Bitcoin Lightning Network and Nostr: A New Paradigm for Decentralized Social Payments

In the first half of 2023, the innovative narrative of the Bitcoin ecosystem became one of the hot topics in the industry. More and more people are starting to pay attention to the development of the Bitcoin ecosystem, including progress in areas such as BRC20, Ordinals NFT, and Bitcoin Layer2.

In the development history of Bitcoin, there have been multiple disagreements within the community regarding the development path. Among these debates, a huge opportunity gradually emerged: a decentralized social payment model combining the Lightning Network and Nostr.

Birth of the Lighting Network: The Scalability Debate

The design of the Bitcoin network limits its transaction processing capacity to about 7 transactions per second. This is clearly insufficient to meet the demands of large-scale applications, especially during active bull markets. Therefore, since 2015, the Bitcoin community has been discussing expansion solutions.

In the choice of technical paths, the community has divided into two opinions:

1. Radicals: Support expanding Layer 1 transaction capacity by increasing block size.
2. Conservatives: Advocate solving problems through Layer1 technology upgrades combined with Layer2 expansion solutions.

Ultimately, the Bitcoin network adopted a conservative approach. In August 2017, Bitcoin implemented the Segregated Witness upgrade, theoretically allowing for a fourfold increase in capacity. In March 2018, the Lightning Network officially launched, helping the Bitcoin network achieve fast payments through off-chain transactions.

After a complete development cycle, the Lighting Network has 18,000 nodes, operates over 70,000 channels, and has locked up more than 5,400 BTC. Meanwhile, several Bitcoin Layer2 projects have emerged one after another, such as Stacks Network, Rootstock, and Liquid Network.

However, the payment functionality of the Lighting Network is more suitable for being embedded into other applications rather than existing as an independent Decentralization application. Among them, social applications have become one of the best carriers for embedding the Lighting Network.

Social Payment: The Integration of Nostr and Lighting Network

Nostr is a simple, censorship-resistant global social protocol that does not rely on blockchain technology. It transmits Notes and other information through Relay, without depending on any centralized servers. Users can freely create public and private key pairs, unrestricted by third-party servers.

The Nostr-based social network Damus is functionally very similar to a certain well-known social platform, allowing users to create posts, like, follow others, repost, and more.

When using Nostr, users need to run a client (which can be a local client or a web client). When publishing content, users must first edit the content, sign it with their private key, and then send it to multiple Relays. Relays are responsible for broadcasting the content published by users. Anyone can run a Relay, which simply needs to accept and forward posts from users connected to it.

The most popular Nostr client, Damus, has built-in Bitcoin Lightning Network payment functionality. Users just need to enter the Nostr public key to directly call the one-time fee for the Lightning Network payment Relay, and after payment, they will receive a Bitcoin Lightning Network invoice.

The design philosophy of Nostr is somewhat similar to that of the Bitcoin network. Developers create various clients for users to choose from, with the clients used for signing and verifying information; Relays are responsible for fetching, storing, and transmitting information; users only need to create a pair of public and private keys to use Nostr without any barriers. This design has a certain robustness and resistance to censorship at every stage.

According to data statistics, there are currently over 23 million public keys on Nostr, with more than 3.6 million accounts having personal profiles, and over 170,000 accounts with Lighting Network addresses. There are a total of 1,644 Relays, with more than 100 million events occurring.

However, the main concern of the cryptocurrency community regarding Nostr is the lack of incentive mechanisms for Relay. If Relay had token incentives, it could lead to tokens being concentrated in the hands of a few, making it difficult to form effective incentives and vulnerable to attacks; if there are no token incentives, Relay may lack the motivation to continuously store data for users, and there is also the risk of actively or passively deleting data.

One possible solution is to set up an AI robot as a Relay for Nostr, responsible for fetching, storing, and transmitting information. Compared to humans, AI may be more neutral and will not filter out user content due to personal preferences or negligence. At the same time, a Lightning Network address can be set up to charge users, requiring new users to make a one-time payment of a small amount of BTC to use the Relay. The BTC collected by the AI Relay is used to cover operational costs.

The combination of Nostr and the Lighting Network provides a model for the native integration between social applications and Bitcoin. In the future, there may be more social applications integrating with Bitcoin (Lighting Network), and the large-scale application of decentralized social networks may first emerge from the combination with the Bitcoin Lighting Network.

Conclusion

Bitcoin, as a decentralized payment system, has financial inclusivity with no barriers to entry. After achieving fast payments through the Lighting Network, it has shown unique advantages in applications within decentralized social payments and even the AI field. This combination opens up new possibilities for the future development of digital social interactions and payments.