This week, Tether issued more USDT-Liquid due to rising demand, tripling the amount in circulation (~100M) to surpass the total USDT in circulation on Tezos, Polkadot, and others. A few points on why @Liquid Network and other bitcoin L2s will continue to eat up liquidity from alts. First, some context, Liquid has accomplished this with effectively: - no speculative markets (governance token, NFTs, memecoins), the main driver of volume on alts. - no comparable marketing budget, eg, Polkadot spent $37M alone in H1 2024 on promotion:

Polkadot Forum

Polkadot's Astonishing Marketing Spending

On June 29, Polkadot community members released the Polkadot Treasury’s operational report for the first half of 2024. The report revealed that t...

Instead, the Liquid ecosystem has prioritized the development of native features and infra for bitcoin capital markets (confidentiality, @Blockstream AMP, legal frameworks, etc) -- resulting in organic growth of securities issuances. (RWA TVL on Liquid recently hit >2.5B). This is further validation of the effectiveness of bitcoin's design philosophy vs crypto, ie the prioritization of security and low-time preference. The downside, however, is that alts can fill these niche, emerging needs faster and extract value from bitcoin in the short term. Alternatively, with the new language Simplicity coming to Liquid mainnet next month (and potentially bitcoin in the future), the gap in developer UX and expressivity will be largely addressed as Simplicity competes directly with ETH's Solidity. It will certainly take longer for the larger-cap crypto L1s to succumb, but we've already started to see cracks and a shift back to bitcoin. Eg: Vitalik wanting to simplify ETH like bitcoin:

Ethereum Co-Founder Vitalik Buterin Wants to Make Ethereum Simpler Ahead of Pectra Upgrade

Buterin put out thoughts for a long-term roadmap that drastically reduces the complexity of Ethereum’s technology.

Hoksinson considering moving ADA treasury into BTC:

MSN

There's still a long way for Liquid to catch up, but as altcoin marketing budgets dry up and they continue to lose value relative to BTC, we will likely see this trend and convergence accelerate, possibly to the point where some re-denominate their governance tokens in BTC and market themselves as L2s. The great thing is you can still front-run them all by buying bitcoin.

Does anyone have more info on the fedimint that went offline (via Fed app) for a certain amount of time a few months back and users were locked out? Was there ever a diagnostic report or anything explaining the incident and how it will be mitigated in the future?

A few months ago I was in BA and met the @La Crypta guys. Their NFC card was the best bitcoin onboarding experience I’ve ever had and turned me into a NFC card maxi. There’s a certain simplicity about just pulling out a tangible card and tapping it - hard to beat that UX with a phone.

It's almost inevitable at this point bitcoin will continue to eat up market dominance, and 99% of current crypto projects will deprecate or have to re-denominate and become bitcoin layer-2s.

When am I going to be able to livestream on this and sell all my old fishing tackle for pristine sats?

Calling all turbo autists: here's your shot to yeet your dream project straight to market with the help of Blockstream. LFG. blockstream.typeform.com/to/KLeflywl View quoted note →

Currently at a nostr workshop from the guys at @Northwest Arkansas Bitcoin. What is everyone’s favorite client/wallet combo? If I’m using primal mobile, best to just use the in-app wallet?

Many are asking how Greenlight numbers can be so high and why they're not reflected in public Lightning datasets like 1ML. To help put things in perspective, let's break down the numbers and what this implies for the 'Lightning is dead' narrative that certain influencers have been peddling: The first thing to know is that Greenlight nodes are unannounced/private and on-demand, so they aren't included in public estimates. This isn’t unique to Greenlight--many other Lightning infrastructure providers (think Lightspark) don’t broadcast for privacy and other reasons. Each Greenlight node roughly corresponds to one user, meaning the 150k nodes represent about 150k users (unless large swaths of users are gaming the numbers by using different seeds with the same or multiple devices). When a Greenlight node isn't in use, it becomes dormant and then reactivates later as well, so no new nodes are created or destroyed in this process that could obfuscate the numbers. More context: most of these new nodes are from Relai's recent integration of the Breez SDK, which runs Greenlight under the hood. A growing number of small Lightning startups, like Blitz, also use Greenlight on the backend, but those numbers often go unreported. So, the narrative of Lightning's impending doom is likely vastly overstated, especially when infrastructure projects like Greenlight and their impact are almost always overlooked when discussing the growth of the network. In my opinion, it's far more believable that Lightning is in a transitional phase due to new developments in bitcoin payment technology and infrastructure (Greenlight, Lightspark, Breez SDK, Ark, etc) and is just now coming into its own. Greenlight's numbers are proof of this. View quoted note →

Many in the comments under impression fees would be too high…and though, yes, fees would be higher than Lightning, the idea here is to use @Boltz - Non-Custodial Bitcoin Bridge on the backend, which has a sats/vB 10x lower (0.01) than usual (Liquid default is 0.1). This makes average fees ~40 sats. Pair the lower network fee rate with a threshold to be able to swap to Liquid from zaps…and you can see how it might be useful - as Liquid is more federated (15 vs a single custodian), has confidential transactions and you can cold store sats. View quoted note →

There’s lots of innovation happening in the L2 wallet space. We used @AQUA Wallet to accept mainchain, Lightning, and even some USDT (via @Liquid Network ) at the Blockstream booth at B24 without a hitch. It’s one of the best mobile wallets for POS and is what I personally recommend for onboarding newbies these days, given there is no channel rebalancing/management. And if the rumors are true, looking forward to even more stables (there are quite a few now on Liquid) being added to the Aqua app soon. My basic set up is using Aqua day to day and Green for long-term hodl - given it has hardware wallet integration and you can connect your node - but I am also keeping a close eye on the Blitz wallet. Exciting times ahead!

re: Fold going public I was fold-pilled a few years ago, it's a great stacking tool, sometimes up to 10% back at select stores, but I've been quietly anticipating a bitcoin cashback credit card. That's when the real fun begins and they could 10x their appeal. Many families - if financially literate and prudent - try to optimize cashback rewards in some way. Even with a standard 2% cashback on all purchases, a Fold credit card would be competitive, but many may not opt in, given that it's bitcoin. If they can offer a 3% flat cashback (as no other issuer really offers this anymore besides the new RH Gold) or even 5% in select categories, it will be very appealing to individuals and families trying to save. (There is also an entire subculture of nerds who churn cards/optimize rewards - Fold should target these guys.) With a 3%/5%, these types will likely overcome their initial bitcoin hesitancy to give it a try. Then once bitcoin's monetary theory becomes clear and their cashback grows (3% becomes 6% etc), you'll have effectively orangepilled them on bitcoin as a value savings mechanism

For those actually looking to make legitimate yield on their corn and not get rugged, check out the Blockstream Mining Note. It’s a tradeable hashrate backed token, so you can participate in proof of work and help secure the network without all the overhead of mining operations. BMN1 yielded a net average of 32% bitcoin-on-bitcoin return or just under 2 BTC per BMN. The net average return in fiat terms was even greater, at 61%, and in both scenarios, it outperformed buying spot bitcoin. Most are sleeping on security tokens, which come with investor protections and obligations from the issuer, they are not random sh*tcoins with empty promises. 32% was the average net return across all 8 series of the BMN1, too, some outperformed others, eg series 1 of BMN1 had a net btc return of 62%, so entry point in the market cycle is a factor. View quoted note →

Those of you wondering if you’re still early to Bitcoin.

Inside the worst Ohio State commencement speech ever

"Social entrepreneur" Chris Pan admitted to writing his speech while high on psychedelic drugs, and somehow he delivered even worse results than yo...

A good question to ask: if your favorite bitcoin apps went offline tomorrow, would you still be able to buy, sell and trade for bitcoin? If not, you have some work to do over this holiday break, building out your local P2P economy—myself included.

We must make direct P2P transactions outside of any third party, including "P2P exchanges," which still rely on infrastructure outside of Bitcoin, the default way to interact again. This is even more relevant in a high-fee market where we can avoid paying extra fees and markups. It's time to form chat groups with friends and leverage local Bitcoin meetups to exchange P2P. We should also hasten the implementation of key encryption standards like NIP 87, NIP 38, etc., so that Nostr can have encrypted group chat capability. By doing so, we can build a permissionless economy as originally intended and create a network of exchange that relies solely on the protocol. Too many of us are using third-party apps and sites regularly. We must have a thriving local P2P economy first and foremost. A good question to ask yourself: if every exchange, payment processor and bitcoin app went offline tomorrow, would you still be able to buy, sell and trade for bitcoin? If not, you have some work to do over this holiday break—myself included.

Liquid isn't a long-term scaling solution on its own (that's obvious), but federations can and will be part of the solution. Many federations (both off-chain like Fedimint and on-chain like Liquid) will scale #Bitcoin alongside Lightning, which will play a key role as the connective tissue between different protocols. There will be no 'one size fits all' scaling solution but rather a range of complementary protocols that cater to specific use cases and markets, each addressing different challenges with a unique set of trade-offs. In July, I wrote about this and the importance interoperability will play within second layers and think it's even more relevant today with the discussions happening over the past week. Give it a read if you like.

Blockstream

Increasing Interoperability Between Bitcoin’s Second-Layer Protocols

The prevailing wisdom is that, in order to achieve hyperbitcoinization, Bitcoin should scale in layers. The current discussion or debate is mainly ...

For the average pleb using a software wallet, your sats flow and time horizons should be as follows: Lightning <> Liquid -> Bitcoin days -> months -> years Stack smart, hodl Liquid in the mid-term and occasionally swap to Lightning for daily use, then to mainchain when fees are low for long-term savings.

More educators and Bitcoiners should be onboarding newbies to Liquid first, with Lightning as a next step, imho. It's not just easier from a technical view to onboard to Liquid these days given the high-fee enviro but conceptually and in terms of natural learning progression it makes the most sense. Sidechains are a far more digestible concept than payment channels/liquidity mgmt after first learning about Bitcoin and blockchains.

The issue with Argentina abolishing its central bank is that they have plans to dollarize, so they are merely trading their own for one controlled by bureaucrats in DC, in which they’ll have far less agency with and control over. Situation is even more dire given their outstanding debts (some of the worst in the world) to the IMF and the like. I understand dollarization (something El Salvador also did in the 2000s) is a somewhat necessary step to lower inflation and have price stability in the short term, but on the one hand, skipping dollarization and going right to bitcoinization would be the true “anti central banker” visionary move...and have the potential to free Argentina of the shackles of its international creditors much quicker. Of course, another probably more politically viable option would be to follow Bukele's playbook of playing just nice enough with the IMF and other creditors while buying #bitcoin...with the same end goal in my mind. Let's wait and see what role bitcoin will play, if any. The jury is still out in my opinion but they do have a historic opportunity to show the world the potential of bitcoin.

Payment failure is a major flaw in all account-based networks, such as Tron, Ethereum, and other alts. The sad irony is that this impacts the demographic most likely to use crypto rails to begin with—those in emerging markets suffering from currency debasement and hyperinflation. Fortunately, there is a better alternative on #Bitcoin. 🧵 Estimates of Ethereum's payment failure rate range, but there was a consistent rate of over 1 million transactions per month during peak periods. A quick search on reddit will garner hundreds of threads like the one below of users losing money due to failures. https://www.reddit.com/r/ethereum/comments/qq5iin/failed_transactions_costing_250_is_not_fine/ Even Vitalik himself cites a ~2.3% failure rate. Note, we shouldn't fault those flocking to Tron or Ethereum with strong stablecoin network effects (there is clear use case) but, instead, encourage awareness of the downsides and the better alternatives that exist on #Bitcoin. With what looks like the early beginnings of a bull market, users in places like LATAM, particularly in Argentina, where stablecoin usage is surging, should expect a similar spike in transaction failures and consider more architecturally sound chains like the Liquid Network. In contrast to #Ethereum or Tron's account model, the Liquid Network, a Bitcoin layer-2, opts for Bitcoin's UTXO model. This enables an "all-or-nothing" transaction, avoiding the possibility of losing funds when sending a payment. Liquid's fees are competitive with the aforementioned account-based models and stay reliably low. There is also the added feature of confidentiality (no one can see asset type or amount).

The Liquid Blog: Tracking the Latest in Bitcoin’s Financial Lay

An Everyday Guide to Confidential Transactions

Confidential Transactions are an exciting and often overlooked feature of the Liquid Network, allowing users to keep the quantities and assets they...

Our CPO Jeff Booetz, recently detailed the tradeoffs between the UTXO and account models in an op-ed. The latter's lack of transaction reliability is only one example of the many downsides: it's also much harder to scale, less secure, and less private. Highly recommended: https://www.forbes.com/sites/digital-assets/2023/11/07/why-bitcoin-may-offer-the-best-foundation-for-blockchain-based-finance/?sh=453db2457ba2