Can Lightning Liquidity Be Solved with Liquid? With Tankred Hase SLP601
Sep 9, 2024
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Tankred Hase, a seasoned expert in Bitcoin and Lightning networks, dives into the evolution of Bitcoin and Liquid. He discusses real-world challenges developers face, such as liquidity issues and capital gains taxes. Tankred emphasizes the necessity for user-friendly solutions, including custodial and trust-minimized options like Fedimint. He introduces StashPay as a promising low-fee payment solution on Liquid. The conversation also highlights the contrasting preferences between self-sovereign and custodial solutions among users, particularly in regions like Dubai and South America.
The current state of Bitcoin technology development highlights significant user experience improvements but still faces challenges like technical hurdles and capital gains taxes.
Innovations like StashPay aim to reduce transaction fees while maintaining user control over private keys, enhancing Bitcoin's adoption for everyday transactions.
The need for a cohesive ecosystem integrating various solutions and protocols underscores the importance of accommodating diverse user preferences within the Bitcoin landscape.
Deep dives
Current Landscape of Bitcoin Technologies
The development of Bitcoin technology, particularly Lightning and Liquid, is at an exciting stage, marking significant progress since the early days. Initially, platforms like Lightning Labs faced challenges with user experience and technical hurdles, but improvements have been made, with many more options available for medium of exchange applications. The rise of liquidity-sharing experiments has sparked innovation, indicating a broader acceptance of Bitcoin as a functional currency. Overall, the advancements in user experience and experimentation contribute to a more vibrant ecosystem, encouraging the adoption and use of Bitcoin in everyday transactions.
Monetization and Market Readiness
Bitcoin is still in its early stages of monetization, with estimates suggesting only a few hundred million users currently holding the cryptocurrency. Although some regions, like El Salvador, show a greater acceptance as a medium of exchange, there remains a significant gap before Bitcoin can be widely recognized as a unit of account. The ongoing challenge is establishing necessary tools for invoicing, accounting, and wallet integration, which are key to facilitating everyday transactions. The speaker emphasizes the importance of addressing these issues to enhance Bitcoin's utility as a viable form of money, especially for merchants and freelancers.
Barriers to Bitcoin Adoption
Several obstacles exist for Bitcoin users, particularly regarding capital gains tax implications and the complexities of technical setups for transactions. In the US, users face the burden of documenting transactions for tax purposes, contrasting with countries like El Salvador, where Bitcoin transactions are tax-free. Additionally, challenges related to liquidity on Lightning wallets create friction, particularly for businesses that receive payments frequently. These hurdles impact individuals' perceptions of Bitcoin as a currency, often viewing it more as an asset rather than a medium of exchange.
Technological Advances and User Experience
Technological improvements are critical for overcoming existing barriers, particularly with applications aimed at reducing transaction fees and enhancing user experience. The launch of Stashpay, which utilizes Breeze SDK, offers a promising alternative by minimizing fees associated with receiving payments compared to traditional Lightning wallets. This solution allows for seamless transactions while keeping user control over their private keys, avoiding some of the challenges faced with custodial solutions. The focus on building applications that cater to freelancers and small businesses is essential for fostering a better environment for using Bitcoin as a transactional currency.
Future Developments in Bitcoin Usage
Looking ahead, the discussion highlights the importance of broader adoption of protocols like Bolt 12 and improvements in asynchronous payment functionalities within the Lightning network. These advancements could provide greater sender and receiver privacy, ultimately enhancing the appeal of Bitcoin for everyday transactions. Additionally, integrating various solutions, such as Liquid swaps and different wallet types, into a cohesive ecosystem is vital for accommodating diverse user needs. The acknowledgment that there will always be trade-offs, whether custodial or non-custodial, emphasizes the necessity of flexible options to foster Bitcoin's growth as a global currency.
Tankred Hase has experience working with various Bitcoin and Lightning companies such as Lightning Labs and Swan previously. He joins me to talk about Bitcoin, Lightning and Liquid. We discuss some of the real world challenges and trade offs that builders and developers face, as well as the likely path forward from here.
Summary
Tankred discusses the current state of Bitcoin, Lightning, and Liquid development. He highlights the progress made in terms of user experience and liquidity. However, he also acknowledges the challenges that still need to be addressed, such as capital gains taxes, technical hurdles, and the need for more user-friendly solutions. Tankred emphasizes the importance of having multiple options for using Bitcoin as money, including custodial solutions, Liquid, and trust-minimized solutions like Fedimint. He also discusses the trade-offs involved in designing user-friendly Bitcoin and Lightning apps. Tankred and Stephan discuss the different trade-offs and options available in the Bitcoin ecosystem, particularly in the context of Lightning Network and Liquid. They highlight that while some Bitcoin enthusiasts prioritize non-custodial and pure Bitcoin solutions, many users, especially in regions like Dubai, Turkey, and South America, opt for custodial exchanges like Binance for their convenience.
Tankred introduces StashPay, a solution that leverages the Breeze SDK and Liquid to offer lower fees for receiving payments. They also discuss the future of Lightning, including broader adoption of Bolt 12, asynchronous payments, and improved privacy for receivers.
Takeaways
Bitcoin and Lightning have made significant progress in terms of user experience and liquidity.
There are still challenges to be addressed, such as capital gains taxes and technical hurdles.
Having multiple options for using Bitcoin as money, including custodial solutions, Liquid, and trust-minimized solutions, is important for broader adoption.
Designing user-friendly Bitcoin and Lightning apps requires making trade-offs and understanding the needs of different user populations. Users in the Bitcoin ecosystem have different preferences and priorities when it comes to trade-offs and options.
Custodial exchanges like Binance are popular for their convenience, even among Bitcoin enthusiasts.
StashPay, using the Breeze SDK and Liquid, offers a solution with lower fees for receiving payments.
The future of Lightning includes broader adoption of Bolt 12, asynchronous payments, and improved privacy for receivers.
Timestamps:
(00:00) - Intro
(00:43) - Current state of Bitcoin, Lightning, Liquid development
(02:10) - Does the market support Bitcoin as a Medium of Exchange yet?
(05:20) - What stops people spending/earning now?(18:42) - Sponsors
(20:55) - Advancing Bitcoin as MoE
(29:49) - Sponsors
(30:45) - Using Liquid and navigating skepticism around it
(35:29) - What is StashPay?; Leveraging Breez SDK
(43:00) - How does it compare with BtcpayServer
(47:51) - Leveraging the economic density of Lightning Network
