TFTC: A Bitcoin Podcast - #298: Is it a BLIP or a BOLT with Lisa Neigut

Episode Date: January 22, 2022

Join Marty as he sits down with Lisa Neigut to discuss everything going on with the Lightning Network. Follow Lisa on Twitter Follow Base58 on Twitter Learn Bitcoin from the world’s best bitcoin education company at Base58 Shoutout to our sponsors: Cash App Unchained Capital Braiins HodlHodl Bitcoin 2022 - use the code TFTC for 10% off

What is up, freaks? It's your boy Marty Ben here to introduce this rip of TFTC. I sat down with Lisa Nigut from Blockstream, who's working on Sea Lightning. We had an incredible conversation, very fun conversation. She's a great conversationalist, Lisa. She has a really interesting story of how she got to Bitcoin and specifically working on Sea Lightning. Don't be shy, I think is the lesson from her story. I hope you guys enjoy it. I certainly did. Can't wait to have Lisa back on the podcast. This rip was brought to you by good friends at the motherfucking Cash App.

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hodl hodl hodl is also another company leveraging bitcoin's native multi-sig properties and what they're doing specifically is they're providing a lending product for you a two or three multi-sig escrow account in which you hold a key your counterparty in the loan holds a key and then hodl hodl holds the third key what you do is you put bitcoin in this two or three multi-sig quorum as collateral, you get stable coin liquidity in return. You can go spend those stable coins as you see fit. And as long as you're paying back that stable coin loan, plus the interest associated with the loan, you're going to get your sats back at the end of the day. The beauty of this setup is again, since you hold one of the keys in the two or three multi-sig quorum, you can't just

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bitcoin event in the history of the world uh it is being held in south beach miami april 6th to the 9th 6th to the 9th south beach miami all four days will be jam-packed with exclusive content exciting announcements and an incredible lineup of bitcoin speakers artists and leaders day one is industry day for enterprising bitcoiners who are looking to build a business or career within the ecosystem day two and three are general conference days featuring speakers like el salvador's president naib bukele apparently he's got a big surprise coming out uh ceo um ceos in space including michael saylor elizabeth stark jack mallers adam back, Marty Bent, and hundreds more. The conference caps off on the fourth day with the world's

first and largest Bitcoin music festival, Sound Money Fest, which is headlined by rapper and fellow Bitcoiner Logic. Steve Aoki got added to the list. CL, Run the Jewels, San Holo, San Holo, excuse me, Deadmau5, they're all going to be there. Last year's conference sold out, and this year's is on pace to be 3x larger, so make sure you grab your tickets before it's too late. Visit b.tc slash conference to learn more, pay in Bitcoin to save and use the promo code TFTC for 10% off. And I'll see you in Miami. Matt and I will be doing a live rabbit hole recap. Enjoy this, Rep Freaks. So it's all acting like safe haven.

I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. What is up, freaks? It's your boy Marty Vent in the new studio. Lisa, you're the first guest in the new studio. Yeah.

Well, thank you for joining us. Sorry, we're starting this an hour later than we originally agreed. We're trying to throw it together. It's chaotic. Thank you for bearing with us as we do all this. Anytime. I'm excited to be the first one. This is great.

Well, I'm excited to have you here, free freaks at home. This is Lisa Naggett from Blockstream who works on Sea Lightning. I'm very excited to have you on. We haven't really dove into Sea Lightning here. We were just talking before we hit record about the inter-implementation. I don't want to say squabbling but the way it negotiation happens

is it a blip or a bolt before we get into all that I want to learn a little bit more about you like how did you get into Bitcoin and then specifically working on the lightning network and sea lightning yeah it's actually kind of a funny story I'll try and I guess

give the abridged version like Bitcoin was like one of those things like I knew about for like a long time but like i don't know sometimes i kind of have to be the sort of person that like you have to like drag me into it to get me interested in it um so like i started working my first like bitcoin intro to bitcoin was i actually got a job at the cash app working on their bitcoin back end in 2018 yeah so i was working on like the custodial wallet team at cash app for like for a little bit and I read

Mastering Bitcoin when I started on the job and like I was trying to transition so I knew the Cash App team for like a few years before that because I had been an Android dev so like that's kind of how I had like I knew people on the team sort of thing and they're like we're hiring on the Bitcoin team do you want to work on Bitcoin

I was like hell yeah like yeah I want to work on Bitcoin that sounds awesome anyways so like I started you know kind of just actually learning stuff about Bitcoin while I was there read Mastering Bitcoin by Andreas which is just an awesome book um really like actually andres's book like really made me like be like wow this is so freaking cool like bitcoin's just like so cool as an engineering project like it's

just really really cool um yeah and so then i kind of like got more into the bit process and like i think everyone at some point on their journey into bitcoin runs across the um i call it like the timestamp header bug there's like the header in the bitcoin block had the bitcoin block header time stamp field will overflow at some point in like 2100 and something like eight yes this is uh this is one of my favorite uh topics to talk about i actually think we were talking about it last night there isn't you need to hard fork the protocol at some point yeah yeah so okay so i found this and i was like okay this is like i found it i actually recognized it while i was reading andreas's book because i'm a total nerd and i was like oh this isn't gonna work um and

So then I was like, okay, but once you have a little problem, that becomes a really good jumping off point to start digging deeper into a big system because you have a very focused thing to look at. Whereas if you come at the BIPs and you're like, I don't know, newbie to Bitcoin, you have no idea what any of it is. It's just like, it's overwhelming, right? Whereas after reading Andrea's book, I kind of had this small, I was like, okay, what would it take to change this, right? That's like a really specific thing you can then start kind of investigating. You could ignore everything that isn't related to, like, the Bitcoin block header or, like, timestamp shit, right? And you just kind of focus in. So, you know, in order to change Bitcoin, you have to write a BIP.

Yeah, yeah, yeah. You have to write a BIP, which is a Bitcoin, I think, improvement proposal. So there's a whole bunch of them up on GitHub. So I was, like, going through them and, like, I don't know. For whatever reason, I was just, like, concentrating on the ones that touch, like, the block header, like, the version stuff. And most of them were version related. um and so this is so random i just like you know at the top of every bit there's an author's list and it lists emails so i looked through a couple of them i found one bit that for whatever reason

seemed like a good candidate um like for what i wanted to change which was a block header right there were three emails listed it was peter todd rusty russell and someone else i don't remember who the third person was sorry third person um and i like so like i do i'm like kind of a little bit of a terrible like a stalker snoop on the internet um like if I have a um I don't know so I took the emails I did what I always do with an email which is pop it into google and see what pops up and like do like the like okay what can I learn about these people so I found like Peter's blog and Rusty's blog and for whatever reason like reading Rusty's blog I was like Rusty's the right person to ask about this so I sent Rusty just out of the blue like this email I was like

hey here's the problem it's like here's like the thing I found here's what I've been doing to look into it like is anyone working on this is it worth fixing whatever whatever and this was like i was like a month into like my job at square like i just started this new job whatever um just started working on bitcoin shit and when i just like randomly found some guy's email and just sent him an email like hey um like uh well like you know let's like talk about this he was like oh yeah it took him like but then like you know and i kind of like even within square like tried to find some friends that i had on the cash app team to like be like hey this would be kind of a fun thing to do like spare time whatever my friend's like I'm too freaking busy I can't so like for a

little while I was like trying to like I don't know figure out what it would take to do this like sort of a side project at work meanwhile like I'm supposed to be learning about like Square's like system you know like it's like a whole big code base all like in Java and stuff um yeah I think they've moved over mostly they've been when I left in 2018 they were moving starting the move over to Kotlin I think they're moving a lot of stuff over now anyways that's like separate anyway so i sent this email and then i started actually getting into like work stuff like i got like a project i was actually working on the pipeline to enable deposits into cash app um so i started working on that stuff and then a few months later rusty emails me back

i was like wow great question here let me like put you in touch with peter willa who like knows more about this and like i have okay like here's the thing though i had no idea who any of these people are i have like zero idea who i'm talking to or like who i've emailed or any of it I've like emailed a rando on the internet and he like finally wrote me back two months later and I'm like okay great and so like at that point I like sent them some stuff and then Peter and I have this exchange where we go back and forth we're like how would we fix this and like I'm like I think it ends it's like okay let me like write a few tests and I'll get back to you because some of the stuff you had suggested like wasn't going to work because of the way that um the end lock

time stuff rolls over anyways there's like you can't really let it roll over because the end lock time um the way that the unlock time thing does is there's like a point at which underneath a certain number those are block heights and then above it it's actually like the time stamp so if you let the time stamp field roll over all of a sudden you have this problem where you don't know if it's actually a time stamp or a block height for lock time stuff anyway so it wasn't as simple as like oh we'll just let it roll over and i'll be fine um and so the problem we're describing as specifically to do with the way like Unix timestamping

was implemented in Bitcoin. Yeah. Well, they call it the 2068 problem, but it won't happen in Bitcoin until like 2106. Yeah, because they have an extra bit. So the amount of time you have doubles. Yeah.

Because of the way that powers of two work. But yeah. Yeah, yeah, yeah, yeah. Yeah, so it'll roll. So eventually, so basically what that means is it's like, you know how like,

I don't know, you like have like a clock and it's got counters and like each of the numbers slips over. it goes from zero to one or one all the way up to nine and then we get to nine what happens it goes back to zero it flips back to zero and so if you have like so if you think about like data like a data type in a computer it's like basically it's like having like you know so many counters in a row and you just keep flipping them up at some point you get to the highest number you can flip

all those numbers up to right and what happens when it flips over you go back to zero and does that confused the Bitcoin network. That's the question. So the problem is at some point it's going to flip all the way over to zero and it's going to happen. We can calculate out when that's going to happen sometime in 2100 and something.

I got yelled at at the Baltic Honey Badger conference in 2018 or 2019. I forget exactly what year it was. I asked Adam Beck. He was on stage. I think the topic of the conversation was about

soft forks, hard forks, and protocol upgrades. I was like, don't we have something we definitely need a hard fork? Well, that's the question, right? That's what I was talking to Peter about back in 2018 and this thing is like, yeah, at some point, so if you can handle it in software,

is that a hard fork? Oh, maybe. I don't know. Anyway, something's going to have to change. I get really confused on the difference between hard forks and soft forks, not going to lie. But, yeah, there's going to have to be an update pushed yeah it's gonna be interesting now that's like the whole question around this particular unix time stamping problem in bitcoin is like do we do it later and a lot of people are like no

let people in the future think about them yeah yeah when it's 2100 on like the wall clock they can then we can start thinking about it because then they'll have like i think either like 8 to 20 years to fix it and then it's gonna be like y2k all over again like the y2k for the future generations yeah that was that was a that was as like a nine-year-old in 2000 the whole Y2K lead up to that was very very interesting what the hell was going on mommy and daddy yeah people were worried about it I actually so I've I've had like a weird career I worked at Walmart one summer in their information systems department in Bentonville Arkansas so I spent three months in but I had a great time actually you can kind of hear it like when I was working

there i like picked up a bit of an accent you got a twang i got a twang i mean it's kind of but i like really put it on when i worked there because i realized that my co-workers would like pay attention they could like understand me that's terrible but yeah anyways i worked there for three months i had a great time it was really fun walmart's an incredible organization like i mean they have to be right they're like the biggest like they're pretty massive they're big and they like have they work in like every company any every country and like so their information systems department's pretty cool they're like weirdly cutting edge in like weird ways and this is i worked there a long time ago but

um anyway one of like the guys in the group had like worked on the y2k project like like keeping walmart systems up had like yeah it was funny he seemed it was like years later and he still kind of seemed kind of scarred about it yeah i mean it turned out to be a nothing burger right Because people like him worked real hard to make sure that everything still worked. Yeah. So he was like one of the guys in office space that was just going in and manually doing everything. Basically, yeah. Yeah.

I think it was a lot of work. Thank you for filling out all those TPS reports. But we're here to talk about Bitcoin. So you're at Square emailing Peter Willa and Rusty about this problem. At some point. I mean, let's be honest. At this point, I write Java. I've been an Android engineer for a long time.

I kind of took a break and worked for this WebRTC company, which was like Redux, ReactJS, like stuff for a year. So like that was JavaScript. Now I'm like back in Square, which is like all Java and some Kotlin stuff. And like talking to Peter and Rusty and I'm like looking through the Bitcoin core, which is all C++. It's like, I don't know C++. I have never written a line of C++ in my life. And I'm like in this email thread, just like talking to Peter, like, you know, being like, hey, I mean, I can look through the code base and had found everywhere that I would probably need to change to like make it work or whatever. I'm talking to Peter and like at some point I'm like, yeah, let me like write some tests and I'll get back to you.

Like, have I ever compiled Bitcoin Core? No. Like, I will figure this out and get back to you though. Like Lisa's like, I was like, yeah, sure, I'll figure it out. It won't be a big deal. Anyways, I never actually got around to doing it because it was like fine, whatever. And but Rusty was like, hey, we're like interviewing for a new lightning. We have like a lightning protocol position we're trying to fill.

Do you want to like apply for it? And I was like, dude, I just started a new job. Like, no. Rusty poaching. Yeah. But I was like, that sounds awesome. Like, yeah. I mean, like, do I want this job?

Yes. Does it feel responsible to like leave this organization? Like to leave Square and like the like I've been working on, like, you know, I'm working on like the deposits project. Like I'm going to leave this thing in the lurch, whatever. But I was like, yeah, okay, yeah. He was like, okay, we'll just interview. I was like, okay, fine.

I will interview and I will let you tell me no because like I don't know C. I've never worked on a protocol before. Like I don't actually know anything. Anyways, but yeah, they ended up offering me the job and then I was like, well, I'm not going to say no. That's an incredible journey to Blockstream and random email. yeah

after finding a block header problem yeah in a random book yeah like yeah so yeah super freaking random

and like yeah but it's been fun it's been great I don't know I have no regrets you know well you said

when you were reading Mastering Bitcoin there was something about the project from a software engineering perspective that you're like this is cool what about Bitcoin specifically

it's just like so well engineered in terms of like how all the pieces fit together to make a working system and like how the incentives so like i'm also like i really like kind of like economics incentive design like

that kind of thinking like how people work what makes people do things it was like interesting um and the thing that's so cool about bitcoin is like i would say it's probably one of the first real tech projects that like married incentive design with protocol design and like did it in like a really incredible way like we've seen a lot like a lot of like the crypto industry now there's like I think a lot of people like playing with this idea and really interesting in different ways like outside of Bitcoin but like Satoshi like was a you know he was like pioneering that way I mean I mean I think you should get a a Nobel Prize it's it's yeah and like yeah like no joke yeah and like so I mean I didn't study computer science in undergrad like I went to University

of Texas which we're down the street from which is cool hook them um but uh I had to get a hook them in there yeah but um I studied like I did like liberal arts and business stuff like I didn't like do regular regular computer science classes like part half of my career in technology I've been working as a software developer for a decade now um but like the part of like getting into computer science has always been this question to me like okay what do they teach you in undergrad like what do you learn what do computer science grads walk out of the door knowing that I don't know if that makes sense it's like kind of just like this i mean i'm pretty curious person always just like what on earth is it and i've never like sat down and like actually looked at all this stuff

maybe i've glanced at a few syllabuses but i'm like that's too much work i'll like figure it out just by like talking to people or whatever anyways some point i figured out there's this whole field called distributed computing um in fact one of my um one of my co-workers christian decker got a phd in like the distributed computing field um he ended up studying bitcoin so christian was like the first phd person to get a deep masters in or like whatever the thesis is on bitcoin but he started out he was in the distributed computing like group if that makes sense and so bitcoin was like solving problems that for a long time in computer science were considered distributed computing problems okay so at some point i read a distributed computing textbook

And it talks about all the different ways that people have thought about to write protocols to get computers that are in different places to all kind of understand the world at the same place, right? They call it consensus. So we have a whole bunch of computers that are spread out over a big distance. How do you all get them to agree on what the state of the world is at that particular moment? Well, this is the Byzantine generals problem, right? Well, that's like one solution to it, right? Well, it's kind of like, yeah, actually that's like the Byzantine generals problem is like, okay, but what do you do if like some people are lying, right? Yeah. Yeah. So that's like, but that's, yeah. And that comes from this distributed computing, like subgroup of computer science thought and problem thinking. Right. And like the thing that like, so I read this textbook and it doesn't mention Nakamoto consensus because Nakamoto consensus is so like, and like the thing about the Satoshi white paper, like, you know, Bitcoin in general is that like, it was like a novel step forward.

And like how we think about consensus is using like these time chains, blockchains, whatever to, um, to keep track of like, what is like the next valve? like what is the valid state that everyone agrees on and it's a blockchain and like that is like i don't know i'm not sure what the formal definition of nakamoto consensus is i know there is one but like at some point and this was like recently i guess i mean i've only been in bitcoin for like three and a half years so like three years now anyways but like um though like nakamoto consensus is a novel advancement in the field of distributed computing you know it wasn't in the textbook yet like and i read the textbook like two years ago you know what i mean and like how long has the white paper been out like 13 years at least yeah and so it's like really

interesting to me that like i think there's like a whole industry now like there's a whole crypto industry that uses nakamoto consensus which is blockchains to like do distributed conceding like at scale etc and like i don't know this textbook i read like two years ago didn't even mention it I don't think. Hey, the textbook writers are slacking right now. Yeah, so there's definitely like a disconnect between like what's going on in like industry and like what's going on in academia, which is kind of interesting. That's typical.

Yeah, it's super typical. Academia is always a few steps behind and never really over the target either. Yeah, anyways. Yeah, we're in the binding industry. We're dealing with academia writing terrible papers about energy consumption and Bitcoin destroying the earth. oh interesting yeah that's the other thing too i bring up mining industry because that is one of the interesting things about nakamoto consensus and the incentive mechanism that's

toshi designed to me is like now it has like external uh things that are external to the bitcoin network and its incentive system like energy producers like oh are we wasting energy let's put a bitcoin mine on here like we'll make more money and it's like starting to affect other industries and sectors of the economy. And then those effects within those small industries will then have ripple effects within their industries. And it's like, it's going to touch everything. It's crazy.

You know, I feel like I've tried to have conversations with people that are outside Bitcoin and that for a long time were anti-Bitcoin. So I got into Bitcoin in 2018 and I started working at Square. And I'm in these chat groups with a lot of lady engineers that like tend to be I think more I would say on like the leftist like I don't know anyways I was like at some point I was trying to get all my lady engineer friends to give me ten thousand dollars

each so I could start a bitcoin mining operation to like so we could like so like we as lady as women would have our own bitcoin if that makes sense was like the thing I was like there's all these boys are getting this bitcoin girls like let's put our money together let's like get some Bitcoin. Cause the boys are going to get all the Bitcoin and that's not like, like, that's not right dudes. Like, let's just like, let's get, so like, you know, I like kind of like talked in a group and then, you know, when you're like a little bit of like, I guess alpha, as you call it for people who are doing like community organizing, you also need to like do one-on-one chats with everyone outside of the group. So if you're trying to like move the group consensus,

make sure you talk to everyone you're trying to get a decision out of beforehand, one-on-one anyways um it's a good tidbit yeah um like you talk to every single person before you end up in that room where the decision is being made um anyways like uh not that i do this but anyways um the uh yeah so i was like so then i was like dming everyone right individually also to be like hey this is like a really good idea let's like do this thing i will like make it happen i just need capital investment from you all my friends I'll like handle

like getting the equipment I don't know how I was going to do this again this is like me being like I will like yeah just plug it in at the office or we'll be stacking sets

this is like very similar to me being like on the like oh I'll like figure out how to run your C++ project and like write some tests I was like don't worry about the details guys

like I just need the capital and we'll make this happen like I'll figure it out none of them were interested every single one of them told me that they had severe like um reservations about the energy usage of bitcoin and they like didn't want to participate in it because of that and like yeah anyway so that's like the group of people i've

been talking to about it and i'm like recently i'm like guys you don't understand like having a like buyer of last resort for energy like changes the game and first resort buyer first resort and last resort it changes the game it's it completely changes the game and like it's so hard to like I think this is like kind of one of those interesting things where like now we all use electricity

every day every single one of us no one has any idea how it's produced or delivered or it's like what the pricing mechanics are or like kind of

how fucked up all the pricing shit is like the utility level stuff and like yeah like I mean it is a monopoly and like a lot of them

oh there was a great tweet this morning by Judge so like Judge Alsop out of California he's like famous from the Google

versus oracle case around java he's like really famous in most tech circles for being like he actually took the time to learn to code to like be able to offer like a good concrete judgment on this like google case that was a few years ago just today they released so he's been so pg and e is a big public utility that has a monopoly is my understanding on a lot of like the california distribution stuff they've been in trouble which is like slightly different than production you know i'll get that but it's like you know it's a public utility and it's monopoly and they've been setting fires in california for the last five years like intentionally no but like their

equipment is so out of date they're so behind on maintenance and haven't invested in keeping their their grid up because there's no competition well california's got terrible grid problems yeah yeah but like anyways there's this great like letter small snippet that came across my feed this morning from judge alcep so they've been in probation because like they broke the law and then they ended up in probation like a criminal like this big corporate entity has basically been like in probation with the state of California and this judge has been presiding over it and the five years are up and so they can like statutorily which means according to the laws as they are cannot extend the probation any longer and also it's just like this dude is like a repeat offender

they keep lighting like things keep happening they're not keeping up with their like maintenance shit i can't do anything but like as an or like as a whatever community we gotta like fix it i don't know call them out fucked up shit yeah yeah i mean california's got not only i didn't know their grids were outdated and dilapidated like you just described uh they're decommissioning reliable reliable nuclear natural gas plants oh that makes me so upset when that happens i'm sorry like the whole nuclear thing i'm just like why guys stop it why why are you hitting yourself stop hitting yourself it's

it's mind blowing we all we live and again like going back to your lady developer friends who are like

oh we have a reservation because the energy is like weird too like people don't know how any of this happens I mean

like so my my take on Twitter has been recently like I've been like I don't know

just kind of like people are like kind of yelling about the Kazakhstan thing because they're just burning all their coal sure fair

yes correct they were burning all the coal Kazakhstan Kazakhstan Kazakhstan that one yeah um yeah they um don't worry I'm like a I'm a chronic mispronouncer of words here cool yeah anyways and I'm like wait where was I going with this Kazakhstan I'm like we can't deliver any of this lady friends of reservations oh yeah

and I'm like okay like you don't really care what they're using the energy for you just care that they're burning a bunch of fossil fuels why don't we like

cut to the chase and just ban fossil fuels oh well don't let's not do that but it would solve like all the people are complaining about like okay like

it wouldn't solve anything if we're gonna ban something let's ban the thing that's actually causing the environmental issues right let's ban let's ban talking

about these issues if you actually don't understand how any of that stuff works that's what I want to do but it seems really like if you you could ban all the

cryptocurrency in the world and that won't stop the environmental problem that you claim to care about yes I don't think there's an environmental problem personally

yeah but but assuming that you think there's an environmental problem if you're starting from this basis and you're like your rational conclusion

is that we should ban cryptocurrency it's like well I think you're missing a step here do you actually want to save the environment the cryptocurrency isn't the problem

it's the source of its energy and it's not all cryptocurrency that's using that source of energy why don't you put all your energy like emotional energy towards banning the thing that's actually causing the problem and not something that's like yeah well

it's so frustrating again going back to just the pure reality that most of these people don't understand any of the intricacies that a lot of energy is being wasted we waste a shit ton of the energy that we produce like let's focus on being more efficient with that yeah um and i'm not saying like oil and gas i'm a big fan of i don't think yeah i don't think there's an environmental like existential crisis on our

hands but with that being said like we shouldn't pollute should be efficient should be as clean as possible like we should steward the earth uh with intent which i think we have done a very good job of in uh in recent years too like we've reduced what is the largest driver of carbon reduction in the united states it's natural gas because it helped us decommission coal plants because we're more reliable natural gas that's cool like oil and gas is actually one of the biggest drivers of carbon emissions that's something you care about i think but this is we can get deep down

this rabbit hole I don't want to go deep down I really want to talk about lightning and sea lightning and like how oh yeah I mean it's pretty impressive that you went from

Java Android developer working at Cash App you email Rusty talk with Peter a little bit Rusty poaches you and then like

I mean you're one of the most prominent sea lightning developers in the world right now yeah that's true isn't it I mean I think Rusty and Christian

are also like very much deserve to be more prominent they've definitely written more lines of code in that code days than I have well that's the thing see lightning how would you describe it

before we get into the negotiations between protocols you're looking forward to this it's cool I'm looking forward to it because I'm genuinely curious as somebody who is in Bitcoin has been in Bitcoin, champions lightning who's building businesses on lightning

and leveraging it what is it I want a clearer picture of the future and how this all works together. Yeah, that makes sense. C-Lightning, for a long time, we called ourselves the reference implementation and that the goal of it was that it would be a C.

Back in the day, reference implementations were mostly done in C. So Rusty's like, we're going to write a reference implementation of the protocol in C. Rusty, Russell, who's my coworker, generally you could think of him as the editor-in-chief of the bolts. He's written the vast majority of them.

Not to say other people didn't contribute or help to a lot of it, but the actual authorship was like a lot of his. And Bolt stands for? Bases of Lightning Technology, I think. Yes, yes. Bases of Lightning Technology. It's a backronym. They wanted it to say Bolt,

and they just invent some letters, some words afterwards. They backed into it. Okay. Yeah. It's a backronym. But yeah, it's Bolt. So Rusty is really a big driving force behind a lot of the spec stuff, especially early on.

Now I really believe it's more of a collaborative effort, but my understanding is the early years is really that. So C Lightning was Rusty's implementation of the Lightning stuff in C. And so I think we've kind of tried to be definitely more focused on being the reference implementation and having just like, okay, we do what the spec says. Um, yeah.

Um, so we haven't like, I think I say that cause like, I don't, we haven't really been focused on much on like use of usability of the, the note. Like it's very, it's usable, but I think like, um, I think the easiest way to kind of explain this difference is like for a long time we didn't have a way you could set up a lightning note and then call it over like an HTTP over the web. Um, we use like very Unix-y style ways of doing that, which aren't really, there's not a lot of people didn't know how to handle or use that or like stuff.

Whereas I think L&D had a much better understanding that they needed to be embedded inside an ecosystem of developers that were using web technologies to like access it. So they used like, they added features to their node early on that made it really easy to like build on top apps on top of it basically.

So I think that's like kind of like one of the different, I think that's like a big kind of philosophical difference of the two. Yeah, so C-Lightning I think is definitely more Unix-y because Rusty was a long-time kernel maintainer for Linux. He was actually, yeah, fun fact about Rusty, he was one of like Linus Torvald's like lieutenants. I don't know exactly what software package he was like managing.

I think there were a couple, but like, yeah, he's like been in the open software C development scene for decades. So he knows his shit. He knows his shit. And that's why having him do a lot of the protocol stuff was incredible for the Lightning Network because he has decades of protocol-level experience that the Lightning Network got to benefit from.

Was it multifaceted in a sense benefit from the code that he writes and then the process of adding and reviewing and all that stuff? Yeah, and I think he was probably the biggest driver behind the process of how the bolts would get moved forward etc yeah

so he's like yeah he's brought a lot decades of expertise of managing kind of large open source projects to the lightning scene Rusty if you're out there

and you're listening I hope you're enjoying your vacation yeah thank you for all the work you do yeah and so

Rusty had the intent of this being like a reference implementation got the bolt process we got the build process and yeah

now we've got sea lightning and we've got a great team of people and the like we have a pretty decent size and it's not huge

it's like maybe 10 people of like contributors that don't work at Blockstream that come in and add stuff to the project

yeah yeah it's been fun so how how do you think people like somebody again like me

building a business somebody's thinking about building a business I was just showing you that getmash.com that looked pretty cool so cool somebody wants

like enable micropayments on the web and paywall content how would they do this with sea lighting

so the good news is that we're going to start shipping a way that you can interact with the node over like

the web in our next release so it's like probably a few years later than maybe would have been amazing but it's like our next release

we're definitely going to have it we're super excited Christian Decker's been working on it for the last month or two he's actually

porting over a lot it's going to be our first rest in sea lightning so it won't be pure sea lightning but it's like in a plug-in

so it's not in the core stuff plug-ins are basically little apps you can write that interact really closely with the node

and in some cases modify the behavior anyone can write one but there's a couple that we ship with the binaries so it just works

out of the box and that'll be one of them so it'll be like a standardized interface that you can then use to build apps on top of. That seems pretty dope.

Yeah. Since C Lightning is written in C, I think that's another thing that goes into the evaluation of these different Lightning implementations. C is considered a very clean and predictable language, correct? Yeah, and slightly more performant, I think. The thing, C is really cool. like i i would only recently call myself very proficient in c it's taken a few years

which is fair um but c is so freaking cool as a language like having come from like javascript and i mean i love go and um job is a long time java developer in the app world um like c is just it gives you it's like it's kind of like having a really sharp knife you can make really cool intricate designs with a sharp knife but if you're not careful you can slice your finger off blood everywhere kind of thing so like I don't know I'm like reaching that level of artisanship where it's like anytime I move to a different language

I'm like but I don't have my knife isn't that sharp like I can't make the like fine grain little cuts it's a lot more responsibility of writing a C app is you have to manage and maintain and kind of keep track of memory which is like a thing that in other languages have little

like maids that come around and clean up behind you but in C you're responsible for doing that but because you have control and responsibility for that

to some extent it gives you the ability to do things in more compact and like performant ways which I think is cool maybe Rust

does the same thing I haven't ever used Rust I know people really like it Rust is hot right now at some point I will learn Rust not today

but it would be really fun to kind of just see like how much control Rust gives you over certain things that's what LDK was right at Rust

right? it is yeah yeah though well yeah I shouldn't yeah well just say it

come on you're going to say something yeah I've heard so Rust was Matt Corral or LDK was Matt Corral's first Rust project

and I hear that there's a lot of like Rusty idioms that it's not the it's not the most Rust-ish app that exists because it was written by someone

who was new to the language I'm sure he's got a huge team of people who know Rust I'm sure he's like a lot better at Rust now than he probably was when you started it a few years ago. But I've definitely heard feedback

that it's not the most idiomatic Rust project that exists. It's a C developer writing Rust. Yeah, exactly. I mean, you should see me write Python. It's like the C-est Python you've ever seen. You should see me write HTML, CSS. It's pretty terrible. When we were DMing months ago to come on,

you're like, we're waiting for this big release, and then I'm going to come on. Oh, yeah, that's right. Because I was going to talk about the liquidity ad stuff. Yes. The dual funding thing. Let's talk about it. Oh, my God.

The dual funding thing is exciting for many reasons. It's really, yeah, I get excited about it. Because it could add privacy, on-chain privacy benefits, correct? Some, yeah. It kind of depends on what level of privacy you're, man, this is an interesting question. So, like, part of the reason that I think L&D team has not signals that they support the dual funding protocol that I've written and implemented.

My understanding, based on a conversation that happened in 2018, so it might be a little outdated, has to do with this privacy stuff. So we should talk about it. Yeah. So the general thing with the dual funding thing is it lets you build a transaction with a peer, another Lightning Node peer. Downside of when you're building a transaction with another peer is you have to tell them what your inputs are.

So the great thing is, so then it kind of becomes this like, so let me zoom out a little bit. Okay, so ideally you can build a transaction with a peer or with multiple peers at the same time. And in Sea Lightning it's actually implemented that you could open a channel with two or three people at the same time and all of you produce one transaction and everyone puts their own inputs in, et cetera.

So it's a decentralized protocol, basically, for building kind of your own coin joints that have the outputs, like some of the outputs are Lightning Channel outputs, which is pretty cool. Yeah, it sounds a lot like JoinMarket. Yeah, you don't have to pay a fee to anyone. The benefit is you get a Lightning Channel that's open. And then another nice thing about it is that right now when you open a lightning channel, only one side has an opportunity via the protocol that exists to put funds in it. People have built like stuff on other layers, but at the end of the day, those are kind of complicated to do because only one side like constructs the transaction, so to speak. And then you need like a whole nother way of communicating, et cetera. So we wrote this whole protocol that lets you negotiate with another peer and both of you can add money to the channel, which means when the channel opens, you can use it both ways.

you could receive money or send money immediately as soon as it opens in the same channel which is kind of which is massive yeah

which is like the whole goal of the project was to make it such that when you open a channel both sides can already put money into the channel yeah because this thing

we're the most common way to open a channel now and like create liquidity on both sides if somebody opens a channel at me and then I open one with them

yeah but then you have two channels which is more expensive for gossip reasons because every channel you open creates three new gossip messages so like gossip grows every time you open a new channel the gossip burden gets bigger and bigger and bigger yes um sea lightning pretty much forever has always been like you can only have one channel per pier which helps save on the amount of gossip

that we generate which is like a design constraint that was intentionally put on sea yeah and one of the reasons was that we'll have splicing soon which means you can move money in and out of the channel while it's still open, basically. It's basically like dual funding, except that it happens while the channel's open instead of at the open. Basically, you can renegotiate it, and then they could be like, well,

people could always splice more money in or out if they needed to. Anyways, there's like, the whole multi-channel thing is kind of interesting. We're actually, we're like, this release, we're like doing, I would call like our usability release. We're adding the ability to do multiple channels per node just because so many people's workflows

have developed that way because of all the limitations in the original thing so we're adding it so people can still use their same workflows but do it on c lightning if that makes sense um so that'll be new for us as well as like this rpc thing so now you can like talk to it over the web it's gonna be a whole new wild world for c lightning like what's an example of one of these workflows well like you just did mention if you want to get liquidity going both directions you both have to open a channel and put funds so you both have to have a chain you both have to have a utxo on chain to create it independently, right?

Yeah, you each have to move a UTXO. Yeah, exactly. And now there's two UTXOs in-chain, one for each of those channels. One for the channel you opened and one for the channel I opened. Whereas with dual funding, one channel's open,

which means there's only one UTXO that ends up on-chain for that channel. And we only have one channel. But you both put funds in it, which is cool. So you combine inputs into one. No, it's one transaction. Yeah, and it's cool.

Okay, so it's cool because you can get like and like I said if you do it correctly so the hard part about doing the dual funding then becomes coordination which is what

the second project I worked on last year comes into play and it's really cool but like you can but like yeah on Sea Lightning

you can open a channel with like three different people and then you send all basically you have to send it's a lot of like you have to send all of the inputs and outputs to everyone so they all have a copy

of the transaction and then they all send their signatures everyone gets signatures and the whole copy of the transaction so they can each independently broadcast it you know so it's like whatever um yeah but anyways you end up with this

big transaction that's got like a bunch of people's channels opens in it and then that goes out and like right now on lightning um if you open a channel yeah yeah oh yeah sorry yeah yeah it's cool um if you open a channel on lightning right now it's a pretty good assumption for the most part there's a few other services and stuff that kind of like messes up i think i haven't used pools. So I can't really talk too much about it, but I think they might be one of the exceptions. But generally when you open a channel, it means that one of the nodes has put money on it. So you know that that UTXO on chain belongs to that node that opened that channel. And you know that probably all the inputs are from their node and all the output is to them. But if you build a

multi-channel open on sea lightning using dual funding and all your peers are also doing the funding thing then you end up with a transaction on chain where it's really hard to tell you maybe like four channels open how do you know whose inputs and whose outputs or whose or whose yeah and when the lightning outputs like the each of the lightning channel opens is like two people's funds right so it's funds from two different people so that sum like adds up to like how How did channel announcements come into play here? Is that an area where somebody's privacy can be? Yeah.

So the channel announcement is where you say, this is the channel announcement contains four signatures. Two that commit to, hey, I am this node. Like, because there's two nodes, there's one from each node. And then there's also a signature that says, there is a UTXO in the set now in like the mind UTXO

set or whatever. What do you call that? Yeah, UTXO set. There's now a UTXO in the UTXO set. You can find it here. And here is our proof that we as nodes can spend these two pub keys that are locked up in that thing. So you can

go, so anyone can go take that channel announcement, go find the UTXO and verify that they actually have power to control that UTXO. Yes. So you know that that channel is backed by real funds. Or you just, you don't know that they can control. Yeah, because, well, they provide signatures

to the pub keys that are listed in the UTXO. So you have, so they have to prove, you know, if you sign a different message using the same key that's attached to that pub key, then that's proof that you control that thing. And so if you have a signature from each of them, You have proof that they can spend it. So they basically prove like, yeah, we have these funds and we can use them.

And so you can send money to this channel because it's backed by this right here. Yes. And you can go find it. Yeah, it's a fascinating system. It's really brilliant, isn't it? It really is. And that's like. Yeah.

And so do you think dual funded channels become like what are some of the. Well, so here's the thing that like the feedback we got from some people when we were talking about the protocol is the downside to... So this is amazing for on-chain security in terms of doing coin joins, etc. It's awesome. The problem is that suddenly you have a protocol

where someone can ask you what your UTXOs are because they're like, hey, I'm going to do an open with you. Here's my UTXO. What's your UTXO, etc. I'll show you mine. You show me yours. Yeah, exactly.

We've got like some... There's like a... What do you call it? we have a suggestion of how to like do something very similar to join market where basically you like tell people that like someone has like sent you a UTXO and then that makes it such they can't use it on anyone else, et cetera. Um, I think this is also where you kind of need, what's really useful is like, um, if you have a longstanding relationship, once you have a channel with another peer, you kind of trust them, right? Because you need them to stay online. You're

trusting them to like receive and send payments like you having a channel relationship is basically like a it's a peering relationship like they you need them to be up all the time they need you to be up all the time so like you know there's kind of like picking who to open channels with I think is a little bit of an interesting question sort of meta question also like you want to pick peers that are good peers like they're going to route your payments they're not going to like fuck with you they're not gonna try and steal your money and how do you know they're good peers yeah so that's like a whole that's like a whole reputation thing and it's not really I feel like that's like a hard question but I think like it kind of comes around this little funding thing where like and

my whole thing with it is like well maybe you have one UTXO that you send to everyone and then like if they don't open the channel or like you start with a low amount when you first start like you know kind of it's a hard problem yeah you kind of have to do share this information in order to get the benefit of having the coin join at the end, right? Yes. And in order to do this in a decentralized way without a centralized coordinator, you do kind of have to expose a little bit of your UTXO set

in order to make this happen. And my understanding is that the L&D team really does not like this. This is the thing that they're like, we don't want to add that to L&D. So that is... Why? What is their consternation? I think, well, it's just that now you have a protocol

that someone could ask you what your UTXO set is. And I'm like, well, I think you can write policies that make it such that you protect your U2.0 set a little bit better. One. Do you need the whole set? No, you, well, it's kind of like you, no, you just need to get, if you want to put money in the channel, you have to tell them what your AUTXO is, right? You don't have to give them all of it. You don't have to even, you don't have to participate if you don't want to. If someone tries to open a channel with you and you're like, actually, I don't think I like you or whatever, whatever.

You don't have to. It's like totally optional, right? Yeah. so that's like but I think like I think that's like I think that's a very valid

understanding of what's happening and I think like yeah but I think my thing is I think that the overall you have to trust someone locally

but that makes your privacy globally much better if that makes sense yes because then when it ends up right now when it ends up on chain

it's pretty easy to figure out what your whole UTXO set is anyway because you're publishing it if they're like published channels there are unannounced channels but

I don't know Um, supposedly those are semi easy to find out. Taproot changes some of this. So like, I think a lot of it anyways, but yeah, I think it's definitely when you get back to it, it's like a, who's your enemy here, who you're protecting yourself against. Are you protecting yourself against the person who's going to ask you for them? Do you have good policies in place to like, not reveal all of your stuff or maybe only reveal it to certain people? Or like, maybe you value the ability to do coin joins with the 90% of honest people versus the 10% who are whatever. so you're okay telling one person what a UTXO is.

My whole thing with Lightning is that I think at some point UTXOs aren't as important as we think they are. And that while it's important to maintain some amount of privacy around them, it's so easy to cycle them through a different channel. So you tell someone what one is and then you cycle it through another channel. Then you do one of these big mixes with another person and it's gone. And then on top of that too, with dual-funded channels specifically, Like why wouldn't you just like open a channel

with somebody that you know and trust? Yeah. And if you do it with all people that you know and trust and have like, I think there's a lot of services now that are starting to do more reputation-based stuff. You could just use a whitelist. I think it's a problem, but I think it's a solvable problem with policies,

if that makes sense. What I'm trying to figure out is just not supporting it. I mean, here's the other thing. why not there's more optionality better here lightning labs I think so yeah

and I think it's a really cool exciting thing because you can build stuff like liquidity ads on top of it but here's the thing I don't know lightning labs went

and they knew I was working on the dual funding stuff oh they knew I was working on dual funding stuff the same time we introduced dual funding

we introduced this other thing called liquidity ads which are really I think they're really cool they're a decentralized billboard system embedded into the lightning network protocol that lets you advertise that you have funds you want to put into a channel

so if you want to provide inbound liquidity for someone else's node you can advertise that way you can advertise it you put in your node announcement it's like i'm going to say 20 bytes which is like less than like you know the node announcement contains other information like what color your node is and what your alias is um so we just add it in there it's almost like adding a URL in terms of data. It's like pretty small. So it goes into that note, that channel note announcement that you already have. And basically it says, Hey, I would like to provide liquidity. You can ask me to dual fund a channel with you and here are my rates for how much I'm going to charge you for that capital. And so when you initiate a dual funding request, if you also

indicate that you want to like rent some liquidity from me. Here's how much I will ask you will, you know, this is how much I want you to pay me, um, for that liquidity and kind of has like a rate card. And so then, so the nice thing about this is that when you go to open a channel with someone like a dual funded channel, you can say, Hey, I'd also like to, I'd also like for you to put money into this channel. I'm going to pay you a little bit for it. Um, and it kind of becomes this coordination mechanism then for like how to decide

if you have capital you want to deploy when someone opens or sends a channel request to you it becomes a way for you to decide like oh they're paying me for it

I'm going to like put money in this channel because it I get sass for that yeah but it's all decentralized and so yeah you can get yield

on your Bitcoin yeah exactly it's like a decentralized bulletin board system I have no idea how many of these have actually it's been live

for a while now I definitely know some people have done it well that's the thing how early are we I don't know I was showing you again we're going back to

this get mash thing looks really cool it's very beautifully designed in the very least it will help you monetize content on the web and Lisa and I were looking at we can't tell we're pretty sure they're using lightning because of the demos that they're showing but

I think at what point because I envision somebody like ever on the website we have a large lightning network node a lot of liquidity it's been running non-stop since 2019 since may 2019 we got some bitcoin and we're like all right let's talking to dj or dev i'm like how can we like do stuff with this like i would love to like use these ads like what what needs what needs to happen for this to get widespread adoption in your mind yeah i mean implementations have to adopt it right so like sea lightning has

So again, we're kind of hoping to be like the reference implementation of it. The exciting thing about liquidity ads is that it solves a big problem that providers, LSPs, such as Async have. So the Async team who does the Phoenix wallet, their implementation is called Eclair. They run probably one of the largest kind of like mobile wallet providers, right? And when you have a mobile wallet app, you have a problem that in order for people to receive payments,

you as the organization have to provide them inbound liquidity. Yes, they're opening channels automatically. Opening channels automatically, but that means they have to have the Bitcoin to give these people inbound liquidity to even make it useful as an app. Like a fat treasury. Yeah.

So like, you know, like the Async node is one of the biggest on the network in terms of Bitcoin. I haven't asked them about it, but my understanding would be that's because they have to have all this Bitcoin to make it work, right? Yeah, I mean, that makes the most sense.

Yeah. So Async, in order for them to scale, there's long-term ability. It's accumulated a shit ton of Bitcoin. Well, accumulated a bit. Or they implement liquidity ads and they open up a marketplace such that their users can then get inbound liquidity

from like... Outside. Outside of their organization. Which is good for the network, right? Because all of a sudden, like maybe we'll get some competing people who have a bunch of Bitcoin that want to be selling their inbound Bitcoin

to people who are using Phoenix Wallet so that they can receive payments. Yeah, and more node distribution, async nuts and fat node. Yeah, exactly. And then, you know, things kind of decentralize a little bit more. And so the cool thing I think about liquidity ads

is that it really does let the network decentralize itself. Like I'm really into building tools that kind of let people build more sustainable systems on top of it, if that makes sense. So liquidity ads is like from like if I was running a startup and I needed metrics about how much my protocol was being used, liquidity ads would not be the thing that I would ship because I can't give you any metrics about how often people are using these things.

I can tell you how many nodes have them up right now, but I can't tell you how much liquidity is out there available behind them. I can't tell you how many times people have used it. I can't tell you what people have been getting in return on it or whatever because it's decentralized. There's no central system that knows all that information. So what I'm trying to figure out, because again, you're describing that you can't show any of the user data

because you don't know it. Now I'm thinking, what's the process? If I'm a node operator and I want to provide Phoenix users inbound liquidity. You would publish a liquidity ad, right? Yeah, but how would I get it to those users? So the liquidity ads, every node that gets lightning gossip gets it. Would they scrape the gossip for liquidity? Probably, yeah.

And actually, Ellen Rauter just added a UI on top of liquidity ads. So you can go look at all the people that are offering liquidity ads now and see what kind of connections their nodes have. Because a liquidity ad lets you figure out which node in the network is advertising liquidity. So then you can, if you're like, have certain things you're looking for in inbound liquidity

like maybe a certain level of connectivity or like inbound itself liquidity ads lets you go inspect that each like every ad you can go kind of evaluate on its own merits it's more work etc maybe they'll make an easier way to do it yeah

but it definitely allows for that to happen yeah it's fascinating because this seems this stuff needs to get to market because then it lets you again there's a bunch of people with a bunch of Bitcoin

who aren't going to do anything with it would like to get yield on it would like to do it in a trustman is my fashion this provides that ability by these people now being able to get yield you get more liquidity

on the Lightning Network which drives more utility to the Lightning Network and people using it but I think it'll be really it's going to be really exciting I think when Phoenix adds it because then there'll be

a whole bunch of demand I think in a way that there's not so much right now so that's really exciting but okay So here's the kind of competing thing, though. Lightning Labs, in the meantime, when I was working on liquidity ads, went and built Pool, which is a centralized service

that has different properties than liquidity ads. They use a blind auction. My understanding is you don't know who you're matching with when you buy it. But it's a similar kind of idea. It's a way to buy inbound liquidity through an auction mechanism. So auctions are great. They're really nice for price discovery. So one of the downsides of liquidity ads

is you kind of have to figure out how much you want to make for your Bitcoin. You can look at what other people are offering in liquidity ads. You can look at maybe what your own cost is or maybe like you have a number you want to make that's worth it to you to lend it out. And so that's what you put on the thing.

You're like, here's my price. But you have to come up with a price yourself. When you have an auction, the price is discovered, revealed via what people are willing to pay. So I think that's like a trade-off between the two systems, right? I think it was just kind of interesting. I don't think there's necessarily like a right or wrong

answer. I think Lightning Labs with the auction thing, I read up on market design a while ago, really great book by, I'm going to forget it. I have a whole blog post that I've been meaning to publish that kind of compares this like book on auction design by one of like the leading economists in the area in the US to kind of what we've done with liquidity ads. So that's kind of fun. I'll get that out there. But one thing that he, one thing that like, when I was talking about this price thing where liquidity ads lets you go and look at every individual node and decide whether what their liquidity is worth to you and they tell you how much they want for it and then you decide you know whether or not that's the one you want um with the auction mechanic once you

have an auction and it's blinded right so you don't know who you're getting the money from once you have in order to be able to do that they have to grade the nodes for you they have to tell you what grade of a node you're going to connect it to so they have tier one and tier two nodes right this is where like buy scores come this is where bot scores comes in yeah so as soon as you start trying to blind things out so the the auction book i was reading calls this like commodification so you're basically you're saying all of these nodes are basically the same so we'll put them in the same tier and so we're going to charge you the same for their liquidity so you as a buyer it's a reduced risk profile so you pay something but it makes it such their

auction wouldn't work if they didn't do that you have to do that in order to run a blinded auction because otherwise you end up with like, how do you, then you could like, you'd have to price each of the nodes individually, right? And so they bundle them all together and say, we're just pricing these all the same, same tier of whatever. And the auction will help you find the price.

My theory is that like, that's, we're a little premature for that. I think as a network, I think liquidity ads is actually maybe the best mechanism right now because it gives people control about how much they want to ask for. I think it helps people, you get,

so I think that like the signal of how much liquidity costs comes from the people with the liquidity then, if that makes sense, not from the buyers that are bidding on it. Yeah, I mean,

that makes sense to me. The person providing the liquidity says, hey, here's how much yield I'm looking. Here's how much, essentially, here's how much I'm looking for you to pay.

Take it or leave it. And somebody on the other side is like, all right, that's what I got to pay. I need it. I'll pay it. Yeah. I don't know.

So, I mean, this is just my theory. I mean, I think auction has, an auction has merit to it as well but there's I think yeah there's trade-offs

which is kind of cool because we have both now in Lightning I think one of the downsides is I don't think that the L&D implementation is very incentivized

to add liquidity ads to their implementation because they have a competing project liquidity providing project yeah exactly see this is where

this is where as a Bitcoiner as somebody who's building on the Lightning now I'm like what the fuck like what's going on moving forward

well it's like incentive stuff right it's like incentives and stuff and so like I mean I think if labs so like I was the one who introduced liquidity ads to Lightning in 2018 and it's a

brilliant idea it's such a great idea that the labs team went and implemented their own solution for it because it solves a real need that Lightning users and operators have which is how to get inbound liquidity and Bitcoin holders how to get returned on their stuff

in trusted ways where you know where the Bitcoin is Yeah. So I think it's, you know, it's like, I think it's an awesome idea. It's like one of those things where like, I wish that everyone had decided that liquidity ads was like the way to do it. Cause then it would exist for a lot more people. I think it's been like three, almost four years now that like, this has been a project that, you know, has been out there and people have known about. It doesn't, it hasn't been, only Sea Lightning's done it. I think, like I said, they're working on it. Cause like I said, it solves a real business problem for them. so they're like highly motivated i think to get it done um but yeah anyways that's like

the inter implementation negotiations yeah like zooming out more broadly how would you describe the current state of the lightning network um that's like such a hard question to answer for me personally because i tend to like i'm i'm such a like i can't look at anything when i'm trying to get something done if that makes sense and I've been trying to get things done and it feels like

for years now and you haven't been able to pull your head up and be like oh yeah last year it was like doing the liquidity ad stuff like I had to get that

like that had to go out you know like people like it needed to exist and right now I'm working on getting like accounting done for Sea Lightning

I'm like super freaking excited about it hopefully if it goes in this next release this next release of Sea Lightning is going to like

blow people's socks off like what's the the accounting aspect of it running a node is like it's basically like

a data collection of all the all of your money and where it's going and why so like you'll have like

better all of the data about where your money went like so when a channel goes to chain like an on close chain thing it'll let you like I'm working

I haven't implemented this yet but basically you can do this thing where you like it shows you every single UTXO and where they all went so like if they had HDLCs and stuff

you can see where they resolved to and where they ended up oh shit yeah is that surveillance? well it's just for your node oh so you just it's just your node stuff.

Yeah, it's all your local stuff. I mean, it's all data that you would be able to maybe pull out of your lightning node but I don't know how. Somehow. It's all in there.

It's in there. We're just making it so that you can like see it and hopefully what I'm hoping is like then do like profit loss statements. Like what I'm working on

like now, right now is like I finally got all the data in and now I'm like it's like kind of a little more granular than I probably needed because like I'm an engineer and I wanted like all the data.

Now I've got it all and I'm trying to figure out how to like roll it all up to like actionable like accounting data it's like oh what's your pnl where did you make money from which channels did you like get the most routing fees from how much did you pay in on-chain fees for this channel see this seems like a very useful feature because then you know people start tweaking their yeah lightning man so my like yeah and i was like yeah yeah i think it's gonna like lead to like

better usage of lightning and i think better like you know you can actually put an apy now at the bottom of the chart that's like, hey, you put this much capital in, you've earned this much in rounding fees, you've earned this much leasing liquidity out,

you've paid this much to lease inbound, you've spent this, you've sent this many payments, you've received this many payments, this much in payment stuff, whatever. Here's your APY

on whatever metric of how much you've put into all this stuff and we'll be able to have all that data. It's pretty dope. Yeah. I'm just working on,

now I'm doing the hard part which is I have all the data and now I just need to make it readable. you know but I'm so happy I'm not a developer

yeah this all seems so daunting I'm sorry you asked about the ecosystem though I'm sorry I shouldn't say I'm not I'm so happy

I'm like I can't imagine doing your job I think that's the more polite and the more that's my intent to that comment

I'm gonna be honest sometimes I get real stressed out because like I know what I want like I know what I want the experience to be like it's just like

getting there just takes a lot of sweat and blood and tears etc and like getting to the end it's nice but there's always the next thing you want to do what's the next thing you want to do um oh man the next thing i'm excited about this um i don't know if i've told my team yet but um i want to change how we do channel fees on lightning right now you can

set a fee about how much like a number and like a percent i want to make it possible to charge negative fees so get this yeah yeah yeah this idea actually comes from Clara a conversation I had with Clara

at Bitcoin Miami last year but I think it's time I think we need to add it here's the amazing thing that you get and like this is like I feel like this is

in the same category as liquidity ads like you build this little thing and then all of a sudden you can kind of get these cool ecosystems on top of them

here's what negative fees does is it pays you money to send sats so like you earn money by moving sats around So you can, as a lightning node operator, incentivize people to rebalance your channel for you by making it a negative fee. So you pay a little bit, but it means that you can reuse that capital going the other direction again.

So my idea is that this introduces a form of arbitrage. So we could get arbitrage bots on lightning that are looking for these negative fee routes to push money around. and we end up getting an ecosystem of actors that are incentivized to keep balances in usable form. That's pretty sweet. Right? I'm trying to, like I said. So it's kind of like creating like this whole class of like,

I'm going to call them maids. I know bot operators probably don't like to think of them building maids, but like kind of like little liquidity servicers that make sure that like, so you don't have to like balance your channels. You can just maybe have something that when it gets to a certain point, you set the fee. I haven't really totally thought the whole thing out,

but at some point, ideally, you could set a negative fee and then someone would be incentivized to push the money back the other way because it gives them a little more at the other end of it. Yeah, I'm trying to think. Because it seems like it would be... I think on that, if you offer up a negative fee, it seems like it would go,

your channel would be balanced automatically because, like you said, these maids, you could write a scraping function, like, all right, who's offering negative yields and just, like, automatically take that. But, like, does that create, like, a DDoS? I don't know. I don't know.

I don't know. I'm going through that. I don't know. I like this idea. I think it's interesting. Clearly, this is, like, we're at very early stages. It just occurred to me last week that I should make this happen this year, and I, like, haven't thought through the whole network dynamics quite yet.

But I think it's, like, I think it's going to be a really exciting new thing to put on Lightning. Yeah. Like, I think it's going to be wild. it already is wild everything that's going on and what you can do when do you see the future of lightning

how do you see humanity interacting with it is it scalable do chat apps make sense do social networks make sense how much trouble am I going to get in today it's going to get you in a lot of trouble here man yeah man lightning

you know a lot of people in Bitcoin like to say like be your own bank yeah and I think that Lightning is the

bankingist technology we have in Bitcoin the bankiest the bankiest technology that we have in Bitcoin because it requires

basically when you're creating a Lightning channel you're creating a banking settlement account you're creating an agreement with another party that you will keep

a balance between the two of you and you will like settle every month you do settlement all the time, right? Most banks have agreements with other banks.

They have a big account like the Federal Reserve. You know, when you said like Fedwire, there's one big account somewhere in like, let's say New York State that all the banks

have put like a million bucks in each of their little like, you know, it's a multi-party channel. I mean, this is the... They just wheel the money between the little rooms,

but it's all in the same building. This is the interest rate that everybody focuses on is the Fed funds rate, which is the bank and the rate at which these banks change and settle there.

Yeah, but like the physical way that they like move money between each other is like it's all in like a room

and each corner belongs you know that's the JP Morgan corner that's the like Bank of America corner maybe it's a little more electronic now

but like back in the day right but it was basically a multi-party channel right and so they just like you know they'd like sum up

the accounts well my users paid you 500 your users pay me whatever we like find the difference

so I push you 100 bucks you know we call it even that's like that's banking that's how banks work like that's how

inter-signed settlement between banks used to work back in the paper days. Lightning channels are the same thing. You make that room where you put your money in it and then you just use that money to settle back and forth. At some point, maybe you need to empty it out or add more

or top up or something. I don't know. For some reason, I'm like, that is how agreements between banks work. It's banking technology. you like put the money in you have an agreement you like send the money back and forth between each other i mean it's missing all the like deposit like insurance like not insurance but um there's no like interest rates and all that this is like bank to bank communication right yeah

lightning is bank to bank communication technology i'm gonna get in so much trouble it's like well i don't i don't get why you think you're getting in trouble you said yeah you're acting like this doesn't this precludes somebody from being in their own bank like okay here's yeah Aren't you on bank if you're on one side? Okay, so here's where it gets kind of spicy is that running a lightning channel is costly, right? And having enough capital. So like these kind of banking agreements and having these sorts of banking relationships, like channel relationships, are only useful in long running relationships

where you're going to have a volume of exchange between yourselves, right? Lightning channels are expensive to run otherwise because you're paying the on-chain fee, you're paying routing fees. If you only use that capital once, it is better. If you're only going to use a lane channel one time, it is probably more cost effective

to just send an on-chain payment because in order to open a channel, you have to make an on-chain thing and then you have to pay to send the payment. So like lightning channels make a lot of sense for like big relationships where you're sending money back and forth. You know?

Okay. So now that we've established that, it's like the other thing is they're kind of expensive on chain fees are like not going away there's like a little bit of a maintenance cost in terms of like how much capital you have in reserve so you can pay on chain fees if you need to um so now we're talking about reserves like at some point like how many how many people are going to own enough bitcoin that opening lightning channels in that banner makes sense for them some people don't want to keep capital locked up in an agreement like if you i mean i don't know how you use venmo but like i

take all my money out of Venmo I like use my Venmo money I like you know it's like zero and like even if I did have money in Venmo I'm not paying the same person every time I'm paying 10 people I recently got kicked off Venmo because I wanted to update my contact info but no I agree I was the same way before that yeah yeah Smarty's like zero definitely zero dollars in Venmo um I hope yeah yeah um yeah so like I think I think it evolves into like a network for massive players only yeah yeah yeah i mean like it's like if you have like if you own like a bitcoin if you have that level capital you can be your own bank there's a capitalization requirement though for being your own bank i think is my thing is like there's it's in it's denominated

in bitcoin um and like yeah whether or not you want to like invest in that infrastructure and like setting up your thing and like yeah there are definitely benefits to being your own bank like you can earn routing fees you know what i mean like set up the right relationships with the right people and like provide liquidity in the right place and you earn more capital for using your capital that way so what does this mean i think it means we're going to see a lot more lsps okay i think that like you know like the cash app thing which i'm assuming is custodial lightning wallet like the cat like the cash app just announced that they do lightning right you don't have a lightning node on your phone no there's a lightning node somewhere in a server

in san francisco yes um that has all the lightning channels and you are just borrowing you're using the bank's lightning channels yeah like uh i think that's what i think that's what like 95 percent of people's experience with lightning will be yeah i know that's like not what people want to hear but i feel like it just like just it just seems like where things are gonna go what does that mean what does that mean getting a banking license is real cheap it's one bitcoin well like does are we LARPing

about Bitcoin is it I don't think it's a LARP but I think that the capitalization requirements are high like I don't think

it's accessible you know it's like I think then it becomes like an accessibility question yeah

right and it's like and then it's like okay accessibility at what level of participation right

I mean I think you can get into the lightning thing if you're like a real smart like motivated person with a small amount

of capitalization who's opening channels etc But a lot of these bigger routing nodes and stuff won't open a channel with you unless it's above a certain bar. It must be so high to ride. Yeah, we had Ben the Car Man recently upgrade his minimum channel open to 10 million sats. Yeah, exactly. It's got to be this high to ride.

So, yeah. I don't think I'm saying something that's crazy, but yeah, I don't know. Anyways, I don't think Lightning is going to be Bitcoin only forever. And I think we're going to start seeing, I don't know, not see Lightning. You think we'll start seeing stable coins and stuff like that as well? I don't know. I don't know. I like the thing about, yeah, I really like, I have no idea.

I think we still got a lot of ways to go with the Bitcoin stuff still. like I think that we haven't like the I forgot the thing you showed earlier MASH MASH

that's incredible I think more stuff like that MASH you're getting a lot of free ad space to this yeah it's true I think there's like

so much more stuff to be built on top of Lightning and it doesn't I don't think it's going to matter what the unit of account is

the settlement account is I don't I have no idea why people would want stable coin I mean I'm sure I know that like

Alex from like Alex Gladstein from HRF, I think has a really great, he's done a lot of good writing and reporting kind of on why stablecoins are important for reach of Bitcoin and Bitcoin related technologies. So I'm going to leave that to him, but I'm also going to glibly say, I don't know why you'd want stablecoins knowing that Alex has done a lot of work about exactly why you would want to do it um but uh yeah i don't know anyways lisa and then the rip on a on a spicy note here like lightning uh no it does make sense i mean but i've been so my recent talking point at conferences when i go talk about lightning is um i'm like if you want like okay if lightning does

become like the payment rails of the internet owning bitcoin is a way to like participate in the returns on that you know the fees of like you know some amount of fee is going to be generated from that so if you're bullish on like lightning becoming little payment rails like one reason to buy bitcoin there's a lot of reasons by bitcoin but one reason to buy bitcoin would be because you want to have the currency that backs this like settlement layer and you want to be able to participate in gaining the earned

returns on that from that settlement layer yeah I mean one of many reasons to

buy Bitcoin however do you think it becomes Lightning becomes the dominant payment

network I think it has a real chance to yeah I think like

the wild thing about Lightning is how freaking international it is yeah

I don't think we've really I don't think we've fully understood yet it's coming

I don't think we've fully understood yet what that means for commerce. Yeah. We got to start experimenting with it. Because I would describe like we're at this point where you have these implementations. They've been in the wild for a few years now.

It was four years now, right? Yeah. Longer than that almost. Yeah. I think the first thing went live in 2018. 2018, yeah. But it's been in the works since 2016. Yeah.

Yes, I think something went live in January, probably coming up on the four-year anniversary. It's still so early, right? People on the consumer side or the business side don't even know that they can leverage this network to build tools, to create avenues for which they can accept money, payments, authentication as well. We need to get into using a Lightning Node as a digital passport, if you will, that is self-sovereign in a way. Yeah, 100%. But then you run into the identity problems, right?

Yeah. Because your privacy on Lightning to a large extent means keeping people from knowing what your Node ID is. If you start using it as an identity mechanism, well, then you've just tied your identity to your Lightning Node. So now anytime anyone finds out where a payment is headed, they know who it's going to. Yeah.

So there's trade-offs there. but yeah I can definitely do that it's like the first like public key infrastructure is kind of what that's called yeah which yeah

you can do stuff it's cool yeah we're in the very raw phase right now it's exciting it's exhilarating it's exciting stuff

yeah that's cool can I plug I feel like we're wrapping up no you don't have to plug anything we're done yes okay

a small plug I'm doing like so I just started a I'm starting up some classes on Bitcoin protocol stuff we're not doing lightning we're going to start with the Bitcoin protocol

how Bitcoin transactions work. It's, I can't see how I put it. It's fine. It's called Base58. You can find it at base58.info. I'm going to be teaching class. It's a six weeks class on, six weeks, I think it's like 18 hours of class total.

So we meet three hours a week. I've been, it's off of a book that I'm actually writing on how Bitcoin transactions work. So you'll learn what is a public key, what a private key is, how ECDH8, no, yeah. You learn like ECDSA, sorry, ECDSA works.

You learn about elliptic curves. We're going to figure out what all the different standards. ECDSA when Schnorr's coming? I don't know if we're going to get to Schnorr. There's a lot to cover, Marty, before we get to Schnorr. There's like, I don't know if we're going to have time. I don't know if like, you know, like putting this class together was so hard because there's so much material.

I have like, I have like probably like three months worth of class stuff I could do. And like, you know, we're starting with like the basics. Like, okay, here's like, if you want to learn about how transactions are put together, what's in them how to write them by hand basically everything you learn

you need to know to like basically write your own Bitcoin like transaction parsing machine we're gonna we're gonna do it

yeah thank you it's gonna be great I'm really excited we're gonna go all the way in it's not the cheapest class I'm charging money

you can get 15% off if you pay in Bitcoin though thank you OpenNode for your stack sets yeah stack and some sets but we're doing a free class

on February 4th to kind of do like a prerequisite grizzits class so my idea is that like anyone who can like type on a keyboard and is like curious you got to be curious though type on a keyboard and it's curious about bitcoin can do this class is my thesis what are uh what are your pupils going to be coming away from this class once it's done they're going to be able to i could like hand you a bitcoin transaction in hex and you'd be able to like tell me what all the parts are and break it apart and know what kind of

script it is is it like paying a pub key is it paying to a script hash like you'll just you'll know what what it is the difference between all that stuff why it's just important in its own context yeah exactly how to do segwit stuff like yeah all that stuff oh yeah so we're gonna get through segwit i don't know if i'll get to taproot maybe i'll like try and i need to like learn all the taproot stuff still don't tell anyone i said that um but like yeah maybe we'll tack that on i don't know how big that is the project that might be like a whole nother like three week class or something you know I don't know it's

like yeah you want to like learn how Bitcoin like works at the transaction level yeah base 58.info if you guys are interested in that

free class on February 4th follow us on Twitter we're base 58 BTC we'll link to this too Lisa's also on

the board of OpenSats she's trying to shill that as well but Matt shills it enough on our HR OpenSats if you

want to contribute to Bitcoin development OpenSats is a great organization doing great things too allocate funds

to developers and then what do you got going on tomorrow LARP oh yeah I forget about that yeah tomorrow night

we're running a LARP a live action role play of the Bitcoin network here in Austin we're gonna do

it at the Capital Factory there's an event right you can probably just show up starts at 530 what is a live

action role play of the Bitcoin network so like I mean I've got like mining machines they're not

they're like I've got some like you know you've got like blocks and you've got transactions and you've got people making transactions to spend it and then once you get a transaction, you've got to send it to your

peers. I guess like, hang on, sorry. I'm really bad at explaining how this works. It's like people running, being a node. So you have a role. So you're role playing, right? The role that you're playing is a Bitcoin node.

Put people in groups. I've discovered you've got to put them in groups like five or six because these nodes are doing a lot. There's a lot of stuff happening receiving transactions yeah yeah so you know usually one or two people manning the communication lines between all the other nodes in it so we actually like have strings and you like string up everyone's got a connection physical connection um and then we've got little like rings you put a message on the ring and like send it down the wire somebody controlling the mempool inside the man yeah then there's a mempool in the node and we've

got a utxo set and so when you get new data from your peers you got to make sure it's good data and then if it's good you know if it's bad you throw it out and maybe you ban the peer or something i don't know i'll leave that up to you and then if it's good data you like got to tell everyone else about it right yes everyone's got to get all the info so you like let everybody know you got some new info and then you add it to your set and then at some point the transactions will make it into the you know transactions go in the mempool at some point these transactions end up in the mempool of a miner and the miners are making new blocks and so they're gonna put and they're going to look through the mempool decide which transactions they want put those inside

their block template that they've got then they're like they've got like a crank they turn to try and like get the winning hash number and so like they can't send out a new block till they get a winning hash number and so then once the miner gets the winning hash they like put it on the block get it to the node the node has to validate the new block right make sure it's valid and then they tell everyone in the network meanwhile there's miners and other nodes they're doing the same thing holy crap you're like fighting for having the longest block because you know you want to get that coinbase output as the miner how many blocks are you going to be doing this for dude i have no idea it usually goes like five or six and then just like fall the fuck apart

everything like goes crazy people get tired of writing because there's a lot of writing nice thing about computers is when you copy something it makes the copy and it takes like a second right yeah when you're human you're trying to copy a thing you gotta like sit there and like write it out so there's some downsides to being a human computer but it's fun Well, if you want to go to a little ARP, it'll be here around the corner from where we are. We're at the Bitcoin Commons TFTC studio right now. This will be at the Capital Factory.

And we'll be seeing you at BitDevs tonight? Yeah, I think I'm going to be here. All right, sweet. All right, you got to run. Okay, cool. This was great. Yeah, this was fun. Cool.

We should do this more often when you're in town. Sounds great, yeah. All right. We're going to find out more about you, what you're working on. We just shield a lot of this stuff. Oh, yeah. There's Base58BTC on Twitter,

and then I'm nifty and I on Twitter. I tweet random shit all the time. It's good shit. It's good shit. I like it. Go follow. Go follow Lisa. And enjoy the rest of your day, freaks.

We'll be back for our HR at 1 p.m. Peace and love. Bye.