SLP391 Ben Carman – Bitcoin Privacy, Surveillance, LN Vortex, P2P & Austin BitDevs

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Ben Carman (Bitcoin core contributor, working at The Bitcoin Company, co-organizer Austin BitDevs) joins me on the show to talk about the world of Bitcoin Privacy, the implications of surveillance on us all today, some of his ideas on improving Bitcoin Privacy, LN Vortex, P2P and the Austin BitDevs scene. 

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Sponsors

Stephan Livera links:

Podcast Transcript:

Stephan Livera – 00:00:05:
Ben, welcome to the show.
Ben Carman – 00:00:07:
Thanks, Stephan. Long time friends. And now I get to finally come on your pod. So I’m happy to be here.
Stephan Livera – 00:00:12:
Yeah, of course. Love the work you’re doing. And I know you’re doing a range of things. Bitcoin Core contribution,
you’re an organizer of Austin BitDevs is one of the organizers and working on a bunch of things. So let’s get into
some of this stuff. So, yeah, maybe let’s just get your view just broadly on what’s going on in the space and what
you’re following. What’s exciting to you in terms of bitcoin and bitcoin development?
Ben Carman – 00:00:36:
Yeah, bitcoin has been like, kind of a little weird since tap reactivated. We now there’s no, like, next thing. Like CTB
kind of had its time in the light, but then not so much anymore. And so what I’ve kind of been focused on recently is
just like Lightning privacy stuff and like my open source life, like full time I’m the bitcoin company, but when I’m not
selling gift cards, I try to do some bitcoin stuff. Like, me and some friends like Tony Giorgio and Paul Miller have been
doing some Lightning research on different privacy stuff and kind of turned into a couple of hackathon projects we did
where I made something called translnd which let you rotate lighting pup keys. And we’re working on other various
ideas of trying to figure out how to make your best Lightning node if you could.
Stephan Livera – 00:01:24:
Got you. And so the whole privacy aspect is a hot one right now. There’s a lot of discussion about fungibility,
censorship, resistance, what exactly is required. So let’s talk a little bit about the privacy aspects. Just generally, as I
think it’s fair to say, if you just use bitcoin by default without any techniques, you’re not necessarily being private. And
I think it’s probably important for people to understand that but also understand it’s not like there’s zero hope either.
So at least that’s how I’m seeing it. Do you want to give us your view? And actually it would be really interesting for
you to answer this question as well. Do you believe bitcoin is fungible?
Ben Carman – 00:02:00:
I think bitcoin is fungible. If you can find me some cheaper bitcoin, I’d like to buy it, or if it’s more expensive, I’d like to
sell it. But yeah, I think bitcoin privacy is a problem. It’s not completely confidential. When you make a given address,
you can see all the transactions that come from that address. And this is for chain analysis company to exist as well
as privacy companies to fight it as well as people just kind of use it for fun too. You go to blockchain.info and see if
your transaction is confirmed and stuff like that. So it is a problem where with different heuristics and stuff, you can
kind of weed out what’s someone’s wallet balance or if someone’s doing certain things like multi SIG versus Lightning
versus just normal single SIG. So there are problems there. We have made lots of steps since the dawn of Bitcoin to
actually improve this with things like Taproot most recent upgrades to Bitcoin that really added a lot of potential
benefits that are yet to be implemented. But we’ll have that in the future and as well as like there’s lots of other ideas
and things that don’t need like softworks like tap, really like things like CoinJoint and coin swap that make it a lot
better. So it is always an ever going problem. And the hard part is you kind of need to know what you’re doing, at
least today. But as things get better, it’ll get probably easier, I imagine.
Stephan Livera – 00:03:26:
Sure. And so the other aspect of Bitcoin privacy is, let’s say the elephant in the room is the KYC aspect, right? And
I’m not saying this from a position of I’m coming from the moral high ground, obviously I work as one bitcoin and
many people in the space are either working in the industry and many of the companies in the space are having to do
KYC on their customers. And then as part of that, they’re often having to work with chain surveillance firms who in

turn are potentially getting access to some of that data and that can make it more difficult for a person to be private in
Bitcoin. So what are your thoughts on that aspect, the pervasiveness of chain surveillance and the KYC?
Ben Carman – 00:04:09:
Yeah, KYC is obviously a problem because it forces the user to upload pictures of my documents and even a selfie
like saying I’d like to do whatever. And for one, it’s terrible, UX because you have to go through the whole process.
But for two, it’s a huge security vulnerability in Honeypot where all the time things get hacked. I think maybe this week
there’s a news announcement, like a billion people got doxed from a China hack or something. It’s not actually really
stopping any of these nefarious actors where most likely it’s just someone’s going to upload a document and then it’s
going to get hacked and now someone’s going to steal your identity. And I think something like one in four Americans
have had their identity stolen. People in my family have had their identity stolen before. It’s like it’s an actual problem
that now you have to get lawyers and it’s just a huge headache. You’re going to lose lots of money potentially, so it’s
never good. And the touted reason why they’re doing it. So to stop money laundering, to stop child pornographers, to
stop drug traffickers, anything, whatever the boogeyman is. And in reality it doesn’t really stop munching on this. Like
what they’re actually going to do is going to go find a stolen identity on the dark market and buy that and then do
whatever they want. Or there’s KYC free versions of how we do most things as anyway, so they can just do
something like that. So all this stuff will exist and it’s kind of impossible to stop. So it’s like if we’re going to not stop,
we’re not stopping the bad stuff and just harming the good users. What are we even doing here? So I think that’s a
problem. And then the chain analysis part just kind of makes it worse. Where chain analysis is done by your own
wallet, probably does mild forms of chain analysis to try to give yourself privacy, where it’s checking like, what are my
transactions, how should I make the most efficient transaction and what kind of change output should I use when I
spend this? And stuff like that. But the chain analysis, like companies like Chain, Alyssis, Elliptic, whatever their
secret sauce is, they have their view of the blockchain like everyone else. But then they get all this data from
Coinbase and Kraken and maybe Swan, I don’t know, all these companies that are KYC users and they pull them
together. So they have this huge holistic view of like, okay, user A withdrew to this address on Coinbase and then to
this dress on Kraken, and now I can see, okay, this is their wallet. And then, you know, they have a record of like this
entire user’s balance and they use all these Heuristics that they claim to be anonymised, but it’s really not because
you’re using it from KYC information. So it kind of creates like just another Honeypot of information. And we’ve seen
this various problems with that where, I mean, it wasn’t exactly a KYC thing going. The ledger got hacked and all the
addresses of their users got doxed. There’s lots of people at first getting emails and text messages, like trying to hack
their coins off their ledger. I’m just going to install that firmware or something or enter their seed phrase online. But
eventually I think there was reports of people actually getting knocked on their front door because they got a ship to
their house and stuff. So that’s like actually threatening human lives, which is awful. And that’s just shipping address
when we’re doing actual like IDs and birth certificates, whatever you want, like it gets so much worse and you can
cause a lot of harm that way. So objectively it’s a bad thing. And the people that are trying to enforce this, you know,
there’s just regulators out in DC or whatever that have no repercussions, like, well that’s bad, so let’s do something
that just they think it makes it better, but it doesn’t.
Stephan Livera – 00:07:48:
Unfortunately, it seems that the answer is always do more regulation, do more KYC, do even more surveillance. And
yet the more surveillance they are doing on the world for all of these costs that they’ve imposed on banks, financial
services, bitcoin companies even, they haven’t got a lot to show for it. And in fact, there is research on this. I
interviewed Dr. Ron. Pol. P-O-L. Not Paul. And he has spoken about how ineffective the AML regulation is. But I
mean, anyway, I guess the point is, what should Bitcoin is be doing? Should Bitcoin is the anti-AML laws, should they
be advocating in other ways in the public system? Or is it more about building code, writing code? What are you
thinking that Bitcoiners should do about it?
Ben Carman – 00:08:34:
You should do whatever you can. Like, I’m a coder, so that’s probably my kind of personal mission, is kind of build
software that helps you get away from this. But 90% of the world doesn’t know how to code, so you can go and do
other things like, I don’t think you know how to code, Stephan, but you make a podcast, bring up these issues and try
to get people informed. Or other people can go and talk to the senator and try to get actual laws changed or create
educational tools and all the various things. But yeah, it’s a hard problem, but there are tools to get around this. Like if
you don’t want to buy on a KYC exchange for obvious reasons you just stated, there are lots of other ways. There’s
like things like Robosats and Bisque that’s just like an online PDP exchange that lets you do things. There’s also just
like the good old classic, like go to your local Bitcoin meetup and shake hands with someone. Austin with us here. We

have a huge meet up and people come here all the time. So there’s lots of times where people are like, hey, I’m trying
to get some cash. Can anyone hook me up? And then they shake hands later and send some Bitcoin. And that’s
perfectly fine to do and legal pay your taxes if you want, but it’s a completely normal thing to do. And it’s not like a
total like you show up in a mask with like three guns and a knife and hopefully you don’t get jumped or downtown
Austin, you’ll get caught if you try to or break your knees at the next Bitcoin meetup. So you should be fine. There’s
ways to get around it. It’s not the most hardest thing in the world, I know. Like many people, their first introduction to
Bitcoin wasn’t on something like Coinbase. Their first introduction was on, like, Biscuit or something, which is
supposed to be the advanced Bitcoin or thing, but people are able to do it. So if you like, guide people through that
you want to help, or if you haven’t done it yourself, you should really try because it’s not that hard.
Stephan Livera – 00:10:25:
Sure, yeah. And I don’t have anything against non KYC acquisition of coins. I encourage people to do that also for
me. And what I’m thinking about here is also the scalability aspects of it, like how many people can realistically do
that. As an example, I looked at the Bisque volume over the last week. I think I looked up the stat yesterday. That
number was about $125,000 worth of volume on bisque over a week.
Ben Carman – 00:10:48:
Yeah, that’s like nothing compared to Coinbase or something. So that’s a problem. So getting around, that’s the
harder problem. You can mine bitcoin. That’s a great solution, where lots of people just buy a lot of miners upfront.
That doesn’t require KYC. Electricity doesn’t require KYC as well, so you just have a huge mining operation and mine
some Bitcoin. It does require other skill sets, but it is possible, of course.
Stephan Livera – 00:11:13:
Yeah. And to be clear, I’m not trying to fudge Bisque or anything like that. I think people should be willing to use it.
And the other aspect of it is that volume number might be also down from maybe a few months ago, when we weren’t
as deep into a bear like we are now. And also some of that volume might be happening off those platforms, right?
People might already meet one time and then only do the first trade on the platform and then do other trades off the
platform. So to be clear, that volume number is not taken as gospel, right? It can change. And there are other
platforms like Robust Apps and Huddle Hodl and PeerToPeer stuff in person bitcoin made of things like this. But I
think in terms of where the industry is going, I think that’s probably also an interesting question, right? Is it likely that
every legal or above board Bitcoin business gets forced and pushed down this pathway? I think that’s probably the
tougher question. And is there a way out of that?
Ben Carman – 00:12:09:
I sure hope they don’t. And luckily, this is like a gradient. Like you could have. Like something like Bitcoin Core that
doesn’t talk to any outside service. It’s just your own thing that will never have to do a KYC. But something like
Coinbase. Where they have custody of your funds and they give you tax records and all that stuff. That likely. That
has KYC on it because of regulations and because things like. If you died. Well. Who do we give this money to? And
the KYC lets them figure that stuff out. It’s like legal claims and stuff, but as a user, you should have a choice. So
there are different services that you do that for us at the Bitcoin Company today, we sell gift cards, you get sats back
in your account. And so we’re not like, having to sell you Bitcoin. There’s no tax implications that we have to report for
you or anything like that. So we don’t take anything, we just have an email and that’s fine because the only things we
need to comply with is like a fat compliance, which is like there’s like 14 addresses or something we’re not allowed to
send to, which most likely our user doesn’t have the private key to, so who cares? Stuff like that is a lot easier to get
around, but as you add in things like buying Bitcoin with fiat money, then it’s a lot harder because then you come
under the purview of these other regulatory things and stuff. That’s where it gets hard legally today. You need to take
KYC. But the shade analysis part is always just like a hairy thing where a lot of times it’s not like they won’t knock on
your door and shut down your company if you don’t. But then no liquidity or provider will work with you if you don’t
have chain analysis or anything like that. So that gets weird. But all these laws are the banks are these fiat institutions
that just want to comply with everything because that’s how they make their money with the regulatory moat. So they
require all these things and a lot of times they’re doing the full like the law will say, like do the most reasonable thing
or something. So they take that as well. We’ll do all the chain analysis possible because that’s completely reasonable
to them. But as Bitcoin obviously, hopefully don’t believe that, I personally don’t. I think it’s reasonable to do zero
chain analysis so you have a debate with your lawyer and stuff and find what’s comfortable, but reasonably it makes

sense, I think if we’re doing this OFAC, there are 13 people in the world we’re not allowed to send Bitcoin to. I’ll be
fine with that. I won’t send money to Osama bin Laden, but I’ll send Bitcoin to everyone else. And so I think that’s fine.
But handling the rest of that, is this a good grading you have to do based on what you’re trying to do as a business?
Stephan Livera – 00:14:58:
Yeah, for sure. And so some of this, I think it came up, it flared up a little bit with some of the recent debates on
Twitter as well where you made that comment and saying, look, if we had to do it, then that’s the point, I’d be quitting.
And I totally respect that. Of course. I think the question from my point of view as well is just how pervasive it is in the
industry that even if you quit one particular employer because they’re doing chain surveillance and let’s say that’s
their regulatory requirement and so on. Then the challenge is. Even if you were to get funding. How many companies
or firms in the space are offering. Let’s say. Developer funding without any connection to say. KYC and surveillance.
Let’s say. The Geminis of the world or the others who are doing that? It just is. That pervasive, isn’t it?
Ben Carman – 00:15:45:
Yeah, and I’m not common too. You can do your own chain analysis without having to go and use these insidious
companies like Chain Alyssis and Liptic where like in those you’re just pulling all of your data with these other huge
honeypots of data and just making it worse for your personal users. But if you’re trusting yourself to take this KYC
data, you should be able to trust yourself and you can legally, I think, do the chain analysis yourself, which can be
whatever you dictate is reasonable. So I wouldn’t quit if we had to do our own personal reasonable chain analysis in
that regard as well. Like what you’re saying on other companies say they’re like, you have to use Elliptic and go, so I
know, I quit. And it’s like, yeah, now every other company is doing it as well, so you’re kind of shit out of luck. But I
like the case everyone and their mother are sponsored by Spiral today, where they’re just giving out grants, but there
are a few people sponsored by things like Coinbase and Gemini, these other, like, casino type companies, and those
are actually my favorite grants because you’re taking money from the Gemini and bringing it to Bitcoin development.
So I’m happy to take money from the bad people and bring it towards light. So I think that’s okay. But you do have
that taint of you’re getting the dirty money. But as I said in the beginning, I think the coin is fungible, so that’s okay.
Stephan Livera – 00:17:11:
Yeah, of course. On the topic of okay, so I guess firstly there’s that point that you made, which is if we’re thinking of
the gradient here, the worst is to create the massive globalized honeypot of chain analysis and Elliptic. Again, we’re
speculating a little bit here, but presumably this is what they’re doing is they’re able to pull the KYC data and the
chain data of many customers across many exchanges. Whereas what you’re saying is in a gradient sense, in a less
bad sense, if you’re doing your own personal risk analysis of coins, of customer coins, where they’re coming from,
where they’re going and things like this, then that’s less bad because at least you’re not creating the honeypot aspect.
Now, of course, the privacy purists would still object to that. They’d say, no, hang on, you’re still trying to surveil your
customers. But in this world where we’re dealing with government and regulators, and the only way that you can do
things at scale, at least in certain business models, is to have to comply with that. So obviously I think it’s a position
that we don’t like that, but at the same time, we also understand that the only way to really grow the pie meaningfully
is to have to play inside that regulated pool, I guess. Is that kind of how you’re seeing it?
Ben Carman – 00:18:21:
Yes. Sadly, I think most people won’t onboard Bitcoin in the no KYC way, and I think that’s just because you can ride
a much better UX by doing that. And Coinbase has a beautiful app. I don’t like them, but they did a good job. And
biscuits kind of hard to use. It is usable and you can do it if you want, but my mom’s probably not going to want to do
that. I think if you want to bring bitcoins to the masses, some people are just going to capitulate. And do we want
Coinbase running that and getting all those users or do we build it ourselves? So I think it would be better feel like a
real bitcoin is doing like you guys are doing a swan or Cash App or river, what we’re trying to do at the bitcoin
company, same thing. So I’d like, if people are going to go that route, let’s give them the best tools possible and
inform them like, hey, we’re taking this and we don’t want to, but these are the risks. So I think that is important and
scaling that up is good. When you’re doing this as well, with this internal chain analysis, you get to make your own
risk metrics as well. Then I think in the past, people like BlockFi and Bottle Pay were blocking CoinJoin from coming
into their exchange, which is like most likely that’s just their chain analysis provider being like, oh, that’s bad. And
versus like when you’re doing internally, people like, oh yeah, CoinJoin, those are cool, good job. We’ll give you a
bonus because you’re cool now if you want. So not only are you not just feeding the honeypot, are you also letting

yourself control exactly what you want to do? So you don’t have to if someone decides CoinJoin is bad, you don’t
have to just immediately start blocking those. You can decide on your own and stuff, of course.
Stephan Livera – 00:20:07:
And so in terms of the hopes then for stopping the chain analysis and the elliptics of the world, what are the big ideas
in your mind? I think one idea I can see is this idea of trying to stop the common input ownership heuristic or
undermine it in a way where as an example, if we did a lot of Lightning channel or collaborative channel opens, then
that helps undermine that heuristic, which is a key heuristic that they rely on. So that’s one idea. But I’m curious
what’s really going to move the needle here in terms of actually obsolete them or making them less relevant?
Ben Carman – 00:20:40:
Yeah, these chain companies, they have two inputs. One is the actual blockchain and the other is the KYC
Exchange. So if you stop using them for your KYC Exchange, you block off one input. So now we have to worry
about the other input, which is the blockchain. Things like you mentioned this common input heuristic where you
have a transaction that has multiple inputs in it. Chain analysis firms generally just assume that every input is owned
by the same person because 99% of the chance that’s going to be true. So it’s good way to do that. So if you mix, if
me and you are doing a transaction, if both of our inputs are in there now they’re going to think that both of those are
my inputs or both those your inputs. They’re actually both of ours, now our wallet histories get clustered together and
they’re like data set. So now it gets harder to actually dictate what’s happening. So that improves things a lot. And
typically the kind of way you do this is either like a CoinJoin, but that’s very explicit. They kind of know to exclude
those, but they just know like, oh, after a CoinJoin, it’s kind of gone. We have to create a new wallet history. But
other, like, sneaky ways are things like pay join where you’re actually able to hide the actual payment amount and the
inputs that are in there of who owns what because you’re adding in the receiver’s input. So you can do all these fancy
techniques to hide that, as well as things like coin swap where you can instead of you’re not breaking this common
input heuristic by having a transaction with two inputs, we actually just have two transactions where you and say, like
me and you would swap both like the same amount, UTXO. So I start with UTXO A, you start with UTXO B at the end
and I have UTXO B and you have UTXO A. So that way they just swap histories and no one can tell that we did that
because they never in the same transaction. That’s other ways to do that. But it’s all kind of they’re all just incremental
stuff. You’re trying to get better because if you do all this and then you just go and deposit into Coinbase now they
see, okay, that last justice is so you’re always at something, you’re always keeping up with and trying to improve, and
technology is always improving this as well. Before Taproot, if we knew we were doing coin swaps, then you
deposited into a multisig and I kept it on a single SIG, it’d be obvious. Okay, Stephan is a multi SIG user. I think he
just went to his wallet and it would be obvious that you did that versus now a Taproot. We can hide that you’re
actually using multi SIG. So these would look the same. Not just multi SIG with things like things like Liquid or even
like Lightning. All these different things can all look the same now. So it makes it even harder to do all these
heuristics.
Stephan Livera – 00:23:20:
Of course, and so what you’re referring to there is this new output type Taproot. And so just like how we went through
historically, we upgraded to the native SegWit addresses. Now we’ve got these Taproot addresses. Now. I suppose
one criticism that could be leveled at us here is tap roots a nonsense right now is very small because there’s not that
many users of Taproot. Now I know. For example, BTCPay servers wallet supports Taproot. I know, Moon Wallet, I
think they are actually using Taproot in the background. But in terms of Taproot Lightning channels, that’s not really
here yet, although I believe that’s coming soon. But I’m curious your view on that about growing the Taproot
anonymity set.
Ben Carman – 00:24:00:
Yeah, there’s a couple of wallets using an LND just released it for their on chain wallet. But not for Lightning
channels, I think. So I was told by End of fallish that they’ll have it, so hopefully, like, soonish. But it is something that
like, you know, if you’re a Tapper user today, you’re like one of like maybe 10.000 people, so you’re not, you know,
you’re reducing your anonymity set. But I think just like building tools on top of this and getting people ready to
support, because a lot of wallets don’t even support sending the tap read addresses and stuff yet. So we just kind of
need to do this incremental process. And it was nice with SegWit because when we switched over to there, there’s an
economic incentive where you would have cheaper transactions when you switch to SegWit. So naturally, a lot of

people moved over just to save money. But now with Taproot, it’s more of a privacy saving thing than a fee saving
thing. Like you’re maybe saving a couple of bites, but like, you know, you’re not going to be saving like 30% whatever
you would with SegWit. But there is a kind of a push towards that because lots of people are saying, luckily, the
bitcoin kind of initial use case is now moving towards like a Lightning wallet than an on chain wallet. I feel like most
people get on board onto something like a moon or just a traditional Lightning wallet in that regard, since Lightning is
much better when we have Taproot everywhere, all these Lightning walls are moving towards a Taproot first look,
that’s going to help a lot. So maybe bitcoin in 2013 that has its cold storage buried in Argentina, he’s not going to
upgrade the Taproot, but all the new users coming in are going to upgrade the tap roots because that’s what their
wallet supports and is the default now. So I think that will be a big help.
Stephan Livera – 00:25:42:
Yeah. And actually on this now, again, this may be triggering to some listeners, and I’m not saying I like this reality,
but this is perhaps the reality that we have to acknowledge. I’ve seen some interesting statistics from Sergej Kotliar of
bit refill, and he speaks about an interesting framework. It’s this idea of bitcoin the tool and bitcoin the movement. And
so obviously, people like you and me and even Sergey are arguably part of the bitcoin movement. We go to bitcoin
conferences, we speak, we talk to our friends there and so on. But then there are these users who are not
necessarily ideological about it, right? And by ideological, I mean, broadly speaking, cypherpunk or libertarian-ish,
whereas there are a lot of people who use bitcoin without having any ideology about it. So, for example, he makes
the analogy, which is a good one, of BitTorrent. There are lots of BitTorrent users who are not ideological about it.
They wouldn’t go to a BitTorrent conference. They wouldn’t call themselves part of the BitTorrent movement, let’s say.
And so, just by the numbers, if you. Look at the stats on Bitrefill, he points out that actually a lot of the users are
actually using things like Exodus wallet, which is like a shit coin wallet, or they’re using blockchain.info. Right? So it’s
kind of funny because we have this ecosystem where in our bitcoin world we’re always promoting bitcoin only and
things like this, but objectively, out there in the real world, there are a lot of users being onboarded by basically bitcoin
exchanges. And so I guess this is a reality we have to grapple with, isn’t it?
Ben Carman – 00:27:04:
Yeah, I know it’s a hard problem. It was funny. Blockchain.com there was switched to like SegWit like four years later,
like a couple of months before Taproot activated. And you saw the chart in the graph just like, go straight up. Austin it
doesn’t make a ton of fun of it. It was like, well, in four years we’ll get to talk about when they add Taproot, because
they’ll do that. But luckily there is at least a lot of new users are being pushed onto these non shit coin wallet, it
seems, but they still have a huge dominance. Luckily, some of these are open source. You can go and make the PR
yourself, but if it’s going to emerge, who knows?
Stephan Livera – 00:27:41:
Yeah, of course. And so I think that’s perhaps a little bit of cold water. But of course, we as a community can do what
we can to advocate for obviously what we see as the leading wallets and bitcoin companies that new people should
be going and onboarding with. But at the same time, we have to acknowledge that not everybody is especially the
new people coming in at the top of that funnel. They’re not going to be as ideologically committed or aligned as, say,
we are. But nevertheless, there are possibilities for privacy and security to improve in the background, right, by
default, where if this technology comes out and it eventually makes its way into the mainstream applications and
some of that happens by support from the more hardcore members of the community, the developers and the
advocates and the educators out there. So I think it’s not totally without hope, but it’s just a recognition that it takes
time to change things. Right. And even on the question of SegWit, it depends on how we count it as well. So, as I
understand, if you count it, basically if you count transactions based on if they have any SegWit whatsoever on any of
the inputs, that number is something like 70 or 80%. But if we counted based on every output being SegWit , that
number is more like 20 or 20% or 30%. So it’s actually a lot lower even for SegWit, which came out in August 2017,
and here we are in June 2022 and we’re still trying to get adoption of SegWit.
Ben Carman – 00:29:02:
Yeah. Getting people to change things, especially with their money, is always an extremely hard problem. So I am
hopeful and like, luckily, like, all these things add like, new functionality. Like without SegWit , we couldn’t have
Lightning. So any user that wants to use Lightning will have to they’ll be forced to use SegWit, a Taproot that will
enable other things. Most likely Lightning will go to like a tap only thing eventually. So eventually, if the user wants to

use bitcoin, they’ll have to use these kind of features, it seems. So it’s not all hope is lost, but in the meantime, we’re
all like just streaming our computers. Like, why won’t you implement Taproot?
Stephan Livera – 00:29:40:
That’s the campaign is to shout when taproot, when Lightning as well. And in fairness, we are seeing Lightning
adoption in terms of exchanges. We are seeing large exchanges who are supporting that. And so over time, that’s
more and more millions of customers who can use Lightning. And so it will take time, but I see those network effects
as growing. But it is perhaps some cold water that we have to face when we see statistics today in terms of who’s
spending today and how much Lightning uses today versus bitcoin on chain today. Even for small values, which we
would presumably say, hang on, for that kind of value, you’d be better off using Lightning. Well, maybe that person is
coming from a wallet that doesn’t have Lightning, things like that. But nevertheless, let’s talk a little bit about some of
the ideas you have around Lightning privacy. I know you have this LN Vortex, so do you want to tell us what’s LN
Vortex?
Ben Carman – 00:30:35:
Yeah, LN Vortex is a project I’ve been working on for about a year now. Basically, the idea is today there’s a couple
of CoinJoin solutions like Samuel Wasabi and Join market, but all of these are mostly just like you spend to yourself.
So you create a transaction that just spends your own wallet and then you have more privacy at the end, so you’re
willing to pay for that. But when you want to combine that with Lightning, the typical flow is like mixed yourself a few
times and then send it to your LND or C Lightning wallet and then open a channel. They have this extra step and it’s
very obvious you’re doing that. So that kind of sucks. And so the idea is to be able to kind of merge these two things
where you’re coin-joining to yourself. And then when you want to open a channel, you just do that in the same coin-
join, where you just instead of the output being yourself, it’s now a Lightning channel. And, a couple of things that
need to happen for us to do this. The biggest, like we’ve been saying, is taproot, where these on chain transactions
that you yourself are most likely going to be like just a self spend and without Taproot, a self spend like your own
personal wallet and the Lightning channel are very distinct, you can immediately tell which is which, or at least that
they’re different. So you would be able to tell in the CoinJoin. It would reduce the anonymity set and wouldn’t really
work. Both Taproot, we can combine these two so they could just look exactly the same. And a great thing about
Lightning does is there’s something that is just something that you kind of just always need on. I have a laptop thing
under my bed behind me that’s just running a lighting node all day. And it would be great if this thing was just coin-
joining all day as well because I got coins I want to mix. So kind of the idea is like, well, we have all these nodes that
are running all day, why don’t they always coin-joining? And then when they want to open the Lightning channel, let’s
do that in a CoinJoin as well. Just kind of give yourself a holistic approach of your on chain balance making. If you’re
a Lightning first user, almost every on chain transaction you’re doing is now a CoinJoin. So I’ve been working on that
for about a year now. This current state of it is like it’s kind of is using two separate mixes right now, where for one,
you have your mix to yourself and then after you do that, you can open a channel. But once LND releases or any
implementation releases the tapper channels, then we’ll just combine them both and you’ll be able to open a channel.
And kind of the hard part about it was you can’t really implement this into like Samurai or join market or Wasabi today
because you need to change the protocol a little bit. So today you’re doing a Samurai mix. What you do is you
register your inputs in a blinded output and then you just wait for the mix that happens. That could be in 10 seconds,
that could be in six days. So you’re just kind of waiting. And to have that output, you need to know where you’re
sending the money for this CoinJoins. You have to say, okay, I would like to mix to this address, but you’re hiding the
address in that initial message, but you still need to know the address and in lightning when I want to open the
channel to you, I need to send money to that address in the next ten minutes. So it doesn’t really totally work with
this, like, asynchronous flow in current CoinJoins. So Vortex is custom made for this, where you do a slightly Tweak
flow where you register your thing right before you mix. So that way you can open that channel and it’s not like totally
released yet. It works in tests. Me and my friend Dregs. He’s a front end of the bitcoin company, works on Zeus and
stuff as well. He’s been helping me build the front end and about to do our first Testnet one but it is coming along
once. We’re probably going to release it hopefully soon and have like it on Umbrel and all that. But the idea is really
just let’s get everyone CoinJoining because it seems like everyone their mother has an Umbrel node running in their
closet now, so why not have those funds CoinJoining? And it’s another incentive to get people in the Taproot where,
you know, now someone might be like, I don’t care about Taproot. That’s too much at work to upgrade. Like, hey, you
can CoinJoin all your funds, get more privacy. People like, oh, I can do that. So that’s kind of the hope. And as well as
with that, it will most likely be the first taproot-coin-joint coordinator. So that’ll be cool to have as well. Because today
if you want to use Taproot but you’re like, oh, I need to CoinJoin my funds, you have nowhere really to go. So you
could like go into Samurai Mix and then send Taproot like we talked about earlier. Now reducing your anonymity set
by revealing that you’re going to Taproot. So you’re leaving the hurt. So it’s not a total host approach anymore. So
hopefully with this you could have like your Taproot users just only use this and it’s built in a way where it works with

lots of different types of wallets natively. It supports LND, C-Lightning, and Bitcoin Core. So Bitcoin Core is Lightning
support, but you can still just mix it yourself in your own Taproot wallet if you’d like to do that. I’m going to work on
adding Sunset support soon, but Sunset needs a little more work to get fully worked out. But it is possible. So that’ll
be hopefully soon as well.
Stephan Livera – 00:35:54:
Okay, great. So can we walk through the flow then in this example? So let’s say in the near future, this is available as
an application that people can install on their package node like Umbrel and so on, like rough butts and all the others.
What would the flow look like in this case, is the user going to withdraw from the exchange into their LN Vortex wallet
and then the wallet is just going to do these Taproot CoinJoins in the background. Is that roughly what you’re thinking
or what’s the flow look like?
Ben Carman – 00:36:22:
Yeah, pretty much. So it doesn’t have its own wallet, it just uses your Lightning node wallets, like actual launching
wallets. So it’s nice I didn’t have to actually code that myself. It’s just like LND core. Lightning just handles that for
you. So if you have funds on there, you can use it today. And then you would just open up the Vortex app and just hit
like, I want to be mixing or I want to open a channel. What we’re thinking is you’ll probably just download it initially
and then just click the Mix my funds button and then those funds will just always be mixing and then say like a week
later stuff on you, like, I need some inbound and be selling some hats. Can you open the channel to me? I’m like,
sure. So I’ll go into the Vortex, type in your pub key and then hit open Channel LND. Then the next round I’ll open a
channel straight to you in a CoinJoin.
Stephan Livera – 00:37:13:
Got you. Okay. And so is the idea then that you’re just kind of plugging into the wallets that are already existing, as
you’re saying. And so then the users are having this CoinJoint operating. And so I guess the other question as well is
who’s running the coordinator? Are you going to run a coordinator for this or how does that work?
Ben Carman – 00:37:33:
Yeah, so it has to be its own coordinator. So I can’t use like Wasabi or Samurai or any of those because it does have
this slightly altered protocol. So I do have a pleb friend that offered to run it. So they’re going to be running, and I’m
not going to say who, but yeah, so we’ll have its own coordinator running and it’ll just talk to that. And we’ll have
multiple coordinators for different output amounts and everything like that.
Stephan Livera – 00:37:58:
So you might have different pools pool sizes as an example, that you might have like zero one or point five, or the ball
or pool, one bitcoin pool or whatever. And so then you are just mixing your coins with other people in that same
denomination, let’s say, in that pool. And so then the idea is you open off of that either your LND or your C Lightning
can open a channel out of that and then just spend normally like you would with any Lightning wallet. Like, let’s say
you have Zeus connected to that.
Ben Carman – 00:38:26:
Yeah, exactly. So you would like, have your Umbrel just mixing. You open your channel and then you go to Starbucks
and scan an invoice and just pay for now a mixed channel so you get extra added privacy because in Lightning, it’s
generally very private in most regards, like on the actual Lightning layer, but on the actual Lightning requires a bitcoin
layer under it. And that is, as we know, fully, you can read the whole blockchain. So you need to hide these kind of
UTXOs. You can do that once it’s not announcing the channel, but still people can find it, like what Tony Georgia has
been working on. But if you’re a routing node, you still want to protect you on chain funds. This is another way to do it,
where you could hide this. And now you’re just like, oh, this is a Vortex user, but I don’t know what the onchain wallet
looks like.

Stephan Livera – 00:39:17:
Got it. It sounds promising. And it’s definitely a step in the right direction of helping people have privacy through the
entire flow because it’s not just kind of like a one off thing it’s like you CoinJoin and then you open a channel and then
now you’re doing Lightning channels which those transactions don’t touch the chain per se. Now of course in
Lightning there’s still improvement work required on that side too. And of course there was the recent Lightning
summit. I think that was maybe a month or two ago. So listen, if you can check out Bitcoin Ops, op tech newsletter
two four there’s a summary there of Lightning developer meeting and so there’s things there like gossip network
updates or trying to potentially change some of the aspects about how Lightning shares balances and things like this.
So these are some of the ideas coming that will help bring privacy to Lightning because today Lightning is not super
private but it’s kind of a complicated question where maybe the receiver, sorry, the sender is getting a little bit more
privacy than they do today on chain, just naively spending on chain. But there are some of these other aspects where
let’s say the channels have this aspect what’s called the short channel ID where that’s kind of pointing to the output of
that channel on chain. Whereas maybe in the future that could be changed with let’s say gossip updates, right?
Ben Carman – 00:40:29:
Yeah. So they actually just changed that the channel ID thing. So now for unannounced channels you can just have it
be a random value so you don’t actually have to DOX it to people or they can probe it out of you and stuff. So that
does help but it’s not a totally like that doesn’t solve everything. Like you said, it is slightly better than on chain where
on chain is being stored forever. So that is obviously not good versus with the Lightning payment if they don’t catch it
in time, whoever is trying to track you, they missed it. So you do have that benefit. But yeah, there are lots of
problems where you are requiring this lower bitcoin layer so everyone can know these UTXOs that are using to route
these payments as well as you have these static pub keys which are kind of identities on Lightning. So people tie
different flows of that and there are things like probing where you can kind of almost fish out balances of things or the
tax payments going on. So there are lots of things coming. Like you said there was a summit, they talked about
different things. One of the kind of bigger things that I think will be big is things like trampoline routing and blinded
paths. They’re both by themselves like powerful, but together they’re like extremely powerful. What trampoline lets
you do is just kind of say like you don’t tell someone like this is like how to get to me. You say oh, I have a friend
Stephan, you can pay him and he’ll pay the rest to me. And so what that lets you do is just kind of say you don’t have
to tell you gossip´how all your private channels do you want to receive through or anything like that? You just get it to
him and he knows how to get to me. So that kind of like you get a barrier there and you can actually use multiple
trampolines. So you could say like, oh, Stephan knows how to get to me. And then they’re like, well, how do I get the
Stephan? You’re like, oh, well, Marty knows how to get Stephan, and then Satoshi knows how to get to Marty. You
can do this whole thing. So you just have these, like layers of obscurity. And as well, you can layer in these blinded
paths where instead of saying like, Stephan, you need to know how to get to me, at that, instead of giving you the full
route, I could say, like, go to this guy, and then he’ll have an encrypted version of how to get to the next guy, and then
encrypted vision of how to get to the next guy. So it’s just this easily doing that. You kind of completely hide the way
you’re trying to pay me, and it gets really powerful. But there’s lots of spectrum and things actually need to be done to
get these implemented in the wild for everyone’s using them. But it is possible. So that will hopefully help a lot, but we
remain to see when it’s going to happen.
Stephan Livera – 00:43:05:
Yeah, of course. I mean, it does sound like it’s promising there. And I think it’s also fair to point out that even today, if
a user wants, let’s say, just privacy from the merchant, even today, if they use a Lightning wallet like this moon,
Bitfinex, Breez, these kinds of ones where you make a Lightning payment to the merchant now, yes, Moon, Bitfinex,
or Breez might be able to survive, but at least the merchant doesn’t know your balance. They don’t know your
transaction history. They just get paid on the Lightning Network. So at least there’s something there, right? So I think
people tend to be very binary and all or nothing and say no, unless you’re James Bond, Edward Snowden level
private, you’re not private. And it’s like, well, who are you trying to be private from? And how much privacy do you
really need? Is the average person who just wants to be able to, as an example, let’s say they just want to make a
donation to, let’s say, a particular protest. If you used one of those wallets and you used like, that swap functionality
that’s inbuilt, aren’t you arguably getting a little bit of privacy that way? Now? I guess the counter argument would be,
well, hang on, the authorities could just go to Moon and say, hey, give me all your data. So at that point, maybe
you’re in trouble, but in terms of how much work are they going to do, it might be at least a little bit of something that’s
more private. So there’s just a few thoughts. I’m curious if you have any.

Ben Carman – 00:44:25:
Yeah, definitely. Say they go to moonlight. Give me all your data, was like, well, Moon wasn’t the only one wallet
sending to that merchant or whatever. Malicious actor. They determined and they can only get a small portion of the
pie versus, like we saw with the Canadian truckers, they were like, do not send to this address where you couldn’t
really do that with Lightning. You could be like, don’t send to this node pub key. But you just change your node pub
key with something like translnd or something and you can just say, oh, sorry, it’s a new one every time. I don’t know
what to do here as well. When I pay to a merchant, they have my onchain UTXOs. You can go back and look and see
like, oh, do this little chain analysis and kind of sometimes you can figure out, oh, this person sent us from a 15
bitcoin UTXO. They have 15 bitcoin, they want to go follow them home and steal that from them. But with Lightning,
it’s like they only know the last hop. So most likely it’s not even your hop, so you get a lot more privacy. So if you’re
transacting with someone you don’t fully trust to not follow you home or whatever, you’ll be protected in that regard,
which is a huge improvement over the current bitcoin today.
Stephan Livera – 00:45:38:
Yeah, let’s chat about Austin bitdevs. So you’re one of the co organizers for that, and can you tell us a little bit about
what’s happening in Austin bitcoin scene?
Ben Carman – 00:45:47:
Yeah, Austin, it’s been blown up. So I guess a little bit of history. I moved here beginning of 2021 of the reasons I
moved here was because of the bitcoin team was big, and that’s when I meet up with 20 people on a good day. And
today we get about 250 people. When it’s a bull market now it’s a bear market, we get like 50, but it’s still a really
good meetup here. And honestly, I think for other people, started trying to run up meetups. The biggest thing I think
for us was consistency, where every third Thursday at 07:00 p.m., we’re at unchained and we’re talking bitcoin, and
that helps a lot. During COVID, almost every meet up shut down, but we only shut down for six months and we kept it
consistent ever since then. In September, it will be two years from us for consistency. So I think that’s kind of
something to hang your head on and I think we’re really proud of that. So, yeah, it’s a great scene out here. We have
like, the whole unchained folks. They have their huge office now and they have the Commons as well, which is a
great space to work at, like me and a couple of other people working there every day. And it’s really kind of beautiful
because before I just like, work at home or like, you know, see bitcoiners like, you know, when we go out for drinks
maybe that night, but like now it’s like I’m working right next to them all day. So it’s like you’re coding and you’re like,
hey, what if someone did this? And you’re all just bouncing ideas. Next thing you’re on a whiteboard, like drawing
state diagrams or something and you get a lot more collaboration. So Austin has really brought a kind of a beautiful
bitcoin scene and I recommend like every Thursday we’re having a meet up. So if you want to come out, I
recommend people to come check it out.
Stephan Livera – 00:47:30:
Yeah. And for people who aren’t familiar with bitdevs and what to expect, what sort of stuff, what goes into organizing
a bit dev, specifically in terms of pulling together the resources and the content to discuss?
Ben Carman – 00:47:46:
Yeah, so bitdevs isn’t just like a hangout. We talk about bitcoin. It’s supposed to be a Socratic seminar. So the idea is
like Chatham House rules, no names here. We’re just going to talk about bitcoin and ideas, no people. And don’t
attribute this to like Ben said, let’s just say someone has a cool idea of Bit Devs and we’re doing all things it’s bit dev.
So development, we’re all talking tech. So normally it’s like me, Buck and Justin, we kind of get a list of topics that we
accumulate through the month. Mostly just either reading the mailing list, Twitter or OPTECH or even the other
meetups as well. We steal from them all the time. And you know, once we have our list of like maybe like 50 topics,
the idea is kind of we just like present it and maybe give a brief overview like, oh, this is Lightning Labs released this
idea taro and then we’ll talk about it. And then someone from the audience, it’s really idea to draw the
knowledge from the audience. We’re like, oh, this taro thing happened . And Ryan Gentry biz dev at Lightning Labs
will come up like, oh yeah, give a huge explanation on this and then we’ll talk about Lightning privacy and Tony
Georgia will come talk about it. We’re really just trying to just draw these ideas from the crowd as well as, you know,
kind of hash things out there’s. A lot of times me, Justin and Buck are learning about this topic like 2 hours before the
meet up. And we’re like, I think it works this way. And then we’ll just basically kind of work with the audience and

understand it together, like live. So it’s a lot of fun in that regard and it does take a fair amount of work, but it’s
definitely worth it. And I think I get all the time people telling me I’m not a developer at all or they even just got on the
bitcoin. This is so cool. I don’t understand any of it, but I know I can eventually. Or other people, like people that have
been coming for years they’ll challenge me now. They’re like, oh, actually, why don’t you do it like that? I’m like, oh,
shit, you’re not even a dev and you can pull this stuff off. So it’s really good me up to come to and it’s great to bring
new people to as well, because I remember talking to some of my high school friends like, oh, I do. Bitcoin
development isn’t already developed. What do you do all day? God damn it. So coming there and they’re like, oh shit.
It’s like a real thing. It’s not just like we’re buying dogecoin, going to the moon. It’s like deep research on things that
we’re saying, big words that normal people don’t know. And we know all of them, sadly. But yeah.
Stephan Livera – 00:50:18:
So for anyone who hasn’t been any listeners, if you haven’t been to a socratic seminar or a Bit Devs, I highly
recommend you go. It’s well worth your time. If there’s one in your area, there are some that are run online as well,
but going to the ones in person is really worthwhile. If you can you tend to learn a lot and there might be all these
words at the start that you don’t quite grasp, but they’re very much worthwhile. I’ve been to I’ve been to some of the
big devs in Austin during bull season. And I guess in the bull season when there are 200 people in the room or 250
people in the room, it tends to be more like kind of a lecture from yourself or from Barclay or from whoever is
explaining, because there’s not as much chance for back and forth discussion. But during bear time and sideways
market, you do get more discussion time and that is a bit more interactive and perhaps you might even learn a bit
more that way as well. But well worthwhile for people. So definitely check it out and go. If you don’t have one in your
local area, I suggest starting one. It’s a good way. If you have at least a few technical friends or one or two, you can
get it started and get it going that way. Bitcoin is a community thing, so we want to try to grow the community. So
bitcoin meetups are a great way of doing that.
Ben Carman – 00:51:29:
I want to say too, if you’re looking to start a meet up in your place, a lot of people say because Austin and New York
and a couple of places that had a wild success doing a bit devs that works here, because we have a lot of developers
here and a lot of talent, and all these people are well informed on the ideas. If you live in rural Kansas and you have
no developers, don’t start a bit dev. Start something that fits your audience and your host. So here we’re doing well
because we’re good at facilitating it. But if you’re not a developer or you don’t have developers in your area that are
willing to. Host it. Well, then just start a normal meet up where you just hang out and talk about bitcoin because that’s
equally as fun and awesome. We have a summer and we have the awesome bitcoin club where they do exactly that.
They just bring tacos and chicken and talk about bitcoin. And that’s almost as big as the Bit Devs now. And it’s a
completely different crowd too, which is super cool. So you can get all sorts of different types of people coming to
your meetup based on what you actually discussed there. Yeah.
Stephan Livera – 00:52:29:
And I think to the point around bitcoin privacy as well, to the extent that we can grow the peer to peer market for
bitcoin. And that may be where you find people who you just want to trade bitcoin with. If maybe you’re a miner and
you want to sell some coins to cover your expenses and somebody else there is a club and they just want to stack
and they want to buy the coins off you, then that’s kind of a common example. Or otherwise what you can try to do is
go to your local restaurants, bars and say, hey, we want to run the meetup. Can we help set you up to take bitcoin
payment? And then that’s a chance for local bitcoiners is to go and spend some sats and start this whole peer to peer
aspect as well, which I think is going to be useful. So I think as a community, those of us who are really into bitcoin
advocates, educators, builders, whatever you are in the bitcoin world, that’s something you could look at as well.
Ben Carman – 00:53:15:
Yeah, a million percent echo that in Austin. We’re not doing the best job of getting every business on bitcoin, but we
got a couple of bars and food trucks, which is cool.
Stephan Livera – 00:53:24:

It’s a start. You have to start with something. So with the bitcoin company. So tell us a little bit about that. So you
guys are selling vouchers and what else is coming from the bitcoin company just for SLP listeners who want to know?
Ben Carman – 00:53:38:
Yeah. Today what we’re doing is kind of like letting people live on bitcoin and basically paying you for it. So similar to
like a folder for right now where you can buy gift cards, but we also offer visa cards and international visa cards that
you just pay with bitcoin and we’ll give you a little bit of sats back for those. It’s pretty cool. Right now, I think 75% of
our sales or something are the international visa cards because we’re getting like all these people are just like, oh, I’m
in Brazil and I love these things and they’re living on their bitcoin. And this is kind of another way. In the beginning we
were talking about this KYC free way to buy bitcoin. But the bitcoin company, we kind of solved the KYC freeway to
sell it, where we don’t need to take your ID or a picture selfie of you just sign up with your email and you can buy
these Visa cards with your bitcoin, which is most likely the way you’re going to spend your bitcoin. So you can
essentially sell at KYC free with us and we actually pay you for it. So it’s kind of cool and letting users live on their
bitcoin, but the whole mission of us is basically just kind of like the bitcoin hub or bitcoin super app. So something
we’re rolling out soon is like phone top ups as well as other ways you can earn bitcoin, where things like you could
link a credit card and every swipe get bitcoin back, eventually adding like an exchange in banking and all that stuff.
The whole thing is eventually delete. Wells Fargo use the bitcoin company where you can get your direct deposit, pay
off your credit card and your checking account has a bitcoin and a dollar balance. If it’s 06:00 P.m. On a Saturday and
you want to pay off your credit card bill, you don’t have to wait until Monday for the buyer to go and you can just send
it to bitcoin payment and will pay off immediately. It’s just like bring let’s modernize banking with bitcoin and just
modernize everything with bitcoin. And if you don’t use the KYC Free stuff, or if you don’t want to use KYC stuff, we
have the KYC Free stuff which we offer today, and if you want to go the full view, then sign up for that stuff. So we’re
trying to serve as much people as we can.
Stephan Livera – 00:55:47:
Sure, yeah. Great. So we’ll leave it there then. So, listeners, go and follow Ben if you’re not already following him on
Twitter. So his Twitter is @benthecarman and the website benthecarman.com. Ben, thank you for joining me.
Ben Carman – 00:55:59:
Yeah. Thank you, Stephan.

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