At the end of the month in downtown San Francisco–thanks to Digital Garage for the space and Bitrefill for pizza and drinks–there’s a Bitcoin developer meetup to rehash news, innovation, and proposals in the world of Bitcoin development.
Here are some of the most interesting highlights in my opinion for those just wading into the Bitcoin ecosystem.
Let’s start with my favorite Bitcoin subject: The Lightning Network (LN). As you can see in the graph below, liquidity on the lighting network continues to ramp with over 5,000 Bitcoins on public lightning channels. Note private LN channels don’t broadcast their value which means the actual liquidity on Lightning is higher.
I’m very bullish about the capabilities of the Lightning Network to enable a velocity of small transactions for even lower fees. I believe this will prove to be disruptive for Big Tech over the next five years. See my post The Implosion of Free: Time for Big Tech to Rethink Advertising. I maintain that we all will be using the Lightning Networks on a daily basis in one form or another.
My predictions are starting to be validated as Binance announced integration into Lightning. There was a lot of speculation in the room that, since Binance would be integrating LN, the other big exchanges (i.e Coinbase, Kraken etc.) would be forced to follow suit. And sure enough, as I opened my Twitter(X) feed, I saw a lively exchange on the subject between the CEO of Coinbase and the CEO of Block (formerly Square) on the subject. You can read the exchange here.
Also of note was the Mutiny announcement of an open Beta of a browser-based Lightning wallet. There was, again, a lot of conversation in the room around security, especially things like phishing attacks. My opinion, like half the room, is that the Mutiny wallet is a good innovation that will drive usage. Users should be careful though, and only keep small amounts on these browser-based wallets, not more than you are willing to lose. Be extremely alert to phishing attacks just as you would with any email scam.
Also a topic of interest was Ordinals, an open protocol on Bitcoin which allows individual inscriptions on a single satoshi (100,000,000th of a Bitcoin) that enables an NFT to function on the Bitcoin blockchain. Since Ordinals’ release earlier this year, there have been over 21 million inscriptions with a total of on-chain fees amounting to $52 million. You can see some cool graphics of Ordinals’ inscriptions and fees here
Speaking of fees, when Ordinals and another protocol leveraging Ordinals, BRC20, was released there was a gold rush of data onto the blockchain that caused a massive spike of on-chain fees (see graph below):
This upset many Bitcoiners–except for the Bitcoin miners who enjoyed a windfall in transaction fees. The way transactions on the Bitcoin blockchain work is miners are paid for validating transactions. If there is a backlog of transactions, especially data heavy transactions, which is what Ordinals produce, then the fees of all transactions go up. That means you’re going to pay a miner more in order to have your transaction confirmed on the blockchain sooner rather than later. This is an issue with many Bitcoiners who believe it should only be used to validate transactions, and not for minting an NFT that looks like your five year-old’s crayon drawing of a duck in hopes it will go up in value.
I myself was also forced to delay some on-chain transactions until the dust settled. Bitcoin being an open source there was nothing anyone could do about it except complain and wait for the free market to work itself out, which it obviously did. This is another example of why the Lightning Network is such a game changer in regards to small transactions and fees.
And finally, noteworthy is Frostsnap’s use of Bitcoin’s taproot upgrade, and its hardware software solution for multisignature that’s a snap. Reminds me of LEGO bricks see image:
It’s one step closer to managing large amounts of Bitcoin for families and institutions; essentially easier and cheaper with the multisignature capability. You can read all about it here.
A lot more was covered at the meetup including R&D, Bitcoin Core, and my favorite subject: the Lightning Network. If this wasn’t a deep enough dive for you, get yourself strongly caffeinated and dive into the full reading list here.
All the best,
Jim
