A small IT conference took place at the Montelibero club on June 25. I suggest those interested watch the recording of the most interesting presentation – Anton Gusha talked about how the Lightning Network works and what interesting tools can be built on its basis.
Specifically, he created a startup called StandardSats, which allows anyone to download a specialized Lightning wallet application where the balance in satoshis is floating and pegged to the exchange rate of a particular asset. For example, here in Montenegro, we use the Euro rate as a peg, and thus we can settle payments between each other in fiat without having to convert Bitcoin to Euros first.
I wanted to write about this in the third part of the series on Montelibero tokenomics, but while I was pondering how to present it, the project author came to Montenegro himself and gave a presentation, making my task easier.
Many people know about Bitcoin Pizza Day, celebrated on May 22nd, in honor of the first purchase of a product with bitcoin, when on May 18, 2010, a guy from Florida named Laszlo Hanyecz put out a call, saying he wanted pizza and would pay 10,000 bitcoins; he waited four days before finally finding someone who would buy him that very pizza in exchange for bitcoins.
And on February 24th, Lightning Pizza Day is celebrated. On February 24, 2018, the same Laszlo Hanyecz bought pizza again, using the then-recently launched Lightning Network—a second-layer protocol on top of the Bitcoin blockchain. This time, the price of two pizzas was only 649,000 satoshis, which is 0.00649 bitcoin. At today’s prices, that is approximately 330 dollars. Moreover, he handled the purchase significantly faster; there was no long wait for a seller.
Over eight years, the daughter has grown quite a bit
How did I find out about all this? There is a convenient custodial lightning wallet on Telegram @lntxbot, equipped with many third-party services. In particular, you can subscribe to a mailing list of paid advertisements there. Send the bot the command /sats4ads on 15 and you will occasionally receive messages from the bot with very short ads and a claim button. By clicking the button, you receive a reward of 15 millisatoshis per character (this is very little, but you can play with the price—you can receive more expensive ads, but in smaller quantities). And so, today a mailing arrived where I was congratulated on the holiday, told this whole story, and offered cashback in satoshis for every pizza purchased. Unfortunately, the offer did not apply to the Russian Federation, so the bot’s ad targeting isn’t great.
On the other hand, today I received another offer regarding ad placement. And since it’s such a day, I requested payment in Lightning: 10,000 satoshis—exactly one hundred million times less than what the pizza cost in May 2010.
So, I am happy to post an announcement for a lecture on cryptocurrencies, which will take place this coming Saturday in Yekaterinburg. I hope there are residents of this city among my readers who are not yet aware, and that the lecturer’s advertising budget did not go to waste. Bring your acquaintances to the lecture as well, if, of course, you wish them well, because mastering the use of bitcoins is definitely a good thing. Otherwise, they wouldn’t be trying to fine us and tax us for it.
As for the announcement itself, it will be in the next post, to separate it somehow from the prolonged preamble.
When I was asked a year ago whether TON had any prospects, I, as “smart Masha,” reasoned about the network effect and other technical and economic challenges the project needed to overcome to stand a chance—and generally demonstrated my skepticism. The reality turned out to be much simpler and more hopeless: the project was simply banned.
For this very reason, in a recent post about Bitcoin’s rise, I pointed out that Bitcoin’s dominance among cryptocurrencies seems to me to be the only viable scenario. Not because “helicopter money” flowed into Bitcoin, as Grigory Bazhenov tried to present my position, but specifically because Bitcoin is invulnerable to regulators. They can curb its penetration, they can pressure the exchange of Bitcoin for fiat—but they are unable to destroy it. Even if the NSA manages to find and imprison the real Nakamoto—what would that affect? At most, a heap of Bitcoins would be dumped onto the market, but the market would swallow them without choking. However, sanctions against Durov, Zuckerberg, or Buterin are indeed capable of seriously affecting the projects they lead. This link turned out to be the weakest. This is the Achilles’ heel of any potential “Bitcoin killer.”
Of course, all the software developed as part of Durov’s project is open source, and it has already been launched under the name free TON, but it lacks the very network effect that was the main bet and the killer feature of TON—Durov officially stated that he would not support such projects, which means the new free crypto has no hope of being integrated into Telegram.
But every cloud has a silver lining. It was precisely thanks to my review of TON’s capabilities that I became acquainted with Lightning—and I continue to recommend everyone use it. Over the past year, it has become much easier to use, and while the Lightning manual used to take up a separate page on my site, now it is a short paragraph on the donations page.
Durov created a great achievement—VK. It was taken away. He created an even greater one—Telegram. It took off, but it didn’t seem like enough to Pavel. He reached for the greatest of all, and it is not his fault that it didn’t work out. But what is truly bad is that now Durov will have to cover the losses at the expense of Telegram. I hope he has learned lessons from the VK case and will try not to ruin the project.
Today is a day of serious upheavals: the Russian government has resigned, the US Congress has sent impeachment documents for the president to the Senate, and I have completely rewritten the donations page.
Since the project is anonymous, collecting donations for it has its specifics: money mostly arrives in bitcoins, but I have been repeatedly asked to provide the possibility of payments in fiat as well. Rejoice, a method has been found, and the description is provided.
Topping up a Lightning wallet has now become very simple, fast, and cheap, managed by a new concise Telegram bot.
Previously, various ways of acquiring and using crypto were described across as many as four different pages; now all key things are grouped directly on the “Donations” page, and only the purchase of bitcoins has been left as separate text just in case as an optional supplement.
I have already posted an article here dedicated to the practical application of the trendy Lightning technology for sending me micro-donations — small amounts, but frequently, or for using this wonderful tool for other purposes. Some inaccuracies were found in the article, and someday I will get around to fixing them, but today I want to talk about something else.
I was contacted by Anton Kovalenko, who informed me that he has launched a Telegram bot that can do one single thing — cash out your bitcoins into Qiwi rubles. However, it does this flawlessly, in full accordance with the detailed instructions prepared by Anton. I tested the bot myself, and withdrawing bitcoins into fiat took only a few seconds.
And while I’m at it, I recommend checking out his Lightning manual of a more general nature. Perhaps you will be able to understand more from it than I did. The technology is developing very rapidly, but the interfaces are only just beginning to show any hints of possible user-friendliness. We shall see, as one popular Telegram blogger puts it.
I answered a question about my attitude toward TON, after which a TON expert came to my chat and shared a lot of juicy details. Then a Lightning Network expert appeared in the chat and explained why TON is not needed. I followed his recommendations and convinced myself that it is already possible to send bitcoins to each other in Telegram instantly and with negligible fees. I think this new knowledge deserves a detailed instruction, because theoretically many people are familiar with Lightning, but in practice, few understand how to actually use it. I will provide the simplest recipe based on Telegram, simply because it is the most relevant for me.
1. Buying bitcoins
The simplest way to buy bitcoins with fiat is using a Telegram bot. I have left a referral link, so not only can I get a small profit from you using it, but I will also know how many readers found it useful. By launching the bot, you become the owner of an empty online wallet, which is where you will buy your bitcoins.
By clicking “BTC/RUB Exchange,” you will see the current exchange rate. This is only a rough guide; the rate in the bot may differ significantly. Click “Buy” and you will enter a board of private ads, grouped by types of bank cards or other electronic fiat money.
Suppose you have a Sberbank card. Click the corresponding button and you will see a list of ads for selling bitcoins:
Choose a suitable ad, click on it, start the transaction, and specify the amount in rubles you intend to purchase. If the advertiser agrees to your offer, you need to transfer the money to the specified card, after which bitcoins will be credited to your wallet in the bot.
Important: all communication with the seller is conducted only inside the bot, because its administration provides arbitration in case the deal falls through. The seller’s bitcoins are blocked on their account until they receive your rubles. As soon as they arrive, the seller releases the bitcoins, and they are transferred to you.
2. Opening a payment channel
The Lightning Network technology boils down to people opening payment channels (something like off-chain deposits) for a certain amount, then exchanging receipts, and later, when someone decides to close the channel, a netting occurs, and the remaining balance in the channel is returned to the blockchain. There is quite a complex mechanism inside, but it’s not necessary to delve into it; I don’t delve into it myself.
To open a channel, you need a lightning node, and since maintaining one yourself is a hassle, it’s easier to use a public service. I was recommended the exchanger https://zigzag.io. Open it, select bitcoins in the “you send” field, and also bitcoins in the “you get” field, but with a lightning bolt on the avatar:
Then you need to specify the address to return the change to (the “BTC refund address” field) and where, specifically, to send the money (the “BTC lightning invoice” field). For the change, you can specify the same wallet from which you are sending the money, or any other one you have.
To find the destination wallet, you need to launch the @lntxbot in Telegram. Then send a private message to the bot: /invoice and it will generate a string of gibberish:
Copy it and paste it into the “BTC lightning invoice” field, click “Exchange” — and you will see something like this:
Simultaneously, a message about the receipt of funds will come from the bot to your private messages:
That’s it, you have opened a payment channel.
3. Using lightning
The most important command that you will need in @lntxbot after this looks like this: /pay @ancapsan After this, I receive the amount you have chosen. Of course, you can easily transfer money to any other Telegram user (even if they haven’t launched the bot themselves, the money will go to them, and they will see it only after they launch it).
You can ask the bot about other commands using the /help command
4. Closing the payment channel
So, you have some money left in the lightning network, and instead of sending it to me, you decide for some reason to withdraw this balance back to the blockchain. Go to Zigzag and perform the reverse operation:
Specify the same bitcoin address on both the left and right sides, click “exchange,” and now the exchanger will generate an invoice for you. Then go to the private messages of @lntxbot and write: /pay
That’s it, the payment channel is closed, and the money not spent in the lightning network returns to your wallet. As for dealing with bitcoin wallets, entire volumes have been written on that; you’ll figure it out yourself.
I’ll be glad if the article was useful to you. Be sure to try how it works. If previously a large commission size stopped you from donating to certain causes, making small tips unjustifiably expensive, you can now make people happy without such torment. First, deposit a sum into lightning that is sufficiently large relative to the miners’ commission, and then spend it in arbitrarily small portions whenever it strikes you. It is the large volume of small donations that distinguishes truly popular projects, not a couple of dozen large donations.
