Bitcoin Magazine

Bitcoin Builders Exist Because Of Users

Builder: Nicholas Gregory

Language(s): C++, Rust

Contribute(s/ed) To: Ocean Sidechain, Mainstay, Mercury Wallet, Mercury Layer

Work(s/ed) At: CommerceBlock (previously)

Prior to Bitcoin, Nicholas was a software application designer operating in the monetary system for banking companies establishing trading and derivatives platforms. After the 2008 monetary crisis he started to think about options to the tradition monetary system in the fallout. 

Like lots of from that time, he entirely disregarded the initial Slashdot short article including the Bitcoin whitepaper due to the evident concentrate on Windows as an application platform (Nicholas was a UNIX/Linux designer). Thankfully somebody he understood presented him to Bitcoin later. 

The thing that recorded his interest about Bitcoin instead of other options at the time was its particular architecture as a dispersed computer system network. 

“The truth that it resembled an alternative method. It was all based around [a] sort of […] network. And what I suggest by that, developing monetary systems, individuals constantly desired a system that was 24-7.

And how do you handle somebody interacting [with] it in various geographical parts of the world without it being centralized?

And I’d seen numerous methods of individuals fixing that issue, however it never ever had actually been done, you understand, in a sort of […] scalable option. And utilizing […] cryptography and evidence of work to resolve that concern was simply odd, to be sincere. It was completely odd for me.”

All of the other systems he had actually developed, and some that he constructed, were systems dispersed throughout several parts of the world. Unlike Bitcoin nevertheless, these systems were permissioned and limited who might upgrade the appropriate database(s) in spite of that truth that copies of them were redundantly dispersed worldwide. 

“The fact that in Bitcoin you had everyone kind of doing this proof of work game, which is what it is. And whoever wins does the [database] write. That mess[ed] with my head. That was […] very unique.”

Beginning To Build

Nicholas’s course to structure in the area was a natural one. At the time he was residing in New York City, and being a designer he naturally discovered the initial Bitdevs established in New York City. Back then meetups were exceptionally little, in some cases even less than a lots individuals, so the environment was a lot more favorable to extensive discussions than some bigger meetups nowadays. 

He initially started developing a “hobbyist” Over The Counter (OTC) trading software application stack for some individuals (at that time a really substantial volume of bitcoin was traded OTC for money or other fiat mediums). From here Nicholas and Omar Shibli, whom he satisfied at Bitdevs, collaborated on Pay To Contract (BIP 175). 

BIP 175 defines a plan where a consumer acquiring an excellent takes part in producing the address the merchant offers. This is done by the 2 very first settling on an agreement explaining what is being spent for, later on the merchant sends out a master public secret to the customer, who utilizes the hash of that description of the product or service to create a private address utilizing the hash and master public secret. 

This permits the client to show what the merchant accepted offer them, which the payment for the great or service has actually been made. Simply releasing the master public secret and agreement permits any 3rd party to create the address that was paid, and confirm that the suitable quantity of funds were sent out there. 

Ocean and Mainstay

Nicholas and Omar went on to discovered CommerceBlock, a Bitcoin facilities business. Commerceblock took a comparable technique to service as Blockstream, developing technological platforms to help with using Bitcoin and blockchains in basic in commerce and financing. Shortly later on Nicholas satisfied Tom Trevethan who came on board. 

“I met Tom via, yeah, a mutual friend, happy to say who it is. There’s a guy called, who, new people probably don’t know who he is, but OGs do, John Matonis.  John Matonis was a good friend of mine, [I’d] known him for a while. He introduced me to Tom, who was, you know, kind of more on the cryptography side. And it kind of went from there.”

The initially significant job they dealt with was Ocean, a fork of the Elements sidechain platform established by Blockstream that the Liquid sidechain was based upon. The business CoinShares and Blockchain in collaboration with others released an Ocean based sidechain in 2019 to provide DGLD, a gold backed digital token. 

“So we, you know, we were working on forks of Elements, doing bespoke sidechains. […] Tom had some ideas around cryptography. And I think one of our first ideas was about how to bolt on these forks of Elements onto […] the Bitcoin main chain. […] We thought the cleanest way to do that was […] using some sort of, I can’t remember, but it was something [based on] single-use sealed sets, which was an invention by Peter Todd. And I think we implemented that fairly well with Mainstay.”

The primary difference in between Ocean and Liquid as a sidechain platform is Ocean’s usage of a procedure developed at Commerceblock called Mainstay. Mainstay is a timestamping procedure that, unlike Opentimestamps, strictly orders the merkle tree it constructs rather of arbitrarily including products in whatever order they are sent in. This permits each sidechain to timestamp its existing blockheight into the Bitcoin blockchain everytime mainchain miners discover a block. 

While this is ineffective for any bitcoin pegged into the sidechain, for controlled real life possessions (RWA), this offers a particular history of ownership that even the federation running the sidechain cannot alter. This gets rid of uncertainty of ownership throughout legal disagreements. 

When inquired about the ultimately shuttering of the job, Nicholas had this to state: 

“I don’t understand if we were early, however we had a couple of customers. But it was, yeah, there wasn’t much adoption. I suggest, Liquid wasn’t doing fantastic. And, you understand, being based in London/Europe, whenever we satisfied customers to do POCs, we were contending versus other well-funded jobs. 

It demonstrates how several years ago they’d either gotten cash from individuals like IBM or a few of the huge consultancies and were promoting Hyperledger.  Or it was the days when we would be contending versus EOS and Tezos. So because we resembled a business that required cash to construct models or construct sidechains, it sort of made it extremely hard. And at that time there wasn’t much adoption.”

Mercury Wallet and Mercury Layer

After closing down Ocean, Nicholas and Tom ultimately started dealing with a statechain application, though the course to this was not simple. 

“[T]here were a few things happening at the same time that led to it. So the two things were we were involved in a [proof of concept], a very small […]POC for like a potential client. But this rolled around Discreet Log Contracts. And one of the challenges of Discreet Log Contracts, they’re very capital inefficient. So we wanted a way to novate those contracts. And it just so happened that Ruben Sampson, you know, wrote this kind of white paper/Medium post about statechains. And […] those two ideas, that kind of solved potentially that issue around DLCs.”

In completion they did not end up releasing a statechain option for handling DLCs, however entered a various instructions. 

Well, there was another thing taking place at the exact same time, coinswaps. And, yeah, keep in mind, in those days, everybody fretted that by […] 2024/2025 […] network costs might be quite high. And to do […] coin swaps, you sort of wish to do several rounds. So […] state chains felt ideal because […] you essentially take a UTXO, you put it off the chain, and after that you can switch it as much as you desire.”

Mercury Wallet was completely constructed out and practical, however unfortunately never ever gotten any user adoption. Samourai Wallet and Wasabi Wallet at the time controlled the personal privacy tool environment, and Mercury Wallet was never ever able to effectively take a bite out of the marketplace. 

Rather than entirely quit, they returned to the drawing board to construct a statechain variation utilizing Schnorr with the planner server blind finalizing, indicating it might not see what it was signing. When asked why those modifications were made, he had this to state: “That would give us a lot more flexibility to do other things in Bitcoin with L2s. You know, the moment you have a blinded solution, we thought, well, this could start having interoperability with Lightning.”

Rather than developing a user dealing with wallet this time, they constructed out a Software Development Kit (SDK) that might be incorporated with other wallets.

“{…] I guess with Mercury Layer, it was very much building a kind of […] full-fledged Layer 2 that anyone could use. So we [built] it as an SDK. We did have a default wallet that people could run. But we were hoping that other people would integrate it.”

The End of CommerceBlock

In completion, CommerceBlock shuttered its doors after several years of fantastic engineering work. Nicholas and the rest of the group constructed many systems and procedures that were effectively crafted, however at the end of the day they appeared to constantly be one action ahead of the curve. That’s not always an advantage when it pertains to developing systems for end users. 

If your work is too far ahead of the need from users, then in the end that isn’t a sustainable method. 

“…being in the UK, which is not doing that well from a regulatory point of view, played into it. If I was living in Dubai, maybe that would have been a different conversation. You know, back when we made that decision…things weren’t great in the US. I think things have improved there. But also, I think…Bitcoin is in a good place financially. I think it’s clearly being used as a product. But I think the L2s in the space just don’t have much user adoption.”

When asked why he believed individuals were not utilizing Layer twos at scale, he had this to state: “…in my adventures of working on CivKit (a decentralized marketplace), one of the questions that was always posed to me is, when Tether, when stablecoins? So when you’re working on a project that’s trying to promote Bitcoin in the global south, but everyone you meet in the global south wants stablecoins, you start to wonder, well, am I building the right tool? Do people even want to use this?”

At completion of the day, the most beneficial and sound engineering work still requires to be embraced and utilized, otherwise what is the worth of it in the very first location? 

“…there has been a shift in the last four years for it to be a store of wealth. And I do think that’s a risk because I think if people were using Bitcoin right now and the mempool was expensive, was jammed up and fees were high, there’s enough bright people to build good L2s. But they’re not being built because there’s no demand. And, you know, no one wants to build software, whether that’s open source or commercially, when it’s just a bunch of hobbyists using it. And I think that’s one of the challenges of Bitcoin right now. We have a lack of users and maybe down the line that’s a problem.”

“I think there’s a lot of smart people in Bitcoin that can build interesting stuff, but I think the focus now has to be users.”

This post Bitcoin Builders Exist Because Of Users initially appeared on Bitcoin Magazine and is composed by Shinobi.

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