Fiatjaf - 00:00:00:
The one that had adoption was identical. Sudden and very unexpected adoption. And I don't know why people just like keeping the others on the chat. I don't like that idea very much, but people really loved it. There are super lightweight channels that do not touch the chain. So the magic the best way to scale bitcoin BOLT12 is more like a peer to peer thing. You're paying your friends. It's more like a peer to peer solution, and LN-URL solution it's more like a B2C solution. The fact that users can get paid by the services, the normal field. You're a user, you're browsing some content on the Internet and stuff like that, and you can only spend money, you can never get money out. But yeah, we need more developers making more apps and improving the apps that exist and making them better. But I think the experience could be better, much better than Twitter, Facebook, etc.
Kevin Rooke - 00:01:03:
Fiatjaf is a pseudonymous programmer who has worked on a handful of really impactful projects both in and adjacent to the bitcoin and Lightning Network ecosystem. In our discussion, we started with the work that Fiatjoff has done on things like LN-URL, LNTXBot, Nostr, Pancho and other projects. And then we got into a discussion about the peer to peer Internet movement at large, and we discussed value for value as a concept as well. I've also added Fiatjaf to today's show splits. So if you enjoy this show and if you learn something new, the best way you can show your support is by sending in sats. If you learn a little, send a few sats. If you learn a lot, send a lot of sats. Half go to me, half go to Fiatjaf. And thank you to everyone who has been sending in sats and comments so far. Just a quick shout out before we get into today's episode. This show is sponsored by Voltage. Voltage is the industry standard and next generation provider of Lightning Network infrastructure. Today's show is also sponsored by Zebedee, and Zebedee is your portal into the world of bitcoin gaming. We'll have more from Voltage and Zebedee later in the show. Welcome to the show Fiatjaf. We've got a lot to discuss today. You're working on a ton of different projects in and around the bitcoin space. I want to get into LN-URL, I want to get into Nostr, I want to get into peer to peer Internet, and a bunch of the ideas that you've had in the past shared on your website. But before we do any of that, why don't we start with your background? Maybe you can tell listeners a little bit about how you decided that you wanted to start building on bitcoin.
Fiatjaf - 00:02:49:
I've been a self taught programmer for about ten years now, and I've always programmed as a hobby, and they've done a bunch of different small side projects. And then I was always also a libertarian. I don't know if I should use that word but an anarchist, something like that. And I got disillusioned with politics. And then more or less at the same time, I had found bitcoin long before, but hadn't given it the proper attention. And then I decided that bitcoin was the best way to bypass politics and make the world better. Yeah, I don't know if I should go into the politics stuff, but that's it. And then I started doing it. I realized how I can help this go forward faster. So I started doing what I could.
Kevin Rooke - 00:03:46:
Yeah. When did you get acquainted with Lightning, and when did you recognize that that was going to be an interesting platform to build on?
Fiatjaf - 00:03:56:
Well, I think I had tried to do some things with bitcoin before, and it was very complicated. I didn't have a good understanding of the protocol, and it was very complicated to imagine how I would be able to trace all the transactions in the chain and scan the chain, look for transactions. I was thinking about what would my program do to do all these things? It seems very complicated. And then as I was getting back to bitcoin learning more, I heard someone mentioning Lightning. And then I realized for some reason that that would be a better way to do payment stuff. And then I tried installed LND on Testnet before the first release, and I tested, and I loved it, especially the invoice stuff, because I always hated the address. I always thought the address was terrible idea, terrible UX. You had to make sure you're typing the correct address. And so they were weird. And then I typed the invoice. I could decode invoice and see who it was paying to, and there was no way to me, there was no way to pay the invoice to the wrong invoice. It just doesn't work like you pay the invoice, and that's it. Right. That was the experience that made me more enthusiastic about signing.
Kevin Rooke - 00:05:28:
That's interesting. Yeah. Just the UX improvement of an invoice. I never thought about it that way, but it makes a lot of sense. So you've worked on I don't want to get anything wrong, because I know you have a bunch of projects that you've contributed to and you helped build. Some of the notable ones are Nostr, LNTXBot, LN-URL, Cliche, Pancho, and a bunch of other projects in and around the bitcoin space. I want to understand how you decide what projects are worth working on. Are there any frameworks you use to figure out how you should be spending your time?
Fiatjaf - 00:06:09:
No, it's just guesswork. And whatever I'm thinking about at each moment, it's very weird. In the beginning, I would start a new project every day and would never finish any. So I learned to stick more with a project and get it working first. Try to get it working first. It still doesn't work 100% of the time, but I'm more able to get things working these days than a few years before, but that's the framework.
Kevin Rooke - 00:06:45:
Interesting. What was the first project in Lightning that you did get working?
Fiatjaf - 00:06:50:
It was one called PILN P-I-L-N. It was a service that in IPFS files after you pay the Lightning invoice. And I just took a node computer and we put a hard drive on it and started storing people's stuff on it and receiving Lightning payments, and I use the open load API for that. But then what was that experience that was my final experience with IPFS. With that I learned that IPFS wasn't going to work at all because it was such a simple thing and still had so many problems. But yeah, that was the first.
Kevin Rooke - 00:07:43:
Why do you think that project in particular, was there anything about it that made it more likely to succeed? Or why was that the first one that got a bit of adoption and the other ones prior to it didn't?
Fiatjaf - 00:07:58:
What do you mean? You ask what project had more adoption, I thought you had asked what was my first project with Lightning? That was my first project. I didn't have a lot of adoption. I had like 20 people in files on it before I shut it down.
Kevin Rooke - 00:08:16:
Oh, I see. The first project you completed.
Fiatjaf - 00:08:19:
The one that had adoption, was LNTXBot. LNTXBot had a sudden and very unexpected adoption. And I don't know why people just like keeping the others on the chat. I don't like that idea very much, but people really loved it when it was launched.
Kevin Rooke - 00:08:35:
Interesting. You had no idea this was going to be a successful endeavor at the time, right?
Fiatjaf - 00:08:42:
No. Yeah, I wouldn't call it successful today, but it certainly has a lot of users. I think in the beginning, like, it was 2019 and there weren't very many Lightning projects and wallets. So it was a very strong, very important thing, part of the network at that point. But today is a very small, relatively small thing.
Kevin Rooke - 00:09:14:
Do you know anything about the activity happening on LNTXBot, like, any of the metrics associated with it today?
Fiatjaf - 00:09:22:
Yeah, I keep track of some metrics, but I never look at them. It's not very much compared to other providers that exist today.
Kevin Rooke - 00:09:32:
Fair enough. I would love to get your sense for the scale of it, though, like at its peak or at its biggest moment to date. Are we talking like hundreds of users? Are we talking thousands of users? Are we talking tens of thousands?
Fiatjaf - 00:09:48:
Tens of thousands, tens of thousands.
Kevin Rooke - 00:09:51:
Wow. Okay, so tens of thousands using LNTXBot. Interesting. So now fast forward to today. Can you highlight some of the projects that you're spending your time today working on between the ones I mentioned, Nostr and LN-URL and things like that?
Fiatjaf - 00:10:12:
Yeah, I've been working on mostly on the Poncho and Cliche and the important stuff, which are the mostly hosted channels, tools that puncture is the plugin for C-Lightning CLN that allows you to provide both the channels to clients. The Cliche is Lightning demo that supports normal channels and actually it doesn't support normal channels yet and hosted channels that you can connect it to the puncture demo, you can also connect it to the other hosted channels plugin that exists for Eclaire and making improvements on that side and experimenting things on that and also Nostr stuff a bunch of small Nostr projects I've been working on. But everything is going around very slowly, going parallel.
Kevin Rooke - 00:11:10:
I want to get into Nostr in a minute but first maybe can we step back and help listeners understand what are hosted channels? Can you help me? Give me a high level overview of what they are and how they work.
Fiatjaf - 00:11:21:
They're super lightweight channels that do not touch the chain. So the magic that way to scale bitcoin but also they are fully trusted so they don't have any bitcoin on chain back in there. And the client that opens the hosted to channel a host trust the host to not steal the funds. They are like a custodial wallet but they are much better than a custodial wallet because they have privacy. The normal bitcoin Lightning privacy that you have a normal channel because your host that is offering a channel to you only sees an onion like it doesn't see who you're paying and maybe if you're using more than one or you can use like you can have the same wallet on the same Cliche demo. You can have a hosted channel in a normal channel or two hosted channels and then you can send payments splitting between them. Split the payment in these three channels and then your host doesn't know the amount. You also have the accountability. The client and the host, they sign the updates to the channel state. So the host cannot just claim that your balance is more than it was because you have the signature from the host if you want to if the host wants to steal it can just run away with the money but it cannot say oh, you're wrong, I know your balance is smaller than you think this. These are the improvements. Maybe I'm forgetting about some other improvements. Yeah.
Kevin Rooke - 00:13:16:
So when we talk about hosted channel the host in this example, is this any Lightning service provider?
Fiatjaf - 00:13:25:
Yeah, it's anyone running anyone can offer the service of being a host. To do that you would run the Pancho plugin that is plugged to your C-Lightning so you have your like you need normal channels to offer your hosted clients the ability to send payments out so the payments go through you and they jump into the other channels as a normal Lightning payment would do.
Kevin Rooke - 00:13:59:
Is there any other incentive for a host to offer hosted channels? I'm trying to understand what other benefits might accrue to the host themselves.
Fiatjaf - 00:14:12:
I would get fees from the channel. You can get fees from the channel.
Kevin Rooke - 00:14:16:
Got it. Okay.
Fiatjaf - 00:14:17:
Yeah, but another incentive is like you offer to your friends and family and you don't see where they spending their money on, which is better than using fully to store your solution.
Kevin Rooke - 00:14:33:
Yeah. So there's privacy benefits there too. Do you expect that over time everyone will be using hosted channels over custody? Like if we break out the current setup of Lightning wallet or Lightning users today and we say there's custodial and there's non custodial, do you think that the hosted channels will eat into the custodial kind of market share and kind of like disrupt that?
Fiatjaf - 00:15:04:
I think it's hard to compete with marketing people, but yeah, I think it will eat a little bit and I hope it will eat a lot, but I expect it to eat a little bit.
Kevin Rooke - 00:15:18:
And now if we compare all three, then we have hosted channels, we have custodial and we have noncustodial among those three, then which do you think will accrue the largest market share among Lightning users over time?
Fiatjaf - 00:15:34:
Well, I think it would be the custodial ones, but I hope it would be the hosted channel part. Yeah.
Kevin Rooke - 00:15:43:
And is that just because of the marketing of custodial systems, that they're just a convenient way to get started?
Fiatjaf - 00:15:52:
Yeah, the hostage channels are very convenient, but they don't have the marketing and whatever, they don't have companies behind them to pump them up. But I don't know, just I'm guessing, I don't know about these things. Yeah, most of the users will not understand the internals of the protocols and et cetera to be able to judge. So they would just use the wallet that is prettier.
Kevin Rooke - 00:16:24:
Now I want to understand how urgent or how important it is for people to run noncustodial or hosted channels on Lightning. Do you see an issue where we have too many people operating custodial wallets or using someone else's custodial wallet on Lightning and it leads to some catastrophic issue for Lightning users? What's the worst case scenario if we don't adopt hosted channels and noncustodial setups?
Fiatjaf - 00:17:09:
Well, I don't think there will be catastrophes. You're thinking it would be like a bug in the software, that everybody's running the same software and then everybody loses their phones or something like that? I think that can happen with both the no custodial and the hosted. But there are also many normal custodial providers. I think the thing that worries me more is the government stuff like KYC stuff that is pushed into all the custodial companies. If there was no KYC, I think custodial could be much better and I wouldn't dislike custodial stuff as much as I do today. But yeah, I think more people running more custodial providers, even if it's like an LND server or hosted genus provider, I think that's good to spread around, decentralized the custodians and make it harder for the government to tackle them.
Kevin Rooke - 00:18:16:
Right. This is just my impression from using some of the Lightning apps in the space. It feels like a lot of them either have no KYC or very minimal KYC with just an email or something like that. And maybe this is to do with the fact that a lot of transactions on Lightning are in smaller amounts. Do you think that over time, I guess there's two parts to this question. Will Lightning begin to support really large payments? That I guess the threshold in the fiat world is $10,000 is typically the level at which a bank or a government really wants to know what you start to do with your money. Do you think Lightning will get to the point where it's common for making these $10,000 plus transactions? And if so, do you suspect that we'll also have a KYC that'll be like mandated across the board for a lot of these centralized products to KYC's or customers before onboarding them?
Fiatjaf - 00:19:23:
I think you're very optimistic from what I understand. I actually don't pay very much attention to these things to keep me staying. But I think the bar is much lower. Like at around $100, companies already start to get worried about not KYC users and they start to get more KYC. I don't know about the regulation. I think the government is not very clear about what they want and I think that's good in one side, but the companies themselves that they start to become very much worried about Krasing users and limiting, et cetera at around I don't know. I think the ecosystem needs these companies but also needs people that are less worried about government, like just random people in random countries running servers and providing these services to users and to their families and friends. The best and worst example is open node, like the Open Node Open. Everybody was using open load in the beginning because it was the only API available to run small apps, and then they had no Koc and then they started asking KYC for everybody. I don't know why they did that, but I don't know.
Kevin Rooke - 00:20:52:
Yeah, right.
Fiatjaf - 00:20:53:
I'm afraid that will happen with everybody, so we just have to keep spreading around.
Kevin Rooke - 00:21:01:
I've heard an interesting critique of Lightning recently from a few people. A Lightning node is essentially a money transmitter, at least in the eyes of the government. If we're routing payments through Lightning channels, do you have any concerns that at the node operator level governments begin to clamp down or is there anything they can do to prevent people from running nodes? It's quite challenging, obviously, given that we have so many hobbyists in the Bitcoin and Lightning space, operating nodes from all over the world. But is that a concern in your eyes that at the node operator level it becomes like viewed as money transmitting and all of a sudden he's like some sort of license or some kind of approval to purchase some of these nodes?
Fiatjaf - 00:22:04:
I think the government can do these things, but not based on any rationale or anything that logic, because to say a Lightning node is a money transmitter, but bitcoin is not money, the logic starts to break down at the first sentence. But the government doesn't need logic. It doesn't just do the borders without any explanation. You can't counter the government with arguments. Maybe you can do these arguments to the legislature and people in the government, but in the end, if there's someone with power that can do that stuff, they will do. But my hope, and what I think will happen is that more and more government people will start to own bitcoin, start to like bitcoin. They will start to not want to regulate bitcoin out of system. If the government really wanted, and it was a single agent controlling the entire government, they could kill bitcoin very easily. But that's not the status quo, anyway. That's not what you have. Thankfully, I think it won't happen.
Kevin Rooke - 00:23:20:
That's an interesting counter argument that if the government wants to say a Lightning node is a money transmitter, they have to call bitcoin money. And they're almost allergic to that term right now. At all costs, try to avoid associating bitcoin with money today. But anyways, I want to shift the conversation a bit to one of the projects you're working on or that you design spec for, I believe LN-URL. Can you quickly just highlight to listeners what LN-URL is and what all the different specs do? Because there's a bunch of them in this LN-URL set of specs.
Fiatjaf - 00:23:59:
Yeah, there are four specs. Basically, they were created for different purposes, and I think they shouldn't be club in the same thing. But that's what happened, and that's where they are. They all have the same name, and the thing they share in common is like, you in code and your trinket, and you turn that into a QR code. That wallet scan scam. It was created by Anton whatever, I don't know his name. Anton K something, the creator of sibling bitcoin wallet. And mostly by him. There was a lot of back and forth other people. But the idea was that the first thing was he wanted to ask channels, he wanted his wallet to get a channel from a provider. Like the first LSP that was invented. Was that bit refueled to our service? I don't know if it exists yet. Still. You would scan your code and then the wallet would know. They would have to connect to the node and wait for the node to open and change to the wallet. You couldn't do that before. There was no way to describe that flow. And then he made it in an open protocol that was called later and then your channel. That was the idea. Like in the normal flow. You have that offer today, maybe bit refuel and LNBig and the zero fee routing. I had a page where you can buy a channel like all these. They sell the channels you pay first and then you scan a QR code and then your wallet keeps connected to it and then they open a channel to the wallet. There are some wallets that support this. And then he went to the other purpose like the other goal was to withdraw funds from a service like in the beginning, like 2012 what's the name? I don't know the numbers. In 2018 and 2019 you have these lotteries the only services that use Lightning on the internet was more apps that did lottery stuff because Lightning roll app and some others and you would pay to play and then you deposit like 100 sats and then you run. If you win you get 200 sats. And then how do you get they would ask you like type paste here an invoice, Lightning invoice and then you're on your phone and you play the game on your desktop, something like that. How do you get your invoice from your phone wallet to the desktop? That was impossible. So he made withdrawal protocol. The service would show a LN-URL accurate code. You scan that with the phone and then the phone gets on your to which it can send the invoice through Http and then the service just pays the invoice and then I got it. This one was the most adopted and everybody takes it for granted. I think it's been used in a lot of places right now and no one seems to realize how difficult it was before this thing was created. And the other one is the withdrawal and the other one is the pay. One was the one that I imagine talked about it. For example, the reverse route that the service just asked you to pay and you pay them. You could do this already with just an invoice, but the pay in my mind it was going to be for you having a static invoice on your meat space shop, something like that, like a physical shop. And then you wouldn't have to create a new device every time. And also you could have a server running somewhere and then you could have different behavior every time someone scan that same QR code. And then I had a bunch of use cases and examples and that's it.
Kevin Rooke - 00:28:18:
And then what about LN-URL?
Fiatjaf - 00:28:20:
Yeah, the offline is just logging into websites and with a key. That's an old idea that everybody has had and every time they do it broken. There was big idea. I think they did it with bitcoin addresses a long time ago and a bunch of other similar projects unrelated to bitcoin. But LN-URL is the first one that solves easily like the problem that the phishing attack that can exist. Our website would take the login QR code from another website and show it to you and then you log in to that and then the website shows your credentials and login to the other website if your name LN-URL, solves that. But it's not related to Lightning at all. It's just the key. You just use a key, which happens to be a key from your Lightning wallet.
Kevin Rooke - 00:29:23:
Right. So among those four, you said, Allen, you are withdraw is the one that is most adopted to date.
Fiatjaf - 00:29:30:
Yeah, I think it is.
Kevin Rooke - 00:29:35:
If we look at the adoption of all four, is there anything that's really surprised you to the upside or to the downside?
Fiatjaf - 00:29:44:
Yeah, withdrawal surprised me. I think in the beginning, after Anton created this, he implemented it in his own wallet and then created the protocol and wrote it on GitHub and posted to the mailing list, but no one gave any attention. And then I think I got famous about being the LNR guy because a long time after that I started implementing that on LNTXBot, and then I talked to the LNP guy and the other guy from Lighting Gift and convinced them to implement it and talk to a bunch of other people to implement it too. So it created a little network effect that grew much more than I expected.
Kevin Rooke - 00:30:27:
And do you expect then over time, all apps in the Lightning space will have some component of LN-URL integrated?
Fiatjaf - 00:30:37:
No, I think when it fits the use case, I think they should I don't know, there's all these BOLTs to have drama. You keep asking me to predict the future. Right now, I have no idea. I only know what I want to happen.
Kevin Rooke - 00:30:58:
Yeah, okay. Maybe we can get into the BOLT12 stuff because I think there is a lot of confusion around this. And this is something that I still have a bit of confusion about. I hear LN-URL and I hear bolt twelve often mentioned in the same discussions. Can you give listeners an understanding of where these two overlap, what each one does better than the other, and what some of the potential use cases might be? Where bolt twelve might be necessary, or where LN-URL auth is sufficient? Yeah. Can you break down the similarities and differences between the two?
Fiatjaf - 00:31:36:
I think they're mostly compared when people think of having a static QR code. This is what they share in common. It's a static QR code. You can pay too. It's often compared to LN-URL pay, but people just say LN-URL and forget to say they're talking about LN-URL pay. And I think we start with business in mind, like services that like entities, businesses, shops, stuff like that, that is providing a service to a user. And mode twelve is more like a peer to peer thing, like you're paying your friend. It's more like a peer to peer solution and the thing is more like a VQC solution. And yeah, I think the configure comes from that. And people, they think, oh, Elon pays for me. But then both people will say, oh, but you have to run a server and have a domain name and that's horrible and no one should do that. But yeah, I agree. It's not very convenient for a normal person to have a domain name and run an Http server along with a Lightning node. But for businesses that's normal, like for anyone that is a service provider, that's fine. And they already have websites with domain names etc for so it's easy to add a new thing on their websites.
Kevin Rooke - 00:33:18:
I see. Beyond bolt twelve, do you suspect that there will be other new bolts that are going to be a BOLT13, a BOLT14? As we come up with new things that we want to integrate into the.
Fiatjaf - 00:33:33:
Lightning network protocol, I think they have a lot of BOLTS already in mind. If you look at the mailing list, there's BOLT13 but I don't remember what it is. But not a UX thing, it's more like an internal protocol internal thing on the UX level, I think someone will have to come up with something for authorizing payments. Like you authorize someone else or a business or someone else to access your node. Yeah, people have been talking about this, access your nodes and make payments on your behalf under certain conditions. This stuff has been talked about for since a long time, but no one has managed to make a protocol out of it. But also I don't know if any of these things will succeed because most people will not be running Lightning node. If you think of Lightning having widespread success and adoption necessarily very few people will run node. So I don't know if that's why I'm not very interested in protocols that require people to run nodes and control keys, et cetera. Maybe they can have no custodial phone wallets, but the phone wallets are very limited. You can't access them ever. They're only online when you reach your phone in your hand, click on them, otherwise they are shut down and then to access them you have to use the Google for permission. That's something we shouldn't be cultivating in this case, I think.
Kevin Rooke - 00:35:15:
Interesting. Now for the example of LN-URL and bolt twelve and specifically in both twelve, so specifically the static QR code, can you speak to the requirements for getting LN-URL Pay to launch versus getting both twelve to launch? What are the requirements of building something into the Lightning protocol? How long does that process take? I assume it is a longer process than just implementing LN-URL Pay. How is the kind of timeline, the production timeline on these two ideas? How do you compare those two?
Fiatjaf - 00:35:59:
Well, I don't know. Pay is not part of the Lightning protocol. It's just a way to standard for communication between a wallet and a service. So you can service like a website or service provider on the internet and then you can just implement it. It's just a set of Http requests. So you can just implement that very easy. Any web developer can implement that without knowing anything about Lightning. The Lightning. Protocol and they just need a node to talk to or an API, Lightning API to talk to. And if the wallet is already supported, the wallet can just scan the QR code and the wallet will do the magic that is standardized and talk to the server. So that's very simple. Very simple, very easy. BOLT12. It turns the Lightning Network into a general purpose message passing network. So for it to work seamlessly, you need most of the nodes to support the whole new messages protocol, that is, allowing your peer to send messages, encrypted message through you, and then you use the Channel A as a way to prevent spam. So you only accept message from people that have channels with you, but you take these messages from anyone and you pass them through the other channel and you don't see the messages. But yeah, that's the fully peer to peer thing. And people have been worried about spin. I was worried about spinning. And that's one of the things I didn't like about both incentivizes paying and turns the light network from payment protocol to another thing. Yeah, but maybe there are solutions to these things. I don't know. There was a recent solution proposed that is simple enough to probably be implemented recently. What else?
Kevin Rooke - 00:38:03:
Okay, what's your assessment of the development cadence when it comes to Lightning Network development today? Like, how are your expectations being met for how much innovation is happening in Lightning? Do you think we can do a better job of attracting bitcoin developers to build on Lightning? Yeah, I want to get a high level assessment for how quickly the space is innovating. Obviously, having been in the space for a number of years, you may have a better sense than some of the listeners on here. How quickly has development changed over the last couple of years?
Fiatjaf - 00:38:46:
Well, I don't know. Actually not. I'm paying very much attention, but if you're asking about the protocol level, I think it's going too fast. I think people should stop working on the protocol stuff and stop inventing new things and just fix the problems that exist. What I want to see, and I've been seeing this a little more like I want to see concrete use cases that touch the real world. But I very much don't like when people a new developer shows up and start working on Lightning node manager or solution for balancing channels. I understand. I also working on these things in the past. It's very cool. And also you have an immediate user base that's interested in the Lightning Network, etc. They will start using your products right away, and you can make some money on that or just the satisfaction of people using your stuff. But I wanted to see concrete use cases like people selling stuff and selling services or building interactive services that were not possible in the world. There are some steps in that direction, but I think it's still very lot of to be built on that direction. And also existing businesses adopting Lightning. There were some like, you remember that open old announcement that Sub Stack was going to adopt Lightning? I never seen anything about that later after that, but that kind of stuff is cool. But then they only adopt Lightning. It's just another payment method along with our other payment methods, which is fine, but I still want to see new experiences that the Lightning Network can provide that other stuff can.
Kevin Rooke - 00:40:43:
I hope you're enjoying the show so far. I just want to give a quick shout out to our sponsor, Voltage. Voltage is the industry standard for Lightning Network infrastructure, creating layer. Two applications and services on top of bitcoin starts with Voltage, where you can spin up nodes, get access to liquidity, optimize your node, and much more. Voltage is leading the way as the next generation provider of Lightning Network infrastructure. And if you want to get a free trial and start using Voltage today, you can do so at Voltage Cloud. Yeah, that makes sense. I think there's definitely been some frustration over the last couple of years of like, exchanges not adopting Lightning, of businesses not accepting Lightning payments right away. I think even when the El Salvador bitcoin bill went into play, there were a lot of people thinking we're going to get immediate Lightning adoption everywhere. I think people are still a little bit frustrated of we may only be at 10% or 20% or a fraction of the country adopting Lightning payments. Do you think that the road to getting people to adopt Lightning payments is in coming up with those new use cases that are not possible on fiat rails, mostly being like micropayments and things like that, things that require instant payments, things that require very low fees on very small payments? Or do you suspect that we'll see Lightning payments come in on regular things that people buy, like at your grocery store or buying a pair of shoes or buying gas or something like that, where we do have a fiat solution, but there is a fee associated with it and there are delays in the background. Where do you think Lightning adoptions can come from? Mostly new use cases or the existing use cases that are just going to be improved?
Fiatjaf - 00:42:47:
Well, I think it will come through everything because I think bitcoin will be the only money in the entire world. But I think the way to put our door, put our feet on the door, is to make these new use cases that were not possible before. And then through these examples, we convinced the rest of the things through without Lightning through, like for normal stuff. One of the use cases that you didn't cite is the fact that users can get paid by the services. Like in the normal field. What you're a user, you're browsing some content on the Internet and stuff like that, and you can only send money. You can never get money out with flight, you can get money out and there are many use cases for that, I think.
Kevin Rooke - 00:43:42:
I agree. I think that's one of the sections that I'm most bullish on is people getting paid for using services they already used and they have no idea that the value being extracted from them is worth something. Like their data on Facebook is worth something, that their time on Instagram is worth something. And I think there's a big opening for a lot of social products to offer users the ability to earn right away. We're seeing some of this in soccer news and Fountain and some of these products that allow people to earn from day one. I think it's going to be a really good bootstrap mechanism to get users excited and go, whoa, my time is actually worth something now. And of course, Lightning is the rails that allows you to effectively monetize your time. So I'm with you on that 100%. Want to I talk a little bit about one protocol you're working on that is not a Lightning specific protocol, not a bitcoin specific protocol. It is called Nostr. And the way you describe Nostr is the simplest open protocol that is able to create a censorship resistant global social network once and for all. For listeners who haven't heard of Nostr, can you give them a bit more of an in depth explanation of exactly what it is and how it works?
Fiatjaf - 00:45:19:
It's a very simple protocol for connecting to people like that. It's a transport layer for connecting people and spreading information using public key crypto, cryptography and servers that there are servers that anyone can run and that's it. What do I say? It's not a peer to peer protocol because one user is not supposed to ever connect directly to the other user. They only do it through servers. And at the same time it is a decentralized protocol in the sense that anyone can run these servers and you can use any server. You are not tied to a specific server, although you probably will use some specific servers more than others, but you're not tied to them and then they do not own your identity, like in the Mastodon use case, for example.
Kevin Rooke - 00:46:18:
I see. So rather than me connecting to Facebook server and then connecting to you, it's me connecting to one of many servers which I can choose from, where I can kind of migrate between if I want to and then connecting to you.
Fiatjaf - 00:46:36:
Is that correct? Yeah.
Kevin Rooke - 00:46:39:
Now what makes this protocol simpler than all the others? That was one of the lines that is in the first line on GitHub is that this is the simplest open protocol. What features make it so simple?
Fiatjaf - 00:46:52:
Well, it's just send a signed message to the server and the server will send the sign message to the other person and the other person can ask, I want to see the message from Bob can ask the server oh, send me a message from Alice and Alice can say send me a message from Bob, and here's a message for Bob. And that's it. It's very simple because it just uses web technologies like JSON and WebSockets and that's it, nothing else. And all these huge peer protocols, they are super complicated and they do not work very well unless you have a server with fixed IP. It's very hard to get these repair working and it's very hard to discover people because you don't know if you want to send a message to someone else that somewhere you don't know where that person is. So there are all sorts of ways of asking other node if they know these other person and passing the message around and everything is very inefficient and everything is very slow and most of the times it doesn't work. So that's why I think all these protocols that have been tried before, they always fail to get traction because the experience is very bad. And in this case it's just the same experience that Twitter provides or Facebook provides, but in a decentralized protocol way.
Kevin Rooke - 00:48:17:
Now, initially when I saw and started reading about Nostr, I thought it was something like Facebook or Twitter. But I've since seen a lot of interesting use cases pop up on Twitter. I think I heard of someone building a chess app on Nostr. I had a conversation with Arcade City about a week ago and they are building a decentralized ride sharing app. They're using Nostr as a messaging protocol. So it seems like Nostr is spreading far beyond the traditional definition of social media. What portion of the communication on the Internet can Nostr eat into or disrupt?
Fiatjaf - 00:49:02:
Well, I don't know, but yeah, I think you can eat a lot. And most things that require an identity, I think you can be the owner of that identity. And stuff that requires reputation. For example, the ride sharing stuff, I think it would benefit from the reputation. And mostly stuff that is public, like you just broadcast stuff and you don't care if other people are reading or not. Although there are some Nostalgic sub protocols that's encrypt stuff and try to hide stuff to do DMs for example. But yeah, I figured there's an agnostic protocol like transport layer that some use cases like this I said that they can benefit from and they can use Master.
Kevin Rooke - 00:49:59:
What impact do you think everyday consumers might feel if they're using a Nostr powered app versus like a web to app with the central server? Are there any noticeable differences on the user experience or do you think consumers will be gravitating towards applications that use Nostr over other protocols?
Fiatjaf - 00:50:28:
Again, you keep asking me these questions. I don't know. I think not is very funny. I don't know. I think there are some people that are very mad against these decentralized protocol networks like the Twitter, Facebook, et cetera, they're very mad against these things, but they keep using because there's no other way and everybody's there. So I think they can stop being mad at these things. If they are mad about the relay they're using, set of relays they're using, they can just migrate to other one. The apps are not super good deal yet, but we need more developers making more apps and improving the apps exist and making them better. But I think the experience could be better, much better than Twitter, Facebook, et cetera. For example, when I click on my notifications on Twitter, it takes 10 seconds to load. That's very weird, right? Allows for people to make new. One thing I've heard, I've read a lot on the internet, very much multiple times, was that Twitter was in the beginning, I think it had a very open API, that a lot of people wrote apps for that, and it had a growing ecosystem of interesting apps that use the Twitter as their backbone. And Northern could be something like that. And then the traditional programmers from Hacker news and stuff like that, they like this kind of stuff and they could benefit from using and Twitter like the rest of the story, that Twitter closed their APIs and made everything much harder and everybody was angry. I think notice could be a message board, an open message board you can use for anything. I think many more apps could be invented and also apps that people from the future peer world have been trying to build for years and they never managed to get it working, these steps working because peer to peer doesn't work very well. They can be viewed by own author very well.
Kevin Rooke - 00:52:50:
Yeah, now I can definitely see the advantage of having open protocol and attracting developers to build on it and not being concerned that some companies going to shut them off. How do you bootstrap the network effect of, I guess, developers and users? How do you get to the point where nonstop is recognized as the platform for people to build this open web on?
Fiatjaf - 00:53:18:
Yeah, I have no idea. Well, it's already much more but strapped than I expected. I didn't expect not to be so popular at this point. It's just a very humble idea. Immediately a lot of people started liking it. So I'm very much more optimistic now because of all the people that saw the idea when I just mentioned it first. Like a very high percentage like the idea, and I started doing it and was excited by the idea. So I think I expect this to have the idea reaches more people, more people will be excited and we'll start building on it. And I don't know. I'm very optimistic. I am generally not very optimistic about this thing, but this time I am.
Kevin Rooke - 00:54:07:
Were there any discussion points or any specific things you said that got people excited? Like when discussing this with other people? What made their eyes light up?
Fiatjaf - 00:54:20:
Oh, I didn't discuss very much. I just created links on Twitter and stuff. I think he said in this show too, about the red meat I wrote on the Node GitHub page. He said that was very good. I don't know, I think most people read that and somehow they like it. I'm not sure what I wrote that I never read again after writing.
Kevin Rooke - 00:54:54:
Fair enough. Okay. I do want to tangentially kind of discuss the idea of a peer to peer Internet. You're talking about how the idea of computers connecting to other computers directly without any central servers probably won't work. Can you talk to me a little bit about why that approach is not the right approach and why Nostr allows people to connect to multiple different relay nodes, but is not built on a direct peer to peer to connection between different computers?
Fiatjaf - 00:55:33:
Well, I'm not very familiar with the low level details, but my understanding is that there are too many computers, and if you don't have an address to them, you can't reach them. And in this peer to peer network networks, I can consumer devices like phones and home computers, you generally don't have a fixed address, and if you have, there are all sorts of firewalls and stuff in the middle that prevents people from the external world to contacting you, like your ISP or your router, and generally your lack of a static IP. All these things make it very hard for people to connect to you. And also it wouldn't work either way because in a decentralized word, you generally don't want to connect directly to someone. If it was just connecting to someone, that would be easier. But generally you want to find data that someone has published it, or data that most people have published it. The idea of IPFS, you've heard that about that IPFS is the holy grail stuff that everybody publishing everything and everything is reachable, et cetera. But it doesn't work because there's too many pieces of data and you don't know where that data is. And then they come up with like, that data is spread around multiple computers, but you don't know which computers, and you can't reach these computers. So they came up with the HD stuff that you used to ask, do you know where's this piece of data? And then you must do that a million times to get a file. And then the period of asking for it, they may not know. So you have to find another peer and ask another peer, et cetera. There are all sorts of queries, and in the end it becomes a huge bloat. And if you run an IPFS node on your computer, it will use your entire connection like you use your entire CPU, just talking to other nodes about where pieces of data that it doesn't know, like people know, asking other node about pieces of data. But the theorem people and other peer to peer enthusiasts like IPFS, they only use the gateways. There are some public gateways that cash everything they see. And then you just talk to that gateway. Oh, you know this data? Of course I know. Here's the data. And do you know this other data? Yes, I know. And then it all works. But it's not real PeerToPeer that's working. If you try to do the reopen stuff, as I tried many times before, it doesn't work.
Kevin Rooke - 00:58:19:
I'm curious to know what your views are on hole punch. Have you had a chance to look at that? That's the recent project that the Tether family of companies have been working on.
Fiatjaf - 00:58:31:
Yeah, I tried the key tap and I think I spoke to one of the developers related to the consistent there and he convinced me that a little bit of the DHT may work to find peers. It definitely doesn't work to find data. But if you can use but instead of DHC, you could use a central server and it would be okay. It's just to serve as the bridge so you can establish a direct connection to another peer. And after you establish a direction, then it's very good that it's very fast and straightforward that's the best way to transmit data is to have a direct transition. So if you have a way to coordinate these things to find the other and then establish the recognition, and then you can send a lot of data to the other VPN, vice versa. So I think the stuff like that in case app, it has like video calls. I think it would be nice to integrate that inside the Nostril app. For example, you do a Twitter Spaces thing inside the social networking app, and then only for those restricted people that join the Twitter Spaces, you use some magic to establish their tones to them and then you share video and audio. I think it could work in that way.
Kevin Rooke - 01:00:05:
I see. So for use cases that demand a lot of data, like video calling, maybe that's a great use case for hole punch, but discovering this data and being able to find it anywhere, that is where Nostr excel. Do I have that right?
Fiatjaf - 01:00:21:
Yeah, that's it.
Kevin Rooke - 01:00:23:
Okay, that's interesting. Okay, I want to get into some of the blog posts. You're a thought leader as well as developer. You've written a number of blog posts on Lightning topics, and I want to get into a couple of them. I know these are from a couple of years ago, but I want to get your assessment of how things have transitioned since then. One of the first ones that I saw was a critique of the value for value idea. And I think you wrote this article a while ago on why the idea of value for value and the idea of donations is misguided. Just going to quickly highlight my impression of the article. I think your arguments boil down to, like, it's very hard to define value. Donations are a very inefficient business model and I think the conclusion was that creators would be better off selling content. First, I want to get your assessment. Do I have that right? And have your views on value for value changed at all in the last year or so?
Fiatjaf - 01:01:32:
I think, yeah, it's partly correct assessment. They didn't change, but they also weren't very well defined in the first place and they still are not. Ask the question, what's the next question?
Kevin Rooke - 01:01:53:
Well, I mean, I'm trying to understand, I guess, what the future of this value for value movement looks like. As a creator, I'm experiencing this from a lot of different apps and they use a lot of different strategies for monetizing content. It's not always pure value for value. Like, I think the podcasting apps are pretty much in line with this vision of value for value. But then when you extend outwards from the podcasting apps, you have a lot of different approaches that teams are taking to help people monetize content. One of them is, for example, Mash. I have a section on my site where I can pay wall a transcript, a one time paywall, so anyone can read a transcript for I think it's about $2 right now of any of these episodes. So, for example, a listener listening to this instead of listening to the full episode, they could just go to my website, read a ten minute transcript and be done with it. And that's a way to monetize that. I'd love to just get your assessment on what direction you think creators should be focusing on in this like, value for value Lightning monetization ecosystem.
Fiatjaf - 01:03:12:
Nice. Well, I haven't seen that. I think that's the direction I was thinking at, like this thing of selling more payroll content. And there are other things like sending comments that show up on the podcast. Somehow I think there's a boost, something that they made.
Kevin Rooke - 01:03:36:
Yeah, boost the idea.
Fiatjaf - 01:03:38:
I think these small things, they have much more potential than just donations. But I don't know, maybe I think the donation, the value for valuing it came from that podcast guy, I forgot his name. He invented this concept, which to me is just another name for a donation. But he would say it's not a donation, it's value for valid. But I think that's not sound economic theory, but it works for him. Donation works for a bunch of people, but I think for most people it won't work. And I think these other things are more interesting and they also more cool to do. Like they I think they can bring more excitement to the users. And I'm not very familiar with the Twitch people, like people that string games and other stuff on twitch, but I've heard about a lot of different things they do. First you pay something and then you write something on the screen or there's a voice reading what you said, what you wrote, or stuff like that, that's captured a little by the WD streamer product. I hope you'll be eating more and more of that market as the time passes, and including more features, too. But there are other things, like there's a lottery thing that you do on Twitch Chat, and they pay something, but they do it with points like twitch points, which is very bad because these twitch points just become a very bad form of money that these people do. Like, they earn all these points and they can do nothing with these points except waste their time. If they were running satoshis and then they would pay satoshis to the creator without reach, taking all the money would be much better. It's not selling because no one wants to say, oh, I'm selling rights to my person. But they tell your supporters, so you weren't something, you weren't the right to say something, or you weren't the right to play a game against me in Life in the live Stream and stuff like that on podcast, the comment stuff, I think I like the idea of the listeners suggesting topics and suggesting questions by sending payments and stuff like that. Very good. Filters out spin filters out that stuff. But also you shouldn't commit like the shouldn't commit to asking all the questions that come with money. They must exercise some discretion. Yeah, I don't know. I see there are many possibilities and probably a lot more that I haven't thought about. And these are much more interesting than just donations to nation donations. And donations are good too. Like many people will do donations, that's fine. But I think there's an excessive focus on donations. That's the only way to do stuff. And then they come with the value for value theory, and they need a value for very book to throw in people that say donations are not very good.
Kevin Rooke - 01:07:10:
Okay, interesting. So I guess you may not so bullish on the idea of donations as the only kind of monetization strategy that someone uses, but in tandem with things like comments and with other strategies, you think maybe it's not a bad idea to have a donation option. If I understand you correctly, your point is just that it's not the monetization method that's going to fix all of the creators problems.
Fiatjaf - 01:07:41:
Yeah, I also don't know what I'm saying. Yeah, maybe that's a good summary, maybe not.
Kevin Rooke - 01:07:50:
I love it. Also, one more question on I'm starting to see a more standardized approach to some of these whatever you want to call them donations or boosts or tips or whatever. Across the Lightning ecosystem, I started to see boost buttons pop up, and a number of teams I believe are working on them. It's pretty easy to send a boost through. Like Albi, Mash has a boost button, Stacker News has the Lightning bolts. Of course, you just click it and it boosts automatically. I wonder if there's a standardized button that tips or boosts a set amount that everyone knows and it's kind of like an ecosystem standard. Like, if we agree $0.10 is what a boost is going to be, do you think that eliminates some of the problems associated with people trying to define the value they get out of something and they can quickly go, hey, here's $0.10, here's $0.10, here's $0.10. Yeah, I'm just kind of brainstorming, but I think that might be one way to eliminate some of the mental overhead associated with making payments on Lightning. Because I think one of the points you made in that article, for Value for Value was a good one, that people do have a hard time determining what value they get out of something, and it would be helpful if we had an easier tool for people to default to. I wonder what kind of impact you think that might have on the monetization.
Fiatjaf - 01:09:31:
I think it could help. Yeah, I think it could help, but I don't think it would solve because people would do multiple boosts. Oh, I boosted five times, but I think it would help. Yeah. On Stacker News, for example, if you click once, you pay one set, that's very low for most of the case, but also in most of the case, people don't deserve any set for shit posting.
Kevin Rooke - 01:09:59:
Yeah.
Fiatjaf - 01:10:00:
So again, I don't know. I have a very hard time figuring out the experience I have. Like, in the beginning of LNTXBot was like, people were starting to tip everybody in Telegram chat, and I started doing it too, because I had never done then I stopped doing it because it was so weird. I would tip someone and then someone would tip me. The same person I had just they would tip me back. So the tip meant nothing.
Kevin Rooke - 01:10:31:
Interesting. I think we're going to find out a lot about how humans deal with money in the next decade. As people start to have much more, they can use their money much quicker and they can spend it and receive it in many different ways. I think we'll learn a lot about people's habits for how they like to spend money and what gets people to give someone else money. And I think we're going to learn a lot on this. I want to finish this up off with a segment I do at the end of every show called the Lightning Round. Few rapid fire questions. Are you ready for the Lightning round?
Fiatjaf - 01:11:09:
Yes.
Kevin Rooke - 01:11:10:
Welcome to the Lightning Round, presented by Zebedee, your portal into the world of bitcoin gaming. The Zebedee app offers a full featured Lightning wallet, seamlessly integrated with your own personal gamer tag so that you can earn bitcoin on all of Zebedee's games on mobile and desktop. It's never been more fun to earn bitcoin, and Zebedee is your key to it all, to claim your personal game or tag and start earning some bitcoin. Of your own. Download the Zebedee app today. Okay, so I know you're full of all sorts of ideas rattling around in your head about bitcoin and Lightning and you've been working on a lot of different projects. What is one idea you wish someone would build in bitcoin which has not been built yet?
Fiatjaf - 01:11:57:
Oh, Jesus Christ. I have no idea. I want to see Hivemind the prediction let me say again, prediction market stuff that post store invented. I think that is a huge idea with lots of potential for changing, making the word better in multiple ways and no one cares about it.
Kevin Rooke - 01:12:20:
So high mind and prediction markets built on Lightning is that the idea of.
Fiatjaf - 01:12:26:
Mind is decentralized thing. It has its own blockchain hopes. You use drive chain to move bitcoin to that. But I think it has to be a decentralized thing. Like a censorship resistant thing can't be a service because the government will shut down the service and it's very easily governments don't like prediction markets. We must find a solution for this and build it.
Kevin Rooke - 01:12:51:
I think another one of those in the same line of thinking. I haven't seen any sports betting apps built on Lightning and I imagine that would be a pretty strong use case. Obviously, people's tendency to gamble and want to bet is obviously pretty much universal and there seems to be demand for betting products in all sorts of areas of crypto. I'm curious to know, I wonder if why I haven't betting app launched on Lightning. To me, there doesn't seem to be many of them today.
Fiatjaf - 01:13:25:
Yeah, me too. I built one, but it wasn't properly sports. It was betting home events, but it was very bad. But there was a one called Microbat before, but it was also very bad because the amount we couldn't choose the rate you would bet. Yeah, but we need someone to make one that is centralized so the government will shut it down very easily and then we make one that is decentralized.
Kevin Rooke - 01:13:54:
The progression of events, I guess.
Fiatjaf - 01:13:56:
Yeah.
Kevin Rooke - 01:13:58:
If you could change one thing about bitcoin, what would it be?
Fiatjaf - 01:14:04:
This question. I don't know. Maybe, It should have someway of preventing people from spamming the chain or compensating the people that run node for storing other people's data for free forever. But I don't think there is a solution for that. Yeah, but actual change that would be possible? I don't know. I think there's no change needed.
Kevin Rooke - 01:14:38:
Are there any books that have changed your view of the world?
Fiatjaf - 01:14:50:
Jesus Christ. Yeah, I don't think there were any books.
Kevin Rooke - 01:14:59:
Okay. And final question. If you could only hold one asset for the next ten years and it could not be bitcoin, what would it be?
Fiatjaf - 01:15:13:
Jesus Christ. Discussions are too hard. Maybe gold. Yeah, maybe gold. Okay.
Kevin Rooke - 01:15:21:
I like it.
Fiatjaf - 01:15:22:
Awesome.
Kevin Rooke - 01:15:23:
Well, thank you for taking the time. I really enjoyed this discussion. Even some of the really hard questions of course I enjoy asking them and you had some great answers. Where can people go to learn more about you and the work that you do well?
Fiatjaf - 01:15:38:
Fiatjaf. Com jaf I'm named at Fiatjaf everywhere. That's it.
Kevin Rooke - 01:15:45:
Awesome. Thanks so much for taking the time and hopefully we can do it again soon.
Fiatjaf - 01:15:50:
Thank you.
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