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Connect The World invites Lisa Neigut a.k.a Nifty to the show. Nifty is one of the lighting stars at blockstream where she focuses on the Core Lightning protocol. Besides her work at blockstream she organizes bitcoin protocol classes and writes blog posts at the infamous basic bitch software webpage. Of course we asked her if bitcoin (and the lightning network) is also basic bitch software…. Curious about the answer? Check out the episode!
What was your first experience with the lightning network and do you still know what you did/saw at that moment?
I first heard about it when I worked at CashApp! It was this cool hot new thing that everyone on the bitcoin backend team was really excited about. I have no idea what I did with this info, probably looked up roasbeef’s twitter.
Later I spent time trying to set up a lightning node. I couldn’t figure out how to get LND examples to run, they all used Docker, but CLN you could just build and run and that Just Worked.
The first thing I did when I got my node up and running was buy a little lightning bolt lamp from a seller in China who was running a lightning only store.
Is it possible to pay with Lightning in your neighborhood?
Nope! Not at all. But I spend most of my money online these days, that seems like a lot bigger market.
You posted a tweet about “virtual” channels and stated that the Blockchain isn’t just a security feature, that it’s also a broadcast network for information.
What happens with Lightning if you remove the Blockchain layer? And is this desirable?
This is kind of a longer conversation that we could get into. The blockchain is a couple of things. The broadcast of information is a nice one, it’s a well known way of sending information to other parties, kinda like “multicast” (send one time, multiple recipients).
The other thing a blockchain gets you is something I’d call “instant settlement” which is incredibly new and novel. There’s no other payment rails that works like this. Zero. Basically as soon as the information about wanting to pay someone happens, the money *also* moves.
Compare this to something like a credit card where they “authorize” to take money out of your account, but you don’t actually have to come up with the money until a month or so later. And the merchant gets paid a few days, or a week later by a different bank (who then goes and asks your bank for money). That’s not instant settlement. It’s instant “I owe you one bro”.
Getting rid of the blockchain gets rid of this instant settlement, and puts you back into fiat land of “I promise I’m good for it”.. or something else? Virtual channels mean you have to figure out where the settlement is happening independent of the “I owe you X” accounting. Maybe that’s good? I don’t know. Why do that when you can have a fully backed lightning channel?
Well probably because you don’t want to have to commit the capital…
In Episode 39 Bastien Teinturier answered a question from Christian Keroles of BTC Inc. It was about how Lightning will work together in the future with the underlying on-chain layer.
He then told us that he was having a talk with you over some beers and that you both came up with the quote: “Lightning is the Blockspace buyer of the last resort”.
Can you explain this will mean in the future?
Lightning channels are batch payments. At some point you may want to close up a batch and re-deploy your capital elsewhere, or consolidate your batches etc. But typically you won’t need to do this immediately, you’ll do it as soon as it’s convenient to (when blockspace is cheap).
With enough capital deployed onto lightning, at some point you’ll have people who always have a usecase for blockspace, provided it’s cheap enough. So lightning in a way becomes a “buyer of last resort”, where when no one else is buying it, it’ll make sense for lightning node operators to use the blockspace to move around/redeploy their channel capital.
Transactions on the Lightning Network are more private than with on-chain transactions. When thinking of mass adoption: Will this eventually be a problem for governments in the future to allow Lightning adoption to go any further?
Who’s asking the government their opinion man?
But it’s a good point – all the major card networks are setup so the only entity that’s allowed to transact on a card network *must* be a bank. Banks are all strongly regulated by the federal government. (Fun fact: JC Penney in the USA was the only non-bank entity that ever got permission to connect directly to the VISA network, every other “node” in the VISA network has a banking license).
Lightning’s just data though right? And bitcoin’s an asset? Why would the government care about information flows about an asset? 😉
In the Lightning Network we can view the Node and channel count and the channel capacity, but what is more important is the amount of volume being done inside the network. This data is private, which is a big advantage.
What is the best way to measure the adoption of the Lightning Network without knowing the exact volume?
Volume only matters when you’re trying to make yourself sound cool to an external audience, when you’re trying to impress someone.
I think the numbers that speak volumes are ones that come from merchant stories about how lightning is helping them save on credit card processing fees and reach new markets. If we don’t have enough stories like that, maybe we should work on building them, as a community. Let’s make stories that speak volumes, not numbers that win beauty contests. It’s ok if small scale commerce doesn’t impress anyone. Let’s not try to be impressive for its own sake.
Inbound liquidity is one of the biggest challenges for onboarding new Node owners. Luckily there are many more options to have inbound liquidity for example participating in our Rings of Fire community, using Magma of Amboss.space or Flow from Voltage. You talked and wrote a lot about dual funded channels on demand and about Liquidity Ads. This can help advertise requests from a peer directly over the Lightning gossip network.
What possibilities are there for a Core Lightning Node owner to start with balanced channels and maintain the liquidity in their channels in the best way?
This is a great question. I would seem to be the person who would know the most about this, but I am not super experienced at running a node to be honest.
Starting with a balanced channel is theoretically the best for getting re-use of the sats in your channel; the reality of that I think really depends on where that channel is, the network of capital around you, and the payments people want to make.
I’m excited about the fee ratecard spec project and splicing; I think these two additional improvements, along with liquidity ads and dual-funding, are gonna give lightning node operators some really slick tools for liquidity management and (re)deployment.
I think right now the state of the art in liquidity management is some manner of “rebalancing”; I think we can get to a place where it’ll be “be the best payment router on the network”, if we can align the goals of a routing node’s capital placement with payment success, that’ll be really big for us as a network I think.
Rusty Russell posted a proposal for a new set of Lightning gossip messages. One peer can then generate a minisketch from its complete graph of the public network and send that to all of its peers, who can use the minisketch to find any updates to the network since its last reconciliation. The goal is to maximize efficiency.
Is the gossip problem the result of a too crowded Lightning Network? ANd how important is it to maintain maximum efficiency within the network?
There’s a lot of things about gossip currently that are ripe for improvement. Something like minisketch is great because it will reduce the amount of data you need to exchange between nodes in order to get everyone on the same page.
But if the page is changing all the time, then you’re still gonna need to do a lot of syncing to get everyone on the same page.
There’s a couple of things that make gossip changes “bad”: first is having lots of channels, which I’d say having “multiple channels per peer” is a big contributor to this. Every extra lightning channel creates 3 new gossip messages, two of which change a lot (which we can get into next). So more channels is terrible for creating more gossip traffic.
The other thing is that every time any single channel side changes the rate they charge for routing a payment, that’s more gossip that has to be propagated to every node. So you make multiple channels between two peers and then you update the rates on them every time your capacity changes and all the sudden you have tons of gossip changes that need to go out.
Two ways we can help with this: splicing, so making multiple channels per peer less attractive (dual-funding was an early precursor to this); and the fee rate card idea, which allows you to dynamically price your liquidity with a single gossip update (and even allows you to set negative fees without spamming the network with gossip).
Most Lightning Nodes run on a Raspberry Pi. Do you think it will become a problem that the majority of the nodes are running on such a device with minimum specifications?
Problem for the network? No. Problem for themselves if the memory card dies? Yes definitely. Bigger problem “for the network” is how unreliable Tor is for long running connections – it slows down payments, or payments get stuck/go to chain.
I like to think the eltoo upgrade will help a lot with small capacity computers, since the backup storage requirements are much smaller; I’m also bullish on projects like Greenlight + VLS that will enable you to keep your keys at home on a Raspi and run the node infra (channel state, watchtowers) via a cloud service.
Is it more important to work on the security level of the Lightning Network or focusing on adopting with introducing more use cases for Lightning in the field?
Personally, I think we need more people working hands on as “acquirers” for lightning, that’s businesses who are in the business of getting vendors and shops to offer lightning as a form of payment. Credit card networks had these in the early days and they were really successful.
Also fun fact about credit card networks is they used to do “airdrops” of cards to entire neighborhoods (everyone now has a credit card!) until Congress banned the practice in 1971 because it was basically mass chaos.
We have now already more than 4500 BTC on the second layer.
Imagine the theoretical total amount of BTC on the LN of 21M is reached. So all BTC is on the LN. What will happen with layer 1: miners…. What possible problems could the network face?
Lightning is “just” batched on-chain payments. On chain payments aren’t going to go away. They make sense for small payments, they stop making as much sense for larger payments (because you pay per satoshi of volume transferred, unlike onchain where you pay per byte of blockspace used).
So lightning will always be needing to “process batches” by making onchain payments (which will pay miners) and larger transactors will always want to pay on-chain (also paying miners).
How big should lightning channels be, to guarantee big amounts transfers over the LN?
What a great question! I have no idea. But again, that batching idea is pretty key here. You gotta take into account how much you’d need to earn in routing for each of those payments to cover the onchain cost of making the channel in the first place; this equation naturally favors larger channels!
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You’re working for 4 years as a Lightning Protocol Engineer at Blockstream working on Protocol level improvements. What are you working on right now?
Right now I am working on getting v0.12.1 of CLN shipped (bugfixes!), and updating my implementation of the dual-funding spec to match up with what the ACINQ team shipped.
Which also includes some cleanups to the little `funder` plugin I wrote ages ago now, which is a really basic little “policy tool” for setting parameters around which inbound requests to buy liquidity you’ll accept.
Chris Guida from Start9 labs started adding a whitelist for this that I think would be a great addition, really hope we can get that into the next release, in Oct/Nov.
Basic bitch software is a blog about software, the tech industry, writing, the economy, and systems thinking. It reflects your beliefs and lived experiences. What’s for you the most remarkable thing during all these years?
Man I can’t believe how long I’ve been blogging there.
The power of basic-ness in software I don’t think has changed; I wrote the software that drives that blogging platform myself (and did all the CSS from scratch) and the number of times I’ve needed to do maintenance on it as a project is about zero. Which is in itself a real testament to the power of basicness. I still think my love letter to XOR is one of my favorite posts, speaking of basic things. It’s cool how something as “basic” as XOR is the underpinning ‘tech’ behind how to keep things secret in digital systems.
The Liquid Network is a Bitcoin layer-2 enabling the issuance of security tokens and other digital assets. Execute trustless swaps using non-custodial orderbooks and protect your financial privacy through confidential transactions.
Can you give us some insights and updates about this network?
There’s some *really* impressive stuff that the Liquid Network has done but afaik not publicly talked about yet (and it’s not my announcement so I can’t really say anything here) as well as some really exciting new work going on behind contract primitive design that I think is going to be really powerful (but also not my announcement). But things are still happening over there!
I know they’ve been putting a lot of work into the AMP platform, for asset issuance, and the Vulpem Ventures and BitMatrix teams are building some of the coolest covenant based projects, I think Fiji (bitcoin backed stablecoin) is a good example of this.
Elements is an open-source platform for deploying federated sidechains and blockchains, providing developers access to powerful features such as Confidential Transactions and Issued Assets.
What could be an usecase for elements?
Well Liquid is an Elements sidechain, so that’s a good one. I think the original idea was that Elements would be a lot like the “fedimint” model, where a bunch of federations would all spin up their own sidechains and they’d all be interoperable via the mainchain (bitcoin).
That didn’t happen (yet); now we’ve got Fedimint attempting the same thing.
One cool thing that we, as Blockstream, have done with asset issuance is the Blockstream Mining Note, which is a way of betting on the output of a tranche of bitcoin miners that Blockstream is operating. I don’t think we really did the best at using this as an example of how Liquid makes asset issuance easier to do for large/low-value investors, but that’s all because of regulations! Which is sort of disappointing, I think. Hopefully we’ll be able to figure out how to help organizations get the regulations handled, maybe something like how Stripe has Atlas for setting up an LLC, Blockstream will have a “asset issuance” helper that can quickly get you through regulatory regimes? I dunno just an idle thought.
Not so long ago you made a video explaining about a new bookkeeper plugin for Core Lightning. It improves the accounting possibilities of a node. And to have an even better UI for all this data you can import a csv file to Koinly (Cryptocurrency Tax Software).
Do you think this UI will eventually be available within Core Lighting itself or maybe the ability to have bookkeeper connect with third party web applications like Koinly?
“available within CLN” no, we’ll probably never have a built-in UI.
“connect to a 3rd party web app” yes, I really would like to build this/ see someone build it. It should be pretty straightforward to do using lnsocket like I’ve been showing off for demos and stuff. If you’re a web dev who wants to build a dashboard like this, please get in touch!
You’re also the co-founder of Base58. With Base58 you offer for example a developer-oriented Bitcoin transaction class and the long-term goal with Base58 is to try and become a high signal recruiting platform.
Can you explain how you started with this initiative, and about the things that you offer?
Totally! It started with me teaching myself all about how bitcoin transactions work so that I could write the dual-funding spec and sound like I knew what I was talking about.
It was really hard to figure out how to make all the pieces work, so I wrote a bunch of stuff down to explain it.
Then I started teaching what I knew to some local friends in Houston. That was a lot of fun.
So I started running a similar class online, available to anyone who was willing to pay me to learn what I knew. Turns out that brought in a bunch of really great smart, hungry people, who I’d really love to see stay in the bitcoin space. So now we’re working on trying to matchmake all my friends that are running great bitcoin companies to all the great devs and curious people that really learned a lot thru my class.
We’re working on getting a re-vamped website launched soon with a better class calendar and streamlined payment flows, that’ll hopefully make it easier to see what all we offer in terms of classes and hiring options!
Why is it so important to actively recruit more people to work in the Lightning Space?
I wouldn’t say that I’m “actively recruiting” people, i actually don’t think we do need to “actively recruit” anyone. There’s plenty of curious, smart, talented people that are just looking for an “interface”, a way to get more involved in the network, I see a lot of my role both on CLN as well as at Base58 as providing a findable funnel for getting more involved, making friends, finding projects to work on.
Kody Low made a really great intro to CLN on replit, and we’ll probably be doing more there soon.
The developer Fiatjaf really loves Lightning and instead of only working on the protocol side he is a big advocate for more development on apps using Lightning and resulting in more new use cases. At Blockstream you work on the protocol level of Lightning.
Do you also think that we need more use cases?
Yes! 100%. “True micropayments have never been tried” isn’t as true as it used to be (see value4value, podcasting) but I think there’s still a whole huge world of people who want to sell stuff online who could be further empowered by better tools on the “app” side of lightning.
In Episode 40 we spoke to the developer Nitesh who started working at Foundry Digital. The Tweet in which he posted about finally switching his career to a Bitcoin job had more than 1592 likes and 81 retweets.
Also in our community there are also a lot of people, not all developers who want to eventually contribute to the Bitcoin and Lightning Space.
What is the best advice you have for them to get started?
Make friends! Take a Base58 class! Use the software/projects that interest you the most and figure out what you’d want to make different, then figure out how to change it.
That’s how I got into writing software, and bitcoin.
Superlunar is a web3 research & design studio focused on the applications of decentralized technology. They sponsored the Bitcoin++ event in June 2022 in Texas. Can you explain more about this, your role in it and if it will be held again next year?
Yeah! So bitcoin++ came out of an idea, as a bitcoin educator, for making an event to get all the best working bitcoin educators I knew (D++, Justin Moon, Jimmy Song, the learnmeabitcoin.com maker, John Cantrell who was doing a twitter thread on explaining bitcoin) all at one place and having them run workshops.
So the whole thing was going to be very workshop/dev focused. As few lectures as possible. Every sponsor either had to have something you could build on, or be working on bringing more devs into bitcoin (either through grant programs or full time jobs).
We partnered up with the PlebLab team to run a hackathon afterwards, as a place people could then showcase or try out all the new things they learned about during the workshop days.
It was a really great time, we ran it the same week of Consenses a big “crypto” conference, and the energy difference between the two crowds was just night and day.
We’re definitely going to run more events like it in the future, I’m currently exploring the idea of doing a satellite event south of the border, that’s still dev-focused.
What is the biggest mistake you made related to lightning?
Biggest mistake? I shipped a bug in the liquidity ads database logic that only broke for postgres installs in very niche corner cases that Zerofeerouting hit and it crashed his node. Does that count?
(It’s been patched in v0.12)
Maybe the only other mistake is definitely not investing enough time into becoming a central routing node early in the network life, so I could be making those sweet sweet routing fees (and also have a better hands on experience of how challenges around routing etc).
Is the Lightning Network mature enough for mass adoption? If not, what needs to be improved? If so, are there things that you really want to see improved?
Greenlight getting shipped would be huge, really excited for bolt12 to come out soon. I think this will massively change the game for in-person and vendor lightning integrations/ease of use of lightning.
Leasing funds is still an experimental feature. Do you think this will be used a lot more in the near future? And in what way can more work be done on making this even more user-friendly?
Ride the Lightning app just launched a UI for it, this is huge! And LNRouter has had a way for browsing the ads available forever.
More visibility into things like Amboss would help a lot I think, as would more implementations adding support for them.
I’d also love to see a 3rd party marketplace figure out how to use liquidity ads spec as the enforcement mechanism for maybe a lease that’s negotiated elsewhere, if this is you get in touch!
What kind of app would you like to see on your mobile in the next 4 years?
I want jb55’s LnLink to be fully fleshed out, with all the accounting data and liquidity ad marketplace, and just really good business intelligence about how the node is re-allocating funds etc.
I’d also really love to be able to run a webshop from my lightning node, with a webapp that manages getting paid directly from customers over lightning.
What kind of layer three solutions would you like to see soon?
When pay to read the article…
We have LND (lightning labs), c-lightning (Blockstream), eclair (Acinq), and some more… These are all implementations on the second layer. Do you run/test them all?
I do not. I only run CLN; going need to get eclair running soon to test our dual-funding interop 😀
What is the latest thing you are working on, right now?
spec wise, I’m working on getting dual-funding interop w/ eclair, and fee ratecards!
How do you explain the lightning network to a five year old?
“Handshake swaps for candy/money exchange”
What management tool do you prefer to use with your node and why?
I don’t have one, really would like to build one/see one built that uses lnsocket and is mobile friendly (LnLink??) and has all the bookkeeper data nicely done.