End user is not ready for UTXOs
3149 sats \ 24 comments \ @ivarojha 9 Apr bitcoin
I work on a non-custodial p2p Bitcoin platform. Imagine Bisq in a browser.
Almost everyday, our users complain about high fees on the Bitcoin network. And we tell them it's actually pretty decent these days.
The reason they find it high is because they've got a bunch of UTXOs. Like in hundreds. For context, here's how our escrow works. Escrow txns spits out two UTXOs, one for the escrow and another for the platform fee. If for some reason, the trade gets canceled, user gets back both UTXOs. If it does go through, the buyer gets the escrow UTXO. All-in-all, you end up with a stash of a whole bunch of UTXOs if you've been trading long enough.
Now when they have to spend these UTXOs, the fee appears higher than a normal txn because of high tx size based on the inputs UTXOs chosen. We've tried explaining this but 9/10 users do not want this. They want us to get rid of the UTXO system (basically, don't broadcast txns on chain, just hold BTC custodially) and let us withdraw at nominal fees. We are obviously not gonna go that direction.
We've also tried getting them to consolidate at low fee days, but nah, it's still too expensive. In the end, we end up losing these users to other custodial platforms.
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303 sats \ 4 replies \ @DarthCoin 9 Apr
In the end, we end up losing these users to other custodial platforms.
Implement LN. Done. If you do not adapt to Bitcoin LN you will simply die.
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21 sats \ 1 reply \ @nym 9 Apr
This is true and was my first thought.
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49 sats \ 0 replies \ @supertestnet 9 Apr
I don't think anyone has implemented a way to do this without taking custody of user funds for the duration of the trade
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21 sats \ 0 replies \ @nikotsla 9 Apr
This.
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0 sats \ 0 replies \ @SUPERMAX 9 Apr
110%. Pains me to admit but I believe even non-custodial LN (custodial will always be easy of course) will run its course with new users. Cashu, Fedi and ecash in general will be next. New new users will be more susceptible to a "digital cash" connected to sound money, instead of using govt. cbdc
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50 sats \ 0 replies \ @TheBTCManual 9 Apr
I don't know what the ideal solution for UTXO management would be, I suppose improving wallet UI to explain to users they're imposing future costs on themselves and fee estimations might help but that might only cover certain users
People don't like P2P for many reasons, complexity, cost and personal responsiblity, we can only solve so many issues and leave the rest up to market incentives, people who use custodial services are just pricing their risks differently, because they have yet to be rugged
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59 sats \ 0 replies \ @cryptoquick 9 Apr
It sounds like the transactions need to be made atomic, as they would be in a PSBT swap. Then you can get rid of escrow.
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60 sats \ 0 replies \ @IamSINGLE 9 Apr
Yes, you're obviously right.
It's sad that you lose users because of this. Whenever it comes about costing, It's human nature, Noone wants to pay extra if they can pay less somewhere else for the same thing.
I hope someday, they can understand the UTXOs thing.
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16 sats \ 1 reply \ @Fabs 9 Apr
Not only that, most people aren't ready for Bitcoin in general, as they simply don't care about financial sovereignty.
Developing a basic understanding of UTXO'S and their contributions to one's transaction fees isn't hard.
People simply don't care and want everything handed to them, I'd bet most don't even know the difference between using a custodian, and self custody.
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0 sats \ 0 replies \ @Taft 9 Apr
Yes, that's true! I know a lot of people who are into not just bitcoin in particular, but crypto in general, and they really like KYC exchanges for trading. They don't care about their privacy or the risks they are taking by putting their money on these platforms.
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32 sats \ 0 replies \ @notgeld 9 Apr
You could maintain some degree of utxo fragmentation by using pay join and re mixing utxo. But not every wallet supports that.
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20 sats \ 0 replies \ @StoneCodlHodl 9 Apr
This is fine. We invented custodial lightning, Fedi/Cashu mints, and other solutions for the mindless masses whom we must drag to freedom, kicking and screaming.
In a NORMAL fee environment (let's not call it high fees) - is real impact to UTXOs smaller than 0.01 BTC
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11 sats \ 1 reply \ @Taft 9 Apr
In the end, we end up losing these users to other custodial platforms.
But they take a big risk going on these custodial platforms, which they probably don’t understand.
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0 sats \ 0 replies \ @ivarojha OP 9 Apr
True that! It's also quite often that a user comes back because their crypto deposit was "on hold" for unexplained reasons on a custodial platform.
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10 sats \ 1 reply \ @oldrtr 9 Apr
True. UTXOs are hard to explain to people. To be fair, once you start getting into the weeds with how Bitcoin works you can quickly see how people just tune out since there's a lot of technical info and it also requires context to understand why it's being done the way it's being done.
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10 sats \ 0 replies \ @Fabs 9 Apr
True, without intrinsic motivation, it can be difficult to get your head around even the basics, as in my experience, you never really learn things thoroughly the first time.
I've had my heart broken many times in this regard: you think you know something, just to learn that you, in fact, didn't get the full picture, throwing you back to square one.
It's easy to get annoyed and simply say "fuck it", but not for me, for I grabbed that bitch by her horns a long time ago, and am still holding tight.
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200 sats \ 2 replies \ @Elias 10 Apr
@ivarojha I have an idea to solve this problem. Why don't you ask your users to prepay 5x or 10x the platform fees, say 25k sats or whatever amount suits your requirements and then collect the escrow amount separately whenever the users want to trade? Let us say on average you charge 5k sats as platform fee per trade, the user can make 5 transactions with the prepaid amount. This will help you solve the UTXO problem as the platform fee for several trades is paid to you as a single transaction. This is just my suggestion and I am not sure if my suggestion would address your problem. If it helped, just let me know.
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0 sats \ 1 reply \ @ivarojha OP 12 Apr
This is a good suggestion! We are working with some trustworthy sellers to try this out.
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0 sats \ 0 replies \ @Elias 13 Apr
I'm glad that it helped. Please do let me know how it goes. I want to learn smart contracts and blockchain from a software development perspective and build a career or business around it. If you can guide me, I'd be grateful. It feels wonderful how SN helps us connect and uplift one another.
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0 sats \ 0 replies \ @Coinsreporter 9 Apr
Don't worry. They will have to return eventually.
A time will come when everyone starts understanding the value of all these technical things.
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0 sats \ 0 replies \ @falsefaucet 9 Apr
They were never your demographic to begin with then.
Bye Felicia
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0 sats \ 0 replies \ @beorange 9 Apr
Yes, they are not ready, but for most users LN is the way. Dealing with "on chain" stuff is for people "working" on another level. For everyday stuff and for many of everyday tasks, users should rely on lightning network.
Most users won't ever understand Bitcoin internals, however it doesn't mean they are not entitled to have full sovereignty over their own funds.
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0 sats \ 0 replies \ @OT 9 Apr
Hold invoices on lightning?
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0 sats \ 0 replies \ @NIPPLENATOR 10 Apr
100% and retards like Darth telling everyone to just use LN is ignoring the issue entirely. Do we want people to save in Bitcoin or spend in Bitcoin? Because those two things have two different UX flows with nuance and complexity. Users do not want any of that at all. If its not as simple as using a bank account or credit card you are fucked.
No matter what you do, if you are accumulating Bitcoin you will have to deal with swapping between on-chain and lightning. Anyone suggesting that people "just use lightning" are fucking retarded. That isn't a solution and the markets will continue to demonstrate it.
Like, how are we supposed to get people on a Bitcoin standard when Lightning isn't capable of being a place where you store a significant amount of savings? And when you have to pull from your on-chain savings? What then?
Bitcoin fixes all, Lightning fixes this. Sounds like those hippies back in the 70's trying to convince people that weed could cure cancer and shit.
I can't believe we are in a situation where someone is suggesting if you don't get on LN you will not make it in Bitcoin. That is fucking insane to say for so many reasons I am not sure where to begin to unpack that. You are literally saying Bitcoin fails if left standing on its own legs.
I love LN and what it enables, but if it any L2 technology is a requirement for using Bitcoin, and the alternative "failing" because I use on-chain, then we are heading straight for a brick wall.
Love that a non custodian platform is being told to integrate a solution that requires them to become a custodian.
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