BTCPay Server: Optimizing Merchant Bitcoin Adoption – Blockstream Talk #32

Welcome back to blockstream talk today We're speaking with pavin X and Andrew From BTC pay server BTC pay server is a Self-hosted open- source payment Processor that supports free private and Censorship resistant payments for online And real world Bitcoin transactions Recently BTC pay server was used at the Baltic honey bger conference to Facilitate Bitcoin payments with Merchants at the event interestingly Many of these Merchants were relatively New to Bitcoin in this conversation we Talked about how BTC pay server offsets Bitcoin's vol ility a key consideration For retail payment applications how they Manage to get Merchants comfortable with Accepting Bitcoin the feedback they Received and how projects like this put Us a step closer to establishing a Circular Bitcoin economy if you find This podcast interesting as always don't Forget to like subscribe and Share Thanks for joining the show today guys Thank you thanks for having us before we Jump into BTC pay server and what you Guys have been up to could you maybe Introduce yourselves and give our Listeners a brief overview of of your Roles at BTC pay server yeah sure so my Name is Andrew um I go by the by the Name Cooks online um I've been working On BTC pay server for I don't know the

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Past five years maybe a bit more um Mostly working on dev work inside BTC Pay yeah uh so my name is pinex uh I go By pinex um I've been similar as Andrew I've been involved with btcpay for uh Since the beginnings I'd say so that Makes it five years uh I think um so Besides btcpay I'm working uh on stratum V2 uh also spiral grantee worked on a Several other projects in the industry But I guess currently just BTC pay and Stratum and my role is janitor or a PM However you prefer great so for anyone In our audience who might not be Familiar can you explain what BTC pay Server is and how it works yeah sure um So BTC pay server is a free open-source Payment processor for Bitcoin um that is Self-hosted by you uh independently and Allowing you to be self- Sovereign and Your business as well um we there is no Revenue model there is no uh commercial Plans or any of that uh it's not a Company it's just a software project That you that you just run yourself uh We develop everything out in the open uh We don't have any backd door meetings uh We don't have any VC funding we we just Work on this independently and towards a Common goal of self- sovereign Bitcoin Payments very cool I saw a video Recently of Baltic uh Honeybadger and You guys were selected to process Payments there how did that come about

So we've been with uh honey badger uh Since the beginning so we are um in a Way friends with them uh we've been Supported by them uh for a few years now And U we organize our BTC pay server Annual Gatherings which we call BTC Payday uh in Ria um so we have developed Pretty good relationship with them and Uh in one of the conversations they said To us that in like earlier conferences People were unable to pay uh in Bitcoin With Merchants outside and that was Probably the biggest complaint that they Had U for the conference um so we were Just thinking okay how can we help you Guys and then we started uh thinkering How how to make this experience mther uh We identify a few requests that Merchants had and some setback that were Also previously stopping them from from Accepting Bitcoin payments and we went From there and created a very tailored Solution uh for for the Baltic County Bger anything to add Andrew yeah I mean Um to add the only thing I would add is That we've been helping them for the Past I guess two conferences with the Ticket sales uh for the conference Itself as well so we have been you Know uh kind of providing the Infrastructure at least at some level For them um just to be able to accept Bitcoin payments for ticket Sales um this year we just expanded it

To you know the actual merchants in the Conference yeah that's very cool and how Did you decide on the plugins like prism And and and uh sideshift and and how did Those work and maybe also introd Introduce briefly what what prism and And sideshift do yeah so the plugins in Btcp is something that we came up with a Few years back um it was during a time Where we're basically trying to get a Bit more lean in the code base we were Building features non-stop all the time And the UI was getting a bit cluttered In BTC pay um Eventually we we realized that we just Couldn't build everything that everyone Asked for directly inside BTC pay it was Just getting too too clunky um so we Decided that we can create um basically Packages of code that can be installed By server Administrators uh on uh depending on What they need uh and that's that's what The plugins are it's kind of like what Exists for WordPress and all these Other uh Solutions online so the so the Prison plug-in is something it's based On the on the prism concept they came up With and that JG was pushing through Through through noer a few a few months Back it's basically the idea of Automated workflows on Lightning where Money comes uh money comes in in one True lightning and then you split it out

To different destinations automatically Um the prism plug-in in BTC pay is based On this concept where you can enable it On on stores where for example you can Say all the money that comes in through The point through a point of sale Application on BTC pay forward 50% of That to a destination and the other 50% To somewhere Else and the way it works is every Destination is like has a threshold so For example only send out the the amount If it reaches a specific balance so that You can kind of accumulate them and send Them out in in bulk to reduce the amount Of uh needless Transactions um so that's that's the Prism plugin then there's sideshift Plugin um so that one so sideshift is a No kyc uh online exchange um it supports Basically sending in Bitcoin and Converting it to any other asset uh Without needing to do kyc or or any of That and it uh it doesn't stay as as a Balance on on the exchange it sends it Out to another wallet in of you that you Specify so the S shift plugin Essentially works by it will create an Order on demand for you and uh the prism Plug-in sends the funds uh to that to The Sid shift plugin uh and the S plugin Converts it to an order that gets Created on demand and it sends it back To your wallet uh so in our case it was

Sending every time the point of sale of A merchant received 100K SATs it will Create an order on sides shift send 100K SATs to it uh minus whatever fees on Lightning which is basically Non-existent and then it will um uh Convert it to usdt on on liquid and send It to the liquid wallet so I guess Matching up those two ideas yeah that's Exactly how you take care of the the Bitcoin volatility which has been a Historic push back from Merchants right Is it bitcoin's price moves around a lot So it's hard for them to accept and I Guess as soon as you hit the threshold It pings it off to The Exchange and then The exchange sells it in a pretty small Size at a market order yeah exactly Pretty much um the idea is that we Wanted to do it fast enough uh like Often enough that you don't wait until The the USD rate changes too much but You want to do it uh uh slow enough so Don't you don't basically create you Know a million transactions on on the Liquid Network liquid Network so every 100K sets was basically executing I Don't know every five to 10 minutes Maybe so every 5 to 10 minutes an order Was created 100K stat were forwarded and The equivalent am amount of usdt was Sent to the to the wallet why was the Threshold set at 100K SATs is that a Reason for that just an intuitive number

Or uh intuitive number um we initially Actually we started off with 50k STS but It was triggering like quite often um And every 10 15 minutes was acceptable Especially because I think sidei was Saying like the F on liquid was so low That They sometimes didn't even ask you to Cover it so that was a good amount um Like it it cost it didn't cost anything Extra to do it often that as 100K sets Um and I guess in terms of the Volatility it kind of you know it should Average out if you're doing enough Transactions over enough time sometimes Bitcoin price goes up sometimes it goes Down sometimes it goes sideways like it Has for like five Months you know so I guess over time it Should average out if you're doing Enough transactions right yeah I would Say so but Merchants are a bit finicky Especially when you're doing something For 3 Days uh you know if the price Moves 1,000 bucks they're they they get Like oh what am I going to do now even Though they they probably sold like a Hundred bucks worth of coffee or Something so it it's all about making Them feel at ease even even for a Shorter time frame I mean they're They're running a business so they need To really be careful of the costs uh Sometimes their margin is not really

High so they they're selling as Andrew Said to $2 coffee so with all this I Know that like for somebody the Listening this can be very like wow this Is crazy setup how is anybody even Supposed to to accept Bitcoin this way But for those people who may think this Is tricky for merchants it wasn't and I Think that's what matters for them we Managed to address all the concerns that They had which is we want to accept Bitcoin but we we don't want to be to Express be open to its volatility we Want a very easy and smooth user Experience and our customers may not Have Bitcoin to pay in the first place And how do we handle that so those are Three biggest challenges that we had to Address and then yeah we rolled our our Sleeves and try to to figure out a System which somehow addresses all these Needs in a in in a short amount of time I also must stress out because we did it Well Andrew did it in very short amount Of Time do do you have any plans to roll it Out to more exchanges or something like That going forward because one thing I Was thinking about is you know if all of This is going to be all the flow is Going to be one way right this is all Sell flow and you know sides shift the Trading I think is a little bit thin you I guess there's a lot of if it you know

Maybe if you have a big event or enough People on board that just like constant Downward pressure on the price does does That impact price at all and then do you Have any plans to kind of maybe expand It to more exchanges and and more get More liquidity so I don't think it would Impact the price I mean it would take Quite a lot of volume to actually do That like thousands hundreds of Thousands of any anything right to move It that much uh on Sid shift I don't Think they I'm not even sure if they you Know uh kind of simulate the price Movement I think they're more like Following the the usdt the USD price on On a different exchange or different Price sources and then saying oh this is The this is the price at least that's my Impression of it uh regardless we do Wish we could support more um just for The sake of options for the user um the Main reason I chose sideshift was Because Their API allows some interesting things Without having me kind of be like an Intermediary to everything uh so it's Like public API they don't need me to um You know create a service like cooks. Org and running you know some sides Shift intermediary operation like they All the merchants can just do it without Needing to register with sideshift or Getting an API key they can just connect

To it create an order and the money just Flows through regardless of that um we Do have uh part of the plug-in system Also supports uh exchanges to a degree Uh so for example uh we want to make it So that you can hook in an exchange and Create orders on those exchanges and Send and you know creating deposit Addresses and you know payment requests On the exchange so you can forward to That as well so it's all part of Our uh plan to enable these true plugins Not necessarily built as part of core But uh just just for the sake of having Options to the end user and like if Somebody uses an exchange for already For converting to to Fiat they should be Able to use that instead of sideshift And and what was the merchant reaction To receiving the funding in in in tether I mean there's probably still like a lot Of traditional Merchants that would find That a bit bizarre as well did you get Any push back on that and what were Their plans to converting it to their Local currency or did they just not have Plans to do that on their end they had Options uh for us that was just a way to Hedge against volatility and U at the End of the conference they had options To do do whatever they want so I I I I Would assume that most of them opted out To get Fiat uh for sure uh but we just Don't have this this data on uh because

It was handled on the whole whole Platform so we don't really know how This was uh specifically handled um the Case study mentions the importance of Instant and Fess transactions and the Subsequent choice of the lightning Network how does BTC pay server Facilitates seamless lightning Transactions especially at larger scale For you know bigger events and how do You prevent um payment failures that's An interesting one um so obviously Lightning needs to exist for in order For Bitcoin in retail to work because Onchain uh with its first fees and then The the settlement of approximately 10 Minutes doesn't really scale when you're A big business selling um you know a lot Of items you just can't afford uh to to Have people waiting around and then you Just cannot have people canceling Transactions especially these days when Even wallets make double spending very Easy for the end user just by adding an Option to cancel a transaction so um Lightning was really obvious choice There because I think I I personally Believe and maybe Andrew Can U comment On his beliefs but in order for Bitcoin To be used as a medium for for payments We really need to have something uh like Lightning now if lightning is the best System I'm not sure yet but it's the Best uh what we currently have so for us

Uh we were actually one of the first if Not the first uh payment processor maybe Maybe somebody was there before us I'm Not really sure to implement lightning Uh in in the beginning so I think we Implemented it in 2018 if I'm not Mistaken um we support all of major Implementations of the lighting Network So it's up to user to to choose Whichever they want to opt in for uh Unfortunately lightning is very hard Lightning sucks uh it's hard uh you as a Merchant really need to uh pay a lot of Attention to channels to you know um Have liquidity to to be able to accept Payments and we are still not there when It comes to lightning service providers That do this very automatically for for The users uh I assume at some point in Time we will be there but currently we Are not there and it is unfortunate that We had to choose uh for example a Custodial solution in this case to Accept lightning payments which is Unfortunate but it's a reality of Lighting and it's something that we have To be aware of for this to be able to Work at this scale uh for over 2,000 Transactions or even more maybe 3,000 Transactions we had to use uh custodian Node by Albi um but luckily we had this Mechanism which pulled the money out so We weren't weren't really exposed very Long to this custodians ship Risk by Al

We just basically use them um as a Liquidity provider in a way and just Somebody who maintains a node and Channels and take carees of all of this And we just borrowed their their node For for a period of 100K sets before we Pulled the money out of it every time The threshold was reached in a way so That that also shows that we are still Not there in lightning because if Lightning worked the way uh we hope it Will uh we would just use non-custodial Solutions for all of these merchants and This is our goal for maybe next year to Actually try to simulate this same Experience which was very very smooth Transactions were you know there were no Problems in terms of like people not Being able to to send money or liquidity Not being there uh but we need to Simulate this in a non-custodial way and That is one of our goals with the btcpay App we are working on actually we're Really even even more motivated after This experience that we really need to Push more on the non-custodial lightning Because if the future of Bitcoin is for Everybody to use these custodial nodes To be able to accept payments through Lighting then that's not the Bitcoin we Sign up for exactly yeah and to go back To the to the point like if we had to Use the exact same model again for a Bigger conference bigger scale events uh

I think it would work as well I don't Think it makes a big difference between 20 merchants or 100 merchants in this System um like all the money is flowing In and out technically the channels the Lightning channels of Al are kind of Getting rebalanced on demand every Single time Since 100K Flows In 100K flows out um so It was Reusable quite quite extensively um and The BTC pay server instance that we had Running was under no specific load Really like there was nothing crazy Going on it could have handled a lot More um we also got a lot of good Feedback from it uh we we've been fixing Any ux issues that came out of it um we Even did um buil some of the NF C card Issuance directly into BTC pay now so we Can have one one single system for Everything uh so you can literally Deploy BTC pay server and handle the Entire infrastructure for payments uh From tickets to handing out gift cards Powered by lightning to you know Accepting Bitcoin on lightning and on Bitcoin on chain um going back to a Point that uh pav mentioned I do think There is still a place for onchain Transactions uh but it's not going to be For Like a street vendor selling you know Foods like that's not that's not going

To work like you can't wait 10 minutes Uh while you're buying a coffee like It's just not realistic you need to you Will probably want to do it if you're Buying a car from a car dealership or You know buying something high value um I wouldn't send it over lightning at That point because I probably won't have That amount of money on a lightning Channel and and just to add a bit on That also maybe this can be advice for All of the other people building in Bitcoin for us being exposed as as Builders like just being exposed to our Software being used at that scale and Just being there in real time just Seeing how people use your product was Really amazing and we learned a lot and I think we as a bitcoiners usually build This stuff behind the scenes and we Rarely see products uh still how people Use them so if you know you can uh spend More time with users uh who use product Like for for something very specific It's really cool we learn a lot as andro Said got a bunch of feedback and we are Ironing things out even our next release Is basically inspired by by this use Case because we were just looking uh at Them how people used and just take Taking notes on how we can improve and What were the conversations like with The merchants how did you convinced them To to get set up and and and how long

Did it take for them and what was the Kind of push back that they gave you if Any so that's the beauty of it the the Onboarding process was pretty smooth we Ensured that they don't really have to Have any mental effort in order to Accept these payments because first and Foremost we try to mimic very similar or Or familiar experience to them uh so for A merchant all they had to do is make Sure that point of sale is charged and That well we we learn one more lessons And this is like Wi-Fi on on one of the Test days before the conference we Actually figured out that we have Internal Network for all of these point Of sale devices but then somebody shared Shared the password to that network uh In a group with 800 people so then Merchants weren't able to to really have Smooth experience so then we use SIM Cards uh in in these devices which allow Them uh way better uh connectivity but For them it was pretty smooth uh like we Spent literally three minutes three to Five minutes with each and every of them They realized that all they have to do Is type in the amount click charge uh we Explained how they can you know take a Look at invoices and handle all of that And we really didn't receive any push Backs on that one I even wrote a Handbook for them to like detailing how To use everything and but we didn't even

Need to give it to them because they Figured it out super fast and and what Kind of merchants were they were they People that are already familiar with Bitcoin and digital assets or they were More traditional and kind of this is new To them I think they were all new to it Oh wow none of them were very Experienced in what how Bitcoin Works What Bitcoin does like they were Literally just there to sell their food And had no clue what to do that it was a Like they probably knew it was a Bitcoin Conference what uh they probably heard Of Bitcoin but they had no clue how or What it does or why in a Sur conducted After a conference uh with them actually On a SC scale one to five I think Approximately they were on number two How familiar they were with Bitcoin Before the conference so that probably Means that they heard about it and then How concerned were they to accept Bitcoin I think uh their answer was on a Scale one to five it was like four uh Being concerned to accept Bitcoin as a Payment before the conference but then What was really amazing is that we asked Them then okay would you be a up for Accepting uh Bitcoin payments next year And 83% of them actually said yes and When we asked okay would you be open to Accept Bitcoin for your business in General 50% of them said yes which is

Really great number for somebody who Really is not familiar with Bitcoin at All so the experience smooth experience Really helped uh on board them to to Bitcoin in a way could you uh explain a Little bit dig a little bit deeper into Your you know using the point of sale Machines um to make the payment Experience more familiar for merchants Is that um is it a different machine is It something you you guys built Specifically for this or was it Something that was off the shelf so the Bit the the machine is called is from a Company or I guess working group called Bitcoin eyes um there's working on Selling this product to as on a large Scale um so they helped us out they gave It they gave they sold us the devices That are very uh at Cost uh just for the Sake of us trying to enable these Merchants uh their devices they're Nothing special in terms of what what They are what they do um but the good Thing about them is that they are so Similar to uh other devices to other Payment Terminals and that's that's the Main point uh they look exactly the same Um they function the same thing right so Um for them I think that's the main Selling point they they just look like Every other device that they own in on The on their food truck when they want To accept money yeah I think if we want

Bitcoin to be adopted it need people Need to use Bitcoin without even you Know being mentally focused that they're Using Bitcoin without even knowing like For them they were just accepting Payments and that's that's What mattered And what about the NFC voucher cards how Did those work so that was a Collaboration with uh with with the Teams from my plep tags uh and uh Ellen Bits they they ordered then issued the Cards themselves um and basically these Cards they're they're they're called Bolt cards um what they do is you can Top them up with with Bitcoin and as Soon as you tap them on an NFC enable Checkout experience in Bitcoin they will Pull the money from the card and you Know over lightning and and pay for it Um they're pretty cool um uh we've had That support in BTC for pay for a while Now um it started out as a as a plugin Actually in BTC pay um because we felt Like okay this super Niche nobody's Going to use it like you know um it's Like you know it's like okay we mostly Focus on online payments for the for the Most part right so like this is a very Physical physical aspect of of payments So we built uh we built it as a separate Plugin and we noticed that everybody was Basically installing the plugin and Trying to use it so we're like okay Maybe this is more popular than we

Thought and we moved it directly inside The the core BTC pay so now every Install comes with the feature Enabled um it's really cool um we Launched it I think we launched the Plug-in at least last year alongside the When the coin Corner Guys released the B The their paid bolt Cards um yeah I think it's really Amazing and we're working on creating a Lot more experiences around it um for Example the we have a plugin called Ellen Bank uh which acts as a sem Account system inside BTC pay server so You can have sub accounts there with uh Individual lightning balances and each Of these LM bank accounts can have uh You can issue a bolt card directly on it Now uh so we're basically making it you Know a standalone Payment and card issuing service oh very Cool and given you know the feedback From the surveys and the merchant Experience was pretty positive what do You guys what's the plan going forward Are you working with more um Conferences and events going forward are You working with any have you had any Interest from any mainstream events is That something that you're looking to do Maybe non-bitcoin events yeah I mean we Realize that U Bitcoin in retail is Something that we really want to work on And focus on um more in depth uh that

Was the first learning for sure and it Just like the second one was yeah um I Mean we definitely want to this to Succeed we want more conferences to Accept uh uh payments for sure uh Whether it's Bitcoin or not preferably It would be great if we had non-bitcoin Conference accepting Bitcoin that that Would be great but any any conference Organizers is willing to to you know Mimic this setup that that's the reason Why even we wrote this case studies to Motivate people to to adopt this and if Anybody out there needs help on setting This up feel free to reach out we'll Gladly on board you uh and yeah it also It's also helpful feedback for us uh so Yeah feel free to reach out you you Mentioned at the beginning that you also Do a lot of work on other open source Bitcoin projects including stratum V2 um Can you explain maybe shifting gear Slightly can you explain to our Listeners what stratum V2 is and why That's necessary and and also how Individuals and organizations can can Contribute to its development yeah sure So um I work on stratum V2 together with Several other uh people it's an open Source project so Straton V2 is uh Upgrade to an existing mining protocol Uh currently or all miners use something Called stratum V1 or just stratum um It's a mining protocol that allows

Mining devices to communicate with each Other with mining pools at of course the Bitcoin Network um the reason why there Is a need to upgrade the Protocol no Matter how scary that sounds is that the New protocol improves security uh Optimizes for better performance and Most importantly Decentralizes transaction selection in Bitcoin uh so uh currently uh mining Pools are the one that we basically get To say which transactions go into next Block and with Straton V2 we are Shifting that um responsibility to back Towards miners so individual miners uh Will be able to to do transaction Selection so that no single entity can Censor a mining pool for example uh or Just say okay these are the transactions From X individual that shouldn't be Included so um yeah first and foremost That definitely a lot of security Improvements as well because it is uh Mind-blowing that in 2023 we are still Using a protocol which is not encrypt Encrypting communication between all of Them so I would just say that that alone Is worth upgrading uh and then Definitely the decentralization aspect Yeah the decentralization aspect is a Huge one right I mean historically given Bitcoin's history the pools have had so Much influence over or tried to exert so Much influence over Bitcoin and its

Direction that it's great to push back a Little bit Yeah so we are working on Something called uh SRI stratum Reference implementation so just like Maybe I'll give example for lightning Network in lightning we have several Implementations core lightning L&D uh AER uh so in in stratum there is like Stratum V2 is a protocol but there are Different implementations of it one of Them is brains implementation which has Been in use for quite a few years by Them only however uh for implementation To be widely adopted and used it needs To be open sourced uh and it needs to be Developed independently uh so that's why We formed a working group of several Different entities and organizations who Are now involved into building uh an Open source implementation of uh and Also complete implementation of the Stratum V2 protocol um we will be Shipping our I think update next update Uh within uh well next month mid next Month I would say uh and this update Will be very big uh because it will Allow miners to finally Implement mining Pools actually to to finally implement The software within uh their Infrastructure if they want to we've Done a lot of optimization a lot of Restructuring refactoring so the code is Finally ready and when people say why Straton V2 is not adopted I I would say

It's on us we didn't really develop a Software yet and now it's done so now we Will see if uh pools and miners of Course adopt it going forward um so Great guys I don't want to take up too Much of your time is there anything we Missed anything you guys want to Highlight um definitely want to let People know where they can go to find More information about BTC pay server And some of the other projects you guys Are working on yeah you can go to btcpay Server. org to find the entry points to To find our discussions documentation Installation guides um request new Features talk with us give us feedback Um we we want to highlight that we're Working On the non-custodial lightning aspect Quite hard now um we we recently Announced that we're working on a native Application crossplatform to allow Lightning um to allow a lightning note To be run remotely from your BTC pay Instance so that you can have shared Instances with BTC pay uh while also Accepting lightning without sharing Custody with someone else um It's something that we're focusing very Heavily on we're hoping to get something Out by next year at least an MVP um and we're welcome to talk about It with anyone that wants to hear what We have to say and what we're proposing

Just to get feedback see if we're doing The things right if you want to get Insight into Fun Part follow BTC pay Account on Twitter and Noster of course Um for stratum in particular the website Is stratom protocol. org great thanks a Lot guys appreciate it thank you thank You

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