Nostr founder: Drivechain is the future of Bitcoin

Source: LayerTwo Labs

I. Introduction

At the end of 2022, a decentralized social protocol called Nostr created a stir across the Web3 industry. Nostr, short for Notes and Other Stuff Transmitted by Relays, is an open-source decentralized social network protocol that was launched in 2020. The project's founder, Fiatjaf, is also a developer of Bitcoin and the Lightning Network.

The innovation of Nostr lies in its completely decentralized social protocol, allowing users to publish content and interact with others, thereby truly addressing the disastrous decline of censorship. The emergence of Nostr attracted a large number of users' attention and participation, quickly gaining fame.

However, Nostr was also banned by Twitter's current CEO Elon Musk due to its controversial content. This incident sparked debates about social media censorship and freedom of speech. Nevertheless, Twitter's former CEO Jack Dorsey expressed support for Nostr and personally funded it with 14 BTC. This move sparked heated discussions within the industry and provided Nostr with more exposure and development opportunities.

The explosive popularity and controversy surrounding Nostr have drawn attention and discussions about decentralized social protocols. At the same time, let us take a look back at the developer Fiatjaf's admiration for the geek spirit and his views on the Bitcoin ecosystem he has previously delved into. Image
(Twitter's ban policy at that time)

II. What is Nostr?

Nostr is a simplified protocol that can create a censorship-resistant global "social" network once and for all. Nostr does not rely on any trusted central servers; it is based on cryptographic keys and signatures and does not depend on P2P technology, nor does it issue tokens. Image

So how does it work? Simply put: everyone runs a client, which can be a native client, a web client, etc. To publish certain content (like a post), you sign it with your key and send it to multiple relays (servers hosted by others or yourself). To get updates from others, you can ask multiple relays if they know about those other users. Anyone can run a relay, which is very simple; it does nothing but accept posts from certain people and forward them to others. We also do not need to trust the relays, as the signatures are verified on the client side.

Since Nostr's developer Fiatjaf is also a developer of Bitcoin and the Lightning Network, Nostr natively supports the Lightning Network. The Lightning Network is extremely fast and powerful, capable of handling high-concurrency applications, providing strong support for applications on Nostr.

The Nostr protocol provides building blocks for decentralized social networking. As a finely designed infrastructure, it allows secretive super developers to build products that exceed imagination and are deeply rooted in Bitcoin's core. This is the magic of the Nostr protocol!

III. The Explosive Popularity of the Nostr Decentralized Social Protocol

Nostr's explosive popularity is mainly due to its provision of a brand new social media experience, combining the spirit of Bitcoin and blockchain technology with social media. Image

The key factors that led to Nostr's explosive popularity are as follows:

  ● Decentralization: Nostr is not controlled by any central authority or company. Instead, the network is simply a collection of independently operating data relays (servers). This means that Nostr as a whole is less susceptible to censorship or manipulation by any single entity. This characteristic is highly protective of social media censorship and freedom of speech, which is one of the reasons it attracted more attention and concern.

  ● Anonymity: Unlike many social media platforms, Nostr does not collect user data and sell it to third-party advertisers. No email addresses, phone numbers, or government identities are associated with Nostr accounts. Like Bitcoin, the system only verifies the validity of data through public keys and cryptographic signatures. This means users have complete control over their data and privacy, attracting many privacy-conscious users.

  ● Monetization: Nostr provides a unique monetization system for content creators. Unlike other social media platforms that rely on advertising revenue to pay content creators, Nostr allows content creators to directly monetize their content, with fans able to tip (also known as "zaps"). Nostr infrastructure providers can also monetize their services through Lightning Network payments. This is also thanks to Fiatjaf's experience in building the Lightning Network, which allows users to conduct fast and convenient transactions on Nostr, enhancing the user experience.

  ● Open Source: Nostr's code is available for anyone to view, use, and modify. This allows for transparency and collaboration in the development of the protocol. Anyone can contribute to the development of Nostr, and the community can work together to gradually improve the protocol. Nostr's design is flexible and adaptable, continuously evolving to meet user needs. It makes users feel that they own and have invested in this protocol, which is crucial for the long-term success of the protocol.

The explosive popularity of Nostr is the result of multiple factors working together. Its characteristics of decentralization, monetization, Lightning Network payments, interactivity, and controversy have attracted a large number of users' attention and participation. Because of these factors, Nostr also provides a new paradigm for the application of Bitcoin and blockchain technology in the social media field, showcasing the charm of technology and reflecting Fiatjaf's geek spirit!

IV. The High Recognition of Nostr's Founder for Drivechain

Whether it is Nostr or Bitcoin, there is always an unavoidable issue. Take Nostr, for example, when its daily active users approached 100,000. The pressure on the infrastructure powered by relays became significant, prompting developers to implement CDNs and image optimizers to reduce bandwidth usage, ensuring the smooth operation of the Nostr protocol. So everyone should understand what I am referring to: yes, it is the scalability issue. As for Nostr's scalability issue, we will not discuss it for now; new solutions should emerge once its ecosystem reaches a certain scale. However, the scalability issue of Bitcoin is indeed an urgent matter at present.

As mentioned earlier, the anonymous developer Fiatjaf is not only a builder of Nostr but also an early developer of Bitcoin and has contributed to the Lightning Network community's LNURL. He also created a centralized Ethereum application called Etleneum, utilizing the Lightning Network to enhance the speed and scalability of Bitcoin payments. Like many other Bitcoin users, Fiatjaf prefers not to disclose his real name. He may be steadfastly holding onto that rare Bitcoin spirit in his heart.

Due to his past architectural experience, Fiatjaf's views on Bitcoin scalability carry undeniable authority and constructiveness. Among the many Bitcoin scalability solutions, Fiatjaf seems particularly optimistic about Drivechain, believing that the concept of Drivechain can be achieved through the BIP-301 mechanism or Spacechains mechanism. Image
(Fiatjaf tweeted in 2021: Drivechain is the only hope for BTC)
Moreover, Fiatjaf has repeatedly called for Drivechain on his social media Twitter, also supporting the entire team of LayerTwo Labs led by its founder Paul Sztorc! It is worth noting that Fiatjaf is known in the Bitcoin community for his keen insights and unique perspectives on technology. He has conducted in-depth research and analysis of technological solutions and projects within the Bitcoin ecosystem, offering many valuable viewpoints and suggestions. His voice enjoys wide recognition and influence in the Bitcoin community.

Therefore, Fiatjaf's support and recognition not only reflect the value and innovation of Drivechain within the Bitcoin community but also highlight the significant contributions of Paul Sztorc's LayerTwo Labs team to the future technological development and innovation of Bitcoin. It should be clarified that neither Fiatjaf nor Paul Sztorc, including their team (LayerTwo Labs), has any commercial dealings, so we can see that what they share is more likely a mutual appreciation of technical geeks, which also proves the technical "superiority" of the Drivechain solution!

(Fiatjaf tweeted: We need Drivechain, otherwise the work of thousands of people in the BTC industry over the past 13 years has been in vain)

Fiatjaf believes that Drivechain can solve all the problems currently faced by Bitcoin. Drivechain can enable more possibilities for Bitcoin experiments and new use cases, such as issuing tokens, private transactions, smart contracts, Turing completeness, GameFi, DeFi, oracles, etc. These are all very valuable ecological layouts, but they have never truly landed in the Bitcoin ecosystem because the aforementioned cannot be fully realized on Bitcoin. They either deceive users with concepts or are relegated to custodial solutions like Liquid or RSK, thus failing to achieve the corresponding network effects. Image

In contrast, developers can adopt the Drivechain solution to create various sidechains based on different application scenarios, allowing all these user groups to be satisfied simultaneously. While all scenarios are realized in sidechains, the sidechains do not pose any harm to the Bitcoin main chain. Drivechain seems to solve the "scalability" issue, the blockchain security budget issue, and make Bitcoin more decentralized while accomplishing its tasks.

It is not difficult to see why Fiatjaf continues to be optimistic about and praises Drivechain. If the narrative of the Bitcoin ecosystem wants to rise to a new level, the intervention of the Drivechain solution is undoubtedly necessary, and I believe that day will not be far off.

V. Conclusion

Sometimes, thousands of people may spend ten years or more trying to tackle a difficult issue, and the significance of its existence or birth is that it can solve more and greater problems, benefiting those who regard it as a symbol of liberation and revolution. Today, in the rapidly developing Web3 industry, the development of the Bitcoin ecosystem cannot be delayed. The emergence of Drivechain is essential for the Bitcoin ecosystem. It can provide scalability and innovation for the Bitcoin network while ensuring the security of the Bitcoin main chain, thus comprehensively meeting the development needs of the Bitcoin ecosystem and promoting the growth and expansion of the entire ecosystem.

I believe that with the intervention of the Drivechain solution, the Bitcoin ecosystem will also usher in a period of prosperity. Although Drivechain may not explode in popularity across the network like Nostr, it will be "hotter" than Nostr in a more lasting way, just like Bitcoin!

Special Notes:

1): Nostr is an extremely simplified decentralized social protocol that does not rely on any centralized servers. The client information publishing and transmission are completed by non-communicating relays, making the publication and transmission of information censorship-resistant. Any user can create public and private keys without relying on specific social accounts or domain names, making it easier for users to join and freeing them from the constraints of third-party servers. It has gained popularity in the Bitcoin community and was banned by Twitter's current CEO Elon Musk, while also prompting Twitter's former CEO Jack Dorsey to personally fund it with 14 BTC.

2): Fiatjaf is an anonymous developer who is the developer of Nostr and also a developer of Bitcoin and the Lightning Network.

3): Fiatjaf believes that Drivechain will bring a new paradigm to the Bitcoin ecosystem.

References:

1): https://fiatjaf.com/drivechain.html (Original text of Fiatjaf's views on Drivechain)
2): https://foresightnews.pro/article/detail/24607
3): https://twitter.com/fiatjaf
4): https://link3.cc/layertwolabs

Below is the original text of Fiatjaf's views on Drivechain (the following article includes both the English version and the Chinese translation, along with corresponding links to the original text):

Understanding Drivechain requires a shift from the paradigm most bitcoiners are used to. It is not about "trustlessness" or "mathematical certainty", but game theory and incentives. (Well, Bitcoin in general is also that, but people prefer to ignore it and focus on some illusion of trustlessness provided by mathematics.)

Here we will describe the basic mechanism (simple) and incentives (complex) of "hashrate escrow" and how it enables a 2-way peg between the mainchain (Bitcoin) and various sidechains.

The full concept of "Drivechain" also involves blind merged mining (i.e., the sidechains mine themselves by publishing their block hashes to the mainchain without the miners having to run the sidechain software), but this is much easier to understand and can be accomplished either by the BIP-301 mechanism or by the Spacechains mechanism.

How does hashrate escrow work from the point of view of Bitcoin?

A new address type is created. Anything that goes in that is locked and can only be spent if all miners agree on the Withdrawal Transaction (WT^) that will spend it for 6 months. There is one of these special addresses for each sidechain.

To gather miners' agreement bitcoind keeps track of the "score" of all transactions that could possibly spend from that address. On every block mined, for each sidechain, the miner can use a portion of their coinbase to either increase the score of one WT^ by 1 while decreasing the score of all others by 1; or they can decrease the score of all WT^s by 1; or they can do nothing.

Once a transaction has gotten a score high enough, it is published and funds are effectively transferred from the sidechain to the withdrawing users.
If a timeout of 6 months passes and the score doesn't meet the threshold, that WT^ is discarded.

What does the above procedure mean?

It means that people can transfer coins from the mainchain to a sidechain by depositing to the special address. Then they can withdraw from the sidechain by making a special withdraw transaction in the sidechain.

The special transaction somehow freezes funds in the sidechain while a transaction that aggregates all withdrawals into a single mainchain WT^, which is then submitted to the mainchain miners so they can start voting on it and finally after some months it is published.

Now the crucial part: the validity of the WT^ is not verified by the Bitcoin mainchain rules, i.e., if Bob has requested a withdraw from the sidechain to his mainchain address, but someone publishes a wrong WT^ that instead takes Bob's funds and sends them to Alice's main address there is no way the mainchain will know that. What determines the "validity" of the WT^ is the miner vote score and only that. It is the job of miners to vote correctly -- and for that they may want to run the sidechain node in SPV mode so they can attest for the existence of a reference to the WT^ transaction in the sidechain blockchain (which then ensures it is ok) or do these checks by some other means.

What? 6 months to get my money back?

Yes. But no, in practice anyone who wants their money back will be able to use an atomic swap, submarine swap or other similar service to transfer funds from the sidechain to the mainchain and vice-versa. The long delayed withdraw costs would be incurred by few liquidity providers that would gain some small profit from it.

Why bother with this at all?

Drivechains solve many different problems:

It enables experimentation and new use cases for Bitcoin

Issued assets, fully private transactions, stateful blockchain contracts, turing-completeness, decentralized games, some "DeFi" aspects, prediction markets, futarchy, decentralized and yet meaningful human-readable names, big blocks with a ton of normal transactions on them, a chain optimized only for Lighting-style networks to be built on top of it.

These are some ideas that may have merit to them, but were never actually tried because they couldn't be tried with real Bitcoin or interfacing with real bitcoins. They were either relegated to the shitcoin territory or to custodial solutions like Liquid or RSK that may have failed to gain network effect because of that.

It solves conflicts and infighting

Some people want fully private transactions in a UTXO model, others want "accounts" they can tie to their name and build reputation on top; some people want simple multisig solutions, others want complex code that reads a ton of variables; some people want to put all the transactions on a global chain in batches every 10 minutes, others want off-chain instant transactions backed by funds previously locked in channels; some want to spend, others want to just hold; some want to use blockchain technology to solve all the problems in the world, others just want to solve money.

With Drivechain-based sidechains all these groups can be happy simultaneously and don't fight. Meanwhile they will all be using the same money and contributing to each other's ecosystem even unwillingly, it's also easy and free for them to change their group affiliation later, which reduces cognitive dissonance.

It solves "scaling"

Multiple chains like the ones described above would certainly do a lot to accommodate many more transactions that the current Bitcoin chain can. One could have special Lightning Network chains, but even just big block chains or big-block-mimblewimble chains or whatnot could probably do a good job. Or even something less cool like 200 independent chains just like Bitcoin is today, no extra features (and you can call it "sharding"), just that would already multiply the current total capacity by 200.

Use your imagination.

It solves the blockchain security budget issue

The calculation is simple: you imagine what security budget is reasonable for each block in a world without block subsidy and divide that for the amount of bytes you can fit in a single block: that is the price to be paid in satoshis per byte. In reasonable estimative, the price necessary for every Bitcoin transaction goes to very large amounts, such that not only any day-to-day transaction has insanely prohibitive costs, but also Lightning channel opens and closes are impracticable.

So without a solution like Drivechain you'll be left with only one alternative: pushing Bitcoin usage to trusted services like Liquid and RSK or custodial Lightning wallets. With Drivechain, though, there could be thousands of transactions happening in sidechains and being all aggregated into a sidechain block that would then pay a very large fee to be published (via blind merged mining) to the mainchain. Bitcoin security guaranteed.

It keeps Bitcoin decentralized

Once we have sidechains to accommodate the normal transactions, the mainchain functionality can be reduced to be only a "hub" for the sidechains' comings and goings, and then the maximum block size for the mainchain can be reduced to, say, 100kb, which would make running a full node very very easy.

Can miners steal?

Yes. If a group of coordinated miners are able to secure the majority of the hashpower and keep their coordination for 6 months, they can publish a WT^ that takes the money from the sidechains and pays to themselves.

Will miners steal?

No, because the incentives are such that they won't.

Although it may look at first that stealing is an obvious strategy for miners as it is free money, there are many costs involved:
  1. The cost of ceasing blind-merged mining returns -- as stealing will kill a sidechain, all the fees from it that miners would be expected to earn for the next years are gone;
  2. The cost of community goodwill -- when participating in a steal operation, a miner will suffer a ton of backlash from the community, which is not something to be ignored. If they are public entities they can be physically harassed, receive death threats, or be persecuted by the State justice system;
  3. The cost of coordination -- assuming miners are just normal businesses, they just want to do their work and get paid, but stealing from a Drivechain will require coordination with other miners to conduct an immoral act in a way that has many pitfalls and is likely to be broken over the months;
  4. The cost of miners leaving your mining pool: when we talked about "miners" above we were actually talking about mining pools operators, so they must also consider the risk of miners migrating from their mining pool to others as they begin the process of stealing;
  5. The cost of Bitcoin price going down: If a steal is successful that will mean Drivechains are not safe, therefore Bitcoin is less useful, and miner credibility will also be hurt, which are likely to cause the Bitcoin price to go down, which in turn may kill the miners' businesses and savings;
  6. Another small way the community goodwill can end up affecting self-interested miners is that if they attempt to steal, even if failing at the end, that will contribute to growing concerns over exaggerated miners power over the Bitcoin ecosystem, which may end up causing the community to agree on a hard-fork to change the mining algorithm in the future, or to do something to increase participation of more entities in the mining process (such as development or cheapment of new ASICs), which have a chance of decreasing the profits of current miners.

Another point to take in consideration is that one may be inclined to think a newly-created sidechain or a sidechain with relatively low usage may be more easily stolen from, since the blind merged mining returns from it (point 1 above) are going to be small -- but the fact is also that a sidechain with small usage will also have less money to be stolen from, and since the other costs besides 1 are less elastic at the end it will not be worth stealing from these too.

All of the above consideration are valid only if miners are stealing from good sidechains. If there is a sidechain that is doing things wrong, scamming people, not being used at all, or is full of bugs, for example, that will be perceived as a bad sidechain, and then miners can and will safely steal from it and kill it, which will be perceived as a good thing by everybody.

What do we do if miners steal?

Paul Sztorc has suggested in the past that a user-activated soft-fork could prevent miners from stealing, i.e., most Bitcoin users and nodes issue a rule similar to this one to invalidate the inclusion of a faulty WT^ and thus cause any miner that includes it in a block to be relegated to their own Bitcoin fork that other nodes won't accept.

This suggestion has made people think Drivechain is a sidechain solution backed by user-activated soft-forks for safety, which is very far from the truth. Drivechains must not and will not rely on this kind of soft-fork, although they are possible, as the coordination costs are too high and no one should ever expect these things to happen.

If even with all the incentives against them (see above) miners do still steal from a good sidechain that will mean the failure of the Drivechain experiment. It will very likely also mean the failure of the Bitcoin experiment too, as it will be proven that miners can coordinate to act maliciously over a prolonged period of time regardless of economic and social incentives, meaning they are probably in it just for attacking Bitcoin, backed by nation-states or something else, and therefore no Bitcoin transaction in the mainchain is to be expected to be safe ever again.

Why use this and not a full-blown trustless and open sidechain technology?

Because it is impossible.

If you ever heard someone saying "just use a sidechain", "do this in a sidechain" or anything like that, be aware that these people are either talking about "federated" sidechains (i.e., funds are kept in custody by a group of entities) or they are talking about Drivechain, or they are disillusioned and think it is possible to do sidechains in any other manner.

No, I mean a trustless 2-way peg with correctness of the withdrawals verified by the Bitcoin protocol!

That is not possible unless Bitcoin verifies all transactions that happen in all the sidechains, which would be akin to drastically increasing the blocksize and expanding the Bitcoin rules in tons of ways, i.e., a terrible idea that no one wants.

What about the Blockstream sidechains whitepaper?

Yes, that was a way to do it. The Drivechain hashrate escrow is a conceptually simpler way to achieve the same thing with improved incentives, less junk in the chain, more safety.

Isn't the hashrate escrow a very complex soft-fork?

Yes, but it is much simpler than SegWit. And, unlike SegWit, it doesn't force anything on users, i.e., it isn't a mandatory blocksize increase.

Why should we expect miners to care enough to participate in the voting mechanism?

Because it's in their own self-interest to do it, and it costs very little. Today over half of the miners mine RSK. It's not blind merged mining, it's a very convoluted process that requires them to run a RSK full node. For the Drivechain sidechains, an SPV node would be enough, or maybe just getting data from a block explorer API, so much much simpler.

What if I still don't like Drivechain even after reading this?

That is the entire point! You don't have to like it or use it as long as you're fine with other people using it. The hashrate escrow special addresses will not impact you at all, validation cost is minimal, and you get the benefit of people who want to use Drivechain migrating to their own sidechains and freeing up space for you in the mainchain. See also the point above about infighting.