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In Person Connections – Bitcoin’s True Superpower

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It was 12:45 a.m. on a Friday out and about in Riga, Latvia. Without going into too much detail, I was having a good time with fellow Bitcoin and Lightning folks.

I was there for the Baltic Honeybadger conference, one organized by plebs for plebs. And you could feel this! Everyone was eager to help and understand what other people in the ecosystem were doing or were there to learn.

We stood outside a bar where all the drinks were paid for with Bitcoin, and people seemed to be enjoying themselves. At that moment, I stood back, looked around, and observed what was happening. Most of us were far away from home, in a foreign town at almost 1 a.m., yet we only talked about Bitcoin and how we will use it to make the world a better place.

That’s where it hit me. Although we tend to fight on X, all while looking like absolute lunatics, in the end, we manage to agree on one thing. It doesn’t matter what your background is. For some weird reason, we tend to blend in once we meet in real life.

Meeting fellow Bitcoiners in real life, making those connections, and using the time to discuss ideas or even set up new businesses are the best things about this community. It’s also the perfect time to clear the air and have better conversations than what we have on social media.

This got me thinking: What if there is more to Bitcoin than the benefits we’re all familiar with? What if there is a secret superpower to it, one we haven’t fully utilized yet: In-Person Connections!

Social Movements Are the Backbone of Technological Progress

One of Bitcoin’s core ethos is that of the cypherpunk movement. It values logic in code above all else. Doing so eliminates human error and corruption, which have always been issues for humankind.

Cypherpunks envision a more decentralized world where everyone has total control over their identity, privacy, and online rights. Bitcoiners know how important all of these points are. However, most people don’t care that Big Tech monetizes their data.

The pioneers of the cypherpunk movement saw this coming a long time ago. Instead of keeping to themselves, they went on the offense and publicly stated their goals and ideas and why government snooping would be an issue in the future.

What might have started small quickly turned into something big, and before they knew it, a group of cypherpunks had to defend the right to encrypt in front of the Supreme Court in the U.S. The U.S. Government was so frightened by encryption that they took on a group of mathematicians and cryptographers. Imagine that!

This small group of enthusiasts built a social movement first to educate and show people why we need mass encryption and how dangerous an authoritarian state is. Out of that, they created the tools and software we now use on a daily basis. Think of PGP, HTTPS, or messengers like SimpleX.

In order for us to accept and use encryption, we had to have a social movement with which we could identify ourselves. It might not be that most people who are privacy conscious these days know of the cypherpunks, but they keep their values alive. The ideas that were planted 40 years ago still hold true today.

The same should be possible for Bitcoin. To achieve this, we as the Bitcoin community need to be more proactive and transform our online communities into more than debates online, but actually into real-world connections. Just like the cypherpunks did back in the day, we need to strengthen the social movement first, either by organizing events or by providing physical copies of essays, books, and thought pieces to read.

If we only stick to the digital realm, which is easier because Bitcoin is digital through and through, we miss out on many great chances to strengthen the social movement. Or even worse, we fall victim to the ever-increasing censorship mechanism we see online.

Breaking Free of the Algorithms and Gatekeepers on Social Media

Most Bitcoin debates occur online, either on X, nostr, or in other chat-based forums. This is part of the day-to-day life for most of us as we seek to engage with all our friends online.

However, this comes with an enormous sacrifice for most of us. We have to play according to the rules of these platforms, which means we get gate-kept, censored, or, in some cases, even blocked.

Our biggest issue is being kept out of the loop or not reachable to people looking in from the outside. Sure, there is always the argument that people can go the extra mile and find other sources or ways to engage.

The sad truth is that only some do. Regular people don’t take the extra steps to read a different source or go to a platform other than the social media site they’re used to. If there is a one-stop solution, they’re most likely to use that.

One step to solve this is to use Bitcoin-friendly places like nostr. Not only because you can experience Lightning through Zaps but also because it’s a protocol where users can decide how they want to engage.

Currently, it might be the best solution to onboard everyday people and show them the differences between open protocols and closed platforms. However, we’re exchanging time for something digital. Getting users on will take a lot of effort from the community and nostr builders.

Luckily, we’ve had a secret superpower for a long time, and I believe we’ve not been using it to the best of our abilities. We need to do better and connect with as many people as possible in real life!

ABC – Always Be Connecting with Fellow Bitcoiners

Thus far, we established that Bitcoin needs more real-life connections to break free from digital censorship and to make it more accessible to people worldwide.

One way of doing so is to use places like nostr, connect with as many people as possible, and move the conversation from a digital dialogue to a physical one. Either by organizing an event, attending a conference to strengthen that bond, or heading out to town and trying to orange pill people.

All of that can be organized on social media or online, but it’s tricky. Some people might not be comfortable sharing where they are or strictly use their profile to help spread the message in a particular matter.

This is where the Bitcoin Social Layer comes in. I am a big fan of the Orange Pill App, a dedicated app to meet Bitcoin’s nearby and engage with them directly. The idea is not to spend your day endlessly scrolling in the app but rather to actually find people nearby, connect, and find a place to meet in real life. It takes the digital realm out of the equation and only uses the app to show you Bitcoiners nearby.

Because you already know that all users on there are Bitcoiners and want to help the ecosystem out, there is no need to make small talk or try to figure out if the person you’re engaging with wants to meet. Most users on OPA are engaging to meet fellow plebs. Personally, I love using OPA at conferences because it facilitates meeting fellow visitors and potentially meeting connections in real life.

I also like such apps to do some orange pilling both for merchants and private people. I can show a small business that there is a large group of potential customers around. All they need to do is to accept Bitcoin or, even better, get on the app and engage.

The same applies to people who have yet to embark on the journey down the rabbit hole. If they can see fellow Bitcoiners nearby, possibly even find plebs who share similar interests, and get on board this way, the whole community benefits by expanding with local Bitcoin hubs.

We need such bridges between the digital and physical worlds right now. The Bitcoin movement is silent; it grows in the background, and I believe it’s time to put it upfront and make it available to as many people as possible.

This is a guest post by Joël Kai Lenz. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

​ Interacting in person leads to deeper connections, more nuanced dialogue, and better understanding. Bitcoiners should take advantage of that. 

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BitVM Just Got A Massive Upgrade

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The introduction of BitVM smart contracts has marked a significant milestone in the path for scalability and programmability of Bitcoin. Rooted in the original BitVM protocol, Bitlayer’s Finality Bridge introduces the first version of the protocol live on testnet, which is a good starting point for realizing the promises of the Bitcoin Renaissance or “Season 2”.

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Unlike earlier BTC bridges that often required reliance on centralized entities or questionable trust assumptions, the Finality Bridge leverages a blend of BitVM smart contracts, fraud proofs, and zero-knowledge proofs. This combination not only enhances security but also significantly reduces the need for trust in third parties. We’re not at the trustless level that Lightning provides, but this is a million times better than current sidechains designs claiming to be Bitcoin Layers 2s (in addition to significantly increasing the design space for Bitcoin applications).

The system operates on a principle where funds are securely locked in addresses governed by a BitVM smart contract, functioning under the premise that at least one participant in the system will act honestly. This setup inherently reduces the trust requirements but has to introduce additional complexities that Bitlayer aims to manage with this version of the bridge.

Source: https://blog.bitlayer.org/introducing_finality_bridge/

The Mechanics of Trust

In practical terms, when Bitcoin is locked into the BitVM smart contract through the Finality Bridge, users are issued YBTC – a token that maintains a strict 1:1 peg with Bitcoin. This peg is not just a promise but is enforced by the underlying smart contract logic, ensuring that each YBTC represents a real, locked Bitcoin on the main chain (no fake “restacked” BTC metrics). This mechanism allows users to participate in DeFi activities like lending, borrowing, and yield farming within the Bitlayer ecosystem without compromising on the security and settlement assurances that Bitcoin provides.

While some in the community might find these activities objectionable, this type of architecture allows users to get some guarantees that they previously could not hope to get with traditional sidechain designs, with the added bonus that we do not need to “change” Bitcoin to make it happen (although covenants would make this bridge design completely “trust-minimized, which would effectively make it a “True” Bitcoin Layer 2). For more details about the different levels of risks associated with sidechains designs, take a look at Bitcoin Layers assessment of Bitlayer here.

However, until such advancements come to fruition, the Bitlayer Finality Bridge serves as the best realization of the BitVM 2 paradigm. It’s a testament to what’s possible after the dev “brain drain” from centralized chains back to Bitcoin. Despite all the challenges that BitVM chains will face, I remain exceptionally excited at the prospect of Bitcoin fulfilling its destiny as the Ultimate Settlement Chain for all economic activity.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Guillaume’s articles in particular may discuss topics or companies that are part of his firm’s investment portfolio (UTXO Management). The views expressed are solely his own and do not represent the opinions of his employer or its affiliates. He’s receiving no financial compensation for these Takes. Readers should not consider this content as financial advice or an endorsement of any particular company or investment. Always do your own research before making financial decisions. 

 The BitLayer Finality Bridge is Delivering On The Promises of BitVM – While still far from a fully trustless system, the progress made over the past year is remarkable 

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Bitcoin Banks: We Should Build Them Ourselves

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Bitcoin banks are going to happen. We already have a few of them. We’re going to have more of them. Existing legacy banks are going to start offering services. New banks are going to be founded around Bitcoin. This is completely unavoidable at this point. Bitcoin doesn’t scale. Even absent that, people value other services that inherently require other parties. Debt being the chief one.

This is an inescapable reality.

Even if we could snap our fingers and roll out every well specified opcode and covenant proposal at once, it would still take a lot of time to begin building out self-custodial layers that could compete with something like credit unions and banks offering bitcoin accounts at scale. That is not a problem that can be trivially solved overnight.

So what can we do? We need to embrace a localist attitude around making interaction with your bitcoin easy. This requires a two pronged approach, one involving technical development and the other involving, I hate to say it, lobbying.

There already exist pieces of software like LNDHub or LNBits that allow people to offer custodial accounts for Lightning. We need a lot more software like this, and we need it to be miles better. It needs to not involve tinkering around on the command line and hooking up independent software, or perusing Github to follow manual installation instructions, or fumbling around trying to fix dependencies mismatches.

It needs to just work.

Click, sync to the network, done. It needs to be something that power users who are still not very tech savvy can run safely, and not lose other people’s money. It needs to support more than basic accounts for Lightning. Ecash offers privacy, which would be something important when it comes to small groups of people who know each other. You don’t want your friend seeing what you spend your money on. It needs to support things like Unchained or Nunchuck style on-chain self custody. People aren’t going to want to hold all their friends and family’s life savings, but holding a recovery key to safeguard them from their own mistakes is another matter.

We need the software that will actually scale this type of user interaction beyond a bunch of activist nerds online.

We also need a regulatory carve out. There needs to be a clear acknowledgement that running this type of software for friends and family with trivial amounts of money, say thousands of dollars, and without charging anything for it, is an unregulated activity. Helping friends and family interact with Bitcoin safely and easily, and for free, does not make you a bank. The idea of a few thousand dollars needing to comply with the regulations banks managing billions of dollars do is frankly absurd.

This is the path forward given the current constraints of Bitcoin, and the reality of growing and accelerating adoption, that leads us away from a system that eventually becomes completely captured and neutered by legacy financial institutions.

Instead of depending on them to deal with the current scaling limitations of Bitcoin, we depend on each other. 

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

 Bitcoiners shouldn’t sit around and wait for fiat banks and financial companies to offer services built on Bitcoin, we should do it ourselves. 

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Galoy Launches Bitcoin-Backed Loan Software, Sets Groundwork For Open-Source Banking

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Founder: Nicolas Burtey

Date Founded: September 2019

Location of Headquarters: United States

Number of Employees: 11

Website: https://www.galoy.io/

Public or Private? Private

Last week, Galoy launched Lana, software that enables banks to accept bitcoin as collateral for loans.

Lana helps community and challenger banks (the banks with which Galoy is looking to work) to offer bitcoin-backed loans to various types of customers.

“Some banks might want to use it to sell to retail, and some might want to use it to sell commercial customers or high-net-worth individuals,” Burtey told Bitcoin Magazine.

In offering such loans to a wide array of customers, Burtey believes that the high cost of borrowing currently associated with such products will come down.

“Today’s interest rates are 12% to 15% if you want to get a loan using your bitcoin as collateral,” said Burtey.

“The rates are high because there are so few financial institutions offering this type of product. We see an opportunity now that the regulations are allowing banks to do things with bitcoin,” he added.

“We think a lot of banks will want to enter this market.”

If Burtey is correct in his prediction that banks are keen to offer bitcoin-backed loans, this will not only lower rates for such loans, but it will also introduce open-source Bitcoin software into the world of banking, which could initiate a new trend in the industry.

But more on that in just a minute. First, some background on Galoy.

Galoy’s History: From Blink Wallet To Lana

Founded in September 2019, Galoy had intentions to enable banks to use bitcoin from the start, but it had to hold off on doing so due to an unfriendly regulatory environment.

So, instead, it focused its efforts on creating and supporting Blink wallet (which was originally called the Bitcoin Beach wallet and which Galoy recently sold), a custodial Bitcoin and Lightning wallet predominantly used at first in El Salvador and then in Bitcoin circular economies globally.

“Galoy’s mission was to onboard banks to Bitcoin five years ago,” said Burtey.

“But the regulatory environment was so bad during the last five years that we decided to create Blink. The reason we are now focusing on our original mission is because with the end of Choke Point 2.0 and the repeal of SAB 121, we think now is the perfect time to help banks adopt Bitcoin.”

Burtey spoke about his work in creating and growing Blink fondly and shared that he had to stop working on the project only because it would be too difficult to continue managing it while also aiming to serve a new type of clientele.

“Blink is a B2C (Business-To-Customer) play, and it’s hard as an early-stage startup to focus on too many things,” explained Burtey.

“Galoy is a B2B (Business-To-Business)-driven business, and we want to work with banks and financial institutions,” he added.

“It’s good to be focused on just one thing.”

And, as mentioned, that one thing will now be Lana.

How Lana Works

Lana is software that Galoy helps banks integrate and manage for a subscription fee. With this software, banks can issue bitcoin-backed loans under the terms they create.

“We’re not the ones deciding how much interest will be charged or anything like that,” explained Burtey.

“We give banks the platform to do this, and then they can figure out their cost of capital, the duration of the loan, the liquidation price for the bitcoin in the loan and the rate at which they want to lend,” he added.

“We’re giving you software, and helping you run and automate that software.”

Something else that Galoy doesn’t do for banks is custody the bitcoin provided as collateral for the loans they issue. Each of the banks with whom the company works is responsible for selecting their own custodian.

“You can go to BitGo or Fireblocks or each loan can have its own multisig,” said Burtey. “We’re agnostic on custody.”

With that said, Lana helps banks monitor the bitcoin in custody so that banks can be aware of whether or not collateral is nearing liquidation levels.

“A key piece of this product is risk management,” said Burtey.

“Bitcoin is volatile, and the bank will need a tool to show that it’s taking calculated risk. So, we’ll provide banks with a dashboard to monitor this risk,” he added.

An example of the risk-monitoring dashboard for bitcoin-backed loans that Galoy has created

Who Will Use Lana?

Galoy is targeting community banks and other smaller financial institutions with this new product mostly because they think these smaller players will benefit most from it — and because the big banks likely won’t need such a product.

“We don’t think JP Morgan will really want to work with us,” said Burtey. “They’re probably building something like this themselves, whereas a smaller bank, a credit union or small company probably isn’t.”

Burtey also understands that smaller lenders’ incorporating Lana as opposed to building something comparable themselves can save these financial institutions a significant amount of time and effort.

“Our goal is to say, ‘Look, you can develop this internally, and it will take you six months, a year or longer depending on how much you know about Bitcoin,’” said Burtey. “‘Or we have a lending product as a service for you, and you can launch it much more quickly.’”

And as Burtey and his team onboard their first round of smaller banks, they’ll not only be making history in enabling more banks to accept bitcoin as collateral for loans, but they’ll potentially be altering the trajectory of banking in general by introducing open-source software to it.

Open-Source Bitcoin Banking

Burtey’s long-term vision for Galoy is to do much more than just help banks issue bitcoin-backed loans. He’s looking to introduce open-source software into banking as more banks begin to embrace Bitcoin.

However, it’s important to note that Lana isn’t open-source just yet. It’s fair-source software, and, under such a license, code becomes open-source after two years.

“It’s a delayed open-source system, but it’s all available on GitHub,” said Burtey. “You can go and try it, test it, and play with it on your own.

Under the fair-source license, no company other than Galoy can sell the product to a bank right now, allowing Galoy to profit while still building with auditable code.

“We sell the deployment, and we help banks to plug in to their custodian,” explained Burtey. “We’re building in the open — but we also want to generate revenue.”

Beyond helping banks implement Lana, Burtey’s wants to develop open-source “core banking software,” as he’s looking to disrupt the “core ledger” oligopoly.

“The core ledger is where banks store the account data, customer information and transaction details,” said Burtey. “It’s the source of truth for banks.”

And only three companies — FIS, Fiserv and Jack Henry — have the core ledger market cornered.

“These are all like hundred billion dollar companies that you’ve probably never heard about because all they do is focus on selling software to banks,” said Burtey.

“Our long-term goal is to disrupt this industry by making something that is open source,” said Burtey. “Today, there is no company that does core banking with the idea of open source, and so we’re working towards this.”

Burtey envisions a world in which open-source software can make it much easier for someone to start a Bitcoin bank. (For those who wince at the words “Bitcoin” and “bank” being used in tandem, might I remind you that it was the legendary Hal Finney himself who wrote that bitcoin-backed banks would serve as a scaling solution.)

“To start a bank today is a very expensive and complicated process,” said Burtey. “You have to pay $100,000 plus just to purchase the core ledger technology.”

Burtey then referenced his own experience in starting Blink wallet, essentially a bitcoin bank run on open-source code, before continuing.

“I just went to El Salvador and started what was effectively my own bank because I wanted to,” said Burtey.

“We need to reinvent how core banking software is being made in the world of Bitcoin, and I think this is where open-source becomes relevant,” he added.

“This is really why I think the world of banking and Bitcoin will be very different from the world of banking with fiat, and I think we’re one of the companies at the forefront of this.”

 Galoy founder and CEO Nicolas Burtey wants to help more borrowers use bitcoin as collateral for loans while introducing open-source software into the traditional banking stack. 

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