Bitcoin Lighting Network and Nostr: Exploring a New Paradigm for Decentralized Social Payments

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

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

The Birth of the Lighting Network: The Scaling Debate

The design of the Bitcoin network limits its transaction processing capacity to about 7 transactions per second. This clearly cannot meet the demand during periods of high transaction activity, so the community began discussing scaling solutions in 2015.

The expansion solutions are mainly divided into two factions:

1. Radicals: Support expanding transaction capacity by increasing block size.
2. Conservatives: Advocate for scalability through technological upgrades and Layer 2 network solutions.

Ultimately, the Bitcoin network adopted a compromise solution: implementing Segregated Witness upgrades and introducing the Lighting Network as a second layer solution. This decision preserved the core attributes of Bitcoin while enhancing its use cases.

After a complete cycle, the Lighting Network has developed into a network with 18,000 nodes and over 70,000 channels, locking up more than 5,400 Bitcoin. At the same time, other Bitcoin Layer 2 solutions such as Stacks Network, Rootstock, and Liquid Network have also emerged.

However, the payment functionality of the Lighting Network is more suitable to be embedded in other applications, especially social applications, rather than existing as an independent Decentralization application.

The Combination of Nostr and the Lighting Network: A New Model for Social Payments

Nostr is a simple, censorship-resistant global social protocol. It does not rely on centralized servers for information transmission, but instead uses relay nodes, allowing users to freely create public and private key pairs.

From a user experience perspective, the Nostr-based social network Damus is very similar to Twitter, allowing users to create posts, like, follow others, and more.

Using Nostr requires running a client, which can be a native client or a web client. When users publish content, they need to edit the content first, sign it with their private key, and then send it to multiple relay nodes for broadcasting. Anyone can run a relay node, which only needs to receive posts from users connected to that node and forward them to other users.

The design philosophy of Nostr is similar to that of the Bitcoin network, including three main roles: developers, relay nodes, and users, each with a certain degree of robustness and resistance to censorship.

Currently, the Nostr ecosystem has over 23 million public keys, with more than 3.6 million accounts having personal profiles, and over 170,000 accounts with Lightning Network addresses. There are a total of 1,644 relay nodes, and more than 100 million events have occurred.

The main criticism from the community regarding Nostr focuses on the lack of incentive mechanisms for relay nodes. One possible solution is to use AI bots as relay nodes for Nostr, charging a one-time fee via the Lighting Network to cover operational costs.

The combination of Nostr and the Lighting Network provides a demonstration for the native integration of social applications with Bitcoin. In the future, there may be more social applications integrated with Bitcoin (Lighting Network), and the large-scale adoption of decentralized social networks may first explode in this area.

Conclusion

Bitcoin, as a decentralized payment system, combined with the Lighting Network to achieve fast payments, has unique advantages in applications in decentralized social payments and even AI fields. This combination opens up vast space for future innovations.