Everyone here will love Blockstream,
Not everyone.
Disclosures: I have no connection to Blockstream. I do appreciate some of the stuff they’ve done, I respect some of the current or former Blockstream principals, and I think they were smeared very badly by ridiculous FUD in the Fork Wars. For that last reason, I tend to be defensive of them.
their Blockstream Satellite project which is essentially altruism (not only B2C, but made to help poor people in poor countries use Bitcoin!),
A hype project that has helped nobody and makes no sense.
I hear a rich person in rich country talking. Marie Antoinette never said “let them eat cake”—that is a propaganda smear-attack against her. But I hear you implying, “let them eat cake”.
Have you ever lived in a situation where downloading the entire Bitcoin blockchain from the Internet, and keeping up with blocks, would be cost-prohibitive in terms of bandwidth? It is not a rare situation. Not a corner case. I think that the worldwide majority of people are probably in that situation.
Satellite TV dishes are ubiquitous. Surprising and disturbing, but true. They can be repurposed for this, with a few parts that fit into a poverty-level budget. Now, at least, you can have the BYOB security of consensus-validating the blockchain yourself. To make transactions, use your mobile data connection that has kbps speed, and costs money you can’t afford billed by the kilobyte. Although it is
not ideal from a decentralization viewpoint, it gets your foot in the door.
Still makes no sense?
Not going to say where I live, but I know what it’s like to be poor; and I myself have done “Be Your Own Bank” stuff when I was practically bankrupt, using cast-off trash hardware that would make most people’s jaws drop. I always take it a little bit personally when I see people (worst of all, Silicon Valley devs) behave as if everyone in the world has current-gen many-core CPUs, unlimited gigabytes of RAM, terabytes of fast SSDs, and vast amounts of inexpensive, low-latency Internet bandwidth.
Blockstream’s advertised primary use case for Satellite makes
excellent sense.
well—where does Blockstream make their money? I don’t know their internal structure or their financials (none of my business!), but I plausibly guess that their bread and butter is Liquid, and their Lightning infrastructure projects, and their hosted mining—all B2B, and/or for very wealthy customers.
VC capital. None of their stuff makes money AFAIK (I believe they do some mining but that's not their core business). More people should be asking questions like this.
Not wanting to dig too deeply into others’ private business, just wondering aloud and wildly speculating:
What if their primary business strategy is HODL? They probably have a large amount of BTC. “Altruism” projects are thus self-interested, insofar as anything that helps to grow the Bitcoin ecosystem increases the value of BTC.
I emphasize that the following
is speculation. I have no real information about how Blockstream makes money, or how much they make, or whether or not they make any money at all. Just thinking aloud.
What do you do if you have a large amount of BTC and high technical competence, and you want to build your BTC’s
long-term fundamental value?- Fund Bitcoin Core development—in effect. A few posts ago, I observed that in principle (regardless of any questions about the implementation), the Zcash “dev tax” is not altogether a bad idea. Developers need to be paid somehow.
Some (not all) people who opine in WO are only luser-level Bitcoiners. They have no idea how Bitcoin happens. They behave as if Bitcoin just falls out of the sky—a freebie.
Bitcoin has long had a problem with paying people who pour their lives into maintaining and improving Bitcoin where it most counts: Bitcoin Core. I have had many behind-the-scenes discussions about this. Some Bitcoin investors are very thoughtful; I once had a BTC whale ask my advice on how best to fund Core development, as a concrete “where should I send money?” question. (My reply was that I was not the right person to ask—sorry to disappoint.) Some Bitcoin businesses and exchanges are also good about funding Core development. They know the foundation on which their profits must rely. I will not spend the time digging around for this post, but I have seen somewhere at various times some good analyses of which businesses and which exchanges contribute the most—whether with funding grants, or by having employees on their payrolls who are effectually paid to work on Core. DYOR.
Now, consider this: Some of the current or former most-active Core contributors are current or former Blockstream employees.
That is not cause for a Blockstream conspiracy theory. It is cause for recognizing that if you want top-flight coders to work full-time on a free, open-source project, they need to be paid somehow.
(P.S., aside: cAPSLOCK, Bitcoin has no “dev tax”. So, how much have you donated to support Bitcoin Core development?) - Pay for other “public goods” infrastructure projects like Blockstream Satellite. Many people will laugh at you. DGAF. Do it anyway. Bitcoin has no government raising taxes to pay for “public goods” infrastructure. In practice, Blockstream is thereby doing what libertarians and ancaps preach: A private company is apparently wasting money on unprofitable public goods, out of long-term rational self-interest. Blockstream Satellite helps to make Bitcoin ubiquitous.
- Liquid, Lightning, etc. Same principle in action. Build infrastructure that otherwise won’t get built.
AFAIK, Liquid is the only existing viable solution if Exchange A wants to settle a big block of BTC with Exchange B—
without FUDding the market with whalewatcher idiots on Twitter posting the txid, using it to predict either moon or dump. Liquid’s privacy sucks—it is
not a privacy chain; but at least, it uses CT to avoid leaking the amounts being transferred. No, Liquid is not really decentralized; centralized exchanges,
et al. are not exactly known for being idealistic purists about decentralization.
(Or, um... Use centralized-idiocy-WBTC on Ethereum, and run it through Tornado.Cash! Seriously. Better: Use wrapped BTC tokens on Solana, which has negligible fees—and which will soon have zero-knowledge privacy for tokens.)
I don’t know if or how Blockstream earns any significant revenue directly from Liquid. I am simply observing that it is useful. Useful to big businesses. Seems not-stupid of them?
IMO, their Lightning infrastructure stuff is more of a “hype” issue. I would need asbestos underwear to explain my opinion in rational, constructive terms here. Don’t get me wrong—I think that Lightning is good technology, and I am glad that Blockstream pours money into supporting it. (
Developers need to be paid somehow.) I simply have no illusions that Lightning will take over the world Any Day Now(TM). Moreover, I recognize in principle the plain fact that
anything on L2 has limitations and trade-offs.
Some things
should be done on a Lightning-style L2. But it is not a panacea for scaling ailments. No magic bullet. The always-online hot-wallet requirement itself kills many use cases—and it results in practice in many users relying on
totally centralized Lightning “wallets”. How is that different than shitcoins that use hype about “decentralization” as a veneer to hide centralization? The channel liquidity requirements are even worse—ironically, all of the chatter from Lightning-fans about Lightning as “Bitcoin’s POS” tend to illustrate my worst criticism of Lightning. POS economics are inherently corrupt!
Many of the centralized-“wallet” problems can be fixed, in the long term. Blockstream helps with that, by paying developers who work on relevant projects that >99% of people don’t even know exist. The channel liquidity requirements are fundamental to how Lightning works, so cannot be fixed. All in all, I think that Lightning will be one important tool for scaling Bitcoin use in mass-adoption—an important tool, but only one tool.
I am guessing that Blockstream’s activities with Lightning probably make them
some money in the short term. Their support for Lightning definitely adds value to BTC in the long term.
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