In this conversation, I discuss with Nate the current state and future prospects of the Lightning Network as of December 2025. They explore various aspects such as payment success rates, public perception versus practitioner insights, routing fees, centrality in nodes, yield opportunities, privacy considerations, and the overall adoption of the Lightning Network. The discussion highlights the improvements made over the years, the economic incentives for node operators, and the importance of community-driven initiatives in shaping the future of the Lightning Network.
Takeaways:
🔸The Lightning Network has improved payment success rates over time.
🔸Public perception of the Lightning Network often differs from actual usage statistics.
🔸Routing fees are crucial for maintaining liquidity and economic incentives in the network.
🔸Centrality in Lightning nodes affects payment success and routing efficiency.
🔸Yield opportunities exist for those operating Lightning nodes.
🔸Adoption of the Lightning Network is expected to grow as more enterprises recognize its benefits.
🔸Privacy in Lightning transactions is nuanced and requires careful management.
🔸Innovations in Lightning technology continue to enhance user experience and functionality.
🔸The future of the Lightning Network may involve more integration with traditional financial systems.
🔸Community-driven initiatives are essential for the growth and improvement of the Lightning Network.
Timestamps:
00:00 Intro
02:53 Current State and Performance of the Lightning Network
05:58 Public Perception vs. Practitioner Insights
08:53 Routing and Payment Success Rates
11:55 Fee Structures and Yield in Lightning Network
14:56 The Evolution of Lightning Node Operations
17:56 Centralization Concerns in the Lightning Network
27:45 Hub and spoke model?
30:14 Privacy Concerns in Lightning Network
32:41 The Centralization Debate in Lightning Network
35:43 Merchant Adoption of Bitcoin Payments
38:47 The Role of Bitcoin as a Medium of Exchange
40:53 Exploring Lightning Network Implementations
45:36 Recommendations for Different User Types
50:45 Comparing Lightning Network with Alternative Solutions
54:52 Enhancing Bitcoin’s Functionality
57:37 The Future of Bitcoin Development
59:59 Bitcoin Myths and Misconceptions
01:02:08 The Importance of Bitcoin Ownership
01:06:05 Lightning Network Adoption and Innovations
01:11:01 Privacy in the Lightning Network
Links:
Sponsor:
- CoinKite.com (code LIVERA)
Stephan Livera links:
- Follow me on X: @stephanlivera
- Subscribe to the podcast
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Timestamp:
Stephan Livera (00:00)
Hi everyone and welcome back to Stephan Livera podcast. Today we’re gonna be talking about the Lightning Network where it’s at today here in December 2025. And rejoining me on the show today is Nate. You may know him online under his ⁓ name as beef or bacon. Nate works at Voltage doing things like, know, Lightning stuff, customer support and also kind of handling the Lightning ⁓ uptime and payments and things like this. So.
Nate (00:27)
Exactly.
Stephan Livera (00:28)
And I know,
⁓ you are a big believer in the Lightning Network compared to a lot of other people out there who are maybe more bearish. So we’re gonna hear more of a bullish, a bull’s view on Lightning Network. So welcome back to the show. ⁓ Let’s hear some of your ⁓ bullish takes on the Lightning Network.
Nate (00:39)
Probably.
Yeah, awesome Stephan. Thanks for having me inviting me again. I’m a little bit congested. So just anyone listening if I sound nasally, ⁓ that’s why ⁓ I’m not always nasally but Gosh, yeah, we’re almost it’s almost 2026 The network’s been around for almost gosh, not quite 10 years. We’re getting there though ⁓ Yeah Right, it still feels like a long time but
Stephan Livera (01:08)
Yeah, was it mainnet in 2018? So that makes it about, what’s that, seven? Seven or eight years? Yeah.
Nate (01:16)
Not at the same time, not really. ⁓ So yeah, mean, there’s so much to talk about. So it’s a very general like beat on that. But I will say that ⁓ anyone who wants to use the Lightning Network, whether to receive payments, send payments all over the world instantly, ⁓ it still works really, really well. And the tooling has only gotten better ⁓ over the years for. ⁓
whatever you want to do with it. ⁓ Most people want to receive Bitcoin or send Bitcoin. I think that’s obviously the primary use case of the Lightning Network. And I think for that, works really, really well. ⁓ But we could definitely guide. Yeah.
Stephan Livera (01:47)
Yeah.
So on that, let’s talk a little bit about
things like payment success rates, the size of the payments, the fees, the costs. Let’s talk a little bit about some of those. ⁓ Do you have any thoughts on payment success rates and the improvement in that over time? Or just kind of has it flatlined or is it getting better? What’s your thought there?
Nate (02:06)
Great.
Mm-hmm.
Yeah,
It
in the grand scope of the public lightning network ecosystem, the. ⁓
The capacity, the total capacity of Bitcoin deployed hasn’t really changed much over the last few years. But what you’ve noticed over time is that payment success rate does go up. ⁓ We’ve done ⁓ studies with ⁓ the data that we’ve accumulated at a voltage and published with Fidelity that kind of go through this. ⁓ It’s really hard to. You kind of have to compartmentalize different scenarios.
for example, different hops, right? The more hops that you have, that your payment has to go through the network, the chance of it succeeding goes down, but that also involves the size of the payment as well. So we’ve done certain studies over that, ⁓ which I can link to you later if you want to put in the show notes or something. ⁓ And we’ve pretty much determined that over time, things are getting more efficient. Like that’s my point.
So the same amount of Bitcoin is deployed, but success rate is going up. When the Lightning Network first came out, Bitcoin was $10,000 or lower even. And it was really easy for like people back then who can open 5 million sat channels and open 20 of them. You why not? Right. And so over time, though, that starting a node and trying to we can get into that, but
What I’m kind of saying is that like really kind of like building out a node as price goes up, payment success goes up, but the ability to have an impact on deploying Bitcoin into the Lightning Network kind of goes down because it takes a lot longer for someone to probably stack five million sets than it used to. And that’s kind of always been my default channel size is five million sets. So that’s kind of why I’m saying that.
Stephan Livera (04:13)
Interesting yeah
now on the As like on the size of the lightning network, this is a kind of a common thing where people say Okay, like it’s only let’s say about last I checked it’s about four or five thousand coins Let me just quickly check again, but that what I’ve seen is this pattern where recently we saw actually there was there was some cases where the capacity was coming
Nate (04:31)
Yeah, we could.
Stephan Livera (04:40)
down but the and the number of nodes are going down but they were more reliable and then what we’ve actually seen more recently is that the capacity has come back up and so now
⁓ Just looking at some dashboards, I can see it’s 5720 BTC in public Lightning channels. Right, but again, that’s the stock, that’s not the flow. So that’s the other thing where people, I guess the common conception, if you talk to, let’s say crypto people, not necessarily Bitcoiners, they might have a view of, your Lightning is this thing that exists, but maybe not that many people are really using it. But actually under the hood, there actually are a lot of people using Lightning and there are a lot.
Nate (04:49)
Mm-hmm.
Yes.
Stephan Livera (05:15)
of payments coming through. Do you wanna explain a bit of this view of how there’s almost this weird dichotomy of the public perception of lightning versus the practitioners perception of lightning?
Nate (05:17)
Yep.
Yeah, if if you don’t have a decent grasp on how the lighting network sort of works, you would probably see that 5000 capacity and think that that is kind of like the total amount that could be used. But in reality, that 5000 Bitcoin is being sloshed around all over the place multiple times. So the and we can’t see that as part of the Lightning Network because it is a peer to peer network that isn’t published to a blockchain. It’s only between the peers that are actually transacting.
So it’s really hard to get an accurate view of liquidity flow through the network and volume through the network. We’ve had entities that run large nodes like river sort of extrapolate their own activity to the wider network to sort of give an estimate of the kind of volume that light network might have. But at the end of the day, it’s basically.
Impossible and that’s it’s kind of hard too because we get those questions voltage during sales calls You know, what’s the volume of this? How is it growing and a lot of this stuff is just kind of unknown? ⁓ which On one side from like from like a marketing standpoint is really hard but from a usability and like cypherpunk standpoint, that’s really cool and Yes exactly ⁓ and then the other part was
Stephan Livera (06:45)
Right, the privacy aspect of it is interesting.
Nate (06:55)
The what you have to remember is when someone deploys Bitcoin into a lightning channel for the purpose of Maybe connecting other people’s payments through the network like hopping through ⁓ If there isn’t any activity there or they can’t figure out how to do it then you’re kind of just sitting on dead capital at that point so you have to most of the lightning network is Hot as they say every lightning transaction requires
on under the hood and on chain transaction to be signed. And that requires the keys to kind of be there to be, especially if the Lightning channel is really moving payments around, it constantly has to update what’s essentially a signed Bitcoin transaction, just not broadcasted, right? That’s how you unilaterally exit the channel. So that kind of requires the keys to be hot. So people might think, okay, I’ve deployed this much Bitcoin on there. And it’s not really moving for whatever reason.
⁓ So I have two options either close the channel put my funds back in cold storage or I close the channel and try to redeploy to a different peer and see if That’ll work and I want to say that what I’m talking about right now isn’t really someone who’s making or receiving payments as much It’s someone that’s kind of like wants to be a hub on the network and route payments for others ⁓ Any user doesn’t really need to care about moving payments for others if they route a payment great, you know, that’s a little bonus you might get a little
Routing fee on that and we could talk about that too But I just want to say that ⁓ that sort of efficiency is kind of happening We’ve seen that over the last few years where at the beginning a ton of Bitcoin was deployed and then maybe 40 % Got closed down over the last couple years and that isn’t because it’s failing just the network doesn’t need it right now and What’s really cool about the light network is that the incentives? ⁓ Like if we saw over time because the fees that are charged
For a payment are public also that’s a public gossip thing in the light network so we could track fee rates If you rates are going up over time, but Bitcoin capacity of the light network is not going up Then that signals that there is more demand that ⁓ Then the network can really handle and so if we see that then that should trigger more liquidity inflow into the light network for people that do want to harvest that yield
Stephan Livera (09:11)
Good point.
Nate (09:21)
quote unquote, as Amboss likes to say, because it’s like, ⁓ if I deploy 5 million stats into it, I can get a higher percentage because the light network is being used so much now. ⁓ So I think that there’s certain canaries in the coal mine, think, on that also that over time we’ll probably see.
Stephan Livera (09:41)
If we just kind of look only at what you have seen in your experience as an operator on the Lightning Network, are you seeing a secular uptrend in Lightning volume? Does that align? The reason I’m asking this is as an example, I did an interview recently with LQWD’s CEO, Shone, and he was saying, yeah, they’ve seen a secular increase, but maybe during the bull season of Bitcoin price, do you get kind of a spike there?
Nate (09:46)
Mm-hmm.
Mm-hmm.
Yeah.
Stephan Livera (10:08)
Is that aligning with what you see? Like it’s just been a secular increase over time, but with these bull jumps?
Nate (10:14)
Right.
⁓ Yeah. So I guess just to lay the foundation in there, I’m sort of the main manager for the main voltage routing node. We’ve got 200 channels and I could probably we could probably do more. But my goal on that is to really keep it as efficient as possible. So like maintaining really high centrality and payment success rate without deploying as much Bitcoin is absolutely necessary. So ⁓ that node kind of plugs into all of our enterprise clients or enterprise clients run a node because we’re non-custodial.
⁓ and They usually have a channel with our main node and then we kind of like route payments to and from their note ⁓ and so To answer your question. I I think the answer is yes But I haven’t really done much study on that like I kind of go into our node and I kind of see how Traffic is moving but at the same time ⁓ actually Off the top of my head. We’ve probably routed more payments this year than any other year actually
⁓ I just haven’t quantified that or done any sort of report on it, but that might be a fun thing to do. ⁓ Actually, because I do have that data. I just need to run it through a. I don’t know a vibe coded chart or something and get it done. ⁓ Yeah. Yeah.
Stephan Livera (11:26)
So maybe it is happening like that. It’s interesting because
we have seen some different public stats come out. I think Miles earlier this year from, you know, Cash App and Square came out and gave a number.
Nate (11:37)
Mm-hmm.
Stephan Livera (11:40)
you know, and was saying like this amount of yield, you know, and so, and then even the LQWD guys are saying there’s this amount of yield. Of course, as you said, it matters on how many coins, how many BTC you have put into your channels. And of course it matters the direction, it matters the centrality, like you said, because I guess the general idea how I’m understanding it is you wanna be in the direction of the flow, right? Because if people are routing through you in order to route a payment to whether that’s…
Nate (11:40)
Yes.
Yes, it’s very important. ⁓
Mm-hmm.
Stephan Livera (12:07)
an exchange or a merchant or whatever, then you’re the one collecting routing fees and you know, you are becoming like a more central node, right?
Nate (12:15)
a good analogy for like with this goes over people’s head and it’s not perfect, but imagine if nodes were cities. Okay, but you could get to any other city in the world instantly, but it still requires a highway. All right, so if ⁓ so if I’m running Houston, okay. ⁓ And I want to have a highway to Dallas. Okay.
But I also want to have a highway to college station and these small state small towns around Tech, I mean, but but it could be anywhere in the world Tokyo, whatever but the idea is that being able to also Link in with these smaller nodes on the network. That’s kind of where the real traffic is It’s not about slingshotting bitfinext to binance. Like it’s not because they have direct channels with each other anyway It’s really trying to form Trying to plug gaps
in a lot of ways and there’s got the tooling to be able to do that now is so much better like ⁓ The lightning labs tool the terminal web interface now They have a totally revamped auto channel system that actually Goes through your nodes channels your centrality your history of routing and then actually chooses up here. That’s actually not bad If you turn on auto channel, so you kind of like deploy on chain Bitcoin into your
Lightning nodes on chain wallet if you’re running LND and then you say hey I want five million Yeah, so you put 30 million sets on it and just say I want I have a budget of 30 million sets I want five million set channels and it’ll kind of it won’t all be instant it’ll It’ll spend a day or two to kind of like see how your node is performing and then it’ll kind of open one or two and then kind of wait a little bit and then open one or two it’s really smart and I talked to ⁓ destruct over there at
And and Mike and everybody at lighting labs a lot about it and sort of help them test it and there’s still a lot of ways to go but the tooling is is amazing like it used to be I would have a Python script and I would try to run centrality scripts against my note to try to find out which is a good peer to open channels to and I feel like that’s getting a lot more automated. Which is cool.
Stephan Livera (14:28)
Gotcha, yeah.
So, yeah, interesting that you are pointing, I guess it’s the analogy of highways and roads and trying to make sure you have a good view of the network or a good routing to the rest of the network so that payments can come through your node.
Nate (14:44)
Right. And the thing is, it’s like if
College Station doesn’t have a road to Dallas, but Houston does, you know, I’m charging a toll now to drive through my town to get to College Station, right? So if you know Texas.
Stephan Livera (14:56)
Yeah. Yeah.
And so, in terms of like the yield conversation, like routing fees and things, let’s talk a little bit about that. Now, as I understand in Lightning, you can open a channel and there, there can be like a base fee and also like a PPM fee, like a variable fee. So can you talk to us a little bit about your thinking there? How do you set those fee rates? Do you try to say, okay, this route is obviously very in high demand.
Nate (15:06)
Mm-hmm.
Mm-hmm.
Stephan Livera (15:26)
I
Nate (15:26)
Okay.
Stephan Livera (15:27)
can raise my fee there or do you manually manage it or not really?
Nate (15:31)
So I used to manually manage it a lot and I actually kind of like talking about this because fees in my opinion isn’t really about the yield as much but it’s about targeting flow of liquidity and trying to keep things moving where they need to be. So to kind of simplify that a little bit I run a node that has 200 channels but at the end of the day I really only care about having high payment success to maybe 15 to 20 of them.
for our enterprise customers, which are usually the exchanges. And because exchanges have high directional inbound demand, if I set my fees too low on that, other nodes on the network can craft a route to like kind of jam liquidity, my liquidity out that channel back into theirs, and then they could charge a higher fee on it and sort of siphon it, take advantage of my charity, so to speak, so that they can capitalize on it.
⁓ That’s why if you go to Ambas.space and look at some of these exchange nodes, you will see that the average fee rate of channels connected to them are generally higher than sort of a ⁓ just kind of a goofy name node that might have like 50 channels or something. ⁓ It’s just because of the demand. I char, so my general baseline on a lot of those is around 2000 PPM. And what that means is that for every million sets routed through,
I get 2000 parts per million is what the PPM is. And that’s cool. But the idea really is that I want to make sure that my liquidity, if it is, I want to make sure that when that liquidity moves, it’s actually an economic movement and not somebody trying to manipulate my channels somewhere else. I hope that kind of makes sense a little bit. And that’s something Alex Bosworth taught me about.
Stephan Livera (17:19)
Gotcha, I see. Yeah, and the way I’ve heard this explained is kind
of like you almost have to like set the right fee that you’re not getting exploited per se. Like it needs to, you need to set it the right level that people aren’t just sort of trying to make free yield out of you.
Nate (17:29)
Mm-hmm.
Right. I guarantee.
I guarantee people are running scripts out there that are monitoring all of Bitfinex’s channels, for example, and as soon as they detect a channel with 100 sat or 100 PPM or something, they’re now trying to pay through that out out the other end back to their node so that they could charge a higher fee on it. ⁓
Stephan Livera (17:56)
Interesting. Yeah, and
so as I understand how that works is in lightning the it’s Source routed payments meaning when you have your node you can construct the route and so the idea is your lightning node is kind of having a view of the network of the lightning network and Saying hey, look at the fee here. I’m gonna try to specifically construct my route through this way to kind of do that and that’s how they’re able to do that because it’s not just kind of like
Nate (18:04)
Mm-hmm.
Mm-hmm.
Stephan Livera (18:23)
central provider, obviously each of these nodes is able to try to route through the channels that it knows about.
Nate (18:30)
Yep, and ⁓ and again, I want to reiterate anyone that’s like well, I know it’s too complicated You guys are talking about this complicated stuff. This is why like where this is all like under the hood like we’re mechanics right now talking about how an engine works you don’t need that in order to drive so I just want to like Point that out real quick. Like this is anyone who’s doing that ⁓ But but yeah, so that is the main purpose for fees when my goal isn’t necessarily yield But I’ll talk on that here in a second
But it’s to optimize payment success and like economic like payments really everyone else. So ⁓ also lightning labs has auto fees, which is really cool. Every couple of days it’ll either increase or decrease your fee rate based on the activity and ratio of outbound inbound you have as well. And they listened to me thankfully and added a feature on that where you could sort of set a fee floor. So
If there’s no activity at all, it won’t go to zero. Like it used to just go to zero. It’s like, I don’t want to go to zero. I want to set it at 500 as like the floor. So they added that, which is pretty cool. So most of our default channels are, and this is all public info. I probably started around 2000 and then they’ll gradually kind of like go down through the Lightning Terminal Auto Fee system until it kind of hits a point where things are happening.
Stephan Livera (19:27)
Right, a, can I go below that, yeah.
Yeah, okay. And let’s talk a little bit about the yield aspect. so do you have something more there? Yeah.
Nate (19:58)
But some of the channels like I mentioned, and have a floor. Yes. So,
so the folks that are optimizing for yield, they’re usually trying to get as much fee, there’s two ways, but the baseline is they’re trying to get the highest fee possible to route to an in demand destination. That’s the easiest way to do it, like really capitalize on it. You’re still going to sort of make fees through other channels and stuff, but really focusing on the big
players, like your Kraken’s and your Bitfinex’s and your Binance’s, that’s always worked for me over the years. ⁓ But we’ve entered this stage now where if you’ve got a high quality node, which is easy to measure ⁓ through the Lightning Terminal ranking system and centrality scores and things like that, ⁓ the more high quality node you have, now you could charge a premium for liquidity to other nodes on the network.
the AMBOSS Magma is probably the most popular ⁓ marketplace for that now, which is also becoming more automated. ⁓ Hopefully soon, the LSP, the lightning service provider, yeah, the LSP spec ⁓ is constantly being worked on and that uses ⁓ sort of a zero conf. ⁓
Stephan Livera (21:13)
So this is the right aspect you’re talking about? Yeah.
Nate (21:25)
system and auto invoice system to do like this just in time inbound liquidity. So hopefully you could essentially generate an invoice when the invoice is paid. It’ll detect if you need inbound liquidity. And if you do, it’ll snag one from a service provider. They’ll charge a fee and the payment will then go through, ⁓ which is cool. ⁓ That’s been working. People have been working on that for a long time, but it’s really hard in open source world and open spec world.
where you want to build something that everyone can use. so the work on that is ongoing. They have a telegram group. I’m of peeking in there from time to time. So the point on there is you could sell liquidity, which according to AMBOSS is 1 to 4 % APR generally. So yeah.
Stephan Livera (22:07)
Yeah, and while we’re on that, yeah.
Gotcha, okay. Yeah, interesting. And I guess that number that Miles put out on his yield number at CashApp, or from Block, the company behind CashApp, I think he announced 9.7 % yield. But remember that that is CashApp who are obviously, they’re also an exchange, they’re a provider. So obviously they’re gonna get a lot of volume just by nature of that. yeah.
Nate (22:27)
Mm-hmm.
Mm-hmm. I can tell you, yeah.
Yes.
Right.
Right. The thing
is, if you’re using your node to run a business, we’re doing more send outs than receives. So like if you’re sending out more than your channels are going into the inbound light, which means that your channels, ⁓ the majority of your channel size is actually owned by your peer. OK, but you can capitalize on that by then deploying a channel to a sync node.
Usually loop and I’m pretty sure cash up is doing loop and loop is a submarine swap service So a lot of people would use that and you can get up to five or six thousand ppm on that so if you’re running a business where you’re spending a lot and then you open and say you have a bitcoin of inbound liquidity you can now open up a bitcoin channel to loop and All that inbound on all those channels now will get replenished and get shot through the loop channel and then you’ll get the fees And i’m pretty sure that’s
Stephan Livera (23:38)
because people will be riding through you. Yeah, gotcha.
Nate (23:41)
kind of how Block does it.
Stephan Livera (23:44)
Gotcha, yeah. then when it comes to things, because there’s, I guess there’s two main forms of this, I guess, quote unquote, yield. One sense is, the routing fee yield. There’s also the sense of selling or buying inbound channels, right? So in the case of if you are a service provider, you may be selling a channel to people and just taking an upfront fee for that. Now, what’s your thought on that? I know that has kind of shifted and evolved a little over the years too.
Nate (24:09)
⁓ I think it’s actually great ⁓ It depends Still on what kind of user you are if you’re running a node and you’re bootstrapping a node and you need inbound there are And you kind of do need inbound and again inbound is just when you have your peer Having capital allocated to the channel ⁓ It’s kind of like a mirror your outbound is there inbound your inbound is there out
I think that if you really need to receive payments, going to somewhere like ⁓ Magma, if you go to any, if I tell you, Stephane, say you like, want to get, a birthday present, right? And you know my node’s public key. You can put my public key into AmBoss and gift a channel now.
Stephan Livera (24:59)
Right, and then they would open the channel to your nerd, right?
Nate (25:01)
Yeah,
they would go into the the marketplace themselves find the best deal and then and then do it automatically used to be you’d have to like sift through like like an ebay or something and kind of buy it but now it’s like It’s just becoming better and I do that sometimes for our peers, ⁓ our enterprise clients and even on the voltage It’s like we need some inbound i’ll buy a ten dollar channel, which is like six million sats or something, which isn’t bad and and then
And then that’s just going through the folks that are running good lightning nodes that are hooked up to the magma system that are getting paid for that now and in bus rails does that too you can You know, we’ve had we’ve talked to Jesse a million times about that, but I could go on and on about how that’s such a really good service ⁓ but my personal opinion though is if you kind of want to take the next step and run a lightning node Just open channels and start buying stuff because that’s how you get inbound also
Stephan Livera (26:00)
Right,
because you’ll automatically have inbound from that.
Nate (26:01)
go to the Bitcoin company, go to Bitrefill, go
to your local Square enabled Bitcoin shop and pay with your node.
Stephan Livera (26:09)
Right, but
also protect your channels with sufficiently high fees that you don’t get, your liquidity doesn’t get drained by if you’ve got too low fees, right?
Nate (26:17)
That is true too. Yeah,
that’s actually a good point. If you don’t care about routing at all and you don’t want your liquidity really touched but you still want the channels to be public because you want to receive maybe at some point, then just increase them to the moon. That’s okay. It just might annoy your peer a little bit because your peer would think, why do I have a channel with this guy if he doesn’t want us to? Right. Yes.
Stephan Livera (26:38)
like doesn’t actually have a reasonable fee, right? Yeah. But I mean, you can sort of keep them like, you know, high enough that people aren’t just
gonna abuse your fee or abuse your channel kind of thing.
Nate (26:48)
Exactly. And now we have auto fees,
like I said, so that’s not a science you really have to learn.
Stephan Livera (26:54)
Right, right. so that’s probably, this is probably an interesting question or maybe triggering, but you know, back in the earlier days when, you know, B caches were angry about lightning and stuff, one of the big arguments, now, obviously, I think the B caches were wrong overall, to be clear, but a common argument they made was, the lightning network is gonna become this hub and spoke model thing, and it’s just gonna be super centralized in that way.
Nate (27:02)
Thank
Stephan Livera (27:23)
Is there a kernel of truth in that? Because the way Lightning evolved was not quite the vision of families and uncle gym node operators all in their homes. It seems to be more about, let’s say, professional Lightning node operators and services. ⁓ What are your thoughts there?
Nate (27:23)
Mm-hmm.
Yeah.
So I guess there’s two angles there that I’ve heard. So my first initial sort of question to that question is why does that matter? And I can still man two reasons why that matters. One is if if it’s millions or billions, hopefully someday of people using the Lightning Network in a small way, and there’s only 10 nodes out there that are relaying it around.
There’s there are two issues with that. One is if one of those nodes goes away does payment success go down? I would say no on that because there’s always gonna be a rush to fill liquidity gaps if the if the fee incentives are there and the other is privacy, so If there’s ten we’ll just say ten I mean this is like worst-case scenario if there are ten large nodes out there all have channels with each other and then all have channels
Mostly with the small folks on the edges, right? The chance of them colluding and kind of, because, okay, so if I route a payment, I only know where it came from and where it’s going, but I don’t know if, but I only know one hop. I don’t know if where it came from, right? I don’t know if where like the previous hop, I don’t know if that’s the origin or if they’re routing it also. And I don’t know if the hop I’m forwarding it to, if that’s the end destination or if they’re forwarding it along.
Stephan Livera (29:01)
Yeah, you know, the incoming hop and the outgoing hop. That’s it.
Nate (29:15)
But if I know what the big nodes are and say, hey, I routed this payment, did you forward that to anyone else also? Or did it end with you? They say, no, we forward it to this one. then maybe if it ends at a smaller node down that chain, they can say, OK, we think that it might be this node that received the payment. So what are the implications of that, then, is the question.
And then, I mean, this is like a whole thought process, right? And I think there’s a lot of nuance that’s lost on Twitter because someone like me who doesn’t have a blue check, I can’t write a whole story on there. So like, I usually don’t talk about this kind of stuff too much, even though I hear these things. If there’s a KYC component anywhere in there, the worst thing that could possibly happen is for a KYC entity to be able to have high probability of knowing.
what your nodes public key is because now it knows all of your public information. So then the question is, what can I do with that? And it’s not too much. There are some things there, but they can’t see any payments that you’re making after that. They could sort of send fake payments through your node, which is called probing, to kind of look at channel balances and maybe have an idea. But then my thought goes to like, but why?
⁓ Like is it just to kind of like map the network or are they targeting you to think that you’re doing something? ⁓ And then and then that’s where it gets kind of muddy and then that’s where the kind of the debate really kind of kicks in at that point So do so I don’t think that we’re gonna go that way but it’s possible it’s possible ⁓
Stephan Livera (31:06)
Yeah, I
guess another angle might be, well, see if it becomes really centralized and lightning nodes, you know, it becomes like a whitelist system where they only peer with other, let’s say, whitelisted or KYC’d like entities who know each other’s lightning node pub key and then therefore the kind of the dream of decentralization is lost at that point is maybe that’s the steel man.
Nate (31:17)
Right.
Well,
we have, we already sort of see that if you start aligning note and try to open a channel a bit for next, they’ll probably it’ll probably fail. And the and that’s because a lot of these entities do have these because the regulatory environment on this is so gray right now. So ⁓ sometimes these highly regulated exchanges and institutions, they don’t want channels from, you know,
Stephan Livera (31:55)
Rando.
Nate (31:56)
rando lightning node guy with a tour only endpoint. ⁓ But ⁓
I forgot where I was going with that actually.
Stephan Livera (32:11)
Yeah, well, I guess that that’s
the criticism would be, you know, I guess the hypothetical would be the world. But I think it’s also fair to say we can’t judge things by what’s the word? ⁓
There’s like a word when you criticize something based on it not being perfect and it’s like, well, hang on, the world we’re in today is not already not perfect. We’re already dealing with a lot of that issue around, know, when you try to send a fiat wire today, right? Like people are dealing with all this stuff around compliance, KYC, et cetera.
Nate (32:34)
I
Yeah. And
I think that if it all goes into sort of a whitelist whitelist slash blacklist sort of thing, the Lightning Network is still an open protocol that is has very similar properties to Bitcoin. I can still start a Lightning node. I could still open a channel with your node. I could still I could still connect through the network. And a lot a lot of the funny thing is
And I mentioned the Biffenex, but any of these nodes that have a whitelist system, all of their public channel peers are public. You can go to AMBOSS and look at them. Maybe you can open up a channel one of them. Maybe they only care about like one degree of separation. And now you could connect to those other guys instead. And now you can make the payment to Biffenex. Maybe they only care about that one degree of separation. But you could still connect into these if you want to, along with other people.
Stephan Livera (33:39)
Right.
Nate (33:39)
If I’m going to the same car, yeah.
Stephan Livera (33:39)
So it’s kind of like you pay a little more in fees, but you kind of go one or two extra hops and then you can get it. You can make the payment.
Nate (33:44)
Sure.
So I don’t think I think that if it does go like full consortium mafia lightning node mafia where you know, whatever ⁓ That’s still not stopping us from opening up channels with each other and ignoring them completely We only really need them if we want to pay them We don’t I don’t think we need them to really route at all because I think the incentives will kick in if they blacklist too much and Other nodes will pop up
Stephan Livera (34:16)
Yeah, and it still has that same kind of even from a censoring point of view, you still have this question of well, who sets the white list and black list and do people all agree or disagree, right? Because even from like a fiat, AML and sanctions perspective, you know, the USA will have different sanctions to what the EU sanctions to what Russia or China or some other country. So even then, it’s kind of like people would just
Nate (34:28)
Mm-hmm.
Right.
Stephan Livera (34:42)
your Lightning Knob will just find a route that works and just make the payment that it needs to.
Nate (34:46)
That’s and
and that’s what keeps me so engaged with this technology over so many years is the fact that I Let’s talk about the the square terminal real quick the cash out block square terminal that just so every single merchant at least in the u.s I think maybe in another country. I don’t remember but you can turn on the ability to accept bitcoin payments at for temporarily at zero fees
Stephan Livera (35:01)
Yeah.
Nate (35:16)
Meaning you don’t have to pay whatever it is 30 cents plus 3 % or whatever it is per transaction if somebody pays in Bitcoin and you can receive it as dollars or as big if you turn it on I Have gone through my town and I have hunted down It’s square terminal people and I’ve been very very chill about it be like, hey Square has this payment method now. You could turn it on on your back end
And you don’t have to pay the 30 cents plus 3 % or whatever it is if somebody pays that way and you still get dollars on the other end And they’re like, cool. That sounds great. But the thing is cash app also has the map that kind of shows you when they turn it on I mean again, this might just be me but I am one for four right now and so it’s really I don’t I think there’s a
And I’ve encountered this with just like normal people talking to Bitcoin over the years. It sounds too good to be true. Like, are you tell it’s like, it’s like, it’s like you’re telling me that I can accept a payment that’s instant, no chargebacks anywhere in the world for like no fees and almost nobody knows about it. You’re scamming me, dude. There’s no way that’s real. I feel like there’s that sort of mental block.
Stephan Livera (36:18)
Yeah, that’s Bitcoin in general. It sounds like it’s too good to be true.
Nate (36:38)
That we are leapfrogging the system so hard with this tech that it just short-circuited and for good reason like I don’t blame them It does sound nuts, but the tech is here. We have it. It works great But I just feel like there’s like this like okay this if something’s too good to be true It usually is right and here we have an instance where it’s like breaking down that wall of like no, it’s real and it works really good but it’s It’s hard. mean
Which kind of blows my mind because if I ran a coffee shop, that’s like the worst because your your your average purchase is probably five to twenty dollars and you just get wrecked on these fees from from all this stuff. It’s like we got a solution for you guys. I don’t know. That’s just like my theory. Like what’s going through your head?
Stephan Livera (37:21)
on the face, yeah.
Yeah, and I think and it is temporary, like I’m
sure they will eventually have to put in some kind of fee to make it sustainable. nevertheless, I think, you know, great work from the team, the guys at Block and Jack Dorsey and the guys who are pushing this, you know.
Nate (37:35)
Yes.
Mm hmm. Yeah, the option is there, and I think
that’s what’s always important. ⁓
Stephan Livera (37:44)
Right. And it’s up to four million merchants that they’ve got there, I think. And then the other big, big one is in South Africa. Right. So Karel from Money Badger has turned on 700,000 locations where you can pay with lightning in South Africa, which is incredible. And so I think these are really cool. You know, so I understand people have different areas that they’re interested in, right? Like people, some people are into like the Treasury Company stuff. Some people are into like store of value and stuff. And other people are more into like, yeah, let’s earn and spend Bitcoin. Let’s like,
Nate (37:51)
The brave.
Amazing. Yeah.
Stephan Livera (38:14)
let’s drive that side of things more. So, yeah.
Nate (38:18)
Yeah, I think the medium
of exchange part of Bitcoin is so important and. And I think it’s easy as for someone who who’s agrees with me on that, the medium of exchange component is really important. I think that. Over time, when you. All right, I’ll put this simply, I don’t think when you go to a bar and like trying to get them to accept Bitcoin is the way to go.
And I’ve said this multiple times and I still believe it. I think it has to be merchant driven, not customer driven. The merchant has to want it for whatever reason, whether it’s lower fees, stuff like that.
Stephan Livera (39:00)
Sometimes you know what and here’s the other thing it
could just be personal relationships right like it might be the coffee shop you go to every day and you know the guy and he knows you and there’s kind of a relationship built up over time and then then if you pitch Then he might be a bit more inclined to be like yeah, all right. I know Nate. I like this guy, you know
Nate (39:04)
Yeah.
great.
That’s
Like look into it.
But and then and then to just like really extrapolate on that a little bit more is I’m very bullish on Bitcoiners either accumulating businesses from these business owners that are retiring and their kids don’t want their businesses anymore and then implementing a Bitcoin standard, whether it’s a Bitcoin treasury on their back and or accepting Bitcoin straight up as Bitcoin price goes up ⁓ and our.
and our wealth goes up. I think that’s a really exciting idea, personally. When people say Bitcoin Treasury Company in my head, it’s like, well, if I ran a car wash or whatever, right? Just some porta potty business, like whatever. And I put a portion of my profits into Bitcoin. I’m a Bitcoin Treasury Company. I’m not a publicly traded Bitcoin Treasury Company. But that is really, really important because now you can…
your employees more than the competitors or give them bonuses if it’s like a good year. ⁓ And I don’t know, that idea is really interesting to me. So, little tangent there.
Stephan Livera (40:25)
Yes, I mean we’ll see what happens with that and ⁓ I am bullish on both kinds, whether it’s an operational company doing Bitcoin treasury or they want to do the financial engineering. Of course, there are caveats around that. Not all of them will succeed. Let’s talk a little bit about, you back to the Lightning tech stack. ⁓ There are different implementations of Lightning. As you mentioned, there’s different tech that people are using now, whether it’s like the Amboss stuff or other Lightning
Nate (40:28)
in.
Yeah.
We will.
Stephan Livera (40:54)
know, Lightning Labs products and services. Talk to us a little bit about that. Maybe just start with the different Lightning implementations. Do you wanna just start with that? Like I know the big, obviously the well-known ones, LND, Core Lightning, LDK and Phoenix Async or Eclair, I think their implementation is called. So do wanna talk to us a little bit about those?
Nate (41:06)
Yeah.
Mm-hmm.
Yeah.
Phoenix D to yeah.
Sure, so there are multiple implementations of lightning. It’s still the big four, which I’ll talk about. But it’s important to know that the they all interoperate based on what’s called the bolt spec, the basis of lightning technology, you have to.
You have the which are sort of the rules for interoperability when you’re building a node software. So if you’re running a core lightning node, which is built open source by Blockstream and I’m running a lightning labs LND node, we can still open a channel. We still make payments and it’s all good. Over time, there has been weird little interoperability quirks, but that’s not to say because they want to create their own separate lightning network. That’s not interoperable. It’s just it’s new tech. It’s beta and these things happen.
L &D by Lightning Labs, Lightning Network Daemon is by far the biggest and most popular because I think that they focus, Lightning Labs just leaves their focuses on their lightning stuff and they want to make it as easy as possible. They’ve built great user interfaces and innovative technology like Lightning Node Connect, which makes it really easy and would be my recommendation for anybody who’s interested ⁓ in starting an actual Lightning Node.
If you’re a little bit more technical, though, and you want to use lightning in a very specific way, ⁓ I think core lightning is really good because they have a plug in sort of you create different plug ins and download plug ins to kind of mold the node the way you want to be. Like if you really want to focus on ⁓ accounting or something like that, you can download all these plug ins. I haven’t really played with that too much, though, but I do know it’s one of its fundamental features.
⁓ And then there’s LDK, ⁓ is the lightning, ⁓ yeah, the development kit, sorry, yeah, the lightning development kit. And this is like for the hardcore technical folks that actually wanna build their own implementation of, the lightning, ⁓ build their own software, build their own lightning node software. And it’s just a library of components.
Stephan Livera (43:22)
Spiral one,
Nate (43:41)
So instead of getting all the little Lego pieces, get some of the Lego pieces already put together so you can kind of like build it easier. So that’s kind of what LDK is for. And then Phoenix ⁓ by Asonk and Eclair. I don’t know what to call them anymore, but Phoenix is sort of like the end product now, which is strictly focused on making payments. And they have a very robust liquidity under the hood system, which is really cool, ⁓ where
I mean, it’s really cool because it’s self custody. You still have to pay for the inbound liquidity on there, which is always going to be a thing on self custody, I’m afraid. But the liquidity is kind of automatic. ⁓ So for sending and receiving, it’s really cool. So you can run ⁓ the Phoenix app on your phone, which is what it’s built for, or the daemon itself on a server and just have access to that liquidity as like a lightning node.
Stephan Livera (44:41)
Excellent. Yeah. So ⁓ if you were, ⁓ you know, setting up today, do you have any kind of typical recommendations based on the different kind of users? So let’s say, I guess probably three, I can think of three just off the top of my head. One would be like just kind of everyday typical hodler or DCA pleb, right? And then maybe a small business merchant and then
Nate (44:42)
That’s the deal.
Yeah.
Mm-hmm.
Stephan Livera (45:04)
larger professional level lightning infrastructure provider, LSP. So do you want to just talk us through some of the different types of users and what you might recommend for them?
Nate (45:08)
Mm-hmm.
OK.
Excuse me. Yeah, I think that if you are a big pointer, you’re kind of you kind of want to try out making payments. I’m always, always going to recommend self-custodial options like I’m always going to recommend your hold your own keys. And so I will recommend Phoenix or the Zeus Zeus L.N.
⁓ integrated node, which is a mobile application that can actually deploy a lightweight LND node on your phone. ⁓ That’s what Zeus uses. And then Phoenix has their own implementation, which is pretty cool. ⁓ Just the innovation on the Phoenix app is ⁓ unparalleled when it comes to just the mobile experience.
Under the hood you have things like splicing which allows you to add or remove liquidity from a channel without closing the channel which to my knowledge Phoenix is the only tool to be able to do that. So those are my two highest recommended ones. ⁓ I’m sure there are others out there. I’m sorry if I don’t mention those. However, ⁓ I just I love Phoenix and I think Phoenix is doing great. ⁓ Zeus as well.
Stephan Livera (46:27)
Okay, so now the small business or just typical merchant who wants to take lightning payments.
Nate (46:31)
Yeah.
Yeah. So ⁓ for brick and mortar, and if you want to like maintain that self custodial aspect, I would say I would say take advantage of AI, if you’re not technical, and have it walk you through how to install start nine OS on an old laptop or something. And then you can have BTC pay server lightning, all hooked up together. Like, I
I have saved so much time this year when I get an error on Linux and I just paste that error into the AI and say, tell me what this is saying and how I can fix it. It’s like, yeah, you’re missing a dependency, run this command, and then it’s fixed, right? Where before I couldn’t, like, it was like awful. ⁓ So take advantage of that. Really, I used to say, yeah, learn Linux basic commands and stuff, but now I feel like you can ask the AI tool something.
Stephan Livera (47:16)
Yeah.
Nate (47:29)
Something general, never give it your personal info, right, is my recommendation. And then if it spits something back at you, you can then ask them, hey, I’m new at this, explain what you mean by that so I can learn about it if you want to. And you can learn as you go, ⁓ which is kind of like holding your hand. And so you can install Ubuntu if you want to go crazy on Linux or start nine and run BTC Pay Server, which ⁓ is what I would say. Now, if you don’t want to run your own node, but you do want to accept Bitcoin,
Go to Square. Square is the way to go for sure on that. Yeah.
Stephan Livera (48:02)
Gotcha. Any
thoughts on for a larger pro level or just kind of light, although I guess this may be a different question because like this is by this level, you’re like talking about professionals here. So it’s a bit, it may be it’s a different kettle of fish, but let’s say you’re doing a larger infrastructure thing, LSP exchange, what kind of tools ⁓ do you see being very useful for them?
Nate (48:28)
Yeah,
if you’re very technical, you might want to learn LDK. That is what Spiral uses, I’m pretty sure, in Block. But outside of that, ⁓ again, this is just my personal experience because I haven’t used everything. But I’m a huge fan of Lightning Labs. I’m a huge fan of LND. And I think that it is
really good for beginners, but it’s also really advanced if you want it to be advanced as well. ⁓ The programmability on it is really good. The way that they use the, there’s an authentication system attached to it so you can.
Connect it to web apps and things like that if you want to do that. There’s tons of documentation on that. The education is out there. You just kind of have to look for it. ⁓ And if there’s one ding I’ll give Lightning Labs is that they come out with so much cool stuff, but they don’t market it. Really? Like you have to like log in one day and be like, they just added this. And it’s like, wow, that’s really cool, which is how I found like, it’s like, you guys added the fee floor thing to auto fees.
Like that wasn’t announced, it just kind of happened. And that was kind of a cool thing, for example. ⁓ Which is kind of cool, because Bitcoin’s the same way. And that’s kind of what drove me to Bitcoin. Like there’s no marketing agency or anything coming after trying to get you to sell some bitcoins, just Bitcoin. So yeah. ⁓
Stephan Livera (50:00)
Any thoughts on the
new L2? So you know the new kit on the block you’ve got ⁓ ARK and SPARC and maybe some renewed interest in Liquid. Some of the ECash style systems like Fetty or Fetty Mint which is ⁓ one example and then the…
⁓ Chowmian sorry cashew which is the single mint ⁓ Now all of them now to be clear all of them have different trade-offs different, you know They they may be better in one way worse in another way, but some of them make criticisms or some of the ⁓ Proponents of them will make criticisms of lightning So probably most notably the inbound liquidity requirement of lightning right that is a fair, know I think everyone accepts that that’s a challenge ⁓ especially if you are trying to build something for end users and especially if they want to onboard
Nate (50:20)
Mm-hmm.
Yeah.
Thank you.
Stephan Livera (50:45)
with a very low amount like a small like their first transaction might only be a few hundred sets people aren’t going to set up a channel just for that that’s where they’re kind of you know some of these other systems might be more suitable in some ways and in others they may be more like a liveness requirement or in other cases it’s like the practicality of doing it on mobile so how are you seeing this in terms of the comparisons with just straight lightning
Nate (50:48)
Mm-hmm.
Mm-hmm.
Mm-hmm.
Yeah, so I guess my take is any innovation is good. ⁓ If there’s a if the trade offs make sense for make sense for certain segments of users. Awesome. I could totally see how E cash is awesome. I could totally see how it’s not awesome. Right. If the mint owner shuts down the mints, then all your money goes by. ⁓ You know, but it’s very private.
You could do very small amounts and stuff like that, which is cool. So if you’re not worried about losing a small amount, it could be fine. And my main take on this, though, is if any of these are to really take off, the vast majority, pretty much all of them that I can think of, still needs the Lightning Network to get in and out of their respective systems. ⁓ So if
Stephan Livera (52:08)
Correct.
Nate (52:12)
The Lightning Network might not be the peer-to-peer network or the payment network, but it might be the settlement network for bigger players someday. It’s really hard to tell because it’s so early and we’re still in this stage where we can still make payments on it. ⁓ But the idea…
Stephan Livera (52:31)
Yeah, I think
as you said, they all connect through lightning, at least today, maybe small exception with liquid because people can do like just Bitcoin peg in, but that’s a bit of a slightly different case because ⁓ in terms of their use, yeah.
Nate (52:40)
Yes.
I think liquid has some
use case also. I’m sure people use liquid for ⁓ privacy reasons maybe to do stuff like that.
Stephan Livera (52:53)
Yeah, and some and
there’s kind of the tokenized equity and debt stuff on there as well. And yeah, like some of the liquid based wallets like aqua and bull, bull Bitcoin wallet. They are doing it. Yeah.
Nate (53:01)
⁓
Mm hmm. Yeah, I.
I do want to if you if we’ve got a few minutes still ⁓ to touch on. The. So our arc, for example, I’m not an expert on Arc, but I do know Arc and is very similar to lightning in that it works, but it could be so much better with further. ⁓
Stephan Livera (53:12)
Yeah, sure.
Nate (53:33)
expand ability of the on chain op codes. Yeah, and I really wish that we could be talking. This is just a little bit of a rant. You know, this core versus knots thing is absolutely ridiculous. This, uh, the
Stephan Livera (53:34)
like covenants and things. Yeah.
But if anything now
the noise there has kind of come down a bit now people are talking about quantum That’s like the new hot narrative now
Nate (53:54)
Quantum is absolutely ridiculous. All of this stuff
has marketing pushes and narrative pushes behind it, which is why I that’s like my one of my big red flags kind of and right when we were talking about Ellen Hans and and the script restoration and stuff that people are still talking about on the Optech newsletter. Merch is still talking about it. Reardon is still talking about it, but it just kind of like fell off a cliff and I’m just
I scratch my head when I think people are talking about using Bitcoin as money. Lightning does work, but it could be so much better. It could be so much better. We can have multiple parties owning the same channel. We could have ⁓ the ability for the peers to actually be synchronous in their ⁓ in their in their commit transactions and
not need to have these penalty mechanisms. Yeah, exactly. That’s exactly what I’m referring to. So much. I don’t know. It’s just like this is what we need. And a lot of folks are like, no, lightning works just fine. It’s like, it does work, but why not make it better? And the funny thing is, and I think this is what a lot of people don’t realize is that CTV, for example, check template verify. doesn’t.
Stephan Livera (54:54)
Right, like LN symmetry and stuff, yeah.
Nate (55:22)
This is going to when I realized that these new ideas, these new operational codes are built to actually create more limits in the programmability of Bitcoin, it doesn’t expand functionality. It does. But it does it by adding more restrictive ⁓ options and operationality.
Stephan Livera (55:44)
Right, because they take like an unused,
I think, op success code and then make that becomes, you know, yeah. So, and then they restrain in certain ways. Yeah, but of course there’s the devil in the detail. They’ll argue about like this particular trade off or does it enable MEV or this kind of, you know, there’s different aspects to it. Yeah.
Nate (55:48)
Yeah. And so, mm-hmm. But people think it’s just like, it’s making it. Yeah.
Right and then then it kind of goes above
my head but like when I talked to reared in you know Brandon black and say hey And just talk to him and just he just tells me what they kind of like can can can do for us as To enhance the medium of exchange component of it. I’m just like yeah It makes ⁓ it makes a lot of sense ⁓ so I just want to point that out and that’s kind of like just trying to wrap my head around like the knots thing and that it’s like
Stephan Livera (56:22)
Yeah.
Nate (56:30)
I know. Anyway, I hope those that are listening kind of understand my confusion.
Stephan Livera (56:31)
Yeah, look, I’ve thought it’s worth I’m in
favor of some form of covenant like if it’s a LN hands or maybe in the future people like I know there are people talking about other ideas like template hash and things like that. But I guess it’s just like we have to get people you know, I don’t want to I don’t want to do what the knots people were doing, which is like or to be more clear, rdts people and the bit 110 or whatever this other one it like because they’re trying to ram it through.
Nate (56:36)
Sure. Now, we’re not going to die if we don’t get them, but… Right, right.
scaring people. Yeah.
Stephan Livera (56:58)
without the consensus, you know, they’re trying to ram it through and try to tell people, well, maybe we can do this as a minority group anyway. It’s like, not like you gotta, you you need to bring everyone on this journey. And so, yeah.
Nate (57:09)
The entertainment factor
is there. I won’t deny it. ⁓ But at the same time, I wish I wish we could just be more serious about just actually making a Bitcoin is as good as it can be. Now, that’s not to say it’s not good already. It’s totally great already. But my position is if it can be better, let’s make it better ⁓ without breaking anything, obviously.
Stephan Livera (57:13)
Ha
Yeah, and I think I’m still hopeful, let’s say I’m still hopeful and ⁓ that we’ll eventually get something like LNHance or maybe if people want if like the current, you know, flavor of the month is all the quantum stuff, maybe it’s like BIP 360 plus like one or two other pieces that allow people to use this covenant tech to make their coins quantum resistant. Maybe that’s the thing. But that said, even the quantum thing, there are people
Nate (57:45)
Yeah.
Mm-hmm.
Right.
Stephan Livera (58:07)
There’s a lot of different views there because there are some people who think, nah, that’s like not happening ever. There are some people more like, maybe the realistic thing is more like somewhere 20 to 30 years away. And then you’ve got like the full on panickers who are like, my gosh, it’s going to happen in like one year or two. It’s like climate change, know, it’s like climate change for Bitcoiners, it’s quantum. Yeah.
Nate (58:17)
Yeah. I just. I don’t know,
maybe maybe I’m too trusting, but over the years meeting all of these giga Chad brained protocol developers and stuff, they’ve been talking about this stuff for years just because Joe Schmo on X doesn’t see the conversation happening doesn’t mean it’s not happening. It’s happened ad nauseam. It’s like insane how much it.
like quantum’s been talked about, ⁓ vaults and CTV’s been talked about. It’s crazy. And not just talked about, actually coded up and like kind of ready to go, honestly, and just sitting there. ⁓ Which is, you know, if I could get Peter Woola to come back, I would.
Stephan Livera (59:06)
Yeah, but I think even there, there were some of the core developers
who were reviewing some of those proposals and I think they found like one or two little dings against it and I think there’s a new one called template hash. But the thing is there’s always like some new ones and then it’s like, even if you’re like full time in this space, it’s like hard to keep track of everything going on. ⁓ but shout out to the Optech guys for helping. But yeah.
Nate (59:15)
Yeah.
yeah, I know. Right. But what I can do is. But what I can do is
when I see them is shake them their hand and say thank you. It’s open source work. It’s not very thankful in my opinion, and it’s it’s like and people like I mean, I don’t want to name names, but folks like Rusty Russell. His passion for this stuff is insane and like I respect that dude so much just as an example. I think a lot of them also have that passion where they just kind of love.
just love the work. I’m a fanboy for the devs, I guess.
Stephan Livera (59:53)
Yeah, so yeah, ⁓
some dev slop. But, but while we’re here, let’s talk a little bit about that. So I know you also had you are, let’s say, there some Bitcoin myths, right? What are some of the cringy Bitcoin myths in your view that you know, think? Well, what’s what are your issues that you take with some of the online conversations about Bitcoin?
Nate (59:59)
Yes, that’s right.
⁓ I posted something funny about this a while ago. Excuse
me. ⁓ I can only I remember that post. only remember one, and that’s the Bitcoin is for everyone one. ⁓ Which as as a semantic jerk sometimes kind of rubs me the wrong way, because Bitcoin is for everyone sounds very prescriptive. It sounds like I’m opening the door for you and now I’m pushing you through it.
Stephan Livera (1:00:28)
Hahaha.
Nate (1:00:42)
where if I say Bitcoin is for anyone, I open the door and anyone can walk through it. It’s now a choice. And I know that’s a semantic thing, I just think that’s funny. Where it’s like Bitcoin is for everyone. It’s like, no, I don’t think, I don’t know. Is it really though? ⁓ So, I don’t know. So that was just kind of like a funny little thing. What else?
Stephan Livera (1:00:59)
I think ⁓ as the saying goes, everyone, you
know, you get Bitcoin at the price you deserve. And there’s a lot of people who unfortunately don’t understand the value of Bitcoin, like the true. Yes, of course, there’s the dollar value, but what we mean is more like the value to society, the moral, the ethical, the practical aspects of it that we all see. And we think this is like the best thing ⁓ and we wish more people would get into it.
Nate (1:01:05)
Great.
Yeah.
And I get no engagement on X since Elon took over. I think people need to stop worrying about how much their Bitcoin is worth and start worrying about how much Bitcoin they have.
Because it’s actually incredible when You take 21 million. Yeah, if you have one Bitcoin only one only Theoretically only 21 million people on the planet can very have one Bitcoin, which is like 0.25 percent or something it’s so insanely low and I don’t know I Don’t know six seven eight years ago where people this worried about number go up as much I
I don’t, it’s hard for me to remember. I don’t think so. I feel like it’s so, the most important thing now to so many people. And… ⁓
Stephan Livera (1:02:19)
I mean,
I’ll take the opposite side a little bit. I’ll say, NGU matters. Like it is very important for this system to grow. And I’m not worried, to be honest, but I just think what we sometimes we get into this thing where people sort of virtue signal against NGU when actually NGU is a big part of the adoption story. And remember, NGU is what is going to bring the overall freedom aspects. Like, for example, if we get more people coming into Bitcoin, then
Nate (1:02:24)
Yeah.
Mm-hmm.
Right.
Mm.
Mm-hmm.
Mm.
Stephan Livera (1:02:47)
the value of your coins goes up, you are getting richer as a matter of that and whatever you want to achieve in life, having better, know, higher, greater purchasing power, it helps you there. Now, I, but yeah, but I also understand there is an element of like,
Nate (1:02:51)
Right.
Mm-hmm. Yeah.
Stephan Livera (1:03:05)
Yeah, there’s an element of you want to make sure the network stays decentralized and secure and all these components of it too. I so I think it’s sort of understanding the value of all those things. But yeah, I unashamedly say NGU really, really matters. It is very important. ⁓ I don’t diminish it. ⁓ But I say that as someone who is happy to earn and spend Bitcoin, right? I’m not saying only HODL, you know.
Nate (1:03:10)
Mhm.
I won’t diminish it either, I’m always I’m thinking of Think of the person who got and started learning about Bitcoin in the summer of 2017 They were stacking during that run up to 19 K or whatever it was They were probably excited. But at the same time probably like man, I wish I had more and Then 2018 came where it fluctuated between six and eight thousand that whole time
There are people out there probably super stoked for that and stacked 2018 super hard. And that is the sort of excitement I think that really builds the wealth and builds the conviction is realizing that Bitcoin.
The Bitcoin protocol the Bitcoin network, it doesn’t recognize the label of Fiat value at all. It just is that’s something that we place on it and I think that’s important because Dollar go down number go down is Not gonna hurt the protocol. We’ve got the difficulty adjustment. We’ve got all this stuff ⁓ Plus we’ve got the having so Yeah
Stephan Livera (1:04:38)
Yeah, yes and no like I there’s a to a to a point like there’s a certain level
but I’m not again like I’m not worried right because for me it’s adoption right it’s just about getting adoption and as We get more adoption the price is necessarily going to go up right just because there’s more people enter right? But it is literally a network right it is you know the Bitcoin network and the lightning network are literally networks that are growing in their you network effects and so it matters that it stores value for people because that’s part of what
Nate (1:04:52)
Yep.
Sure.
Stephan Livera (1:05:08)
you know, makes the system kind of work. Because let’s be honest, if Bitcoin had, you know, not gone up, would this many people have come? Would this many people be here? Probably not, right? Or definitely not. So I think it’s a balance of understanding, NGU is important, but also, yeah, focusing on decentralization, keeping the network secure. Obviously, as we all of us maxis say, hey, not your keys, not your coins, all these things that we say. But…
Nate (1:05:10)
Absolutely.
right? No, that’s a point. Yeah.
Thanks.
Stephan Livera (1:05:37)
I would say the pattern is typically this, right? Like at least historically, you get this big run up, a bunch of people get wrecked on the drawdown after it crashes. And then they start researching and learning a bit more about what they actually bought. so it’s funnily enough, sometimes it’s the bare cycles of those dips that people actually take the time to pick up a book, read, listen to some podcasts, watch some online conversations about Bitcoin and learn from that. So it’s just a process. Now,
Nate (1:05:41)
Yeah.
Stephan Livera (1:06:05)
I don’t know. mean this current dip we’re in, whether it’s a dip or a bear market or whatever, yeah. Yeah.
Nate (1:06:09)
Weird, right? It was a weird year. I personally
hope the four year cycle is broken. Like, let’s just forget about it. It’s… Let’s forget about it.
Stephan Livera (1:06:16)
I do think it is, but I’m curious,
what do you, do you have any hopes or predictions for next year?
Nate (1:06:24)
I don’t. I have nothing I couldn’t tell you. I it could be. Yeah. ⁓ I think. ⁓ It’s a question. I would. Yes, I was I was going to say I would definitely I think that the trend will continue for that. I think I think the developers working on the medium of exchange stuff.
Stephan Livera (1:06:28)
Well, it doesn’t have to be price, but even just like Bitcoin or network lightning.
Do you believe lightning adoption will increase next year?
Nate (1:06:53)
are doing really good work. A lot of it is a little bit slower than I would hope. The you know, the Bolt 12 invoice standard is still not as widespread, things like that. However, LND does have blinded invoices now, so you can hide your public key, which is really cool if you want to. So like that sort of tech I’m really excited about. At Voltage, we are, if you,
Go to conferences and stuff. You really don’t see voltage too much anymore at Bitcoin conferences. And the reason why is generally because we are expanding towards industries that really could use an instant settlement network and don’t know that we exist. ⁓ A lot of the financial ⁓ conferences, fintech conferences, and even these like iGaming conferences and stuff that are out there, you know, we’re kind of tackling that now. And we’re actually onboarding
a lot of enterprises onto Lightning for ⁓ minimal viable product, MVP ⁓ stuff, trials, demos, things like that. But we also have a great sales team and they’re also getting signed on. But we don’t really talk about it too much. And a lot of that is actually because some of our customers, they’re like, we don’t want anyone to know that we’re doing this ⁓ because of competition or things like that. ⁓
Stephan Livera (1:08:13)
Right. Yeah.
Right,
or they prefer just a quiet trial without making a big song and dance about it. And so, yeah.
Nate (1:08:23)
Yeah, but a lot of them have gone live
this year. Like this is the best year we’ve had a voltage actually. ⁓ And even though you don’t really hear about it too much anymore. we’ve one of our I just want to mention real quick, like one of our like core products right now is actually a node list credit backed ⁓ voltage lightning payments API. So you simply top up your credit, and you tap into the API and you can
Facilitate sends and receives on the lightning network through our infrastructure just based on credit, which is really cool because that’s not a money transmitter at that point So we’ve got products like that too for enterprises So if you’re curious about that anyone listening in voltage cloud is the website on that foot ⁓ So yeah, so we’re trying to innovate on on on ⁓ Not so much now getting lightning in the hands of
just anyone in the neighborhood sort of, but entities that already have thousands of users, let’s get that entity plugged in so now all of their users have access. Now that’s not like the sovereign cypherpunk way to do it, but that’s the way to kind of get this exposure out there to users. ⁓ And hopefully everyone makes some money from that. ⁓ So Voltage is still around, we’re still.
still really cooking and I think expanding to these other parts, other sectors and industries in the world that might not realize that there is this better payment method available that is out there is actually doing really, really well.
Stephan Livera (1:10:02)
Yeah,
lower fees, less friction. I mean, there’s a lot of reasons that people should be learning about lightning and using lightning. Obviously, the obvious example is like the 3 % credit card fees, but even just like the friction of doing like fiat wires. That’s a massive friction. Think about like,
You have to like write out, okay, what’s the ultimate beneficial owner? What’s their address? What’s their Swift code or I-Ban? What’s their account thing? What’s the reason for this transfer? And if you get even one detail wrong, boom, your payment is declined or whatever, and it’s like off in the ether and you don’t even know where it is. With Lightning, it’s just literally scan this QR and pay it. Or like contact name, pay it.
Nate (1:10:25)
All right.
Right. Anywhere in the world.
One of the most magical experiences for lightning for me was that when I was at the Atlanta Bitcoin Conference, maybe three or four years ago, and someone brought in one of their ⁓ lightning powered beer tabs, beer tabs, right. And instead of paying for the beer, I put the cup under there. I took a photo of the QR and I posted it on Twitter. And five seconds later, out comes the beer. Yeah, yeah. And it’s just like, this is the coolest thing. You can’t do that with any other tech.
Stephan Livera (1:10:53)
Yeah.
Like a random had paid it, yeah.
Nate (1:11:07)
It’s, it’s, I mean, at least I don’t, I mean, maybe you could, but the point is nobody, I don’t know who did that. I don’t know. I don’t know what happened, but.
Stephan Livera (1:11:17)
Yeah,
I guess one final topic. know you were touching on this earlier, but privacy and lightning, right? So this is another thing that it’s maybe been a little bit of a criticism that, okay, as the payer, can generally, you can make reasonably private payment, but I think now the new thing people are talking about is receiver privacy. And you were touching on this with blighted paths a little bit, but can you talk to us a little bit about privacy as a receiver or a merchant in lightning?
Nate (1:11:31)
system.
Mm-hmm.
Yep.
So the standard what’s called Bolt 11 invoice, which is, you know, just a string of letters and numbers, LNBC, it usually starts with. You can take that string and decode it. You could decode the final destination public key. You can decode the amount and a few other things out of that. So what that is saying is if I give a party to pay me my invoice, they could go toss that into a decoder really fast.
and see that the final destination ⁓ is a public key. And then they could go look up that public key and see how many channels I have that are public, what my capacity is. They could say, wow, he’s got 10 Bitcoin on his note. He must be like a rich guy. It’s almost like doxing through on chain when you make a $50 on chain payment out of a UTXO that was like a million dollars. I could look back and be like, ⁓ you probably have a lot of money. It’s almost like that.
Stephan Livera (1:12:28)
Right.
Right. And because they can look at what
is the channel out point and be like, what’s the size of that UTXO? What’s how many SATs is in that? Right.
Nate (1:12:44)
Yeah.
Yeah,
that’s true. Yep. Yeah, good. Yeah, that’s true. ⁓ They could do that. ⁓ They the funny thing is about the lightning channels themselves is the public information is it who what isn’t what the ratio of who owns the channel is just the total capacity. So if you and I have a 10 million set channel with each other, that’s public. But the public doesn’t know that you have nine million of it and I have one million of it. They could know that if they do some sophisticated probing and
all this stuff, it is kind of possible. yeah, Lightning Everprivacy is really nuanced and really strange. ⁓ If you open up a channel from a UTXO that you just bought from an exchange, they might be able to deduce based on timestamps and things like that, that you opened up a Lightning channel, that your public key is whatever, because they could look it up on Amboz or whatever they can there. ⁓ So, but the good news is…
⁓ If that is a really important that you kind of like stay away from being ⁓ any third party knowing your public key There’s there are still tools out there that you can learn and use ⁓ I mean I’m just gonna throw it out there. We have GM and joint market is still out there Ashigaru, which is the successor to the samurai system
is out there. can start you could still do pay join is out there. You could still do coin join. And I’m not a lawyer, but I don’t think it’s illegal to do coin join still. ⁓ Now, that’s a whole other rabbit hole that I probably don’t want to get into right now is the coin join stuff. But the idea is that
If you are trying to run a node and you’re using UTXOs, you’re using Bitcoin, on-chain Bitcoin that has touched a KYC exchange, then you should probably assume that they will also have an idea what your Lightning node is if they want to. If you just want to make Lightning payments, though, you can still load that up into Phoenix. Phoenix is actually like kind of a cool privacy Lightning node anyway.
because everybody has channels to the same peer and none of it’s really public. It’s all to that big ASOC node with thousands of channels. So that might be better than running your own sort of Lightning node. Now you still get your own pub key and stuff on the Phoenix, don’t get me wrong on that. ⁓ But it’s kind of, it’s, in some ways it’s better.
Stephan Livera (1:15:32)
is less clear
to tell who is the owner of that channel, let’s say. Yeah, yeah. I guess the point you’re getting at is that it’s kind of a nuanced answer on whether the privacy inside of Lightning, probably fair to say your payments in Lightning can be private because they’re not on chain, but it’s kind of again a nuanced theme because like it matters how you connect it to the internet, which way you use to make that payment and so on.
Nate (1:15:36)
Right. Right. So.
But, ⁓
Right. The question.
Yep.
Yeah, the question is, who are you trying to be private from? guess is is is important. But the LND does have blinded paths now, which it basically creates a dummy public key at the trade off of having a invoice about four times bigger than the standard invoice as far as data goes, which is kind of annoying. I hopefully that shrinks at some point. ⁓ But but but that’s that that’s there and that works. ⁓ So.
Yeah, so it really depends on who you’re trying to be private from but just like Bitcoin on chain Your real name is never associated with anything or anything like that. If you’re running a lightning node that’s using your home IP WAN address, that’s probably the worst thing you could do for privacy. Thankfully most of the note in the box stuff is Tor only and you can’t really foot gun yourself too hard on that one But if you install LND on a computer yourself and you don’t configure that then
your IP address will be attached to that public key forever, because that’s like a historical thing, even if you change it later. So there are foot guns. I will not say that there are not foot guns. There definitely are ⁓ on that. ⁓ Yeah.
Stephan Livera (1:17:07)
Yeah, interesting. So
yeah, okay. So I guess there’s a few things, we’ve talked about a lot of stuff today, but essentially, know, lightning is here, it’s growing, it’s usable, it’s useful. ⁓ It’s maybe not always the growth in the lightning is not always so public. So that’s probably one of the things that’s like a mismatch between like, say, let’s say the public perception of lightning versus the actual view that
Nate (1:17:27)
Mm-hmm.
Stephan Livera (1:17:37)
real practitioners on the ground are able to see. ⁓ But it seems to still be growing and you know, it’s maybe it’s not exactly fulfilling all the same wishes that many of us thought in like 2018 and 19. But ⁓ I think it’s come a long way. So it’s interesting to see any last closing thought any final comment you want to make and where can people find you online.
Nate (1:17:53)
Yeah.
I’ll make a couple sure.
Sure, I will say those of you that maybe started around a lightning node five years ago and thought it was too hard and kind of like gave up and thought still things lightning was cool. Give it another shot. Try these new try the lightning terminal tools. Try to try to try the new stuff that’s come out because it’s things have actually ⁓ been been improving and I know you probably don’t hear about it too much, but it’s true. So it’s definitely worth diving back in.
And like I said, using AI to determine what errors you’re getting and fixing them is like, it’s amazing. It’s so much. It’s just, it’s just amazing. ⁓ Last thing I’ll say is ⁓ for no KYC exchanges using Lightning RoboSats is awesome. Looking to RoboSats. RoboSats is an amazing tool. And then ⁓ if you haven’t signed the petition to get Keone and Bill out of jail, go to KeoneandBill.org.
or sorry, it’s Bill and Keoni dot org, B I L L and K E O N N E dot org. They’re the samurai devs that really did nothing wrong and is completely ridiculous. And I guess and I guess that’s it from for me. Yeah, I just wanted to shout out RoboSats and stuff too. ⁓
Stephan Livera (1:19:15)
Excellent. Okay. Well, yeah,
links will be in the show notes. Listeners, if you enjoyed it, make sure to share it with your friends and family. ⁓ And Nate, thank you for joining me today.
Nate (1:19:23)
Thanks, Stephan.