?" These are common inquiries that often stem from a fundamental misunderstanding of a crucial Lightning Network process: routing.
Unveiling the Concept of Routing
To unravel this mystery, it's essential to grasp the concept of routing within the Lightning Network. Routing allows the transfer of bitcoin (sats) across the network over multiple channels without requiring a direct channel between the sender and receiver. This process is similar to how internet packets travel from their origin to their destination through various nodes. Learn more about routing.
How Routing Influences Your Sats
When you deposit sats into a channel, those sats represent your side of the channel's balance. As your channel engages in routing payments for others, the allocation of sats between you and the channel's counterparty changes. However, it's crucial to understand that while individual channel balances fluctuate, the overall balance of your node, when considering all your channels, remains unchanged by routing activities alone.
Clarifying a Common Misconception
A crucial concept that often goes misunderstood is this: when you route funds, the channel that forwards the funds sees a reduction in its balance, but another one of your channels that receives the routed funds will see an increase. Thus, routing doesn't lead to a loss of funds.
A Typical Routing Scenario
Forwarding 100,000 and earning 5 sats in fees
Let's expand our typical scenario to incorporate this vital concept:
Opening a Channel: You open a channel with 1 million sats. All these sats are initially on your side.
Routing a Payment: Your channel routes 100,000 sats to another user, decreasing your balance to 900,000 sats. Meanwhile, this routed payment is received by another one of your channels, increasing its balance correspondingly.
Earning Fees: By facilitating this transaction, you earn a small routing fee (ex. 5 satoshis). This fee is added to your balance, incrementally increasing the total sats across all your channels.
Understanding the Overall Impact: Although the balance of the specific channel used for routing decreases, another channel's balance increases. Therefore, the total balance across all your channels remains the same, barring the fees you've earned, which slightly increase your total holdings.
Closing a Channel: When you close a channel, you receive the final balance of that channel, which reflects all the routing and fee earnings. If, for instance, the closing balance was 900,000 sats, this does not account for increases in your other channels.
Monitoring Your Lightning Network Activity
Monitoring your channels is key to understanding the flow of sats. With the right tools (ex. Thunderhub), you can see how balances shift between channels due to routing and how your overall balance is affected.
The Routing Benefit: A Holistic View
Participating in routing payments enriches the Lightning Network, keeping it efficient and scalable. It's a cooperative effort that, while it may initially seem like your funds are depleting, actually maintains your overall balance and incrementally increases it through fees.
Public / Private Channels
It's crucial to grasp the difference between the two types of channels on the Lightning Network: public and private.
Public Channels are open to the entire network. They appear in the network's public graph, making them visible to all participants. This visibility allows nodes to use public channels for routing payments to nodes with which they do not have a direct connection. The ability to route payments through a node depends on the availability of sufficient capacity in the necessary direction on the involved channels.
Private Channels, on the other hand, are not broadcast to the entire network. Visibility is restricted to the nodes directly involved in the channel, rendering them less prominent for routing on a broad scale. Despite this, private channels can still participate in routing payments. For routing through a private channel to occur, nodes outside the channel must be informed of its existence, typically through "routing hints" provided by one of the participating nodes.
Conclusion
Routing within the Lightning Network is a dynamic process that redistributes sats across your channels but doesn't inherently decrease your total holdings. By actively participating in routing, you not only support the network's efficiency but also have the opportunity to grow your total sats through accumulated fees. As you familiarize yourself with these principles, managing your channels and optimizing your participation in the Lightning Network becomes an engaging and potentially rewarding endeavor.
We are thrilled to unveil Layers Academy, an educational platform designed to demystify Bitcoin and its ecosystem for a rapidly growing audience eager to grasp and utilize this groundbreaking technology. Our lessons, which last between 5 and 10 minutes, are presented in an engaging video format and crafted for easy comprehension. We incorporate real-world examples and parallels to simplify complex ideas. Additionally, each lesson comes with a full transcript, offering the option to read the voiceover if preferred.
Layers Academy is structured into faculties, courses, and lessons. At launch, we offer basic Bitcoin courses, which will soon be complemented by courses on the Lightning and Liquid networks, followed by advanced courses covering all these subjects in greater detail. Each course and lesson builds upon the information presented previously, ensuring a cohesive learning experience.
After completing each lesson, you'll have the chance to gauge your understanding through quizzes. Achieving success in these assessments rewards you with accomplishments, marking your progress.
What’s in the Name?
The Bitcoin ecosystem extends beyond the code of the Bitcoin blockchain. It includes a broad array of innovations and solutions developed in layers atop Bitcoin, such as the Lightning and Liquid networks. The name Layers Academy reflects our aim to elucidate these layers for learners.
Work in Progress
We recognize our current lessons as merely the beginning. We warmly invite our community to engage actively in this educational journey. If you come across any inaccuracies or have suggestions for improvement, we encourage you to reach out via our contact form or lesson comments. Your insights, resource recommendations, or ideas related to the content are highly appreciated and will contribute significantly to enriching our academy.
A Bitcoin Lightning Network channel backup, also known as a Static Channel Backup (SCB), is a feature that allows for the on-chain recovery of Lightning channel balances in the case of data loss or hardware failure. It is a failsafe to record the state of a Lightning channel, enabling the recovery of off-chain balances. The SCB contains all necessary peer and channel information, allowing the Lightning node to send a request to force-close the channel on their end to all previous online peers.
However, it's important to note that the channel backup does not allow the recovery of Lightning Network channels, but it increases the chance of recovering off-chain balances. The backup is created and managed through the Lightning Network node, and it is essential to download a copy of the SCB file when opening or closing any channels. The backup is a critical security measure, and it is advisable to have a proper backup strategy in place to ensure the safety of Lightning channel funds.
What is a Bitcoin Lightning Network Channel Backup?
The Purpose: On the Lightning Network, payment channels exist between two individuals, allowing for lightning-fast Bitcoin transactions. A channel backup ensures you don't lose your share of the Bitcoin locked in a channel if something happens to your Lightning Network node.
What it Contains: Static (unchanging) channel information:
The channel's funding transaction
Channel capacity
Public key of the other node in the channel
Other relevant channel configuration details
What it Doesn't Contain: The current channel balance or its associated commitment transactions. This information changes often.
Types of Channel Backups
Static Channel Backup (SCB): The core backup stored as a file (often channel.backup) or multiple entries within a file. You'll need your Lightning wallet seed phrase to use an SCB effectively.
Database Backups: Lightning Network implementations save important channel information to a database. If you have a full database backup, you can restart your node without the need to use a SCB which would close channels.
How to Use a Bitcoin Lightning Network Channel Backup
The recovery process in the event of data loss is called Data Loss Protection (DLP), and its steps can vary between Lightning Network implementations. Generally:
Node Failure: Your Lightning Network node experiences a major problem (e.g., corrupted hard drive, software failure).
New Node Setup: You install a fresh Lightning Network node.
Restore Wallet Seed: Restore your 24-word wallet seed phrase. This recreates your on-chain Bitcoin wallet.
Restore SCB: You transfer the SCB file to your new node or re-enter individual SCBs. Different wallets and LN tools provide the recover option in different places. In Thunderhub for example you can find it under Tools / Backups / Recover Funds from Channels / Recover.
DLP Process:
Your new node uses the SCB file(s) to discover the public keys of nodes you had channels with.
Your node contacts your former channel partners, alerting them to your issue.
Cooperative nodes will initiate force-closing the channels, returning your on-chain balance according to the last agreed-upon state in the backup.
Important Considerations
Always Update Backups: Backup your SCB(s) whenever you open or close a Lightning channel. Outdated backups won't reflect the correct channel state.
Secure Your Backups: Treat your SCB and wallet seed with extreme care. Anyone with access to both can steal your funds, because they can close the channels and then send out the on-chain funds to their own wallet. Store them securely, with copies in safe locations.
Uncooperative Peers: In the worst-case scenario, where a channel partner becomes uncooperative, you risk losing some funds since the SCB doesn't hold the most recent channel state. This is rare, but highlights the importance of choosing reputable nodes as channel partners.
Watchtowers: In order to ensure that your peers can't cheat you consider entering a Watchtower Swap.
Thunderhub's Backup and Recovery options
Backup Strategies
Automated Cloud Backups: Popular Lightning Network wallets often have built-in features to automatically back up your SCB to cloud storage (encrypted, of course). For example, if you are running an Umbrel node, they have your channel backup and you can contact them if needed.
Manual Backups: You can periodically copy your SCB file to external drives or another computer. Different wallets and LN tools provide the link to download in different places. In Thunderhub for example you can find it under Tools / Backups / Backup All Channels / Download.
Database Backups: If your implementation uses a database, include regular backups of it as part of your strategy.
Ever wondered how Bitcoin manages to stay secure and functional? It's all thanks to a bit of mathematical wizardry called Elliptic Curve Cryptography (ECC). Let's break the concept down into simple terms. At the end of the post you will find resources to dive deeper into the subject.
What is Elliptic Curve Cryptography?
Imagine you have a magical lock that's super easy to lock but a real headache to unlock without the right key. That's basically what ECC is in the world of cryptography. It's a method of encoding data so that it's super secure. In Bitcoin, this magic helps keep your transactions safe and sound.
The Role of ECC in Bitcoin
In the Bitcoin universe, each person has two keys: a Private Key, which is your secret password, and a Public Key, which is like your Bitcoin address. ECC is the secret sauce that turns your Private Key into your Public Key. This process is like a one-way street – easy to go one way, but nearly impossible to reverse.
secp256k1: The Specific Curve Used in Bitcoin
Bitcoin uses a specific type of ECC called secp256k1. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, chose this curve for its solid balance of security and efficiency. Think of it as a specific set of rules for the cryptographic process. The '256' in its name indicates the size of the key, which makes it robust against attacks while maintaining performance.
Deriving the Public Key
Let's get a bit visual here. Imagine the ECC as a roller coaster track. Your Private Key is like your unique cart on this track. When you go through the ECC process (or the roller coaster ride), you end up at a specific point on the track – that's your Public Key. It's a fun ride, but only in one direction!
This specific point is calculated using the elliptic curve and your Private Key, ensuring that each Public Key is unique.
Graph of secp256k1's elliptic curve
Why Can’t We Reverse the Process?
You might be thinking, "Can't someone just ride the roller coaster backward and find out my Private Key?" Nope, that's the beauty of ECC. It's mathematically so complex to reverse this process that it's considered practically impossible. This is what keeps your Bitcoin wallet secure.
This complexity arises from the Discrete Logarithm Problem in elliptic curves, a problem that is easy to compute in one direction but extremely hard in reverse.
Metaphor to Understand Irreversible Calculations
A way to demonstrate a similar "one-way street" calculation, like that in Elliptic Curve Cryptography (ECC), is the process of mixing paint colors.
Imagine you're an artist with a palette of primary colors: red, yellow, and blue. You start mixing these colors to create a new, unique shade – let's say a specific tone of green. This green is created by carefully combining a certain amount of blue, a certain amount of yellow and a tiny bit of red.
Mixing a unique green color from blue, yellow, and a bit of red
If you know the formula to create your unique green, mixing it from the primary colors again is straightforward and can be done over and over precisely without much effort. This process of mixing the colors is like generating a Public Key from a Private Key in ECC. Just like you combine specific amounts of 3 colors to get a unique green, in ECC, you perform specific mathematical operations on the Private Key to get a unique Public Key.
Now, here's where the one-way street comes in: Once you've mixed the various paints into green, it's very hard for someone to look at your green and accurately separate it back into the original amounts of blue, yellow and red. They can guess it's made from blue and yellow, but they can't determine the exact proportions that were used.
Similarly, in ECC, once you have the Public Key, it's computationally infeasible to reverse the process and find out the exact Private Key. The mathematical operations (like the paint mixing) ensure that while it's straightforward to go from the Private Key to the Public Key (mixing blue and yellow to make green), it's extremely hard to go in the reverse direction (separating the green back into blue and yellow).
Efficiency of ECC in Bitcoin
One of the coolest things about ECC is how it does so much with so little. It keeps Bitcoin's transactions secure without needing a ton of data. This efficiency is a big deal because it means transactions can stay quick and wallets don't get too bulky.
ECC's ability to offer equivalent security with smaller keys compared to other cryptographic methods like RSA makes it ideal for a system like Bitcoin, where speed and efficiency are crucial.
Conclusion
There you have it! ECC is like the unsung hero of Bitcoin, working behind the scenes to keep everything running smoothly and securely. It's a fascinating blend of mathematics and technology that powers the world of cryptocurrencies. If you want to understand ECC in bigger detail, watch and read the resources below:
The Aqua wallet is the latest addition to the Bitcoin ecosystem, boasting several unique features not commonly found in other Bitcoin wallets. Below is a quick overview of its offerings:
Bitcoin Wallet
This non-custodial wallet supports full SegWit addresses (starting with bc1...), optimizing fee reduction. However, as it's not a full node wallet, users depend on third-party services for block data. While it lacks the option to connect to your own node, you can switch the blockchain explorer from the default minimalistic blockstream.info to the more popular full featured mempool.space.
Opening Screen, Main Screen, and Receiving Bitcoin Screen
Lightning Wallet
Remarkably, the Lightning wallet allows instant receiving without needing to open a channel. This seems similar to Zeus wallet's approach of opening a zero-confirmation channel. The minimum initial receiving amount is set at 1,000 SAT, with a service fee of 428 sats (approximately $0.18). The wallet, declared fully non-custodial by Jan 4, employs unclear means to facilitate this functionality, as the fee doesn't cover channel opening costs. Presently, only invoice generation is possible, with no option to set a Lightning Address. The Lightning wallet is accessible under the Layer 2 Bitcoin section.
Liquid Bitcoin Wallet
The Liquid wallet taps into the growing popularity of Liquid, a Bitcoin sidechain known for its quick one-minute block speeds and lower fees compared to the main Bitcoin chain. It offers straightforward sending and receiving capabilities and is located under the Layer 2 Bitcoin section.
USDt Wallet
The Aqua wallet comes with a built-in Tether USDt wallet, supporting the three largest blockchains:
Liquid Network: Allows native receiving with no minimum amount.
Ethereum Network: Facilitates on-the-fly conversion from Ethereum USDt to Liquid USDt, with a minimum of around $22 and a maximum of $25K. Conversion fees, if any, are unspecified.
Tron Network: Features a similar setup to the Ethereum chain.
Under Settings, the wallet supports additional assets such as INF, JPY Stablecoin, PEGx EURx.
Backup
Backup is handled via a traditional 12-word seed, accessible under Settings.
Bitcoin Chip
An intriguing feature under Settings is the Bitcoin Chip, which allows asset transfers from a poker chip-like device to the wallet via a QR code scan.
Marketplace
The wallet includes a non-functional marketplace feature, expected to offer services like Bitcoin purchases, asset swaps, bill payments, and a virtual debit card for online transactions.
User Experience
The wallet's user interface is exceptionally user-friendly, making it ideal for beginners. However, it may not be the best choice for those expecting to receive very small amounts of Satoshis (below 1,000 SAT) over Lightning. For such cases, custodial wallets like Blink or Speed may be more appropriate.
MicroStrategy's Lightning Rewards program incentivizes customer and employee actions using Bitcoin rewards. This innovative approach leverages Bitcoin and the Lightning Network, offering a unique way to engage with stakeholders. The program includes an administrative portal for easy management and seamlessly integrates with enterprise systems like Salesforce and Zoom. This flexibility makes it suitable for various business applications. Moreover, the platform provides analytics to track the impact of the rewards program, ensuring businesses can measure and optimize their strategies effectively.
The Platform Architecture
Why is the Lightning Rewards Platform better than cash-based systems? MicroStrategy's Lightning Rewards program offers several advantages over traditional cash-based systems. First, it utilizes Bitcoin, which can be more appealing and innovative, potentially increasing engagement. Second, the use of Bitcoin allows for instant, global rewards without the complexities and costs associated with cross-border cash transactions. Lastly, it leverages the security and scalability of the Bitcoin network, offering a more secure and efficient rewards distribution system compared to conventional cash-based rewards.
What actions can be rewarded with the Lightning Rewards Platform? The MicroStrategy Lightning Platform allows for rewarding various actions such as customer purchases, referrals, participation in events or surveys, and online engagement. This versatility makes it a valuable tool for enhancing user interaction across different platforms and activities, potentially reducing spam and malicious bots by incentivizing genuine engagement.
Example Use Cases
Employee Community Contribution Reward employees with Satoshis for publishing articles, selecting the best answers, answering questions. The platform offers out-of-the-box integration with Salesforce (SFDC).
Employee Education Reward employees with Satoshis for completing learning modules, achieving certifications, and viewing educational videos. The platform offers out-of-the-box integration with Wistia and Adobe.
Employee Health Reward employees with Satoshis for achieving daily exercise time goals, hitting step count targets, and maintaining consecutive days of exercise. The platform offers integration with MoveSpring.
Mechanics
Employees receive a web and mobile wallet. They can withdraw Satoshis to any wallet by sending it to a lightning address, scanning an LNURL QR code, or pasting in a BOLT11 invoice. Employees also receive a Lightning Address that can be the same as their corporate email address to receive LN payments.
Web wallet
MicroStrategy's Lightning Rewards platform stands out for its innovative use of Bitcoin to incentivize and reward actions. This approach enables instant, global, and secure transactions, appealing to a wide audience. It seamlessly integrates with enterprise systems, making it versatile for various business needs. The platform's ability to track and analyze reward impact adds significant value for businesses looking to enhance engagement and measure the effectiveness of their strategies.
The Liquid Network is a federated sidechain of the Bitcoin blockchain. It was developed to address Bitcoin's scalability and speed issues. Unlike the Bitcoin main chain, Liquid operates with a group of trusted functionaries, not proof-of-work miners, allowing for faster transaction processing and some privacy enhancements not available on Bitcoin's main chain. You can use Liquid with the Greenwallet by Blockstream.
Liquid Network Logo
The idea of Lightning Network on Liquid: "Liquid Lightning"
The concept of Liquid Lightning involves leveraging the Liquid side-chain to build a second Lightning Network. This network would benefit from Liquid's unique properties, like faster block times and enhanced privacy options. This not just a dream, Blockstream launched experimental support for Lightning on Liquid in 2019 already.
Liquid's functionality for a better lightning experience
Liquid's advanced features can significantly improve the Lightning Network experience. Key aspects include:
Lower Chain Fees and Faster Channel Management: Liquid's 1-minute block time can facilitate quicker and more cost-effective channel management compared to the main Bitcoin blockchain, especially during high on-chain fee times on the base Bitcoin layer.
Advanced Op-Codes: Liquid's scripting system offers more flexibility than Bitcoin's. This could enable more advanced features in channel management.
Privacy Enhancements: Liquid supports Confidential Transactions and Confidential Assets, which enhance privacy by hiding transaction amounts and asset types, though it should be noted that addresses are still visible.
Interoperation between Bitcoin Lightning and Liquid Lightning
One of the most exciting aspects of Liquid Lightning is the potential for interoperability with the existing Bitcoin Lightning Network. Advanced wallets could seamlessly pay invoices on either network using submarine swaps, a method for exchanging assets across different blockchains or layers. Liquid Lightning has native support for atomic swaps, which simplifies implementation significantly.
Enhanced scalability through layered innovation
The Liquid Network presents a dynamic scalability solution, distinguishing itself with the capability to expand its block size as needed. This flexibility ensures enhanced scalability without imposing any risks on the foundational layer of the Bitcoin blockchain. Envisioning a multi-layered architecture, the ecosystem could evolve into a four-tiered system, each tier catering to specific use cases and striking a unique balance between key factors such as security, risk, and convenience.
4-Tiered Scalable Bitcoin Ecosystem
Bitcoin Base Layer: Serving as the bedrock with maximal security and decentralization, ideal for large, non-urgent transfers, long-term storage and and an achor for other layers.
Bitcoin Lightning Network: Offering faster, smaller transactions with reduced fees, suitable for everyday payments and microtransactions.
Liquid Network: Enhancing efficiency for larger, rapid transfers and trading, with added privacy features and quicker settlement times.
Liquid Lightning: The newest tier, combining the strengths of Liquid and Lightning Network, proposing a solution for instant, low-cost transactions, potentially with advanced features not currently feasible on the Bitcoin Lightning Network scalable to global levels.
This stratified approach allows users to choose the most appropriate layer for their transaction needs, aligning with their priorities whether it be speed, cost, or privacy, thereby unlocking a diverse range of applications and use cases within the Bitcoin ecosystem.
Risks associated with Liquid Lightning
While Liquid offers many benefits, it's important to recognize its risks, particularly its reliance on a federation. This structure introduces an element of trust, different from the trustless model of the main Bitcoin blockchain. However, for small transactions and quick exchanges, these risks might be acceptable, especially since it's unlikely users would store large amounts on Liquid Lightning.
Implementation challenges
Key challenges in implementing Liquid Lightning include:
Developing an Ecosystem of Client Software: Robust client software needs to be developed for users to interact with Liquid Lightning, and ideally we should not rely on a single team. In Bitcoin Lightning we have at least 4 large teams working on client software. Liquid Lightning needs at least 2-3 teams as well. The good news is that Lightning in general is designed to run on any blockchain similar to Bitcoin, which is why it was relatively easy to start Lightning on Litecoin (an altcoin based on Bitcoin). Liquid Lightning was also relatively easy to implement according to Blockstream who has already created Lightning support for Liquid on Core Lightning.
Bootstrapping Liquidity: Sufficient liquidity must be ensured for the network to function efficiently. This is possibly the biggest hurdle on the short term.
Mobile Wallet Support: Wallets need to be developed or adapted to support Liquid Lightning and submarine swaps between it and Bitcoin Lightning. Blockstream has made good progress on this front with Greenwallet.
Conclusion
Liquid Lightning presents an innovative approach to scaling Bitcoin transactions. Its potential for faster, cheaper, and more private transactions, coupled with interoperability with the existing Lightning Network, makes it a promising development in the cryptocurrency space.
Pingu's Burger, a new homemade-style hamburger restaurant, is located in the Thao Dien neighbourhood, Ho Chi Minh City (also known as HCMC or Saigon), Vietnam. The place is renowned for its excellent food, friendly atmosphere, and good service. Recently, the restaurant has decided to accept Bitcoin via the Lightning Network and has chosen Neutronpay as their payment service provider. If you're ever in Ho Chi Minh City, make sure to visit Pingu's for a juicy burger. And don't forget to have some satoshis on your Lightning wallet!
Pingu's Burger Entrance
Pingu's Interior
Pingu's Service
Pingu's Hamburger
Neutronpay, Pingu's chosen payment service provider, offers a range of products, including an API designed for businesses across various regions. In addition, it provides an app that caters to both businesses and individuals. There's a special emphasis on the mobile-centric markets of Asia and Southeast Asia, including Thailand, Vietnam, Indonesia, Malaysia, and the Philippines.
The integration of Bitcoin payments through the Lightning Network at Pingu's Burger is a testament to the evolving landscape of Bitcoin adoption in Vietnam. While not the first to embrace this technology, Pingu's Burger joins a growing list of forward-thinking businesses in the region that recognize the potential of Bitcoin and the Lightning Network as a payment rail. This move highlights a broader trend among Vietnamese enterprises to incorporate innovative payment methods, offering customers both convenience and a glimpse into the future of financial transactions. It also reflects Vietnam's commitment to establishing itself as a leader in technological innovation and digital finance within Southeast Asia.
Imagine earning Bitcoin effortlessly every day. With the growing popularity of Bitcoin, numerous services now reward users with Satoshis, the smallest unit of Bitcoin, for their time and attention. By engaging with multiple platforms, you can accumulate a substantial amount of Satoshis daily, leading to a significant reserve over time. Additionally, these activities offer the dual benefits of enhancing your understanding of Bitcoin and supporting businesses contributing to the Bitcoin ecosystem.
Advertising
A new niche in marketing is emerging, targeting users of the Lightning Network, a payment protocol operating on top of the Bitcoin blockchain. Here's how it works:
Sign-Up Process: Register with these services using your Lightning Address.
Earning Sats: Receive regular micro-payments in Satoshis for your engagement.
Relaxation often involves immersing oneself in the virtual world of mobile games. What if you could turn this leisure time into an opportunity to earn Bitcoin? Now, various mobile gaming platforms offer you the chance to earn Satoshis while you play.
Game platforms to explore:
THNDR Games: Engage in online gaming and earn a dozen or so sats daily.
LN Games: Hyper-casual gaming platform that lets you earn Bitcoin while having a blast.
News & Content
Several platforms reward users with Satoshis for activities like browsing the internet, listening to podcasts, reading or posting articles, and even managing emails.
Slice: Browse with an extension and get paid for looking at ads.
Fountain: Listen to podcasts and earn several hundred sats daily for an hour or so of your time.
Bitcoin Magazine App: Stay updated with Bitcoin news and earn 5 sats per article.
Stacker.news: Post content or comment and get paid by readers and the site itself daily. You can easily earn thousands of sats with popular content.
VIDA: A platform that allows you to earn per message or per minute if someone wants to reach you.
Education
Educational platforms are incentivizing learning about Bitcoin and related technologies.
Educational Portals:
Yzer: Learn about Bitcoin and earn hundreds of sats every day.
Blink Wallet: This is a lightning wallet that offers bitcoin classes that pay you for viewing them.
Binance / Coinbase: These major exchanges offer courses with rewards, but they often pay in altcoins, which may not be easy to exchange to Satoshis.
Shopping
Earn while you shop through these Satoshi-back programs.
An innovative way to combine fitness and earning is emerging.
sMiles: This app rewards your daily walking routine with Satoshis.
Earning Satoshis daily is an engaging way to immerse yourself in the Bitcoin universe. It's a win-win situation: You gain knowledge, support the Bitcoin community, and steadily build your Bitcoin holdings, all through simple, everyday activities.
The Lightning Network, built upon Bitcoin's infrastructure, possesses unique attributes that facilitate opportunities unattainable through traditional payment channels or even Bitcoin itself. These attributes include:
Permissionless Access: Anyone with internet access can utilize a Lightning wallet, regardless of age, social status, or geographical location.
Efficiency: Transfers over the Lightning Network are remarkably cheap, often costing a mere fraction of a cent.
Speed: Transactions are nearly instantaneous, typically completed in a second or two.
Streamability: Payments can be extremely small and frequent.
Hard Currency: The network deals in Satoshis, which are fractions of Bitcoin – the most robust form of digital money, highly sought after globally.
Here's a dive into the imaginative business applications enabled by these features:
Real-Time Data Streaming Payments
The Lightning Network allows for dynamic pricing in real-time data services like live feeds or stock tickers. Users can pay per second or minute, ideal for AI models requiring sporadic data access, bypassing the need for continuous subscription models.
Pay-Per-Use Software Features
Imagine a photo editing software where basic functions are free, but advanced features are available via microtransactions. Users pay only for the time they use these enhanced tools, offering flexibility and cost-efficiency.
In-Game Actions and Events
Lightning can revolutionize in-game economies, allowing players to use micropayments for special areas, events, or even player-to-player transactions. This system could attract gamers and entrepreneurs focused on enhancing gaming experiences.
IoT Device Interactions
In the IoT world, devices could autonomously transact for services or data. For instance, a smart car could pay for real-time traffic updates, or households could earn Satoshis by sharing electricity usage data, akin to TV viewership metrics.
Crowdsourced Research and Data Collection
Participants in data collection projects could receive micro-compensations for each data point they provide, such as survey responses or mobile sensor data.
Public Wi-Fi Access Time
Users could pay precisely for the Wi-Fi or cellular data they use, with automated systems finding the best available rates for secure internet access.
Micropayment-based Charity Donations
The network enables minuscule, frequent donations to numerous deserving causes, broadening the scope of charitable giving.
Pay-Per-View Educational Content
Students could access specific lectures or resources on a pay-as-you-go basis, allowing for targeted learning without the expense of full courses.
Pay-as-You-Read E-Books
Develop an e-book platform where payments are made per page or chapter, encouraging exploration without the commitment of full purchase prices.
Automated Micropayments for Content Attribution
This model would allow for automated, small-scale payments for using digital content elements, a currently impractical task due to the transaction frequency and amount.
Micropayment-based Environmental Actions
Create a platform rewarding eco-friendly actions with small payments, like recycling or reducing energy consumption, incentivizing sustainable behaviors. Drop an empty aluminum can to a box, get an LNURL QR code to get sats.
Dynamic Pricing for Digital Advertisements
Revolutionize digital advertising with a model where payments are based on actual views or engagements, eliminating intermediary entities.
Pay-Per-Use Home Appliances
Offer home appliances on a pay-per-use basis, reducing upfront costs and allowing flexible management, like a home-based, pay-as-you-go laundry service.
Decentralized Content Fact-Checking Platform
Develop a platform where users can submit content for verification, rewarding those who provide accurate information.
Each of these ideas leverages the power of micropayments to foster innovation across various sectors. From transportation to environmental sustainability, and healthcare to education, the Lightning Network opens new avenues for community engagement and benefit. This is a call to action: draw inspiration from these concepts, build on Bitcoin and the Lightning Network, and launch your venture in 2024.
