CodePsychology

bitcoin

## Why is competition good?
As a consumer, you can decide what product you want to use. Let's analyze 2 scenarios:

### Scenario A: 
Let's say, there is a product that is manufactured only by one company.

If you don't like how it is done, you can only stop using the product. This way you give up the comfort that it provides to you. But as it requires effort from customer side, less people will do it. This way,  the product creator has close to 0 incentive to make the product better, because the worst case is, people won't use it. But if it is decent enough, people most likely will put up with the problems. 

Also making something better takes effort, that costs money. So it is more cost efficient for the company to keep it as is, and try to sell more.

### Scenario B:
Let's say, a product is manufactured by multiple companies.

If you don't like how the product works, or you have some problem, you can choose another company to go to. As there is another option for the customers to move to, the company is incentivized to make better products then the others, otherwise, they will lose customers. Maybe the lost customers will even suggest their newly used product to their friends, which moves the newly creatable customer base to the other company.

So in such an environment, companies have to compete to keep their old users, and to get new users.

So we can say, that competition drives quality. So bigger the competition, the bigger the incentive to make more quality products. So the more competition there is, the better for you.

## How to increase competition
Now let's assume, you agree with me, and you want better products, so you decide you want to do something. To increase quality, we shall define market conditions, that effect competition:
1. Barrier to entry
2. No "free lunch"
3. Open sourcing
4. Free market

### Barrier to entry
The harder to enter a certain market, the lower number of competitors there will be. 

Ever wondered why only a few telecommunication companies are there? Usually businesses try to change the legal framework to increase the barrier to entry. This way they decrease competition, and make them earn profit more easily.

### No "free lunch"
Money shall be only earn-able by work, not by printing it. 

Money printing creates an environment, where people rather stand in line to get free money, instead of working, because instinctively we go for the least resistance. Why would you work hard, if someone else can get the same amount of money just standing in a queue, that worth the same you worked hard for?

### Open-sourcing
If someone invents something, he shall share it, so that others can improve it. This in increases the feedback cycle, and creates a high growth environment.

### Free market
Capital goes for the highest reward / risk ratio. Market shall not be controlled, so that capital would be allocated by real reward / risk ratio, and not an artificial one.

## Conclusion
If you want better products and services, you shall increase the competition. To increase the competition, you can work on the above mentioned areas.


Why competition matters and what to do about it?

Discussion on best way to pay with fiat for BTC

True, I agree with you on the P2P market. 

Although in this article, I was thinking more in the direction how to send the fiat to the btc seller in a way to keep privacy not sharing bank details.

True, that is what I tried to think about here. There are many p2p options to buy btc. So it is not the question, where you can buy it KYC free.  That is easy. 

The question is more, how do you stay private during the fiat transaction.

## Intro
I stumbled upon the idea, how I could pay with my fiat to buy BTC in a private way, so that I can limit the possibility of censorship. I mean here private, as not a platform to buy and sell on it, but how I can transfer my fiat money to the other person, who sends me bitcoin in return, without revealing my identity to him.

I know it is not meant to be used like this, but still it is an interesting topic to discuss.

Ways to pay with fiat more privately
- Cash
- Gift cards
- (?) Cashu


## Cash
### Description
I think the highest decree of privacy can be achieved for fiat payments are paying by cash. Why? Noone needs to know you, to accept cash from you. Basically you don't have to tell your name in a grocery shop or sign a form to buy milk. You just give them a piece of paper, that they trust will have value later. Also paying by cash does not create entries in a database, so requires bigger effort to maintain a sort of payment log to track transactions.

### How to buy with cash
- Through friend
- Knowing a btc seller from a meetup or btc meeting
- LocalCoinSwap
- Bitcoin ATM
- P2P through cash deposit to bank account

For further details you can check this page: https://99bitcoins.com/buy-bitcoin/buy-bitcoin-with-cash/

### Comparison
| Advantage | Disadvantage |
| ------------ | --------------- |
| Enhanced privacy | You need to meet in time and space to use it.* |
| Cash transactions can't be directly connected to only bitcoin to restrict it, because many people use it for other purposes. | Risk is higher to be mugged, if meeting in person |

* With cash deposits, you can circumvent this, but still you need to be able to go into a bank, to make the deposit, so you can't do it from the toilet.

## Gift cards
### Description
Gift cards are prepaid cards, that can be used in certain shops. They were created to be used as a gift for a certain shop, as people may assume, that it looks nicer to give a gift card to a shop, then to just give an "all purpose gift card" / cash. Gift cards could be purchased online, and offline. Offline bought gift cards could be purchased by cash, but I am not sure if it is transferable in a way, that only the transferee can use it.

### How to buy with gift card
- Through peer to peer exchanges

### Comparison
| Advantage | Disadvantage |
| ------------ | --------------- |
| You don't give away your bank details | The other side still might get to know your name or some details |
| | Not "any-purpose", can only be spent on certain items. This leads to lower liquidity. |
|| The company who creates these gift cards might suspend your account for using such. (e.g.: Amazon does this.) |
|| Online redeemed gift cards might be usable to track transactions. |
|| Usually people don't buy too much gift cards, therefore if 1 account buys many, it can seem like suspicious, and it might lead to ban. |

## Cashu
### Description
One problem with gift cards are, that they are identifiable, who they belong to if you buy them online. So buyer and user accounts could be connected. As I get to know cashu, the chaumian ecash, I realized that this issue of connecting the "gift card" or ecash to an identity could be solved. Therefore, I thought that maybe it could be an intermediate step to transforming to bitcoin, by not having ecash denominated in bitcoin, but in some fiat. So when I would buy btc, I would first buy ecash, and send that ecash to the btc seller, who could redeem it to fiat to keep its "any-purpose" utility.

To my luck, a few days ago, Calle shared a note about nut-strike see: https://nostr.band/note1clgmazrcn82jxw6u3pus6fj4xtzr979d8t9wgqv450a2nv5s94lsnp26pg , which is kind of Cashu ecash denominated in dollars. It seems quite a great initiative. Let's see what it holds for future.

The problem with this approach could be, that if the way of buying cashu through nut-strike is unique, not a way as people send money over strike (small anonymity set), then it can also be easily flagged by other companies/banks to deny sending funds to it, to circumvent buying cashu.

## Conclusion
Adding new private methods to buy bitcoin might fail, because if a method only exist to help to buy or sell bitcoin, it can easily be detected by companies or banks, and if they want to ban selling crypto, they can easily do that.

So at the end those methods are the best, that are used for many purposes, and buying bitcoin with it is only 1 of many. Therefore, if they want to ban it, they would cause pain to too many people, so it will be little harder.

At the moment, buying with cash seems the best way for now, by knowing it's drawbacks and preparing for it.


LnShare - Share your lightning invoices anywhere!

On it! I will release it in the next days!

I am not exactly sure what you mean the no for.

What I know is, of course Nostr apps support lightning. This is by design.

The idea for this project was to make other websites, and social media apps support lightning without really touching their code. This way we could start to show people the power of lightning in the app they use, and then, we can show, that in Nostr it is even cooler with zaps.

# LnShare - Share your lightning invoices anywhere!
## Introduction
If you used [Nostr](https://nostr.com/) already, then you saw if you share a lightning invoice, it will be shown as a widget (see an example below). The widget shows you the information of the lightning invoice (amount and note), and provides a pay button, to pay the invoice conveniently from any of your installed lightning wallets.

On [snort.social](https://snort.social) the widget looks like the following:
![Lightning invoice](https://i.postimg.cc/ThMbLsF2/lightning-invoice.png)

So far, if you pasted a lightning invoice anywhere else (social media, messenger apps, etc), you could only see it as a bunch of characters, and it was not even clickable. 

If you wanted to use it, you had to copy it into your wallet, which is inconvenient. Also for people, who didn't know about the lightning network, and lightning invoices, the presented characters told nothing, it looked gibberish.

Therefore LnShare was born. 

## LnShare
LnShare is a website. It converts any pasted
- lightning invoice, 
- lightning URL,
- lightning address

into a website URL, that when pasted into any website shows up similarly as the widget above. Here is a preview of how the link shows up on websites:
![URL preview](https://i.postimg.cc/g2JfMk0Z/url-preview.png)

And the most important part is, if you click the link, you can pay them from your selected wallet as with the widget.

**Important**: Site shall load the preview of the URL to look like the widget, otherwise you only get the URL that tells nothing. But most websites, and social media applications do that.

## Conclusion
We have now a way to share and pay lightning invoices from any website conveniently. This shall help us to orange pill new people. So let's go!

## Link
[Link to website](https://milefashell.pythonanywhere.com/)

# Bitcoin Privacy
## Privacy versus anonymity
Bitcoin is usually associated with black markets, and as the tool of bad people because of its anonymity or privacy. But this is not the complete picture, and far from the truth.

First we need to distinguish between private and anonym transactions. 
- **anonym transaction**: no identity is connected to a transaction, so it is not known which real person made it.
- **private transaction**: only transacting parties know about the transaction, and its details.

**Cash** is the most private and anonym payment solution. Only transacting parties know about the transaction, and its details. When cash appears at someone's pocket, it is impossible to know where it came from. This property makes it possible to lose cash on the street, and anyone can start to use it without really knowing whose it was. So cash shall be assumed to make bad transactions.
 
**Wire-transfer or card** has lower anonymity and privacy than cash. The identity of the sender and receiver is attached to each transaction, so it is not anonym at all. Also a third party knows about it, so it is not fully private. Although not every people on earth can know each of your transactions, but at least the ones the third party shares this information with.

**Bitcoin** on the other hand is pseudo-anonymous and transparent. 
- **Pseudo-anonymous**: We can know all of the transactions one bitcoin address/person makes, however we don't know his identity. We don't know who that person is.
- **Transparent**: Each transaction is broadcasted to the network for each participant to see it.

This means, bitcoin is not private by default, but has higher level of anonymity than wire-transfer or card payments. See following diagram for comparison:

![Privacy vs Anonymity](https://i.imgur.com/H8fCm3t.png)

This introduces the following problem:
- Once the identity of an address is revealed, all of its transactions can be tracked by anyone, because the blockchain is public as discussed in transparency.

This can happen in different ways:
- Your transaction history is revealed for each of your transaction partners. Imagine you buy something online at a shop. The shop owner will receive bitcoin from your address, so he can associate you with your address. From this point on, he can track all of your transactions that you already made and you will make.
- You share your bitcoin address publicly. 
- Your IP address gets connected to your bitcoin address, and based on your IP, your rough location is known. Also you have KYC-ed when you bought your internet, so your ISP (Internet Service Provider) could connect your bitcoin to your identity.
- A business may share their bitcoin address, where they accept bitcoin. Then if you share that you visited that place multiple times, the transactions of their bitcoin address could be analyzed to find the address that paid there on those days.
- Publicly available bitcoin addresses are decreasing the number of unknown addresses helping the analysis of identity.
- You buy bitcoin on a KYC-ed exchange.
- You send bitcoin from an address with leaked privacy.
- etc

So there are several ways that can break your privacy with bitcoin.

Does it mean we shall stop using bitcoin if we don't want our local grocery shop owner to know our online shopping habits? Short answer is **no**. Solutions are listed below.

## Solutions
The solutions are education, and careful usage of bitcoin. We need to get used to the unprecedented level of transparency that comes with bitcoin, if we want to use it. So let's dive in.

### Use addresses only once
Bitcoin gives the possibility to have infinite amount of addresses. Also you don't need to do anything special to get a new address. You can generate a new one locally without any third-party. 

So a good way to increase your privacy is to only use an address once. If you want to receive bitcoin again, just generate a new address.

Good wallets do this by default, but please check this, when you start to use a new wallet.

### Care with sharing online
If possible, don't share your bitcoin address online. Only share in case you would like to receive public donations.

If you do so, always remember, that if you send bitcoin to another address, it will be connected to you as well.

Also better not to share any information about your transactions, because that could help the on-chain analysis to find your addresses.

### Hide IP address
Be sure to use VPN or Tor network when you deal with bitcoin. Meaning if you would like to use a service, where you have to share your btc address, use VPN or Tor, otherwise they will be able to connect your address with your IP. 

Also a good solution to hide even your node's IP address behind a VPN or Tor.

### Mixing and Coinjoin
Use mixing or coinjoin when you send bitcoin. Using them can break the connection between the sender and receiver. It achieves this by bundling multiple transactions with the same amount, so that it won't be obvious who sent the bitcoin to whom.

Be careful, because you have to trust a service or a third-party to do this.

Also using these methods can help to break the KYC connection to your bitcoin. Do coinjoin a few times on your bitcoin while you send them to your new address to make them KYC free or just buy them KYC free.

## Conclusion
While bitcoin may seem an anonymous and private solution, you might need to do some extra steps to achieve it.

You can use new addresses each time to receive bitcoin, so that your past transaction does not reveal your identity. So by using new addresses each time, you increase your privacy for bitcoin receiving. Also if you use an address to receive and send once, you won't share your entire bitcoin history with the one's you transact with, only the history of that 1 or more addresses.

You can use mixing and coinjoin to send bitcoin to your own other addresses, or to buy stuff, to increase the privacy of your bitcoin sending. This way, the receiver won't be able to easily connect who the real sender address was, so your transaction history is not shared.

Additional steps could be using VPN or Tor to deal with bitcoin, because even wallet applications could log your IP and sell this information to other people for profit. So be careful revealing your IP.

Last but not least, do not share your address online, because that is the easiest way to degrade your privacy.

Bitcoin Privacy

# Introduction
You can buy bitcoin (BTC) on centralized exchanges, and peer to peer (p2p).

A lot of people prefer p2p BTC buying solutions over exchanges because:
- **more private**: there is no central entity who knows about all of your transaction history, and can decide to share it with anyone without your consent. 
- **more control**: There is no central entity who can decide to freeze your account, can decide that you are not allowed to do something with your own money, or even to just get back.

There are multiple peer-to-peer BTC buying solutions, such as Bisq, Robosats, hodlhodl. Every solution has its own benefits.

# Benefits of Robosats:
1. Uses the tor network: enhances privacy 
1. Uses anonym identity for trade, and you can generate a new one for every order/transaction: enhances privacy
1. Uses lightning network (you can get BTC either on-chain or on lightning): makes bonds* easier, transactions cheaper, and lightning can also enhance your privacy
1. Uses Tor browser, so can be used on a phone, and even has an application version.

bonds*: they are payment guarantees to eliminate bad behavior. In case of bad behavior, the bonds can be lost.

# Why I use Robosats over Bisq and hodlhodl:
- Robosats is the only lightning network solution, other solutions require BTC on chain that is more costly
- hodlhodl uses clear web (no tor): less privacy
- hodlhodl and Bisq use the same identity for all trades: less privacy
- Bisq is a desktop app, can't be used on a phone: less portability

# How does Robosats work:
1. You create an order with a FIAT price, FIAT transaction methods, the premium you prefer to pay above market price, and the % of bond you require.
1. You lock up the bond on the lightning network.
1. You wait for someone to take your order.
1. He locks up his bond.
1. He puts his BTC in escrow*.
1. A chat will pop up, where you can discuss with the seller, how he needs the fiat payment.
1. You pay the FIAT money to the seller with the agreed transaction method.
1. He releases the BTC from escrow to your on-chain or lightning address.

escrow*: During these transactions the sellers have to deposit their BTC into an escrow, that makes sure for the BTC buyer, that the seller has the BTC. The BTC can only be released by the seller, but he can only send it to the buyer, or with a problem resolution, it can be released back to him. This escrow makes sure, that the BTC is available, can be sent to the buyer's address when the buyer sent the equivalent amount of fiat to the seller, and the seller can't behave badly.

# Fees
- Premium: this is not really a fee, but you pay it as an extra over market price
- There is a trade fee, which is 0.025% from total sats amount
- If you use on-chain to get paid, then you will have the following fees as well:
  - Swap fee: 1.02% from total sats amount
    - This is the fee to swap sats from lightning-network to on-chain
  - Mining fee: depends on the `sats/vB` you set (does not depend on total sats amount)

The total sats amount is `FIAT / BTC market price`, because the premium goes to the seller.

# Payment methods
The usual payment methods are bank transfers, gift cards, and even cash is possible, but then you have to meet the seller. As p2p BTC buying is about control and privacy, it is better to try to use more private payment solutions. 

## Privacy
One of the most private payment solutions is cash, but for that, you need to meet in real life. This can be inconvenient. 

The other most private solution would be buying gift cards in a shop with cash also. The disadvantage of this is, that your money is locked in a gift card, and if noone takes it, either it is stucked in the gift card, or you have to use the gift card.

The second most private is buying gift cards online, but in this case, the gift card is already traceable to your account. But still you are not giving your bank account to anyone, and the gift card seller has to be contacted to make the tracing possible. In some cases, your account name will be shared when you redeem some gift cards. But you can setup a new account with a fake name, and then only that will be shared. But when you use your bank card with that account to buy the gift card, then you can also be connected to the account. But still it will require more work for traceability.

The least private solution is using a bank account, because then you have to share your bank details.

## Disposability
The second thing to consider for selecting a payment method is disposability. If you buy BTC regularly with your bank account, and it won't be preferred, then your bank can either deny these transactions, or lock your whole account. This can have bad consequences for you.

So if you prefer to use your bank account, it is advised to use a separate bank account for this, not your main one. In this case, if anything happens, your main account is not effected. You can use an older bank account you don't use, or create a new one with Revolut, Wise, etc. Usually it is advisable to select a new bank account that supports fast wire transfers, because people usually go for those orders.

## Salability
The third and most important thing is, that you need buyers/sellers for your orders. You can select any type of private solution, but if no one is willing to use it, you won't be able to stack your sats.

Depends on the location, but usually bank transfers are the most salable, but the least private. People prefer it, because then they get FIAT directly, that they can spend on anything. Gift cards can only be spent in the shop the card is from. Also cash is less preferred, because can't be done over the internet.

# Frequently Asked Questions
### What prevents the BTC seller from stealing my FIAT?
They have to lock the BTC they sell in escrow before you send your FIAT, and then they can only release it. Or if there is a mutual agreement, they can get it back. Until they don't lock it, the chat won't open up, and you can't send your FIAT.

### What BTC price is used for transactions?
The market price is used, and the premium is added on top of the market price you set. This means, you don't specify a specific market price, but a premium that you are willing to pay over any market price. 

### How to get BTC on-chain instead of on lightning?
When your order is taken, and the seller locked his bond and escrow, you can either give a lightning invoice that the seller will pay, or a BTC address where the on-chain BTC will arrive. In case of on-chain BTC, you can even define the mining fee.

### Why would sellers sell BTC on p2p?
They are incentivized to do so with the premium that buyers are willing to pay for p2p or non-KYC BTC.

### How much time does it take to buy BTC on Robosats?
It depends on your order. If you use commonly used payment method and set a reasonable premium, then it can be really fast. But if either you select a not popular payment solution or too low premium, it can take even a day or more to find someone for your order. 

For the premium, you can check the suggested premium on the chart view.

For the payment methods, you can check the currently available BTC sell orders, because you want a BTC seller to match your buy order.

### Why does it make sense to put out your own order?
Usually BTC sellers are creating orders with higher premium because their goal is to sell their BTC for more profit. Buyers are the opposite of this, and want to get cheaper sats. Due to this, sellers are creating orders with higher than necessary premium, in case someone buys them, but in the mean time orders with meaningful premiums are also getting accepted. So if you don't want to pay too high premium, you most probably have to create your own order.