Blitz Wallet @BlitzWallet1 is a #Bitcoin Lightning wallet bringing different Bitcoin layers together (Lightning, Liquid, e-cash) for a smooth user experience.

How does Blitz Wallet work and why could it be a good wallet for Bitcoin newbies?

🧵 👇 

1/28

There are many Bitcoin wallets available and recommending a specific one can be a difficult task.

Finding the right one depends on the use case and how much funds the user will store in the wallet.

2/28

You don't want to store large amounts on custodial wallets or solutions.

On the other hand, if you just send or zap very small payments, having your own Lightning channel might not be cost-effective. 

3/28

Blitz is a wallet that automatically moves you higher on the sovereignty stack when the bitcoin balance in your wallet grows!

4/28

Let's say you're a new Bitcoin user and you download Blitz.

You have no balance in the wallet.

If you have e-cash toggled on in the app and you receive less than 1000 sats, the sats will automatically be e-cash tokens on your balance (found on the "Experimental" tab).

5/28

E-cash is a custodial scaling protocol for Bitcoin with private transactions.

If you're unfamiliar with Cashu @CashuBTC, or Chaumian e-cash on Bitcoin, check out this earlier thread:

https://x.com/teemupleb/status/1836022952812580975

6/28

If you exceed 2000 sats in your wallet, under the hood Blitz will move 1000 sats to your Liquid Network balance, and leaves 1000 sats for e-cash micropayments.

In the Blitz UI, Liquid balance is found on the "Bank" tab (interesting choice of words!).

7/28

Liquid Network @Liquid_BTC is a federated sidechain of Bitcoin with its own trust trade-offs.

You can learn more about Liquid here:

https://x.com/teemupleb/status/1761068870083981436 

8/28

But.. self-custodial Lightning should be the goal for all self-sovereign Bitcoiners to make small payments!

9/28

Therefore, Blitz uses Breez SDK @Breez_Tech and Blockstream's @Blockstream Greenlight @BlksGreenlight to open a hosted Lightning channel for the user (if the user wants) if the wallet balance exceeds a specified amount (e.g. 500,000 or 1,000,000 sats). 

10/28

Learn more about Breez here:

https://x.com/teemupleb/status/1758235062674628839

11/28

Blitz is self-custodial because you have written down your seed phrase!

If your channel gets force-closed, you can receive your funds on-chain.

The channel opening fee can be about 10,000 sats with current fee rates, so opening a large enough channel is recommended.  

12/28

Once you have a Lightning channel open with enough liquidity for sending and receiving, Blitz treats all BTC as Lightning BTC.

13/28

You can also set a maximum channel opening fee you're willing to pay (by default 5000 sats).

If the fee exceeds that, your funds will stay on Liquid.

14/28

When receiving BTC, users can also choose which Bitcoin layer to use for the payment (not necessary though because Blitz does this on users' behalf!).

15/28

For all this back-and-forth between various Bitcoin layers Blitz uses a Bitcoin bridge Boltz @Boltzhq in the back-end.

You can learn more about Boltz here:

https://x.com/teemupleb/status/1709897791844352043 

16/28

One downside for me when testing Blitz was that after my Lightning channel was opened, I couldn't receive Lightning payments instantly.

This was because I didn't have any inbound liquidity on my channel after the 500,000 sats deposit I made to open the channel.

17/28

Lightning channels need to be balanced, so that you have capacity for both outgoing and incoming payments.

I had to first make a Lightning payment from my new balance before I could receive again!

I believe I could have still received on Liquid though. 

18/28

Blitz wallet can be used as a point of sale app for receiving bitcoin.

You can set a store name and after that you can receive payments to a payment URL.

Employees of a store could use this URL to receive payments without them having access to the funds. 

19/28

Blitz point of sale can accept Lightning, on-chain, Liquid or e-cash payments, and users don't have to be cognizant of which layer to use.

Just like credit card terminals don't really care whether you use Visa or Mastercard.

20/28

For some reason during my testing, I couldn't change my store name to "58k Gang Merch Store".

Instead, the app insisted on me keeping the default randomly generated store name.

Maybe a bug.. Blitz is still in beta after all.  

21/28

"Store" tab on the right hand side of the dashboard gives users access to Bitcoin gift cards powered by The Bitcoin Company @theBTCco, ChatGPT credits payable with bitcoin, and integrations with @sms4sats and @ln_vpn.

22/28

Blitz is available on iOS and Android for beta testing, and they instruct users to only put in funds that they're ok to lose. 

The app is open-source and developed by @BlakeKaufman17, with the UX/UI by @Stromens.

23/28

Some features that I missed (maybe these are forthcoming!):

→ Would be cool to import your Nostr graph and zap your contacts

→ Nostr Wallet Connect @nwc_dev integration so Blitz could be used in other apps

→ set the e-cash threshold manually

24/28

Blitz is like a personal Bitcoin security advisor on your phone. 

The more BTC you accumulate, the higher towards self-sovereignty solutions it nudges you:

E-cash ➡️ Liquid ➡️ Lightning

But the user just sends and receives while the app does everything on the background.

25/28

No more of that "Ok, so once you have this and that amount of sats you have to download this new wallet.. and then after you have stacked this amount you should move to this wallet etc."

26/28

Here's a video tutorial of Blitz by @BTCsessions:

https://www.youtube.com/watch?v=Ka60AHkfrPE 

27/28

On Tuesday, November 19, Blitz devs will do an X space hosted by @OrangeSunSpaces in case you want to tune in to learn more:

https://x.com/OrangeSunSpaces/status/1856408362994508165

28/28

Let's discuss Blitz on Stacker News!

https://stacker.news/items/767970/r/teemupleb

You can read the unrolled version of this thread here: https://typefully.com/teemupleb/9Roi6jZ

Blitz Wallet: Lightning Wallet Using Many Bitcoin Layers

Ark is an open-source protocol to scale #Bitcoin.

It's got ASPs, VTXOs etc. and might seem a bit confusing to understand for many.

In this thread I try my best to break it down for us left-curvers!

🧵 👇 

1/42

Ark was initially proposed in May 2023 by @brqgoo.

Many in the Bitcoin community found the proposal interesting and promising, but since implementing the protocol would have required covenants (soft forks), Bitcoin builders kinda brushed it off for the moment.

2/42

A year later in June 2024, "Ark v2" saw daylight, when a new company @ArkLabsHQ was founded to build Bitcoin scaling solutions on the Ark protocol.

3/42

Although a scaling solution, Ark is NOT designed to be a competitor to the Bitcoin Lightning Network!

It can be better seen as a complementary tool.

4/42

On-chain fees are expected to be unaffordable for most people in the future.

It's also economically unfeasible to open self-custodial Lightning channels for everybody. 

5/42

Self-custodial Lightning might not be the easiest way to onboard new users either. 

You need existing inbound liquidity to receive payments (you need to have bitcoin before you can have bitcoin! 🙁)

6/42

Ark scales UTXO ownership.

UTXO (Unspent Transaction Output) is essentially a portion of a Bitcoin transaction, a bit like a physical $5 bill is a portion of a fiat cash transaction.

Your Bitcoin balance consists of UTXOs.

7/42

Sending on-chain bitcoin (an UTXO) might be very expensive in the future for many Bitcoin users.

But what if a single Bitcoin output could have shares from 30 different people?

It's a bit like having roommates because you can't afford your Manhattan rent! 

8/42

To share on-chain transaction costs, Ark users can be onboarded to Bitcoin with Virtual Transaction Outputs (VTXOs).

These VTXOs are managed by Ark Service Providers (ASPs).

9/42

To use Ark, a user would deposit on-chain BTC to a boarding address, and receive VTXOs.

Or another user of the same ASP could send her some VTXOs to get started.

10/42

For a fee, ASPs periodically organize VTXO transactions in rounds and settle these new UTXOs on the Bitcoin blockchain. 

This is to prevent a fractional reserve of creating unlimited "Ark-BTC".

These rounds can last 15-60 minutes, but can vary from ASP to ASP.

11/42

You could think of ASPs as "UTXO renting services".

To be interoperable with the wider Bitcoin payments ecosystem, Ark uses Lightning Network gateways. 

12/42

Technically, Ark is non-custodial.

An ASP can't run away with users' funds, except when the user is not online once in a 4-week period (the time period can vary from ASP to ASP). 

13/42

After the time period has passed without the user logging in, an ASP can take the unused funds to manage stale liquidity.

Maybe an honest ASP could still roll the funds over for the inactive user for a fee?

14/42

However, the use case of Ark is more directed towards daily payments, not necessarily for the storage of funds.

If you don't use your ASP in 4 weeks, maybe Ark is not for you then! 

Use Lightning!

15/42

VTXOs are connected to each other atomically: if Alice is sending a VTXO to Bob, the ASP will create an on-chain output with Alice's share in it, going to Bob!

Alice only loses funds if Bob gets them.

16/42

Existing VTXOs are destroyed and new ones are created on an ongoing basis.

The ASP can't redeem senders' VTXOs if it double-spends recipients' VTXOs.

Atomicity!

17/42

In a way, ASPs work a bit like Bitcoin miners that process transactions.

But instead of processing transactions to blocks, they process users' requests to send VTXOs to someone else. 

18/42

You can also think of a VTXO as a trustless bank check with an expiration date.

Every time you want to transact with somebody within an ASP, you will ask the operator (ASP) to create a new check for the receiver. 

19/42

Technically, you can also "unilaterally exit" from Ark to the main chain. 

Exiting might be expensive though in a high-fee environment.

Will exiting be economically feasible only for larger amounts?  

If you can afford the UTXO fees, then why use Ark in the first place!

20/42

There are some benefits for onboarding on an Ark though.

Within the same ASP, transactions are fast, cheap and private (Ark could also be used as a coinjoining tool).

21/42

Payment speed could be increased with "out-of-round" payments, where users don't have to wait payments to be included in rounds.

This could make the user experience less clunky for senders.

22/42

However, with out-of-round payments, the recipient needs to trust the sender and ASP not to collude.

Once the recipient gets the VTXO payment, he can take it to the ASP who includes it in a new round, and the user will again be in complete control of his funds.

23/42

The trust model in that regard is not forced and it's up to the user.

All these Ark concepts may seem complicated, but hopefully all actions will be abstracted away nicely for the end user by the wallet software!

24/42

Ark scales Bitcoin horizontally, and theoretically you could "virtualize" components of the Bitcoin protocol and bring smart contracting primitives to Bitcoin this way. 

25/42

"Virtual channels", "virtual PSBTs" (Partially Signed Bitcoin Transactions), or "virtual HTLCs" (Hashed Timelock Contracts).

A simpler, more imminent use case could be saving in fees when dollar-cost averaging (maybe you could withdraw from an exchange directly to an ASP)

26/42

This way you could avoid small "dust UTXOs" on-chain and avoid the need to consolidate UTXOs when fees are high.

If you're unfamiliar with consolidating UTXOs, check out this earlier thread:

https://x.com/teemupleb/status/1828917909529473287 

27/42

Ark could also save fees when rebalancing Lighting channels.

This feature could improve the reliability and cost of using the Lightning Network.

28/42

For institutions or large holders of bitcoin, being an ASP can provide a place to get trust-minimized yield.

Maybe players like e.g. @saylor from @MicroStrategy could be liquidity providers. 

29/42

ASPs are by nature bigger and bulkier than LSPs (Lightning Service Providers).

This might incentivize centralization, and ASPs might become money transmitters in the eyes of the regulators even if they don't custody users' funds. 

30/42

However, ASPs could be federated or P2P to mitigate regulatory concerns.

Or maybe the Ark round builders could be separate entities from the liquidity providers.

31/42

Ark v2 doesn't need covenants, but covenants would make the protocol much better and scalable.

The clArk version ("covenantless Ark") emulates covenants by requiring Ark round participants to sign n-of-n multisig transactions.

32/42

Instead of having clear spending conditions in the script for the Ark rounds (covenants), in clArk the participants need to sign every part of the VTXO tree making up the round.

33/42

You can think of it as signing a contract with multiple clauses, whereas with covenants you would only sign those clauses that affect yourself. 

ClArk without covenants has much more overhead and storage and bandwidth requirements. 

34/42

With covenants, end users wouldn't have to be online all the time either.

Covenants could also improve ASPs' liquidity management and help them optimize for worst-case scenarios such as many users wanting to withdraw on-chain at the same time.

35/42

It's still very early for Ark, and there's no consumer app or wallet yet.

The first go-to-market product from @ArkLabsHQ will be a liquidity management dashboard Ark Node that is currently seeking Lightning node operators to test out the product.

https://arklabs.to/ark-node 

36/42

There is also a proof-of-concept wallet by Ark Labs called Arkade that uses out-of-round VTXO payments for senders: 

https://x.com/ArkLabsHQ/status/1852039439905931638

37/42

Recently Ark Labs announced a partnership with the Bitcoin bridge @Boltzhq in order to make Ark interoperable with the rest of the Bitcoin ecosystem.

https://x.com/ArkLabsHQ/status/1844767778261315763

38/42

You can learn more about Boltz in this earlier thread:

https://x.com/teemupleb/status/1709897791844352043

39/42

Another company building software on Ark is @2ndbtc.

They recently gave Bitcoin the first taste of Ark!

https://x.com/2ndbtc/status/1837530708560302522

40/42

Here's a video overview of Ark by @ian__major:

https://www.youtube.com/watch?v=k47hCzgHuuI 

41/42

Finally, a recent Built on Bitcoin podcast with Alex Bergeron @bergealex4 hosted by @JakeBlockchain:

https://www.youtube.com/watch?v=k47hCzgHuuI 

42/42

Let's discuss it on Stacker News!

https://stacker.news/items/756943/r/teemupleb

You can read the unrolled version of this thread here: https://typefully.com/teemupleb/yWdlD6K

Ark - Protocol to Scale Bitcoin by Sharing UTXOs

1/xx

Ark was initially proposed in May 2023 by @brqgoo.

Many in the Bitcoin community found the proposal interesting and promising, but since implementing the protocol would have required covenants (soft forks), Bitcoin builders kinda brushed it off for the moment.

2/xx

A year later in June 2024, "Ark v2" saw daylight, when a new company @ArkLabsHQ was founded to build Bitcoin scaling solutions on the Ark protocol.

3/xx

Although a scaling solution, Ark is NOT designed to be a competitor to the Bitcoin Lightning Network!

It can be better seen as a complementary tool.

4/xx

On-chain fees are expected to be unaffordable for most people in the future.

It's also economically unfeasible to open self-custodial Lightning channels for everybody. 

5/xx

Self-custodial Lightning might not be the easiest way to onboard new users either. 

You need existing inbound liquidity to receive payments (you need to have bitcoin before you can have bitcoin! 🙁)

6/xx

Ark scales UTXO ownership.

UTXO (Unspent Transaction Output) is essentially a portion of a Bitcoin transaction, a bit like a physical $5 bill is a portion of a fiat cash transaction.

Your Bitcoin balance consists of UTXOs.

7/xx

Sending on-chain bitcoin (an UTXO) might be very expensive in the future for many Bitcoin users.

But what if a single Bitcoin output could have shares from 30 different people?

It's a bit like having roommates because you can't afford your Manhattan rent! 

8/xx

To share on-chain transaction costs, Ark users can be onboarded to Bitcoin with Virtual Transaction Outputs (VTXOs).

These VTXOs are managed by Ark Service Providers (ASPs).

9/xx

To use Ark, a user would deposit on-chain BTC to a boarding address, and receive VTXOs.

Or another user of the same ASP could send her some VTXOs to get started.

10/xx

For a fee, ASPs periodically organize VTXO transactions in rounds and settle these new UTXOs on the Bitcoin blockchain. 

This is to prevent a fractional reserve of creating unlimited "Ark-BTC".

These rounds can last 15-60 minutes, but can vary from ASP to ASP.

11/xx

You could think of ASPs as "UTXO renting services".

To be interoperable with the wider Bitcoin payments ecosystem, Ark uses Lightning Network gateways. 

12/xx

Technically, Ark is non-custodial.

An ASP can't run away with users' funds, except when the user is not online once in a 4-week period (the time period can vary from ASP to ASP). 

13/xx

After the time period has passed without the user logging in, an ASP can take the unused funds to manage stale liquidity.

Maybe an honest ASP could still roll the funds over for the inactive user for a fee?

14/xx

However, the use case of Ark is more directed towards daily payments, not necessarily for the storage of funds.

If you don't use your ASP in 4 weeks, maybe Ark is not for you then! 

Use Lightning!

15/xx

VTXOs are connected to each other atomically: if Alice is sending a VTXO to Bob, the ASP will create an on-chain output with Alice's share in it, going to Bob!

Alice only loses funds if Bob gets them.

16/xx

Existing VTXOs are destroyed and new ones are created on an ongoing basis.

The ASP can't redeem senders' VTXOs if it double-spends recipients' VTXOs.

Atomicity!

17/xx

In a way, ASPs work a bit like Bitcoin miners that process transactions.

But instead of processing transactions to blocks, they process users' requests to send VTXOs to someone else. 

18/xx

You can also think of a VTXO as a trustless bank check with an expiration date.

Every time you want to transact with somebody within an ASP, you will ask the operator (ASP) to create a new check for the receiver. 

19/xx

Technically, you can also "unilaterally exit" from Ark to the main chain. 

Exiting might be expensive though in a high-fee environment.

Will exiting be economically feasible only for larger amounts?  

If you can afford the UTXO fees, then why use Ark in the first place!

20/xx

There are some benefits for onboarding on an Ark though.

Within the same ASP, transactions are fast, cheap and private (Ark could also be used as a coinjoining tool).

21/xx

Payment speed could be increased with "out-of-round" payments, where users don't have to wait payments to be included in rounds.

This could make the user experience less clunky for senders.

22/xx

However, with out-of-round payments, the recipient needs to trust the sender and ASP not to collude.

Once the recipient gets the VTXO payment, he can take it to the ASP who includes it in a new round, and the user will again be in complete control of his funds.

23/xx

The trust model in that regard is not forced and it's up to the user.

All these Ark concepts may seem complicated, but hopefully all actions will be abstracted away nicely for the end user by the wallet software!

24/xx

Ark scales Bitcoin horizontally, and theoretically you could "virtualize" components of the Bitcoin protocol and bring smart contracting primitives to Bitcoin this way. 

25/xx

"Virtual channels", "virtual PSBTs" (Partially Signed Bitcoin Transactions), or "virtual HTLCs" (Hashed Timelock Contracts).

A simpler, more imminent use case could be saving in fees when dollar-cost averaging (maybe you could withdraw from an exchange directly to an ASP)

26/xx

This way you could avoid small "dust UTXOs" on-chain and avoid the need to consolidate UTXOs when fees are high.

If you're unfamiliar with consolidating UTXOs, check out this earlier thread:

https://x.com/teemupleb/status/1828917909529473287 

27/xx

Ark could also save fees when rebalancing Lighting channels.

This feature could improve the reliability and cost of using the Lightning Network.

28/xx

For institutions or large holders of bitcoin, being an ASP can provide a place to get trust-minimized yield.

Maybe players like e.g. @saylor from @MicroStrategy could be liquidity providers. 

29/xx

ASPs are by nature bigger and bulkier than LSPs (Lightning Service Providers).

This might incentivize centralization, and ASPs might become money transmitters in the eyes of the regulators even if they don't custody users' funds. 

30/xx

However, ASPs could be federated or P2P to mitigate regulatory concerns.

Or maybe the Ark round builders could be separate entities from the liquidity providers.

31/xx

Ark v2 doesn't need covenants, but covenants would make the protocol much better and scalable.

The clArk version ("covenantless Ark") emulates covenants by requiring Ark round participants to sign n-of-n multisig transactions.

32/xx

Instead of having clear spending conditions in the script for the Ark rounds (covenants), in clArk the participants need to sign every part of the VTXO tree making up the round.

33/xx

You can think of it as signing a contract with multiple clauses, whereas with covenants you would only sign those clauses that affect yourself. 

ClArk without covenants has much more overhead and storage and bandwidth requirements. 

34/xx

With covenants, end users wouldn't have to be online all the time either.

Covenants could also improve ASPs' liquidity management and help them optimize for worst-case scenarios such as many users wanting to withdraw on-chain at the same time.

35/xx

It's still very early for Ark, and there's no consumer app or wallet yet.

The first go-to-market product from @ArkLabsHQ will be a liquidity management dashboard Ark Node that is currently seeking Lightning node operators to test out the product.

https://arklabs.to/ark-node 

36/xx

There is also a proof-of-concept wallet by Ark Labs called Arkade that uses out-of-round VTXO payments for senders: 

https://x.com/ArkLabsHQ/status/1852039439905931638

37/xx

Recently Ark Labs announced a partnership with the Bitcoin bridge @Boltzhq in order to make Ark interoperable with the rest of the Bitcoin ecosystem.

https://x.com/ArkLabsHQ/status/1844767778261315763

38/xx

You can learn more about Boltz in this earlier thread:

https://x.com/teemupleb/status/1709897791844352043

39/xx

Another company building software on Ark is @2ndbtc.

They recently gave Bitcoin the first taste of Ark!

https://x.com/2ndbtc/status/1837530708560302522

40/xx

Here's a video overview of Ark by @ian__major:

https://www.youtube.com/watch?v=k47hCzgHuuI 

41/xx

Finally, a recent Built on Bitcoin podcast with Alex Bergeron @bergealex4 hosted by @JakeBlockchain:

https://www.youtube.com/watch?v=k47hCzgHuuI 

42/xx

Let's discuss it on Stacker News!

https://stacker.news/items/756943/r/teemupleb

Fedimint @fedimint is an open-source community custody protocol to scale #Bitcoin for billions of people!

How does Fedimint work and what are its benefits and trade-offs?

🧵 👇 

1/47

As the Bitcoin ecosystem grows, the blockchain transaction fees are expected to go higher.

Unfortunately, 8 billion people in the world can't afford to all have their own Lightning channels! 

2/47

3rd party custodians have so far filled in the demand:

Centralized exchanges, custodial Lightning wallets, ETFs..

But these solutions bring in counterparty risk and single point of failure.

3/47

Fedimint reduces this risk with its federated Chaumian e-cash model.

Users' bitcoin is held in a federated multisig operated by "guardians".

4/47

These guardians issue e-cash vouchers denominated in sats to the users of a specific Fedimint federation. 

You can learn more about the concept of e-cash in this previous thread:

https://x.com/teemupleb/status/1836022952812580975 

5/47

Issued e-cash can only be transacted within the federation, but with the help of Lightning Network gateways, it can be sent between different Fedimint federations. 

Although federations are interoperable with Lightning, the guardians can still collude and take users' funds!

6/47

If you want to withdraw on-chain, you need the federation's permission.

Effectively, Fedimint bitcoin is an IOU (or weOU) and not real bitcoin!

Not your keys, not your coins!

It's like a community bank or a credit union!

7/47

However, the benefits could outweigh the trade-offs.

If you're already using a hardware wallet or running Lightning nodes, maybe Fedimint is not for you. 

The target group for Fedimint federations are the masses who rely on centralized exchanges and 3rd party custody.

8/47

Fedimint introduces "second-party custody": instead of trusting a 3rd party company to store funds, federation members can trust individuals who they have a prior relationship with.

These could be family members, friends, tech-savvy people in a community etc.

9/47

Federation guardians who have a lot of social capital at stake might be less incentivized to run away with users' funds.

In many developing countries, financial services are already often run by local associations to carry out savings, credit and commerce. 

10/47

Trust is a great way to scale.

Trust isn't inherently bad. 

It just matters who you trust. 

Fedimint is meant to scale Bitcoin by eventually having hundreds of thousands of federations that communicate with each other via Lightning gateways.

11/47

If one federation becomes too large, the rug pull risk might grow.

For this reason, it's important to know which federation you're joining.

Instead of KYC, it's KYF (Know Your Friend, Family, Federation)!

12/47

Larger federations might be better for privacy, whereas smaller ones fit better for custodying funds.

To hedge against the risks, you could reduce your time and transaction amounts in larger federations etc. 

13/47

The idea behind Fedimint (using Chaumian e-cash in a federated way) was first conceived and implemented by @EricSirion in mid-2021. 

Today, a team of contributors work on the protocol to develop it further.

14/47

To join a fedimint, you can just scan a community QR code in the @fedibtc app.

No phone number, email or KYC is needed.

Then you can request sats by depositing a Lightning payment.

15/47

Once you have the "fedi-bitcoin" in the federation, you can interact with other federation members instantly and without any fees.

Because of the blind signatures in the e-cash protocol, the transactions are also private within the mint. 

16/47

E-cash is a digital bearer asset on your device, so you can also transact with it offline.

Once the receiver is back online, the wallet software makes sure the sats have not been double-spent, and credits the receiver's e-cash balance. 

17/47

Fedimint requires a set of guardians to establish the federation, hold the keys to the Bitcoin multisig, and to custody the hardware that runs the Fedimint nodes. 

18/47

Each Fedimint node can be a lightweight Bitcoin node, e.g. a pruned node.

However, there would be a linear growth in the storage requirement the more e-cash is being spent and redeemed.

19/47

Fedimint federations are designed to be Byzantine Fault Tolerant (BFT), and resilient to "m" number of malicious nodes in a federation of 3m + 1.

That means that a federation of 4 guardians is resilient to 1 malicious guardian, a federation of 7 guardians to 2 etc.

20/47

A federation can still operate even if a minority of guardians disconnect from the network. 

If a majority of guardians are offline, the consensus protocol will halt its operation until a quorum is back online, at which point the protocol execution can continue. 

21/47

Besides distributing 3rd party custody, Fedimint e-cash has privacy benefits.

Guardians don't have a view on federation members' transactions or balances. 

Knowing the exact bitcoin balance of all community members could be troublesome for security reasons!

22/47

Fedimints could therefore be used for coinjoins, and since the protocol is private by default, it could defeat the KYC surveillance system!

23/47

Federation guardians don't need to run Lightning nodes.

Any user can act as a Lightning gateway, and generate a profit by charging fees from converting Lightning sats to e-cash and vice versa via HTLCs (hash time-locked contracts).

24/47

Without Lightning, fedimints would have limited utility because they wouldn't be interoperable with the rest of the Bitcoin ecosystem.

Fedimints are like little islands, and Lightning gateways are the bridges that connect them. 

25/47

There could be thousands, millions or even billions of Fedimint users, but only hundreds or thousands of actors running Lightning services. 

Fedimints can also boost demand for Lightning service providers, which could in turn increase liquidity in the Lightning Network.

26/47

To mitigate the rug pull risk, users should choose their federation wisely, and consider the amount of funds they lock in a federation.

Also, the time duration to store the funds is a question to consider.

Maybe treat fedimints as "temporary private money storages"?

27/47

Federations could be audited by creating new standards, or by implementing "automated bank runs" regularly to check if federations' assets and liabilities match. 

To protect users, maybe wallets could let users automatically withdraw after a specified time? 

28/47

Will federation guardians be forced to perform KYC to the federation members?

This is an open question, but some argue that if the guardians don't make a profit from running the federation, they could be exempt from performing KYC.

29/47

You don't need a license to custody your child's piggy bank either, right?

This could save smaller federation communities from strict regulation standards. 

The Lightning gateways represent the economic actors in the system, but they operate outside the Fedimint protocol. 

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It remains to be seen though whether the first major rug pull (it will eventually happen, right?) would stoke discussion whether the sole custodying (without generating a profit) would require some kind of a permit. 

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Also, a "shotgun KYC" is possible: federations can grow larger, and then by government pressure require KYC from users in order for them to be able to withdraw funds. 

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The Fedimint protocol enables various "modules" for financial services within the federation.

By default, these are Bitcoin, Lightning and Chaumian e-cash.

But it can also enable "trusted smart contracting".

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Theoretically, you could build e.g. a P2P exchange, lending, automated market makers, stability pools, prediction markets, oracles, encrypted password management or social communication inside a Fedimint federation. 

A fedimint can execute any command in exchange for sats. 

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The federation could offer a hosted access to an AI model for its members.

Or a Nostr account for communities with federated signing keys.

Or a community Nostr relay. 

Fedimint is an open protocol and no permissions are needed to build new modules and business models.

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Federations can be seen as online spaces where members can use their phone to send each other messages and money, and store sensitive individual or community data in an encrypted manner. 

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If a federation member loses her phone, or access to her funds or data within the Fedimint, the federation can help recover it. 

37/47

Fedimint uses Shamir's Secret Sharing for data back-up:

This allows data to be broken up to shards.

These shards can be placed with different parties, and reassembled only if a threshold of shards can be found.

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You can think of the process as an encrypted password back-up to a mini private Dropbox or Google Drive run by the federation. 

39/47

Building on the recovery process, Fedimint federations could help with estate planning and inheritance, so that the funds and data would be available at one's passing. 

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You could set up a federation for your family Bitcoin treasury and act as an Uncle Jim preserving generational wealth across geographical boundaries and multiple people and devices!

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Ideally, federations have relatively few guardians because having more nodes in the protocol makes its execution slower. 

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With future upgrades, Fedimint could have more guardians than many proof-of-stake blockchains have nodes, and could thus provide a more decentralized alternative to many smart contract blockchains. 

43/47

The programmable environment within fedimints could also provide a testing ground for experimentation and for possible soft forks for Bitcoin. 

Fedimint is a step away from centralized exchanges, but self-custodying your bitcoin is still the best option!

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Fedimint can be seen as "Bitcoin adoption technology". 

Once federation members collect more sats, they will hopefully "graduate" to self-custody.

Maybe they will even become federation guardians for other new Bitcoin users in their circles!

45/47

Here's a short video tutorial about Fedimint by @ian__major:

https://www.youtube.com/watch?v=jaP2ZABnK1o

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Finally, a great presentation about Fedimint by @Pete_Winn:

https://www.youtube.com/watch?v=G4iclApJL0c 

47/47

Let's discuss it on Stacker News!

https://stacker.news/items/737731/r/teemupleb

You can read the unrolled version of this thread here: https://typefully.com/teemupleb/JUhr6DA

Fedimint: Scaling Bitcoin for Billions of People?

Strike @Strike is a #Bitcoin and fintech app that lets you buy, sell, send and receive bitcoin and USD.

How to use Strike and why could it be useful?

🧵 👇 

1/33

Strike was founded by @jackmallers to connect fiat banking rails with the Bitcoin Lightning Network for e.g. to make cheap remittance payments.

Strike can also be used as a broker to buy and sell bitcoin.

2/33

Strike users don't have to own BTC the asset to send and receive money on Strike.

A user can have a dollar balance, and send a Lightning invoice from that balance.

To receive, you can specify whether you want to receive BTC or fiat as default.

3/33

The recipient can also receive fiat, either on Strike (connected to the user's bank account), or to a mobile money account (also often connected to a bank account) in supported countries.

Strike uses the Bitcoin Lightning Network to settle between various fiat currencies.

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You can e.g. send US dollars (or BTC) from the United States to Mexico, and the recipient can choose to receive Mexican pesos on her mobile money account (or Tether's @Tether_to USDT) if she doesn't want to receive bitcoin.

5/33

On its backend, Strike will first convert the USD to BTC on the Lightning Network, then buys back Mexican pesos with that BTC, and delivers them to the recipient's account via its partnerships with mobile money providers ("Send Globally" feature, countries listed below).

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This can be a much more cost-efficient way for sending remittance payments between countries because the Lightning Network has such low fees.

If you send to another Strike account, there are no fees.

Sending BTC to BTC on Lightning often only incurs few cents in routing fees.


7/33

A good thing about using the Lightning Network is that it allows more interoperability.

The recipient doesn't need to have the Strike app.

She can use any app that can create Lightning invoices or she can receive fiat via Strike's partnerships.

No more walled gardens!

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Strike has also added USDT for countries where "Send Globally" is not yet available (most importantly at least Europe).

9/33

Strike is licensed and regulated, so KYC is required.

The app was initially available only in the United States, but has since launched also in e.g. Europe. 

10/33

You can use Strike on mobile or desktop.

At least in the United States, Strike uses Plaid, a financial data company, to connect customers' bank accounts.

11/33

You can create a "tip page" on Strike, e.g. strike.me/satoshi 

If people want to send you money, they can either scan the QR code and send BTC on Lightning, or you can use the tip address as a Lightning address.

12/33

The tip page could be useful for e.g. charities receiving donations, market vendors or street musicians.

Bitcoin donations can also be automatically converted to fiat to the user's account (in the United States and in "Send Globally" countries).

13/33

For buying bitcoin, Strike offers a "no fee DCA".

You can set up a recurring purchase order where you only pay the initial fee.

Maybe weekly set-up is the best?

Could it look too sketchy to your bank if you were paying to Strike every hour?

14/33

Fees are tiered to different levels based on the monthly trading volume, starting from 1.29%, and the more you trade, the less you pay in fees.

It's been reported that Strike also applies a spread (0.5%-1%), which is not always very transparent.

15/33

When it comes to fees and spreads, Strike is definitely not the cheapest place around to buy bitcoin.

But users seem to pay for the convenience of having a Bitcoin and Lightning Network enabled fintech remittance wallet in their pockets. 

16/33

Strike claims its bitcoin is backed 1:1, and it doesn't lend out customers' BTC.

But remember: not your keys, not your coins!

Strike naturally also offers an on-chain wallet, so you can withdraw the bitcoin you buy to your self-custodial wallet.

17/33

If you don't mind waiting for around 12 hours for your withdrawal, Strike will front the on-chain fee costs for you ("Flexible" option below):

This feature could be useful in high on-chain fee scenarios.

18/xx

If you want to buy goods and services from your BTC or USD balance, you can shop e.g. on Bitrefill @bitrefill, and get satsback for purchases.

19/33

You can even buy gift cards on Bitrefill using your debit card (Strike handling the BTC conversion on the backend). 

Read more about Bitrefill here:

https://x.com/teemupleb/status/1615069925982494721 

20/33

Unfortunately selling or spending bitcoin is still a capital gains event in most jurisdictions (even for small amounts.. such nonsense!)

21/33

Strike can be useful for the Gresham's law breed of Bitcoiners who only hodl and don't want to concern themselves with tax reporting while still staying compliant. 

You can send Lightning payments from your dollar balance!

No cap gains reporting!

22/33

With the Strike API, other platforms can use Strike's functionalities in their own apps.

One example is a Nostr client @primal_app that uses the Strike API for its integrated Bitcoin Lightning wallet.

You can learn more about Primal here:

https://x.com/teemupleb/status/1830211631735083242 

23/33

Other features Strike has:

✅  Direct deposit (automatically convert you paycheck (or part of it) to BTC)

✅  Target orders (aka limit orders)

Would be quite cool if Strike was able to combine target orders with the recurring buy feature.. and put that in the Strike API!

24/33

Strike also has Strike Private service to onboard institutions and high-net-worth individuals.

It can also help businesses to buy bitcoin on their balance sheets with Strike Business.

25/33

For who is Strike good for?

If you only want to send, receive and buy bitcoin, there are better options.

But if you want to use the dollar balance or the fiat functionalities together with Bitcoin, Strike might be the app for you.

26/33

If you send or receive remittances to/from the "Send Globally" countries and if the recipient wants to get fiat or USDT instead of bitcoin, then I would consider giving Strike a try. 

27/33

This way the recipient can possibly avoid traveling several hours to pick up the cash while risking getting mugged.

28/33

One downside of Strike that has been reported is that verifying your account and getting help from the customer support can be slow.

It would be better if customers could start instantly using the app with very small amounts while the verification is still in process.

29/33

Strike has shown that Bitcoin can be used both as an asset and as part of a  global and regulated payments infrastructure.

It connects fiat to Bitcoin, using Bitcoin's 2nd layer, the Lightning Network.

All of a sudden, bank accounts are starting to speak Bitcoin too!

30/33

Strike can act as a trailblazer for other companies on other continents.

The more fintech companies use Lightning on the backend, the more liquidity can come to the network, which could eventually lower remittance costs even more.

31/33

This can create a positive flywheel for ascending countries once more capital will start flowing in to the countries.

Having apps like Strike can make the transition from fiat to Bitcoin easier. 

32/33

Finally, a video tutorial of Strike by theBTCcourse:

https://www.youtube.com/watch?v=Jv6aLWn0VRI 