Bitcoin Lightning Network + Nostr: A New Paradigm for Decentralized Social Payments

Author: 0xCousin

In the first half of this year, the innovative narratives of the Bitcoin ecosystem - BRC20, Ordinals NFT, Bitcoin Layer 2 - became one of the major topics in the industry. More and more people are beginning to pay attention to the development of Bitcoin ecology. In the article "Narrative Innovation: A Brief Analysis of Recent Bitcoin Ecological Experiments", we outlined the development status of BRC20, Ordinals NFT and several leading Bitcoin Layer 2.

Around the development path of Bitcoin, the Bitcoin community has broken out ideological struggles more than once. In the process of divergent development, a huge opportunity gradually emerged in the Bitcoin ecosystem: the decentralized social payment combining Lightning Network and Nostr.

The Origin of Lightning Network - The Expansion Controversy (Layer2 Expansion VS Layer1 Large Block Expansion)

The block size of the Bitcoin network is designed to be 1M, and one block is generated in 10 minutes. With the same amount of transaction code, the Bitcoin network can process about 7 transactions per second. This cannot meet a large number of business needs, especially in the bull market where on-chain transactions are active. Therefore, in the Bitcoin community in 2015, there were already voices of expansion.

On the choice of technical path for expansion, the Bitcoin community is divided:

1. Radical Miners: Support to increase transaction capacity by means of Layer 1 large block expansion

Some radical miners chose Layer 1 large block expansion. At block height 478558 before the Segregated Witness upgrade, the hard fork produced Bitcoin Cash.

2. Conservative developer community: advocate using Layer1 technology upgrade + Layer2 expansion scheme

The Bitcoin core development team represented by Bitcoin Core advocates maintaining the pure "non-sovereign asset" attribute of Bitcoin, only carrying out conservative technical upgrades on Layer 1 (Segwit Segregated Witness), and expanding the application scenarios of Bitcoin by means of Layer 2 off-chain expansion (Lightning Network lightning network).

In August 2017, Bitcoin underwent an upgrade to Segregated Witness. Since only the transaction information is packaged into the Block, and the digital signature information is placed in the Extended Block, the current Bitcoin block size is mostly about 1.5M (theoretically, "4 times" expansion can be achieved, 1M transaction information, 3M digital signature). The number of transactions that can be accommodated in each block is a little more, and a certain degree of Layer 1 expansion has been achieved; in March 2018, the Lightning Network was launched, and the Offchain solution such as State Channel was used to help the Bitcoin network achieve fast payment off-chain expansion.

Since then, the combined expansion scheme of Layer1 technology upgrade + layer2 off-chain expansion advocated by Bitcoin Core has been realized to a certain extent. Maintain the value proposition of "Bitcoin digital gold, Lightning Network instant payment".

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After a full cycle, the Lightning Network already has 18,000 Nodes, running more than 70,000 Channels, and more than 5,400 BTC in the Lightning Network. In addition to the Lightning Network, several Bitcoin Layer 2s such as Stacks Network, Rootstock, and Liquid Network have emerged one after another. Bitcoin Cash forked BSV in November 2018.

The problem with the Lightning Network is that the function of payment is not suitable for a large number of independent dApps, and it is more suitable for its fast payment and micropayment functions to be embedded in other dApps to play a role. Especially social applications are most suitable as the embedding carrier of Lightning Network.

Social Payment: Combination of Nostr and Lightning Network

Because the developer of Nostr, fiatjaf, is also the developer of the Lightning Network, Nostr natively supports the Lightning Network.

Nostr is a minimalist social protocol based on no blockchain, a censorship-resistant global social network. Nostr transmits Notes and other Stuff via Relay. Does not rely on any centralized server, Client publishes information, Relay transmits information, so the release and transmission of information is anti-censorship; any user can create public and private keys, so it is not restricted by third-party servers.

From the perspective of product experience, the product functions of Nostr-based social network Damus are very similar to Twitter, where you can create posts (such as tweets), like posts, follow someone or unfollow, forward, etc.

If you want to use Nostr, users need to run a Client, which can be Native Client or Web Client. When a user wants to publish some content, he needs to edit the content first, then sign it with a key, and then send it to multiple Relays, and the Relay is responsible for spreading the content published by the user. Anyone can run Relay, and Relay just accepts posts from users connected to that Relay and forwards them to others. Users do not need to trust Relay, because users sign and verify on Client.

Nostr's most popular client, Damus, has a built-in Bitcoin Lightning Network payment function. Users only need to fill in the Nostr Public Key, and then they can directly call the Lightning Network to pay Relay's one-time fee. After payment, they will get a Bitcoin Lightning Invoice (receipt).

Nostr's design concept is somewhat similar to Bitcoin Network. Developers develop various Clients for users to choose. Clients are used to sign and verify information; Relay is responsible for capturing, storing, and transmitting any client information connected to it, and forwarding it to other clients. There are also many Relays; Users only need to create a pair of public and private keys to use Nostr without permission. It is a bit similar to the developer team, miner group, and User in the Bitcoin community. The design of each link has a certain degree of robustness and anti-censorship.

According to Nostr.Band, as of now, there have been more than 23 million Pubkeys, among which there are more than 3.6 million accounts with personal profiles, and more than 170,000 accounts with Lightning Network addresses. There are 1644 Relays, and more than 100 million Events have occurred.

The Crypto community's doubts about Nostr are mainly due to the lack of incentives for Relay. If Relay has Token incentives, most of the Tokens may be in the hands of a few people, which cannot form effective incentives and is vulnerable to attacks; if Relay does not have Token incentives, there will be no continuous motivation to store user data, and there is also the possibility of Relay actively or passively deleting data.

A possible solution is: set AI Bot to act as Nostr's Relay, responsible for grabbing, storing, and transmitting any client information connected to it, and forwarding it to other clients. AI can be more neutral than humans, and will not filter out user content based on personal preferences or carelessness. At the same time, set a Lightning Network address that charges users. New users need to pay some BTC at one time to use the Relay. The BTC collected by AI Relay is used to cover operation and maintenance costs.

The combination of Nostr and Lightning Network has set a model for the native integration between social applications and Bitcoin. There may be more social applications combined with Bitcoin (Lightning Network) in the future. Perhaps Mass Adoption's DeSo will be the first to explode in combination with Bitcoin Lightning Network.

Summarize

The financial inclusiveness of Bitcoin, a decentralized payment system without barriers to entry, combined with the fast payment realized by the Lightning Network, has incomparable advantages in decentralized social payment and even in the field of AI.

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