I was asked repeatedly throughout this year’s Bitcoin 2024 conference to name the most notable thing about that moment—the signal amidst the noise. As I returned from Nashville, it occurred to me that each time, I was never able to answer the question satisfactorily.
Partly because I simply couldn’t keep up with the action. The activity around the news desk and my support of those running the show left me with little time to focus on anything else. I can’t say I regret it. Anyone who was drawn into our live studio space during the week can attest to the energy surrounding it. The Bitcoin Magazine news desk was the true heart of the conference.
Now that I’ve had a chance to gather my thoughts, I can confidently say that the highlight of the conference was the relatively low profile of the Lightning Network. At different times, this would have been a concern, but this year was different. It struck me that Lightning has not only come this far, but has matured beyond what any other scaling layer can realistically claim.
While largely unnoticed, the payment protocol has quietly embedded itself into every piece of Bitcoin’s core infrastructure. It’s now supported by most of the world’s leading exchanges, some of which run the largest nodes on the network. The network’s dollar-denominated capacity is at an all-time high, and every operator I spoke to this week said its reliability was rapidly improving.
While it may seem to the average conference attendee that Lightning technology has taken a back seat to other promising protocols, it was clear throughout the conference how far it has come from the rest of the field. While I was fortunate to meet many of the talented individuals working on this next generation of Bitcoin design, I left the event with more questions about their progress than I had when I arrived. On the other hand, Lightning answered many of the concerns I had about its status and the path ahead.
Settlement scenes
A recurring narrative throughout the event was the protocol’s promise as a settlement network. Initially touted as a retail payment solution, it could be Lightning’s latest and greatest breakthrough among businesses and institutions looking to address liquidity needs. The vision, notably championed by Strike’s Jack Mallers, seems more realistic than ever, with infrastructure company Lightspark now at the forefront of these advances. Last Thursday, On Nakamoto Stage, Lightspark Co-founder Christian Catalini defended Lightning’s position as a bridge between different businesses and financial institutions:
If you think about the challenge of moving value not just between a few countries but between 200 or more countries every day, 24/7, with deep liquidity, there’s only one asset, and that asset is Bitcoin. That asset has regulatory clarity, it has entry and exit points in almost every country in the world. And now we can connect all of that in an open way.
Lightspark’s latest announcement of its partnership with the Latin American banking giant Nobank Clearly outlines the potential for existing businesses to modernize their infrastructure using the Lightning Network.
In a further boost to Lightning’s case as the global economy’s railroad, Lightning Labs’ release of the Taproot Asset Protocol last week provides another opportunity for the scaling layer to establish itself as the internet’s dominant value transfer protocol. Before Lightning can catch up to VISA, it may have to start by displacing SWIFT.
Improve payments
On the payment front, the talk in Nashville was about the improved user experience brought about by the arrival of features like Bolt 12.
After years of work, the payment protocol provides an intuitive way for users to receive Lightning payments without relying on unreliable and expired invoices. It also paves the way for improving users’ ability to receive payments offline, a major weakness in current applications.
introduction #twelve cashAn easy way to share your Bitcoin payment information with the world. pic.twitter.com/tynzAVEEEt
— Stephen DeLorme (@StephenDeLorme) July 18, 2024
BOLT12 achieves this through reusable, static offers that do not compromise the privacy of the recipient. Along with other innovations such as DNS Payment InstructionsIt is now possible to create human-readable Bitcoin addresses (eg: alex@twelve.cash) that support different payment formats. Imagine using a single ID to receive payments on-chain and Lightning regardless of your preferred criteria. twelve casha prominent project of this year’s conference. HackathonHe did a great job of highlighting the versatility of this technology, by implementing “a simple way to share Bitcoin payment information with the world.”
Other forms of human-readable addresses have existed for some time using the LNURL format but the hope is that users will converge to more mature solutions. Amboss, a long-time Lightning infrastructure provider, also offers Advertise During the event, a new Lightning Wallet was launched that supports a new multi-asset payment system they called “MIBAN.”
Standards fragmentation and compatibility issues are expected to occur in open, permissionless financial systems. Lightning is more advanced than any other alternative in terms of optimizing around these compatibility challenges to ensure seamless payment experiences.
BOLT12 is currently supported by leading wallets such as Phoenix and ZEUS, and may go down Coming soon to the Strike app.
I remember being very disappointed after Bitcoin Park’s Lightning Summit around this time last year about the prospects for consumer Lightning applications. What a difference a year makes. While a fully non-custodial experience may always require a premium, new improvements and different security models are emerging that can meet the needs of retail users wherever they are.
large scale infrastructure
This progress at all levels would not have been possible without the tremendous efforts made in infrastructure work over the past two years.
The recent integration between Lightspark and Coinbase is powered by Spiral. Lightning Development Kit (LDK). Alby Hub was recently announced and is also the first production wallet to be deployed using LDK node library.
Keep in mind that the LDK has been in the works for nearly four years now. Good things take time. Many people I spoke to at the conference expect the scope and quality of projects being done using this toolkit to accelerate dramatically.
Another sign of the evolution of Lightning’s infrastructure came with the release this week of the new Breez SDK integration with Liquid. This is a trend that is gaining momentum and has been pioneered by Boltz’s swap services. It is used in wallet applications such as AquaLiquid allows developers to use the sidechain network’s cheap fees to settle transactions in and out of Lightning into L-BTC. While this involves custodial swaps, proponents claim it is still a better option than full custodial Lightning wallets.
The conference also covered progress made on the Lightning Service Provider (LSP) specification. As a result, the quality of service providers on the network has improved dramatically. LSPs are used to provide infrastructure support and liquidity to businesses that want to connect to the Lightning Network.
Zeus founder Ivan Kaloudis shared his company’s efforts in this direction:
Since the legal uncertainty in this area following the arrest of the Samourai Wallet developers, we have doubled down and now have two different services that provide users with access to the Lightning Network. We have also significantly expanded the Olympus LSP user base; we now not only support the ZEUS Wallet, but we now have integrations into a total of four different wallets, including the default LSP role in the Mutiny Wallet.
Security is another area of the protocol that is seeing amazing growth. Spiral Scholarship Winner Sean GillianThe work of Verified Lightning Signer (VLS) will play a significant role in expanding the reach of this technology to professional users. It will be essential to allow operators to leverage secure zones to protect hot signature keys and define spending policies to accommodate the next wave of enterprise players.
In a panel discussion I hosted on Saturday afternoon called “Lightning for Institutions,” protocol co-creator Tadj Dreja expressed a strong interest in developing more secure key management processes.
We’ve figured out how to implement multi-signature support for Lightning contracts. We’ve done the math, and we know it works. Now we need to work with everyone to get there.
This infrastructure section would not be without mention of the massive innovation around the Nostr protocol and its implications for Lightning. One of my favorites Stadium Day The projects at the conference were: flasha new payment gateway platform that leverages Nostr for seamless integration of Lightning into any internet service or product. The implications of using the Nostr messaging protocol as a bridge between Bitcoin applications have yet to be fully appreciated. The Flash team owns Incredible vision So, shoutout also to Justin from Shocknet Who I met was exploring several interesting ways to scale the Lightning protocol using Nostr’s magic sauce.
It’s time to stop fading lightning.
