Everyone needs to receive and send money, whether it’s to buy a coffee, pay a friend back or get your salary it’s a core part of life. Right now though, the Lightning Network doesn’t support a number of critical use cases which is standing in the way of its broader adoption. BOLT12 sets out to create a future where paying everything and being paid over LN is normal.
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What Is The Lightning Network?
The Bitcoin Lightning Network is a decentralized network of nodes that sits on top of the base, Bitcoin Network. This Layer 2 network, as it’s often called, allows for instant, near zero fee, high volume micropayments all without having to involve trusted third parties like banks or payments processor like Visa or Master Card.
>> Learn More: Lightning Network: What Is It, How It Works & How To Invest In It
The Current Limitations Of Lightning
Lightning payments are honestly one of the best parts of Bitcoin we think. There’s just something mind boggling about sending money from your own private wallet or node, all the way across the globe to literally anyone else, instantly, for essentially free. It’s magic.
But, it has a number of limitations currently as it’s still quite new. This means it doesn’t have support for a number of common features we just take for granted when using other payment services like Visa. For example, you can’t reuse a lightning invoice which is a terrible user experience.
Currently the network uses what’s called BOLT 11 defined invoices. These are signed by the receiving party and then sent to the person paying by getting them to scan a QR code. They are large (data wise) which means the QR codes are quite bulky and can be hard to sign.
They’re also not reusable as mentioned, meaning the shop or person receiving the funds must make a new one each and every time they want to receive a payment. These invoices can be used to request a payment, but can’t be used to send them. This makes issuing a refund currently impossible as that’s what a refund is, the shop sending a payment instead of receiving one.
While some workarounds have been created to address this, they usually require running a dedicated server or trusting a third party. Obviously not great!
What Are BOLT12 Lightning Invoices?
BOLT stands for Basis Of Lightning Technology and is the Lightning equivalent of BIPs (Bitcoin Improvement Proposals), with BOLT 12 obviously being the next iteration of this. This new standard was developed by Blockstream’s CLN developer Rusty Russell, who was actually the author of the BOLT 11 spec too.
Commonly called offers, they are a sort of “meta” invoice that allows users and merchants to send and receive payments to one another. As these offers don’t contain payment information in them, they have far less data and are thus easier to display as a QR code making for quicker and easier scanning.
They can also include other data, such as what’s called blinded paths, which greatly enhances both the sender and receivers privacy and security. You can find a heap more detailed information on onion messaging and blinded routes in Lightning Dev Kit’s excellent article here.
Most importantly though, they’re fully reusable and this is all done without needing to run a server, meaning that everyone, everywhere can make use of these new capabilities. It also means there is less risk of centralization as individuals or companies won’t have to rely on trusted 3rd parties to get these basic features.
Similar to how Silent Payments allows you to have a permanent, never changing, simpler and more secure Layer 1 Bitcoin receive address, BOLT 12 offers bring these same benefits to the Layer 2 Lightning Network receive addresses. It’s an equally amazing upgrade to the Bitcoin network and once fully integrated will enhance anyone and everyone that uses it.
Why BOLT 12 Is Awesome
Currently there’s already a set of protocols that’s used by merchants to make reusable payments on the Lightning Network called LNURL. While they allow you to have a reusable lightning address or request payments similar to BOLT 12, they’re not built natively into the network protocol itself.
Instead they require an additional web server to be run along side your Lightning Node. This server also requires a domain name, a TLS certificate, DNS configuration and all the costs and configuration skills required to set it up.
While this might be totally fine for an online merchant who’s already running their own website/store, it’s a lot for an every day user or small business to run. You don’t need to run your own server just to buy a coffee via Visa, so no one’s going to accept that type of user experience when it comes to Lightning! As a result we get platforms running them instead, with users signing up to those platforms which isn’t what anyone wants.
Having these new capabilities built right into the protocol level of the network (as opposed to the application level) not only means everyone can use them without having to setup their own dedicated server, but that they also gain the other benefits of increased privacy and security too.
With BOLT 12 your average pleb or small business owner just needs their own Lightning Node (or a third party one) and they can then make full use of reusable QR codes, pay for or accept subscriptions, accept or issue refunds and more.
>> Deeper Dive: Bitcoin Lightning Node Profitability: ROI & What To Know
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A Permanent, Private Address
Once you’ve generated your BOLT 12 offer, you’ve got a much more user friendly and permanent way of having people send money to you!
Imagine finishing up a dinner and everyone needs to transfer you their share of the bill. Now all they have to do is open up their completely self custodial Lightning Wallet and send their bitcoin directly from their wallet to yours just by using the same address they’ve always used.
They could be on any platform, using any wallet and the transaction is private, unstoppable, secure, is settled instantly and has near zero fees. The same thing can work with someone sending you a donation or tip online via an address in your profile. As the address never changes, it’s also far more secure too as there’s no chance of malware or an attacker changing the address mid transaction and them not noticing.
When Will BOLT 12 Be Available?
The good news is you can already receive a transaction paid to a BOLT 12 offer! If you want to have a play with them, check out some of the following wallets or services:
- Zeus Wallet: One of our top recommended Lightning Wallets, Zeus currently offers support for BOLT 12 in an alpha release
- Ocean Mining: For those Mining Bitcoin, this is a pool that you can join and receive your funds via a BOLT 12 invoice
- ROYGBIV: A “prism” plugin for Core Lightning that lets you create a BOLT 12 offer that will automatically split the received payment up and send it to a predefined set of users. For example if you receive a payment for a book purchase, 20% might go to one investor, 60% to the author and 20% to someone else
- Ride The Lightning: This software helps you manage your Core Lightning Node, but it now also supports letting you create BOLT 12 offers
- Clams Remote: This software helps you manage your Core Lightning Node and allows you to create and pay BOLT 12 offers
The bad news is BOLT 12 offers are still in the early stages of adoption and they’re not yet standard in all lightning wallets, nodes and invoices unfortunately. Given the huge advantages of BOLT 12, hopefully this doesn’t take too long to role out.
BOLT 12 Vs LNURL
It’s also important to note that we can have both BOLT 12 and LNURL operating at the same time. The LNURL solution can be used by bigger merchants or people that are happy to run their own servers, while BOLT 12 is used by individual users or those wanting to enable more privacy.
Maybe one day LNURL will no longer be needed, and on that day it will be a great step forward for the Lightning Network as a whole. For now, we hope BOLT 12 adoption will continue as it could revolutionize the Lightning Network long term.
FAQ
What Is LNURL?
LNURL is a group of standard protocols that sets out how to coordinate information that’s needed to make payments. Different wallets or services implement different parts of the protocols differently or not at all, meaning that it’s not a universal experience across all wallets. Implementing them also requires a second web server that supports and interfaces with the Lightning Node.
What Is The Difference Between BOLT 12 and LNURL?
The main difference is that BOLT 12 is integrated into the Lightning protocol. This means that all you need to use it is a Lightning Node. To use LNURL you also need a separate web server that has its own domain, TLS certificate and all the costs that come along with that. LNURL currently has a lot broader support than BOLT 12.
What Is The Difference Between Lightning Address And LNURL?
A lightning address will typically take the form of “[email protected]” and is an address you can use to easily send someone bitcoin. This address is enabled by the LNURL protocols and a supporting server.
