Bryan Bishop Transcription: State of Lightning Network with Stacy Herbert, Elizabeth Stark
WP: We have a fireside chat with Stacy Herbert from Kaiser Report and Elizabeth Stark. Some people say she is the CEO of Lightning Network, but she is the CEO of Lightning Labs. Let’s invite them on stage.
SH: Did anyone notice the bitcoin price today? How many here are reckless? How many of you have used lightning? Alright, how many are torchbearers? Wow, not very many. How many are running lightning nodes? Yeah. Alright. Okay. I have some questions here. I want to start here- Elizabeth Stark doesn’t need an introduction, she is the most famous lightning person. She didn’t tell me to say that. I wanted to start with a basic question- what is lightning to you, and why lightning? Why do you work on lightning?
ES: Thank you Stacy and thank you to MCF. I think I was the first guest on the show. It was impromptu. It was back in Mexico.
SH: That’s the only way they can get guests.
ES: Yeah I jus twalked into it and it was a lot of fun. So what is lightning? It’s this philosophical question, right. Part of the why I got so excited about this is that it wasn’t called lightning in the beginning… it was because prior to bitcoin, I wanted to know why I couldn’t easily send money to people over the internet. Why is it so difficult to give someone a dollar? Or read an article or a blog post or watch a video? Why is there no native way to send value over the internet? As many of you know, the creator of the web envisioned that in the early 90s there would be a value layer for the internet but it never got made. We had attempts at Chaumian ecash. At the end of the day, there were problems. When I first heard about bitcoin, I said wow here’s a way for people to immediately transact. But it turns out that with decentralized nature it means that you can only get a few transactions per second to maintain decentralize, and that doesn’t allow everyone to transact instnatly. So much like the architecture of the internet, the idea that bitcoin would have a layered infrastructure made a lot of sense to me. Why is it so easy for anyone to share a photo through apps, but not money? This is what I see Lightning doing.
SH: As of today, there are 39,016 channels on lightning network, and a total of 1,061 BTC. Did you ever expect this kind of growth? That so many people would be willing to be so reckless?
ES: I recently met a really cool community number who got interested in lightning in the beginning of 2018. I love when people find out about this and get excited. People have built explorers, tools, search engines, guides, it’s all really incredible. We like to use the term tradeful. There are still limits on the network, for good reason. If the price of bitcoin goes up, then the limit goes up. Right now it’s $200 per transaction, and $800 per channel. There was this article that said lightning doesn’t work because people can’t send– and I said that’s because it’s the actual network limit. Of course you can’t spend over the limit, because we put those limits in place. Don’t put your life savings on the network yet. It’s still early beta software. Be careful. But the growth has been oustanding to me. When bitcoin goes up, the total funds in lightning goes up, so we just hit $7m USD in the network. One of the important things about the node count, I think that’s total nodes ever seen on the network. It was only the public advertising nodes. I know we have zapwalle tand lightning labs has a wallet that doesn’t advertise channels. If you’re on your phone or desktop, you might not advertise those. I know we have Casa here as well. Awesome job bringing a usable experience to the community. People are really excited about their nodes. At Lightning Labs, we were worried, what if this doesn’t work? We’re putting this out to the community and it might have bugs? But we’ve been surprised the degree to which this is working. This is bringing self-sovereignity back to the community, people are running full nodes and lightning nodes and it’s incredible to see the excitement around it.
SH: People are starting to think in term of satoshis instead of BTC.
ES: Yeah who here has been doing this? They have been propagating that meme as well. Square as well, people are really into that. It’s fantastic. When you have all these zeroes past the decimal place, how many zeroes is that? Zaps, it’s much easier. 100,000 zaps. It sounds cool. It’s $7 now.
SH: There are 8332 nodes, but what’s the importance for anyone out there who hasn’t participated in bitcoin or lightning, what’s the importance of running the node? And what about the 1k BTC on the network, is all capital equal on the network?
ES: For me, the importance of running the node is the point of bitcoin and having the ability to control your own nodes and money, it’s about freedom. Alex Gladstein will be talking about freedom of money especially in places where you might not have a lot of liberties. The ease of running these nodes like Casa, it’s really important. There’s a lot of easy to use nodes out there right now. People can do this without a huge amount of technical knowledge. I think that’s powerful and really key. There’s been debate in the community about neutrino. My cofounder laolu has proposed a BIP that has more privacy than existing SVP. There’s a debate about full nodes and neutrino, but I don’t think it’s either-or. I think some people will have a node at home, and then one from their phone. At the end of the day, it’s about holding your own coins and keys. Time after time, we have seen hack after hack after hack. You can see your coins in a rnadom exchange, but at the end of the day you might not get your coins. We want people to be able to hold their own coins and get their own custody. On the second point, we will be hearing from the LN community today like Alex Bosworth. He is next level lightning in terms of what he’s putting up there. People say they can put in a lot of capital in the network and open up a lot of channels, but that’s not effective or efficient. It’s about enabling efficient allocation of capital in the network. If you somebody opens up a bunch of inbound channels to you, that doesn’t work. You have tubes of money and you need directionality in terms of inbound or outbound capacity. 2019 is about infrastructure, rather than capital allocation, like watchtowers and so on. Next year in 2020 will be a liquidity phase. These limits will be lifted. I don’t know yet. Once it’s sufficiently safe to put larger amounts, it’s called wumbo. The idea is that it’s opt-in. The user won’t just go in and put in a lot of capital. But once wumbo is implemented, we will see more capital flow into the network, see larger potential transaction size, and much work around efficient allocation of capital. There’s also someone working on financialization of bitcoin and lightning. At the end of the day, you can’t just throw money in and expect it to work. There’s also autopilot that we’re working on. Alex Bosworth has been working on something. You can have good inbound and outbound connectivity so that you can efficiently connect to the network.
SH: My husband might be hearing about this for the first time, but I plugged in my Casa node and threw in a lot of bitcoin into it. Then I read some articles about how reckless this is and some people lost money.
ES: Yes, don’t put more money into this than you’re willing to lose. At the end of the day, the goal is for this to just work. But this takes time. ARPAnet was 1969. We’re decades beyond that. This will not happen in just 12 months or so. We have an internal saying- perfect payments perfectly executed. But it’s just not going to happen right now. There’s still a lot to be done.
SH: How do you see lightning looking in 2 or 3 years? Bitcoin looks a lot different from 2009-2010. Not that I was around then. What does this look like in 2 years?
ES: We’ve seen a lot of development lately. One of the things I’m super passionate aobut is people building on top of lightning. I think some of the other communities were asking for lots of developers, but it turns out nobody is using the dApps. But on lightning, people are using it and are interacting wit hit. Who here is using a lightning app, like buying pizza or something? We’ll have some talks later about that. Lightning first got a lot of uptake about scalability and low fees. But the ability to work on top of bitcoin and there’s so much potential there. I see more and more use cases. There’s a site where you pay per letter or word. There’s a fantasy book where each page you pay for the next page. Desiree runs … with a Casa node. So a year ago… and Elaine, is feeding birds. But, gaming. There’s really use cases where with lightning you can open a door but if you die in the game you can have infinite life or something like that. One area where I think ther’es a lot of potential is not just paying but earning. Check out elan new york dot com, I go on there and earn sats by working on projects. It’s like amazon mechanical turk. There’s apps around mining, where you can get payouts through lightning. To me, there’s an interesting new type of economy where you can transact anywhere around the world. It’s not limited to the US. We’ve already seen people in the phillipines or South America using lightning where they don’t have equal access to the economy. We want to build up use cases and enable people to do things that weren’t previously possible. It was lndwork.com. There’s a site for machine learning where you can help with training data for machine learning, and things like that.
SH: Obviously, lightning is a second layer riding on top of bitcoin. Some say there’s some centralization necessary because of that. What’s your response to that?
ES: It’s interesting. The amount of lightning FUD out there. Some people say that lightning turns you into money transmitters. But they are fully non-custodial and they use multisig. People have heard that lightning doesn’t work. But that doesn’t mean it doesn’t. You have some people saying oh it will never work because lightning transactions can be subsatoshi amount or below the dust limit. Yes, that’s a parameter that can be modified. You can’t transact 1 satoshi on chain but you could in the lightning network. So they say it’s centralized. You can look at the network map today, and you can see it’s not. It’s easier to run a lightning node than mining. There’s no commodification pressure there. At the end of the day, if I have a mobile phone, it’s not going to be always online. But the casa node or these other cool guides for running nodes and other lightning nodes, goes against that. The internet, right, the architecture and the way in which it evolved- it’s true that not every node is going to have full connectivity, and we’re still seeing this. We imagine the network will evolve. Some will be connected more than others. Some people say that lightning is— but on that’s not how it works. By the way, those 8332 are only the nodes that are advertising. A lot of the work the community has been doing across implementations is making sure there are efficient architectures. If there’s a big AWS outtage, it’s not going to impact the network.
SH: In terms of the second layer, there’s bitcoin as a unit of account. Someone said bitcoin threatens the US dollar as a unit of account. We ended up with the fiat system right after gold. Credit was built as a second layer on top of gold. But that second layer system where gold was stored at Fort Knox… those are the nodes in the old system that allowed this global trading to emerge, but it was subjected to cheating because it was a centralized ledger. Now bitcoin because of lightning and the following stuff, allows bitcoin to threaten the US dollar as a unit of account.
ES: Oh so this thing is going to threaten our precious political monetary system? Bitcoin is a millenial retirement account. It’s for people who don’t trust the traditional financial system. A lot of us in the wake of 2008 don’t trust these institutions. We no longer have faith in systems where people put a lot of faith into those. We want something backed by a global decentralized community and system that is not dependent on any one individual. I am going to put my faith in decentralized technology. I definitely, having conversations with people in the traditional financial world and they see the potential threat. From my end, I don’t know the timing of if and when that will happen. But if you look at the internet, it did governments and nation states controlled information in a variety of ways and they can no longer do that at scale. Internet routes around censorship. I think you have the same with bitcoin and lightning. I believe in that future where we won’t be dependent on any one government or nation state to really see that through.
SH: You have an announcement?
ES: We’re putting together a lightning network conference for developers and all of the users, designers, etc. It’s called the lightning conference. It’s October 19-20th. I think the location is Berlin. I invite all of you guys to attend. I’m particularly excited.