In the first half of this year, the innovative narrative of the Bitcoin ecosystem - BRC20, Ordinals NFT, Bitcoin Layer2 - has become one of the main topics in the industry. More and more people are beginning to pay attention to the development of the Bitcoin ecosystem. In the article "Narrative Innovation: A Brief Analysis of Recent Bitcoin Ecological Experiments", we outlined the development status of BRC20, Ordinals NFT and several leading Bitcoin Layer2.

The Bitcoin community has had ideological struggles over the development path of Bitcoin more than once. In the divergent development process, a huge opportunity has gradually emerged in the Bitcoin ecosystem: decentralized social payment that combines the Lightning Network and Nostr.

The origin of Lightning Network - the expansion dispute (Layer2 expansion VS Layer1 large block expansion)

The block size of the Bitcoin network is designed to be 1M, and one block is generated every 10 minutes. When the transaction code volume is similar, the Bitcoin network can process about 7 transactions per second. This cannot meet a large number of business needs, especially in a bull market with active on-chain transactions. Therefore, in 2015, the Bitcoin community has already voiced calls for capacity expansion.

The Bitcoin community is divided on the choice of technical path for expansion:

1. Radical miners: support increasing transaction capacity by expanding Layer 1 blocks

Some radical miners chose to expand the Layer 1 block size. At the 478558 block height before the Segregated Witness upgrade, a hard fork produced Bitcoin Cash.

2. Conservative developer community: advocating the solution of Layer 1 technology upgrade + Layer 2 expansion

The Bitcoin core development team represented by Bitcoin Core advocates maintaining Bitcoin's pure "non-sovereign asset" attributes, only making conservative technical upgrades in Layer 1 (Segwit), and expanding Bitcoin's application scenarios by expanding Layer 2 off-chain capacity (Lightning Network).

In August 2017, Bitcoin was upgraded to Segregated Witness. Since only transaction information is packaged into the Block and digital signature information is placed in the Extended Block, the current Bitcoin block size is mostly around 1.5M (theoretically, it can be expanded "4 times", 1M transaction information, 3M digital signatures). Each block can accommodate more transactions, achieving a certain degree of Layer 1 expansion; in March 2018, the Lightning Network was launched, using the Offchain solution of State Channel to help the Bitcoin network achieve off-chain expansion of fast payments.

Since then, the combined expansion plan of Layer 1 technology upgrade + Layer 2 off-chain expansion advocated by Bitcoin Core has been realized to a certain extent, maintaining the value proposition of "Bitcoin digital gold, lightning network instant payment".

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After a complete cycle, the Lightning Network has 18,000 nodes, running more than 70,000 channels, and more than 5,400 BTC in the Lightning Network. In addition to the Lightning Network, several Bitcoin Layer2s have emerged, including Stacks Network, Rootstock, and Liquid Network. Bitcoin Cash forked BSV in November 2018.

The problem with the Lightning Network is that payment is not suitable for a large number of independent dApps. It is more suitable to be embedded in other dApps with its fast payment and small payment functions. Social applications are especially suitable as the embedding carrier of the Lightning Network.

Social Payment: Nostr and Lightning Network Integration

Because Nostr's developer fiatjaf is also the developer of the Lightning Network, Nostr natively supports the Lightning Network.

Nostr is a minimalist social protocol without blockchain, a censorship-resistant global social network. Nostr transmits Notes and other Stuff through Relay. It does not rely on any centralized server. Client publishes information and Relay transmits information, so the publication and transmission of information are censorship-resistant; any user can create public and private keys, so it is not restricted by third-party servers.

From the product experience point of view, the product functions of Damus, a social network based on Nostr, are very similar to Twitter, where you can create posts (such as tweets), like posts, follow someone or unfollow, forward, etc.

To use Nostr, users need to run a Client, which can be a Native Client or a Web Client. When a user wants to publish something, he needs to edit the content first, then sign it with a key, and then send it to multiple Relays, which are responsible for spreading the content published by the user. Anyone can run a Relay, and the Relay only needs to accept posts from users connected to the Relay and then forward them to others. Users do not need to trust the Relay because users sign and verify on the Client.

Nostr's most popular client, Damus, has a built-in Bitcoin Lightning Network payment function. Users only need to fill in the Nostr Public Key to directly call the Lightning Network to pay the one-time fee of the Relay. After payment, they will receive a Bitcoin Lightning Invoice.

The design concept of Nostr is somewhat similar to Bitcoin Network. Developers develop various clients for users to choose from. Clients are used to sign and verify information. Relays are responsible for capturing, storing, and transmitting information from any client connected to it, and forwarding it to other clients. There are also many Relays. Users only need to create a pair of public and private keys to use Nostr without permission. It is somewhat similar to the developer team, miner group, and user of the Bitcoin community. The design of each link has a certain degree of robustness and anti-censorship.

According to Nostr.Band, there are more than 23 million Pubkeys so far, of which more than 3.6 million accounts have personal profiles and more than 170,000 accounts have Lightning Network addresses. There are 1,644 Relays and more than 100 million Events have occurred.

The Crypto community's doubts about Nostr mainly lie in the lack of incentives for Relay. If Relay has token incentives, most of the tokens may be in the hands of a few people, which cannot form effective incentives and is vulnerable to attacks; if Relay does not have token incentives, there is no continuous motivation to store user data, and there is also the possibility that Relay will actively or passively delete data.

A possible solution is to set up an AI Bot to be Nostr's Relay, responsible for capturing, storing, transmitting information from any client connected to it, and forwarding it to other clients. AI can be more neutral than humans and will not filter out user content based on personal preferences or carelessness. At the same time, set up a Lightning Network address that charges users. New users need to pay some BTC in one lump sum to use the Relay. The BTC collected by the AI ​​Relay is used to cover operation and maintenance costs.

The combination of Nostr and Lightning Network has set a precedent for the native integration between social applications and Bitcoin. Perhaps in the future, more social applications will be combined with Bitcoin (Lightning Network), and perhaps Mass Adoption's DeSo will be the first to explode in the combination with Bitcoin Lightning Network.

Summarize

The financial inclusiveness of Bitcoin, a decentralized payment system with no entry barriers, combined with the fast payment achieved by the Lightning Network, has incomparable advantages in decentralized social payments and even AI applications.

Reference Documents:

https://bitcoin.org/en/bitcoin-core/capacity-increases

https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-December/011865.html

https://github.com/nostr-protocol/nostr