RBF Workarounds

RBF (Replace By Fee) is not going away anytime soon. RBF is a pox on bitcoin in blatant and subtle ways, as I showed in recent posts. We are stuck with customers waiting at least ten minutes for their just-purchased wares. Actually, we’re not. There are workarounds and they work really well. In this post, I will go over the two best in my opinion: bitcoin over Lightning (BTC-LN), and litecoin (LTC).

Mid Close Ups of Iron Man and War Machine. Iron Man has the BTC-LN logo, and War Machine has the LTC logo.

Bitcoin over Lightning (BTC-LN)

RBF (Replace By Fee) committed a cardinal sin: It allowed people to hit ‘send’ and then fiddle with their transactions. Luckily, there is a form of bitcoin called bitcoin over Lightning, and it is untainted by RBF. If you use bitcoin over Lightning (BTC-LN) then it’s forbidden to fiddle with your transaction. You hit ‘send’ and that’s that.

Needless to say, I try to use bitcoin over Lightning (BTC-LN) as much as possible. All the RBF-type problems vanish with BTC-LN.

If you want to sell bagels at your local Farmer’s Market, then bitcoin over Lightning is fast, cheap, and fraud-resistant. Customers scan your QR-code and then two seconds later you get paid with no shenanigans.

Layer Two explanation

BTC-LN is a ‘Layer Two’ on Bitcoin. That means that it can’t exist in its own right. It needs the Layer One. It’s just adding to normal bitcoin, hence the term ‘layer’. People sometimes say that BTC-LN is fake bitcoin, but that’s not true. Consider my analogy with the motte and bailey from the last post:

A pictorial diagram of a Motte and Bailey style castle, in a childrens' book style. There is an outer stone wall, and the entrance gate is labelled 'A'; there is also a narrow rope bridge over a moat near the main entrance, guarded by a soldier, labelled 'B'; inside, there are stables and a path leading up to the hill, the motte, with a palisade around the motte, and the entrance to the motte is labelled 'C'; finally, there is the Bailey, a stone tower, and it is labelled 'D'.

The main gate, labelled [A], is the normal way of sending BTC. That’s the way they screwed up with RBF. The guarded bridge over the moat, labelled [B], is another way of sending BTC. That is the Layer Two. (A, C, and D are all part of Layer One). If one wants to send bitcoin over the Lightning Network, one uses [B]. It’s not like path [B] leads to a second castle. The path from [B] leads to the palisade, [C], as well.

Layer Two has boons and banes. One boon is that it’s much faster. Another boon is that it allows extra privacy. BTC-LN is much harder to track than regular BTC.

One needs a bit of prep

The bane? Imagine you’re in a shop, and you need to pay in cash, and the shopkeeper doesn’t have the right change. That puts a halt to the transaction. The reason is that the BTC used in Lightning transactions must have been bought beforehand using the ‘real’ Bitcoin transaction log, i.e. the blockchain. You can buy once, and then spend it over months in tiny amounts on the Lightning Network, but you can’t spend more than you originally bought. Every user of BTC-LN has some “oh, fuck it!” moments when he or she must do the equivalent of running back to the ATM to get out more cash.

If you haven’t had any of those moments, you must be using a Lightning Service Provider instead, e.g. Wallet of Satoshi.1 This is a big can of worms and I will open it at another time.

Litecoin (LTC)

I told you that I try to use bitcoin over Lightning as much as possible. Strictly speaking, I try to use bitcoin over Lightning as much as possible when litecoin isn’t an option.

Litecoin (LTC) has bona fides. It’s the oldest living crypto after bitcoin. Charlie Lee launched it as a literal copy of bitcoin in 2011, but with a few crucial variances. The main variance is that new blocks get published every 150 seconds.

You might be thinking: “This is a bit on the nose— you might as well just say ‘don’t use bitcoin.’”

It’s not on the nose because litecoin came into being to help bitcoin with all these headaches I’m mentioning. Litecoin is not a son trying to oust his father from the household. The Prince serves The King. War Machine backs up Iron Man. Charlie Lee knew that bitcoin was destined for high fees and hassles. That’s the cost of being the World’s most secure and decentralized money. Charlie Lee brought litecoin into being to take the load off bitcoin for the smaller transactions.

Charlie Lee even described litecoin like it was a de facto Layer Two for bitcoin.2

Litecoin not only has Satoshi’s original model of verification, it has a second-to-none history of reliability. No transaction has ever been taken from the blockchain. Think back to my analogy of job-seekers waiting in a queue to take an exam. (If you haven’t read it already, read here.) Now, change it so that job-seekers plucked from the queue turn out fine 100% of the time. This has deep ramifications. Merchants can take ‘zero-conf’3 transactions with a high degree of confidence. For any wares under $100, in my opinion, merchants can hand it over in seconds, not minutes.

Iron Man and War Machine are a team

People normally want a ‘which is better?’ summary at this stage.

In my experience, one should have both quarrels in the quiver. BTC-LN’s adoption has picked up in the last 12 months. Sometimes, that will be your only option— apart from normal BTC with all the problems of RBF I have been harping on about. Other times, you will have the option of litecoin, and it ‘just works’ as they say, so save yourself any risk of hassle.4

  1. A sacrilegious name, given that it sins against one of Satoshi’s most basic principles, that of self-sovereignty over money.(Return)
  2. In rereading this article by Charlie Lee, I noticed that he foresaw that Replace By Fee, then just a suggestion on Reddit, would slow Bitcoin down. (Return)
  3. i.e. zero-confirmation. It means that the transaction has been checked by all the nodes but is still waiting for the official publishers, i.e. the mining-nodes, to publish it in a block. It is the shorthand term for the feature on which I have been focussing in these last few posts. (Return)
  4. I might write about the runners-up, bitcoin cash (BCH) and monero (XMR) in a later post. (Return)

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