Friday, December 8

A conversation with the creator of Bitcoin’s Lightning Network | Bitcoin Portal

Tadge Dryja, the developer who wrote the paper from Lightning Network, was in El Salvador on November 18 to participate in the Labitconf conference.

While the Portal do Bitcoin interviewing Jameson Lopp, Dryja appeared to greet him excitedly: it was the first trip he had taken in nearly two years because of the pandemic.

He spent all this time in Boston (USA), the city where he lives and teaches at MIT. At the university, he is part of the MIT Digital Currency Initiative (DCI), a study group created to develop innovations for cryptocurrencies.

Dryja was invited to speak at Labitconf about Lightning Network, a second-tier bitcoin solution he developed in 2016 together with Joseph Poon.

Five years ago, the two authors were looking for a way to make using bitcoin as a medium of exchange simpler. The alternative they came up with was to create secondary channels where transactions would be processed outside the main currency network, thus allowing thousands of transactions to be made in a matter of seconds and at almost no cost.

Although he was the author of Lightning, Dryja doesn’t work directly with the technology and currently focuses on other projects that also aim to help bitcoin evolve.

Read the full interview with Tadge Dryja below.

How do you like the weather in El Salvador? Enjoying the conference?

I’ve been to several conferences but this one is different, the government is involved and it’s very big. It’s bitcoin… but it doesn’t look like bitcoin. There are a lot of different people and “crypto” people in general. Bitcoin folks are usually very religious and maximalist, but this one is different, it feels like a more open crypto conference.

Everyone is talking about Lightning Network here and there’s a conference going on in parallel just on the topic. Why aren’t you there?

I do not know. The Lightning Network conference… I feel bad because I really wanted to go, I was wondering if I should go there and say ‘hey I want a ticket’ but I feel weird, I don’t want the guy going ‘hey , I wrote to Lightning Network’. I said a few times last night and people didn’t believe it. Anyway, there’s so much company working on Lightning that at this point who cares, they don’t want to talk to me. laughter

But I also wrote Discreet Log Contracts and saw that there are now three or four startups building on top of this kind of smart bitcoin contract, and that’s what I wanted to see and talk to them about. The community that works with this is still small and I wanted to give some ideas.

So are you focused on Discreet Log Contracts right now?

I’m actually working on a third project now called Utreexo. Unlike Lightning, it’s a first-tier solution that makes everything smaller on the bitcoin network.

In bitcoin, you basically try to track who owns what. There’s the blockchain, which is pretty big, but you can actually throw away the rest of the blockchain after you download it.

So you can go into settings, download what you need to see who owns what, and then delete the rest. The idea is that you don’t need to keep loading the blockchain, you have to download it to see what the Alice sent to the Bob and what the Bob sent to the Carol, but in the end you know who owns what, their public keys and their values.

With Utreexo you also get rid of that. You say, I don’t know who owns what. I know next to nothing, all you have is this little kind of cryptographic hash, and when you want to spend money, you prove you have bitcoin.

Currently in bitcoin, if you want to spend bitcoin, you make a transaction and you say ‘hey, this is the bitcoin I’m spending and I want to send it there’. Then the nodes look and see ‘oops, this bitcoin exists, it’s in my database’, I’m going to delete it and move it here. With Utreexo you no longer have a database, everyone just proves that they have bitcoin.

The result of this is that everything gets a lot smaller, you can run a full node and it’s kind of 2kb of space.

Does that mean bitcoin could run outside of the blockchain? How are we going to verify transactions?

Everything is still on the blockchain, you still only need to download everything once and then delete it, but you don’t need to keep all that amount of data on your hard drive. So it’s good for a cell phone, or a raspberry pie. But you’ll still have to download and check everything to know that you’re fully validated and secure, but don’t take up as much space on your machine anymore.

It’s not that Utreexo will make transactions cheaper, but it will make it easier and faster to run the software, making it more accessible for people. In the beginning of bitcoin it was very easy to run a full node, you would download bitcoin in a few minutes, run it, and make transactions. Today, most people don’t run the bitcoin node and I think this is a problem.

Here in El Salvador, for example, they use Chivo or these cell phone wallets. In some of these you don’t even have your own private key. In all of them you are not checking any signatures. The server might say ‘you have money’, but they might lie to you and you have no idea.

It’s not just Chivo, even good wallets, you as a user don’t check security. And I understand why: it’s getting harder and harder to run a bitcoin node, you need a good computer to do this. So Utreexo comes to make it easier to run node even on a bad computer or even an old cell phone.

And for Utreexo to be implemented in the bitcoin network would it need a soft fork?

No need for a fork. I don’t want to say that you can run Utreexo today, but the software works without any changes to the bitcoin network. So there can be people running and nobody knows about it.

This I think is the coolest bitcoin, if you want it, you use it. If not, ignore it. It’s up to each person. I know some people will say ‘I don’t trust this’ but that’s a big change because deep down you’re using this new ‘evidence’ mechanism. If you look, feel safe and think that you can now run the bitcoin node and check the signatures, you can because it’s so small.

After Lightning gained a lot of popularity back in 2019, you seemed kind of unmotivated because there was a kind of hype that you didn’t expect around the technology… now 2 years later, Lightning has only become more important. Being here in El Salvador and seeing everyone using something you helped build, how do you feel? Are you still afraid?

I don’t know, it’s not a “uhu, I got it!” feeling. On the one hand, it’s great! Super cool, maybe it will help. But deep down, I don’t know if it actually helps. I think that my thinking is part of being an engineer working with bitcoin: you are the least optimistic person because everything we work on revolves around the problem.

If something is working, it means I’m done and go to the next problem. So the focus is on the problem all the time… it’s hard for me. When I got here I went to see how Chivo works and I thought, ‘oh no, this isn’t good’, stuff like that, so I’m always looking at the problem.

And to be honest, I’m not really working on Lightning anymore, so I’m wondering whether or not I should focus on that anymore. I know there is this and that problem and I wonder if I should solve them. The feeling is more of responsibility. And if everything that’s going on here goes wrong and everyone loses their money and they say it’s because of Lightning… then it’s cool that people are committed to building on it, but we’re not in a safe place where everything is yet. Perfect. It still has problems to fix.

What are these problems?

The truth is, it’s hard to be decentralized. There is so much pressure to centralize things, let’s use Coinbase, use Kraken, leave the money in exchanges and not run a real bitcoin node. There’s a lot of pressure because doing it is so much easier and faster. Same thing with Chivo, it’s easy and the government comes and says ‘here, get $30’, but deep down you don’t own your bitcoin.

Lightning Network can also become centralized. I always thought that would happen and everyone said no, but I already thought that there would be nodes that would have lots and lots of channels and you would end up having something like the internet. If you have an internet connection, it’s just your house connected to a big data center with lots of other connections and that’s okay, that’s how life works. There will always be big companies and small individuals.

But hopefully Lightning Network’s goal is: if you have a channel you can always close it, you always have the option to say ‘ok I’m leaving’. If you are connected to a bank, you cannot get your money out without their permission. With Lightning Network you may not like the person or company you have a channel with, and close it without asking permission. This is very important and a great backup for the user.

Maybe I’m connected to Chivo’s server and the government decides to create a big server for Lightning Network where everyone has a channel for it, this is better than what they have now because at least people can say they have their own channels. that no one can control.

But the reality of Chivo and many of Lightning’s built-in wallets today is that you don’t have your own channel and private key, so if the server goes down, you’re stuck.

And how can we solve this problem?

Encourage people to have their own Lightning Network channels.

I think Chivo and most of these wallets aren’t using Lightning, they don’t have a channel. The user sees in their wallet that they have 0.01 bitcoin, but you don’t really have anything if you don’t have a private key and can’t decide which channel to use. You just have a bank account that says you have this money, but you can’t do anything on your own and that’s a big problem.

You go to the bank and say ‘hey I can get all my money’ and usually they let you, but you still have to ask. They can say no, say the police said they have to block your account, or whatever. But with Lightning you can’t say no because you’re not asking, you’re just taking your channel and taking your money. And for me that’s a big distinction and I don’t know if everyone cares so much about it.

Are you considering getting back to work with Lightning Network?

I don’t know… I don’t know if it would help because I would be telling people ‘hey do this’, ‘hey change that’ and that’s hard. If Satoshi Nakamoto came to bitcoin now with a smack, no one would listen, just as no one will listen to me about Lightning… and they shouldn’t, I haven’t worked on the project directly for years, I think the last time in late 2018 at a conference in Australia.

So what’s your focus now?

There are other projects that I’m excited about, like Discreet Log Contracts. I’ve been talking to staff and I think I have ideas that might help. It’s somewhat similar with Lightning, it’s also a second tier smart contract but it’s not focused on payments but rather a way to enter into a contract with a counterparty. For example, we can bet on the price of oil, if it goes up you will earn more coins, if it falls, I will win.

But I’m also with other projects that aren’t focused on bitcoin. Over at MIT we’re working with the Federal Reserve, the US Central Bank, which is weird because it’s kind of the opposite of everything I’ve ever done, but whatever. They came to us to help them think about the best way to do a CBDC, but I don’t know if I want to continue with that.

And of course there’s Utreexo which is my focus in bitcoin and where I’ve been working for the past two years.

We’ve talked a lot about bitcoin issues, but are you hopeful about the currency’s future? We are on the right way?

Being here in El Salvador I feel much more optimistic than before. Good to see so many new people working with bitcoin. This was something I was worried about if I was going to succeed because there aren’t so many people dedicated to this in the market that grows elsewhere, but there is still a lot of interest and there are still several improvements.

Taproot is new and really cool with the new aggregated signature system. I think Utreexo is also very cool and is already kind of working. Hopefully over time this will become more of a part of how bitcoin works, so there are a lot of cool things we can look forward to in the future.