What is Boltz.exchange?
I introduce https://boltz.exchange, a non-custodial, privacy-focused platform that simplifies swapping funds between Bitcoin, Lightning, and Liquid. Learn how to maintain full ownership of your funds while using a service that guarantees immediate refunds in case of any issues. Join me as I guide you through the swapping process, tips on minimizing fees and optimizing your swaps. Plus, hear my prediction on the future integration of a Lightning Network on top of the Liquid blockchain, potentially revolutionizing transaction efficiency and costs.
Transcript
Our next question is: “Can you guide us through the swapping process on boltz.exchange, please? Is there anything I have to pay attention to? Thank you.” So at first, I want to explain what boltz.exchange is and what it does. So boltz.exchange is a website. It’s a privacy focused, non-custodial website where you can swap funds between bitcoin, Lightning and liquid. Non-custodial means in that sense that it’s an exchange, but they never own your funds. So you retain ownership of your bitcoin, Lightning or liquid. And even if something goes wrong, they have a process where they refund you immediately. So it’s basically very easy to do, and I will show you soon. And what you can do is, for instance, if you own Lightning bitcoin, then you can swap it into liquid or into bitcoin. Because as I said in our last call, the differences between bitcoin, liquid and Lightning, the differences and the similarities, so Lightning is Bitcoin. It’s a faster Bitcoin in a way. The Bitcoin blockchain is on-chain and Bitcoin blockchain means on-chain, and then you have Liquid. Liquid is a side chain of Bitcoin, meaning it is also a blockchain. And if you swap from Bitcoin to Liquid, you swap the same value. But you’re not on the Bitcoin blockchain anymore. You are in the Liquid blockchain. And the advantage of that is that the transaction fees on the Liquid blockchain are much lower than on the Bitcoin blockchain at the moment. And I think for the next years this will stay that way. Because what we have seen recently, last year, is that the transaction fees on Bitcoin have been rising up to like $40 per transaction. And this is actually very much because if you only want to use, let’s say, an amount of $10 with your bitcoin, you can’t do that when the transaction fees are so high. And that’s why you can either use Lightning bitcoin, where you can use very small fractions of a bitcoin called a satoshi, or you could use Liquid bitcoin. Sorry, Liquid. And Liquid has the advantage compared to Lightning, that you can use it with a hardware device, hardware wallet, like the bitcoin on the blockchain. And for that you need a swapping service. If you have bitcoin on the one side and Liquid on the other side, you can’t just interact interchange exchange it. You need an exchange to exchange and the same with Lightning. So, for instance, I want to show you how that works now. So that means let me just change my window here. So here I’ve got now the boltz website, and I have a wallet that is called SideSwap. SideSwap is a Liquid wallet. And what I want to do now is I want to send from my Liquid wallet into my GetAlby Lightning wallet. So I want to switch from Liquid to Lightning, and the amount I want to switch is 0.0001. That’s then 9842. Satoshi. No, let me make it 0.001. That’s 99. That’s too much. Oh, no. Okay, let’s do 50,000 satoshis. I want to send 50,000 satoshis from my Liquid wallet into my GetAlby wallet, which is here. It’s a custodial, it’s fully custodial Lightning wallet, but it’s very easy to use. And I think if you want to start to use Lightning bitcoin, then Wallet of Satoshi and GetAlby are good options. So what I want to do now, I want to receive these Liquid into my Lightning wallet. So I have a Lightning address. It’s anita@getalby.com and I can put in here, I can copy the Lightning address in here. And now all I have to say is fetch invoice from this address. And now it has read the invoice. Now it knows where to send the Lightning bitcoin. And now I say create atomic swap. That’s the moment where I can download a refund file, which I’m going to do just in case something happens with the swap. But now the next thing I do now is I open my Liquid wallet and say I want to send, I open the QR code camera. Did you see? And it’s already in my Liquid wallet. I can already see the Lightning address of the receiver, which is my GetAlby address. And now I’m sending these 50,000 satoshis. Now I have to enter my pin. This is the moment where I’m going to not show you. So now I unlock the wallet, and now it’s sending the amount. So it’s been sent. So my Liquid have been sent to boltz.exchange. And here is my swap. The transaction has been received, and the swap is completed. And what I can do now is I go to my Alby wallet, and I hope it’s here. It’s here because I can see here that’s my payment. So I just swapped 50,000 satoshis from Liquid into Lightning, and I paid 198 satoshis for that, which is very little for that what was happening. And the transaction fees for that are like when you want to swap either from bitcoin or Liquid to Lightning, then the fee is 0.1%. That’s the boltz’ fee. And then if you want to swap from Lightning to Liquid, the fee is 0.25%. And from Lightning to bitcoin, the fee is the highest, it’s 0.5%. And additionally, if you swap from Liquid and bitcoin, then you have to pay the mining transaction fees, which are lower with Liquid than with bitcoin. So I think economically seen you have to try it out for yourself. What do you need? Which swaps do you really need? Sometimes when you are stacking sats, for instance, in a custodial wallet like Wallet of Satoshi or GetAlby I always say stack until, let’s say 100,000 satoshis and then swap it into Liquid or to bitcoin on-chain for long term storage. Of course, if you want to spend those 100,000 satoshis in between, then it doesn’t make sense to put it on-chain. But for long term savings, it’s more secure to have it on-chain, either bitcoin or Liquid. And I have also to add, bitcoin is really trustless. If you self-custody your bitcoin, no one can hinder you from spending it or whatever. Liquid is a little bit, there is trust involved because you have the Liquid federation which is basically holding your bitcoin. In the meantime, when you are using Liquid. So when you want to change from Liquid to bitcoin again, there’s trust involved because you need that federation of signers from the Liquid network. And that’s the opposite. That’s the difference to the Lightning network, because with the Lightning network, you don’t need anyone to be an intermediary or to swap out or anything. With Lightning, you can go on-chain yourself without an intermediary that’s inside. I mean, you could say boltz is also an intermediary. That’s true in a way, but they are non-custodial and they never hold your money. So in that sense, they are not really an intermediary because they can’t hinder you from using your bitcoin, Liquid or Lightning. Okay, I think this was the answer. And then I want to add also that I think that one day, when the transaction fees are also rising on the Liquid network, because they will. It’s also a blockchain. And the more people use it, the more transactions there are on the Liquid network. It’s the same with the Bitcoin network. Then the transaction fees on-chain will rise. And I could imagine that one day we will see a Lightning network on top of Liquid as we have a Lightning network on top of Bitcoin at the moment. And those Lightning networks could be intertwined. And in general, I think I foresee, or I hope that we will see a future where you, as Bitcoin users, don’t have to think of all the trade offs between the different layers and sidechains anymore, but where the app, the wallet is choosing the most economical, most secure way for you to use your bitcoin. But at the moment, the technology is not there yet. So I think it’s important to know trade offs to use bitcoin in an optimal way.
