#29 - Adopting Bitcoin, Making Lightning invisible, New Release, Ecosystem and much more!

⚡ Everything Bitcoin & Finance

🇸🇻 Adopting Bitcoin with Nicolas Burtey

Nicolas Burtey has been driving Bitcoin adoption on the ground in El Salvador. He is the co-founder of Galoy, which has developed the Bitcoin Beach wallet. His work has certainly played a role in the passing of the Bitcoin Law, giving Bitcoin the status of legal tender in the country.

We are of course very curious about his work, thanks Nicolas for taking the time to answer our questions 🙏

You wrote a great piece on Lightning as a payment retail system. Could you give us a summary of its main thesis?

Nicolas Burtey: The TL;DR is that fiat uses layers to scale. So many critics like to say that Bitcoin is old tech and doesn’t scale, yet most probably don’t realize that the fiat layer 1 (Fedwire) doesn’t scale either. Fiat scales with layer 2 systems like ACH, Visa, Mastercard or Paypal. Analogously, the leading solution for layer 2 bitcoin is lightning.

Could you tell us more about Galoy and its pilot project Bitcoin beach?

Galoy is a startup developing banking solutions on top of bitcoin. Our first proof of concept is a wallet deployed in El Zonte where Bitcoin Beach started.

Why did you develop a “community wallet”? How does it work?

The Bitcoin Beach wallet uses a shared custody model. The wallet has a multisig solution for the cold storage, and the keys are distributed among different trusted members  of the community (note: Galoy doesn’t have access to the funds of the multisig).

To allow for instant payments, a hot wallet with lightning is also used. 

In effect the wallet is set up like most large exchanges, with funds mostly in cold storage, but some in the hot wallet to manage daily transactions. The particular difference with the Bitcoin Beach wallet is that some people from the community are the keyholders of the wallet.

Since you have spent a lot of time on the ground in El Salvador, what’s your view on “la ley Bitcoin” and its controversial aspects like the obligation for local businesses to accept Bitcoin?

Bitcoin Beach really started as a bottom-up movement. La Ley Bitcoin is indeed a top-down approach, which is somewhat the antithesis of Bitcoin Beach.

The law says that “every economic agent must accept bitcoin”. First, it’s unclear whether the law will be enforced or not at this stage. Second, I am on the side of “this is not great to impose the use of bitcoin” because education is necessary to understand all the risks associated with it, and education takes time. Yet, I see how this could have a trickle down effect of using lightning as a payment method -- such that other countries could quickly favor it, and this could start a hyperbitcoinization movement. So all in all, I see potential very large positive side effects for Bitcoin (and the world).

How did you think it went since the Bitcoin law came into effect? From an outside perspective, it seems less messy than could be feared. Do you share that feeling?

I agree with the sentiment, but everything is still very early.

The level of adoption in the upcoming months is really what matters now.

We will be happy to attend the Bitcoin Lightning Summit Adopting Bitcoin in El Salvador mid-November, presented by Galoy. Could you tell us more about the event? 

As shared above, for a successful Bitcoin rollout I think education is key for the people, companies and merchants in El Salvador. So we have decided to create Adopting Bitcoin - a Lightning Summit in El Salvador. The goal is two-fold. First is to regroup many of the developers working on Lightning, so that they understand the issues faced on the ground. Second is to let all the companies and interested parties on the ground meet the experts in the field, with the goal to facilitate a successful rollout.

Do you think of other countries that could follow the footsteps of El Salvador?

Many countries in Latin America will be looking at the adoption of Bitcoin in El Salvador very closely. If the rollout is successful, I think we will all be surprised how fast other countries could follow.

What lessons could these countries learn from the El Salvador example?

  • Provide / do not provide a default “public” option (as was done with Chivo wallet) 

  • More time for wallet development and rollout (eg, 12 months instead of 3 month) 

  • Focus on educational campaign with consumers / citizens 

  • Provide transparent guidance to businesses / merchants (with the ability to test API well in advance of launch date)

  • Create physical stores / kiosks to provide in-person customer support (as was done with Chivo ATM kiosks)

What are the next steps for Galoy?

We’re working with entrepreneurs around the world to duplicate the success of the Bitcoin Beach wallet. If we can help entrepreneurs in every country to create their own wallet plugged to the lightning ecosystem, then I think we could make a great contribution to the Bitcoin space.

🪄 Making Lightning invisible

Martin Cooper, an American engineer famous for building the first mobile cell phone in 1973, famously said:

“Technology has to be invisible. Transparent. Just simple.”

The Lightning Network has long been blamed for its poor user experience. The tech is indeed very complex. And it takes time to build intuitive tools which can make the technology disappear.

However, things have been moving very fast lately, and the Lightning Network went from not working to on-boarding a whole sovereign nation to Bitcoin! And things have been much smoother than anticipated, with global brands like McDonald’s, Starbucks, Pizza Hut already accepting Lightning payments.

This comes after Substack, the online publishing platform on which we are currently typing these words, added Lightning payments for its paying subscribers and after Twitter beta testing a lightning tipping service.

With our node, we have also witnessed an exponential increase in payments routed - just forwarding payments, not taking into account deposits/withdrawals to LN Markets:

So, how did we go from a clumsy tech to this momentum? Of course the main reason is facilitating instant payments at scale for the soundest money on earth.

But there is an other reason for this sudden explosion, that we have witnessed first hand: the gradual improvement of tooling and user onboarding over the past years. And this is just starting!

Let’s look at three examples of Lightning innovations that can be game changers for the space:

  • Lightning Address

  • Lightning Browser Extension

  • Lightning explorer

✉️ Lightning Address

Lightning Address is “like an email address, but for your Bitcoin”. It’s a very simple way to send Bitcoin instantly on the Lightning Network. No scanning of QR codes or pasting invoices necessary. Cool, huh?

Lightning Address has been developed by André Neves and relies on the lnurl protocol, developed by the legendary Lightning builder fiatjaf. You have probably already used lnurl on LN Markets, maybe without even knowing it, for login, deposit and withdraw.

Here is a quick primer on how Lightning Address works:

Well, we are very happy to share that this new standard is coming to LN Markets! You will be able tp use it for deposits and withdraw with wallets such as Breez, Phoenix, Blue Wallet, or Blixt (full list here). If you want to support the contributors pushing the Lightning Address standard forward, feel free to donate sats here: lnaddress@zbd.gg!

🔌 Lightning Browser extension

The Lightning Browser Extension is a browser plugin that connects to different wallet interfaces and provides deep Lightning Network integration for websites for payments and authentication flows. Think of Metamask for Lightning apps. Of course, this comes with trade-offs, but look how cool this is:

The Lightning Browser Extension implements the WebLN standard. Its main difference with Joule (an heavy inspiration) is its sole focus payments and authentication, rather than being a full node with advanced channel-management. Like Lightning Address, we look forward to adding support to it on LN Markets!

🧭 Lightning Explorer

When you run a Lightning Network node, you want the best tools to analyse lightning network channels, capacity, routing, etc. Amboss is doing just that! Their ethos is that at the end of the day, it is regular people that make up Lightning with their own personalities and networks. And they are building one of the most user-friendly Lightning explorers to help humanize the space! Feel free to check them out and claim your node.

♻️ Time to conclude: this is just the beginning for Lightning. There is a virtuous circle at play: the network is more robust which drives more money flowing into it, leading to more app developers building cool stuff with better tooling. We are all on the path to make this technology invisible!

⚒️ New release

The latest release of LN Markets will be out this week!

Its main features:

  • Lightning Address

  • Static LNURL Pay

  • Better LNURL Withdraw UX

  • New Profile menu: Account/Trades/Wallet

  • Trades History

  • Funding fees History

  • Cool LNM QR Codes

  • Various bug fixes

  • API: added history of index, bid-offer, fixing and carry fees

We have also released a Node.js connector to LN Markets API.

Hope you enjoy! Please feel free to share with us any feedback and feature request you may have.

And good news: our team of buidlers is growing 💥

🌱 Ecosystem

🏄‍♀️ We hope you all had a great summer! Ours was good, especially when we gathered with more than 800 people for SurfinBitcoin21 in the south-west of France. Awesome to see some of the best French-speaking bitcoiners orange-pill a very diverse audience in real time!

This year’s edition has been centered around the Lightning Network, with various talks and workshops dedicated to it. Yorick De Mombynes gave a great primer on LN (in French but you can generate subtitles in any language) :

We were happy to discuss different Lightning implementations with Bastien Teinturier from ACINQ and Antoine Poinsot from Revault:

And Nicolas Burtey gave an enlightening talk on his work at Bitcoin Beach!

📺 Speaking of bringing Lightning mainstream, Kevin Rooke did a great job to demystify Lightning with Pomp:

👛 The “one-man army” Anton has released Simple Bitcoin Wallet, the first mobile wallet which supports routing of third-party Lightning payments and thus allows users to earn routing fees in a non-custodial way!

🏛️ Canadian exchange Bull Bitcoin has launched Lightning Network integration, future proofing their non-custodial business model!

🛣️ Even though IBEX Mercado node seems to have successfully bootstrapped El Salvador’s payment liquidity in a matter of hours, feel free to provide them with more inboud!

📰 And finally, two great reads:

⚡ Bonus

🏄‍♀️ Nice to see this Bitcoin on the front of one of the finest art-deco buildings in Biarritz, the European capital of surfing!

⚒️ Very excited to be pursuing the same mission as Jack Dorsey and TBD: build a Bitcoin DEX!

🛗 And another elevator pitch for LN Markets

You can reach out to us on Twitter and Telegram.

Thank you for your support, let’s build the future of finance together!