This is a value for value post: see the explanation in the footer.
This is by way of a reply and expansion of what @taskmaster4450 wrote here: Wrapped Bitcoin Using Hive: How That Would Change Things.
Lightning and Taro
The Lightning people think they will wrap "shitcoins" and "stablecoins" (many of them consider these to be the same) on Lighting. In fact this is the basis for a great deal of VC funded work by Lightning Labs on something called Taro. Try as hard as I might, I can't figure out what they're doing. You can see for yourself in their Medium post.
The reality is Lightning is the worst place to wrap anything.
I'm pretty sure we'll be wrapping BTC before Lightning is usefully wrapping anything.
Bitcoin on Hive
What I'm really waiting for is a solid way to wrap Bitcoin on Hive. Something like an over-collateralised multi-sig kind of thing which is the direction the @spknetwork and @disregardfiat are heading in.
That might sound like gobbledegook but in reality it builds on the things I wrote about trust and value here. If I were to wrap $5,000 worth of BTC and pass it into the control of others, if those people's total skin in the game or their own funds at risk greatly exceed $5,000 I'm happy to trust them.
Once we have a token on Hive that represents one Sat, we can move those around all day every day with our nearly zero fees (assuming you have enough Resource Credits). This would be so much easier than the Lightning Network.
Lightning still sucks
And just to rub this in, here's an explanation of what happened on my node this morning. A few weeks ago, just before the current explosion in fees on Bitcoin, my direct channel to the Lightning Node used by the Muun wallet shut down. I didn't do it deliberately but something caused my node not to like what their node was doing and it shut a very useful channel for me.
At just about this time Muun ran into various problems because internally they aren't really a Lightning wallet. The swap on and off the BTC main chain when people send and receive Lightning. That just isn't tenable when the fees sky rocket.
I emailed them and asked them to re-open a channel to me and finally they did that this morning. Previously I had a 5,000,000 or 5m Sat channel. This morning they opened to me a 21m Sat channel which is very big and nice.
Lightning Channels are like strings on an Abacus
The problem with this is that immediately after opening this channel, I started routing payments in from their channel and out of other channels of mine. I charge a few Sats for this so I do make some money, but the problem was that Sats which I have waiting to go out on behalf of users, suddenly now sit on my side of a channel to Muun instead of on more generic channels that are good for other payments.
Fees
I did earn about 115k sats in the minutes after they opened the channel, but then I had to pay fees to restock sats (by moving Bitcoin around on chain) and put the Sats in the right places on my node.
Sorry I can't Explain
If all this sounds like gibberish, I'm sorry, I'm doing my best to explain it but it all comes down to the fact that running a Lightning node is far from hands free or simple.
Bitcoin wrapped on Hive would be amazing by comparison!
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I lol'd.
That would be really cool. I'm going to be honest here, I'm a very average (or below) programmer. I'm still in school for computer science and because I have a double major (one also in neuroscience) I can't devote enough time to really allow my skills to flourish. In the space of academia I have done blockchain based research (even published one recently), but this is mostly in the dapp space more than the infrastructure space. I really really really wanted to build on Hive for this, but it feels like there is some inadequacy in the "bridge" solutions that we have. I don't know that I'm prepared to build something of this magnitude that would be sufficiently decentralized and permission-less.
I never really understood the "plug-in" feature on the nodes here on Hive. To your knowledge is it possible to build an extra consensus layer on top of this? I would be willing to attempt to help with something of that nature if it is. If this isn't the case, what are the limitations/capabilities of plugins?
This is @disregardfiat's wheel house. I'm not a deep understander of the core functions of Hive.
I gotcha. Well maybe I'll reach out and ask some questions. I fully expect to start pumping stuff out soon (as long as I can make the time).
Kind of get what you mean I think, @brianoflondon: To move some wrapped BTC around on Hive doesn’t cost anything compared to real on chain transactions on the Bitcoin blockchain. That way we could for example delegate wrapped BTC to others which they could use as HP Forchheim votings. Stuff like that, right?
What I do not understand…we seem to have had such a token already. I saw WBTC (Wrapped Bitcoin) in my Hive Engine Wallet the some time ago, currently I cannot find it again. Is that only a trash token behind and not „real“ wrapped BTC?
Oh or it was this BBH Token, Bitcoin backed Hive. Isn’t that something like you meant?
The WBTC is on Hive Engine but there really isn't enough use or liquidity to make it useful. I think its also completely within the control of the Hive-Engine guys. Not that I don't trust them, but I'd like something a bit more developed.
Understand. 👍🏻
Nice the abacus is such a great example to showcase it. Wrapping other coins to send them around via LN and Taro , that is , an amazingly stupid plan. 10/10 Points on Jack Scale calibrated by the One Flew Over the Cuckoo's Nest Scala to be committed immediately to a psychiatric institution.
Thanks for sharing your view and experience, I understand what you described since I had also to find alternatives…
Luckily, hour service is still alive and running
The prospect of wrapping Bitcoin on Hive would be a solution that leverages the benefits of trust, value, and low to no fees on the Hive blockchain, while highlighting the limitations and complexities of the Lightning Network. Bringing wrapping to Hive would boost this ecosystem with new cases all over the spectrum.
How much transaction time would be reduced with this lightning services?
Not sure I understand. Hive is 1 to 2 seconds usually. Lightning transactions take anywhere from 3 to 60s in my experience (and sometimes fail).
So people still use lightening as a means to store their bitcoin?
I sure hope not! I wouldn't consider Lightning nodes a safe place to hold BTC. I do it because I have to.
I have always appreciate every of your work because they're is s lit to learn from it and also the work well done happening on Hive.
#hive #posh
Lightning is basically a more centralized infrastructure than Bitcoin's base layer, since there are so many fewer nodes, and Lightning goes over most commoners' heads, so, it's not likely to be adopted for anything
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STOPTo support your work, I also upvoted your post!