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Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Apr 20, 2022.

  1. Jack Kruse

    Jack Kruse Administrator

    This network will create massive use cases for Bitcoin. It is akin to mixing AMEX, VISA, Paypal, MASTERCARD, VENMO, into one payment rail that only works with Bitcoin. I'd suggest you go watch the Maller's video from Bitcoin 2022 in Miami. It shows you that effectively Lightning Network has made BTC legal tender in the USA already. No one in the BTC ecosystem need the permission of the government to pull this off.

    Lightning Network provides a framework to measure the time-value of bitcoin, a precursor for a capital market and reserve currency status. Observable variables in Hashed Time Locked Contracts (Bitcoin DeFi is now a reality on Lightning) can be used to calculate the interest rate received on bitcoin held in payment channels, allowing investors to measure their opportunity cost of capital. Lightning Network wallet software should include ways to calculate interest and prove the rate received in a trust-minimized way. A reference rate should be developed akin to US Dollar LIBOR, using consensus to dictate how the rate is calculated. This reference rate can anchor off-chain bitcoin lending into the global economy, leading to bitcoin-denominated banks, credit ratings, debt capital markets, and eventually an entire financial system: a path toward status as a global reserve currency.

    And it’s all coming true on Lightning.

    LN has now built a circular economy around BTC. [​IMG] can now become a reality much quicker.

    The annualized volume is still less than $500m on LN, but the amount is dust relative to the trillions ($4.2 trillion in 2021) that now move on bitcoin’s blockchain every year.

    Lightning Labs announced Taro, a new Taproot-powered protocol for issuing assets like stablecoins on Bitcoin over the Lightning Network. Like OmniBOLT and RGB, Taro aims to turn Lightning into a multi-asset network to attack the fiat payment rails that now exist.

    Taro is a game changer!
    GavinH, April, ND Hauf and 1 other person like this.
  2. Jack Kruse

    Jack Kruse Administrator

    On April 5th, 2022 Business Development Lead for Lightning Labs Ryan Gentry announced that Bitcoin and the Lightning Network will soon have the ability to handle multiple assets. Taro is a protocol powered by Taproot and enables Bitcoin to have app developers integrate assets that may be settled alongside on-chain Bitcoin and Lightning transactions. Lightning will allow for instant, high volume, and near zero-fee transactions while on-chain transactions will be utilized as the settlement layer.

    The deployment of Taro aims to expand Lightning adoption throughout the world. By bringing in more users who wish to transact with other assets like fiat, adding Taro will potentially increase volume and liquidity for Bitcoin.

    More volume on Lightning will also increase the number of routing fees to be dispersed to Lightning node operators. For many operators, running a Lightning node is not the most profitable endeavor at this stage. However, many hobbyists trust that the skills required to run a Lightning node will be in high demand in the future. Taro is a step in the direction of making that possible.

    Gentry mentions in the post that Lightning Labs has received a high number of requests to integrate stablecoins for countries in Latin America (El Salvador, Guatemala, Argentina, and Brazil) and West Africa (Nigeria and Ghana). In countries where intermediaries require high fees for payments, Lightning Labs sees this as an opportunity to integrate stablecoins and other assets for instant and cheap settlements with Lightning.
    ACP1717 and John Schumacher like this.
  3. Jack Kruse

    Jack Kruse Administrator

    Major Benefits of Taro
    • Scalability: One Taproot output has the ability to contain a large number of Taro assets.
    • Programmability: Developers have the ability to set transfer conditions into these Taro assets.
    • Auditability: All transactions are auditable within local wallets as well as globally for any Taro asset.
    • Usability: Taro allows for asset-specific addresses to help users avoid sending the wrong asset to addresses.
    ND Hauf and John Schumacher like this.
  4. Jack Kruse

    Jack Kruse Administrator

    Taro Transfer Over Lightning
    A Taro transfer will require multiple participants but essentially there will be BTC channels and Lightning U.S.D. (L-USD) channels between the sender and receiver. Alice wants to send $10 in L-USD to Dave but will need to pay a small BTC fee to Bob. Bob will then route $10 worth of BTC to Carol who also requires a fee but in L-USD. Carol will then route the $10 of L-USD to Dave, the final destination.
    John Schumacher likes this.
  5. Jack Kruse

    Jack Kruse Administrator

    The Lightning Network gives bitcoin a path to become a global reserve currency. It is the Rx for Triffin's Paradox
    John Schumacher likes this.
  6. Jack Kruse

    Jack Kruse Administrator

    For those who do not know every transaction done on the LN is a smart contract. It is what DeFi will become. I no longer think DeFI will wind up on ETHER with this development.
    ACP1717, ND Hauf and John Schumacher like this.
  7. Jack Kruse

    Jack Kruse Administrator

    The 7 network effects of Bitcoin as laid out by Trace Mayer are as follows:

    1. Speculation - As a novel, cryptographically-backed asset class with the potential for appreciation and high volatility, Bitcoin is perfect for speculators with a high tolerance for risk. HODL!!!

    2. Merchant Adoption - Merchants will increasingly accept Bitcoin because they can increase their profit margins by avoiding credit card fees and chargebacks. The

    3. Consumer Adoption - Consumers can use Bitcoin to save money at certain vendors. For example, getting a 20% discount on Amazon by spending Bitcoin through Purse. Additionally, consumers can buy things with Bitcoin that they cannot buy (easily) in any other way. Consider: An American can buy Persian rugs or Cuban cigars online despite trade embargoes. Bitcoin increases the efficiency of the economy, particularly in niche areas such as these.

    4. Security - Merchant, consumer, and speculator adoption lead to a higher price and thus incentivize more miners to participate and secure the system. The decentralized, immutable transaction ledger also serves as a form of Triple Entry Bookkeeping, wherein Debits plus Credits plus the Network Confirmations of transactions increase trust and accountability across the system.

    5. Developer Mindshare - Bitcoin is a dumb and predictable network with simple rules and a publicly-auditable codebase. It is fertile ground for the development of complicated algorithms, machine-to-machine payment protocols, smart contracts, and other tools. Its decentralized nature allows for innovation without permission. Altcoins (such as Litecoin and Ethereum) pose little threat as Bitcoin is already dominant as a store of value and as a medium of exchange in the cryptocurrency space. If you harbor doubts about the importance of this currency network effect — or worry about altcoins overtaking Bitcoin in some other way; I would point you to Daniel Krawisz with an insightful and thought-provoking article on the subject: “The Coming Demise of Altcoins”. Ultimately, developers will continue to flock to Bitcoin over time when these benefits are recognized by the market.

    6. Financialization - Bitcoin will eat up progressively more of the market share of legacy banking institutions in areas such as remittances, micropayments, peer-to-peer lending, and the exchange of stocks and securities. This process has already begun (consider NASDAQ's support of Open Assets/Colored Coins for the transfer of securities, NYSE's investment in Coinbase, etc.). Old money risks dying out lest it embraces new protocols such as Bitcoin.

    7. Adoption as a World Reserve Currency - Eventually all transactions will be settled on the blockchain, including house titles, stock purchases, car titles, and other monetary instruments and currencies. Network effects one through six culminate in this final network effect. Any newcomer in the realm of cryptocurrency or traditional currency, for that matter; would need to beat Bitcoin in all seven of these areas. This is unlikely considering the pace of development in Bitcoin Core, the level of investment in Bitcoin companies around the world, the growth in Bitcoin's user base, and on and on; Further price increases will only accelerate the process. Finally, a speculative attack could dramatically boost the value of Bitcoin almost overnight.
    Bitcoin is a strong currency: it thrives on the internet; it frees its users from 3rd parties; it saves merchants money; it is deflationary; its code can be audited by all; its developers work tirelessly to improve upon it; the list goes on.
  8. Jack Kruse

    Jack Kruse Administrator

    Lightning Network will birth Lightning banks. Those banks will be called Lightning Nodes. Their first function will be to provide liquidity to Lightning Network by funding payment channels. They will try to position themselves as central routing hubs, capturing as many fees as possible. Competition will be open and fierce. Those with the greatest ability to efficiently manage payment channels and actively optimize routing positioning will profit.
    April and John Schumacher like this.
  9. ND Hauf

    ND Hauf Pleb

    The network it’s where my true conviction was birthed.

    I believe most people can point to pivotal moments in their life that totally changed the trajectory they were on…good and bad.

    Around five years ago I heard the OGs Dryja and Poon speak then came a talk by Elizabeth Stark at Lightning Labs….my mind was blown….and I haven’t been the same since.

    The stuff coming down the pipe is Epic….

    Prior to that moment… I somewhat…..only understood the asset side…..

    John Schumacher and ACP1717 like this.
  10. ACP1717

    ACP1717 Gold

    We are getting a node going to play around with it and plant a seed.... thanks Jack
    John Schumacher and ND Hauf like this.
  11. Jack Kruse

    Jack Kruse Administrator

    Why did Musk buy Twitter? Because Jack Dorsey explained to him that Twitter could be used to disintermediate the ACH transfer system.
  12. Jack Kruse

    Jack Kruse Administrator

    The original PayPal team that Musk was on tried to disintermediate ACH > 20yrs ago but couldn't. Now, it's reconstituting to finish the job, with a few new faces involved with cyrptocurrenices. Lightning is already built into the Twitter app.

    When he sells Twitter by 2030 I expect Twitter to worth north of 100 billion dollars. Maybe a lot more if Bitcoin does half of what I think it might by then.
  13. JanSz

    JanSz Gold

  14. TimPaige

    TimPaige New Member

    The grid is not preferable for bitcoin, given that all transactions through bitcoin are constantly subject to changes due to the demand for the rate. My point is that a payment system can only exist based on standard exchange rates, and bitcoin is always volatile. If I could create a single payment system for my firm and implement it into a revenue grid to track demand trends, I would. But bitcoin isn't stable, so even for a forecast it's hard to do, you have to be at least a broker
    Last edited: Dec 9, 2022
  15. Jack Kruse

    Jack Kruse Administrator

    Who and what are you referring to?

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