wallet/docs/manifesto/SWIFT.md

---
# katex
title: >-
	Lets eat SWIFT's lunch.
sidebar: true
notmine: false
abstract: >-
	SWIFT transactions are slow, expensive, and unreliable. And there are a lot of them,
	a mountain of money to be made.  SWIFT is being weaponized and shooting itself in the feet.
	Everyone wants to move into the vacuum that has opened up,
	but what moves into the vacuum will be Bitcoin,
	*if* we can handle the scaling problem.

	SWIFT merely provides an infrastructure for exchanging messages.
	Double spends are resolved by databases of the entities receiving the messages.
	The grotesque profits are made by the banks that use it.
	And the profits for its crypto currency replacement are going to be made
	by the cexs, dexes daos and wallets that use it.
	With a lions share of the profits made by first dao of the first dex,
	because of first mover advantage.

	A replacement of SWIFT will not make money.
	It will be a neutral environment in which people can make money.
	So the replacement needs to be funded by software bounties.
---

# Opportunity.

People are spending an enormous amount of money on SWIFT transfers.
How much is hard to know, because the profits are made by the participant banks,
not by SWIFT, which is a neutral platform and neutral protocol,
that does not in itself transfer any money, but enables transfers,
but something in the ballpark of a billion dollars a day.
If people who create the infrastructure that repaces SWIFT can
capture a tiny sliver of that, they all get very rich.

Incoming international wire transfer fees may range from $10–$30,
while outgoing fees can be up to $50 or more.
SWIFT reported an average of 42 million payments and securities transactions per day in 2022,
indicating a about a billion dollars a day in fees.

The World Bank estimates that the average cost of an international bank transfer
is around 6% of the amount transferred,
which also indicates about a billion dollars a day in fees.

It is difficult for Bitcoin to replace gold as a store of value because of Metcalfe's law.
Central banks keep gold and do not keep bitcoin,
because all the other central banks keep gold and do not keep bitcoin.
If Bitcoin level two replaces SWIFT, then the central banks will need bitcoin,
and soon enough bitcoin will replace gold.
This will raise the market cap of Bitcoin to something like ten times its current value,
but that is small potatoes compared to capturing a tiny sliver of SWIFT fees.

# Outline of what needs to exist.

SWIFT is a messaging system that handles about five hundred standardized structured messages per second
(many messages of many types) between a few hundred banks, with certain special security guarantees,
in particular reliable and provable delivery. To eat SWIFT's lunch,
need a sharded reliable broadcast channel with open entry, without centralization.

I am using “reliable broadcast channel” in the cryptographic sense.
It will not be reliable in the ordinary sense, since you may attempt to put a message on it,
and the message may not get on it, and you have to try again.
It will not be broadcast in the ordinary sense,
since most messages are end to end encrypted so that only the two parties can read them.
What makes it a reliable broadcast channel in the cryptographic sense,
is that if Bob sends a message to Carol over it,
as part of a protocol where Bob has to send a message,
and Carol has to send a reply, then if the protocol fails because of Bob, Carol can prove it,
and if the protocol fails because of Carol, Bob can prove it.
And both can prove what messages they received,
and what messages they sent that the counterparty should have received.

Being sharded, can handle unlimited volume.
And once that exists as a neutral protocol with open entry and no central control,
can put dexes on it, Daos on it,
uncensored social media on it, web 3.0 on it, and coins on it.

And the first thing that should go on it is a dex that can exchange
Bitcoin, Liquid Bitcoin, Liquid Tether, Lightning, and Liquid Lightning.
And the next thing that should go on is the Aqua wallet.
But it needs to be a neutral open protocol, not owned by anyone,
and especially not owned by Blockstream.
Because Blockstream will gain value by being able to send or receive
a money bearing message to anyone.

At present each dex has its own messaging platform that does not talk to any of the others.
Bisq has a custom platform that runs on Tor, while Particl uses a fork of Bitmessage.
And each platform lacks some of the features a dex needs,
for which the dao of each dex has ad-hoc workarounds requiring frequent human intervention,
such as Bisq's painfully slow and unreliable mediation and arbitration system, which most
of the time winds up resolving issues that computers can and should solve automatically.

If one party goes down and stays down in the middle of a Bisq transaction, it gets
resolved by humans to the disadvantage of the unresponsive party, a simple rule
that machines should execute automatically.

Such a channel needs a distributed consensus as to what messages went on it.
Consensus is a hard problem, that gets a whole lot harder when you have sharding.
But a whole lot easier when the platform does not have to resolve double spends,
but merely provide a total order that enables other systems to
communicate about their resolution.

In existing dex communication platforms messages have value because of their relationship to other blockchains,
and it is those other blockchains that resolve double spends.
This is the equivalent of the way SWIFT does it.

And Bob can prove it even if his message is supposed to appear on one shard,
and Carol’s response on a different shard

Because SWIFT does not carry money, sharding its cryptocurrency equivalent
is a much easier problem than sharding a blockchain.
If two incompatible messages are sent over Swift,
the equivalent of a double spend on Bitcoin, the conflict is resolved outside of Swift,
and then messages resolving the conflict are sent within Swift.

# Scaling

Bitcoin hit its scaling limit in 2016-2017. Lightning still has capacity,
but high level one fees have ended growth in the number of lightning channels,
so it is going to hit its scaling limit soon.
And we are very soon going to be facing vastly increased demand for transactions.

Blockstream’s plan is to use the layer two bitcoin blockchain,
Liquid, to take over from SWIFT. Liquid can handle a lot of transactions per second,
but to really take over from Swift, we are going to be taking Visa’s role in international transaction,
and that will need Liquid Lightning, a layer three.
Which theoretically exists, but has no useful consumer wallet and has no useful Liquid lightning network,
because its command line wallet is only barely usable by a linux guru
who is running exactly the right version of linux.
Which is OK, if you have half a dozen linux systems running on
your private network and several shelves full of computers
with no keyboards or video screens running in your basement,
which you interact with over ssh and xrdp.

The collapse of SWIFT is happening now, and Blockstream’s replacement for it is happening now.
The internal collapse of the US$ is a few years off,
and we need to have crypto currency ready to replace it.
And I don’t think that even liquid lightning Bitcoin can handle that.
Going to need recursive snarks with snark based sharding.
BitcoinOS are addressing that.  When last I looked their solution was far from ready,
but it does not yet urgently need to be ready.

To take over from SWIFT, lightning is unlikely to suffice.
Going to need Liquid.  Since Liquid uses polynomail commits, it
might be possible to shard it, but the path to that is unclear,
in which case replacing SWIFT is going to need to need Liquid Lightning.

For Liquid Lightning to be any use, going to need more than Boltz
for exchange between lightning and liquid lightning.
Third parties will not want to build on a network wholly owned by a single party,
for fear that once that party gets Metcalfe law network lockin,
it will, like SWIFT, enshitify the network, as so many beneficiaries of Metcalfe's law have done.
To replace SWIFT will need liquid lightning, and liquid lightning
will need to be exchangeable on a dex,
a dex on which Boltz may well be the largest single liquidity provider,
but only one liquidity provider of many.

To take over from Visa in international transactions,
Lightning and Liquid are unlikely to suffice, due to scaling limits,
going need Liquid Lightning, which theoretically exists, but not really.

To take over in internal transactions when the US$ collapses,
Liquid Lightning is unlikely to suffice. Going to need recursive snarks,
which allow a sharded blockchain. Bitsnark's plan is
[Grail](https://assets-global.website-files.com/661e3b1622f7c56970b07a4c/662a7a89ce097389c876db57_BitSNARK__Grail.pdf),
a bridge between level one Bitcoin and a shardable level two bitcoin based on recursive snarks.

# Existing messaging systems

Every interchange blockchain bridge and every dex has its own ad hoc,
incomplete, and unsatisfactory messaging system,
and the design for this swift killer was primarily motivated by
the messaging systems of Particl and Bisq, and in particular by
Particl's adoption of Bitmessage for its purpose.
If there was something much better, and more scalable, than Bitmessage, everyone could use it.
So the first step is to create a better, and more blockchain friendly, Bitmessage.

We need something like Particl to enable a dex that exchanges
bitcoin, lightning, liquid bitcoin, liquid tether, liquid lightning bitcoin,
and liquid lightning tether,
for SWIFT is a nexus of third parties and third parties are not going to build on a cex.
A major reason that Particl is not very satisfactory is that Bitmessage is not very satisfactory.

# misc unorganized fragments

## consensus

> why do you hate POW? Because of resource waste? I thought it was the
> reason for success of BTC. With proof of share, or proof of stake,
> there will be always discussions of pre-mine, centralization etc.
> Would it be the case?

Hate the resource waste.  It offends me.  Plus a system that does
not directly handle money, that is a a messaging system between
systems that do handle money, cannot incentivise the
necessary resource waste.

It could bill people for messaging, and the payments could go to the block winner, but then
it would be a dao or yet another crypto currency, and not a neutral platform that other daos
and crypto currencies could use.

Suppose we have a filecoin style proof of spacetime .
Which also wastes resources, but identifies those
peers that are contributing to the network by storing
information and are capable of passing it around,
and have lots of connections to other peers.
All peers that pass the proof of space test become
authorized consensus makers for
a certain number of blocks, say 8192 blocks.
The test is not too hard.  Most peers are authorized.

We harvest randomness, possibly from the fact that parties
do not know each other's secret keys, possibly from the
proof of space time  test, so that each round, or each group of rounds,
a peer gets a random weight, such that the inverse of the weight is uniformly
distributed between one and two to the fifty sixth

Which means the weight is non uniformly distributed, with a very few peers
having most of the weight.

Each peer goes with the consensus block that has the highest chain of weights that it knows of.

Actually that algorithm has pathologies that could lead to suprising chain re-organisations
 -- a slightly more complex algorithm is needed.

Every time a proposed block  consensus is shared, it now has addiitional support.\
 The weights of the two peers that have that consensus
and have the highest weight of all peers having that consensus is propagated
among all the peers that have that consensus, and the weight of the consensus is the weight of
the lesser of the two peers, plus the weight of the lesser of the two peers of the block it
was built upon that were known to the peer that built upon it at the time he built upon it,
plus the weight of the block that block was built upon, and so on and so forth.

Thus the most well known chain is propagated, becoming more well known.  The more
peers that know of a block, the greater the weight of the block.

It is a better algorithm, but a whole lot more work to implement than RandomX POW.

## plan


> > But there is a perfectly respectable case for a social net that
> > allows end to end encrypted conversations and allows
> > pseudonymous identitities to conceal their network address, since if
> > one is doing trades of blockchain currencies on
> > a dex, one has make public offers without revealing the network
> > address of a computer that could be stolen, or
> > a person who could be subjected to rubber hose cryptography, and
> > engage in securely private conversations
> > about the resulting transactions, also without revealing one's
> > network address.
> >
> > For liquid lightning to work, needs an exchange between level one
> > lightning, liquid lightning,
> > tether lightning, bitcoin, liquid bitcoin, and tether.
> >
> > And the early adopters are not going to get aboard if the wallet is
> > locked to a cex, locked to  Boltz, fearing
> > that once Boltz gets Metcalfe's law on its side, it is going to
> > enshitify the network.
> >
> > Early adopters will want a dex, on which Blockz happens to be the
> > major, but entirely replaceable, supplier
> > of liquidity, so that if it turns evil, as corporations that have a
> > Metcalfe's law lockin tend to do, the
> > dex will become dominated by less evil alternatives.
> >
> > And a dex, a dex that exists for the perfectly respectable purpose
> > of exchanging level one bitcoin
> > for level two (lightning and liquid) bitcoin, tether, and level
> > three (liquid lightning) bitcoin needs a
> > privacy social net.

> It makes sense.

> > If they decide they want a liquid lightning network to exist, they
> > need a dex, and they need a privacy social net for it
> > (Though I need a  name less likely to give corporate officers the
> > hebee jeebies than privacy social net.

> Special social net. :)

Maybe I will just long windedly call it a social net designed to support
humanand and machine communications in a way suitable for cryptographic currency
purposes and especially a dex, that is a superset of the capabilities of Particl and
Bisq human to human communication protocol, particl's system being Bitmessage,
and Bitmessage being out of support.

> > My plan is to tell them they need a liquid lightning network to
> > exist, for it to exist there has to be
> > a liquid lightning dex, and it needs a mechanism for communicating
> > publicly and privately
> > without revealing one's network address.
> >
> > Therefore, fund a privacy protocol that is an update to bitmessage,
> > with additional capability of
> > zooko names and reliable broadcast, reliable in the cryptographic
> > sense.
> >
> > Reliable broadcast in the cryptographic sense being that if one has
> > a transaction protocol in which Bob is supposed
> > to send a message to Carol, and Carol supposed to send a
> > corresponding response to Bob, the blockchain
> > can prove who dropped the ball -- so one can have contracts on the
> > blockchain that have one outcome if Bob failed to
> > send the message, and a different outcome if Carol failed to reply.
> >
> > This makes possible a whole lot of useful dex capabilities, which do
> > not yet exist on any dex, but could.
> > I need to write them up as part of a totally bland proposal for a
> > totally bland privacy social net that
> > enables arbitrary  dexes and daos, among them a totally bland dex
> > that enables exchange of things near and dear to
> > Blockstream's heart.

> Ok, if you want me to pass your proposal, I'm ready to do it. I'm
> sure I can contact Adam, and at least get a response. I'm not sure
> how it should be proposed though. "Someone I messaged on BitMessage
> sharing this proposal, I'm sure you'll like it." :) But I think we
> can work it out.

I want to read what Adam has been writing, before I prepare the proposal.

I think he has been on some you tube channels, or something like that --
some kind of conference.

The proposal is going to be long and technical -- a white paper explaining what
Bitmessage is, that it is being used in the Particl dex, and explaining what
additional capabilities a dex needs, that Bisq and Particl lack.

## Python rant

 Wouldn't it be an start to use existing code to experiment some p2p
> payments using bitmessage protocol?

Python is the best language in the world for code you intend will only be used by yourself,
used only a few times, then thrown away.  It also works great for small trivial programs,
because these are apt to remain reasonably portable.

But the bigger it gets, the more it traps you into code that is only going to run
correctly on your one particular development system and that no one else is
going to be able to modify and add to, so investing in python
in anything you intend to be widely used is a trap.  Open source
python is also a trap, because no one else is going to be able
to modify and add to it.

If I try to start modifying Bitmessage, I will surely fail.  It is a bigger python
program than anyone except the original developer can maintain and modify.

In this sense, no large open source python program is truly open source.  PHP
has the same problem, though to lesser degree.  Javascript likewise.  Has
improved considerably, but still sucks.  But typescript which is compiled to javascript is OK.
so all big projects with many developers use typescript rather than javascript.
Or they die before they get big.

## mixer plan

(Which I am sure  blockstream does not want)

> > Get early adopters to use it.  One obvious use case is bitcoin
> > mixing.  We have mixers, but the social environments that made them
> > usable have all been shut down.

> Or maybe integratate Samourai wallet into current BitMessage client?

Samourai wallet migrated to centralisation, which directly led to them getting
busted.  That codebase is poisoned with communications that the FBI
has flagged as actionable.  And integrating anything into current
Bitmessage is impossible except for the original developer.  No
big Python program is truly open source.

The correct design for a mixer is as follows.  One has a social net,
on which anyone can offer to coordinate a single mixing transaction.
for a mix that will produce mixed coins (utxos )of a particular
round number, 10mBTC, 20mBTC, 50mBTC, or 100mBTC,
 plus unmixed changed coins.

All the mixed coins are of equal value, for example all 100mBTC.

Not some funny value highly identifiable value like 99.9872384mBTC

People offer to contribute utxos to this mix transaction - revealing
to the coordinater the public keys, the address, of the utxos,and
revealing to the coordinator that these utxos have a common owner.

They also give him the blinded addresses of coins they want to
receive.  He blindsigns those addresses.  They then reveal the unblinded
addresses, and his unblinded signature, which proves he signed those
addresses, but does not reveal to him which of the addresses he blindsigned it
is -- he does not learn the relation between the utxos that will be contributed
to the mix transaction, and the mixed or the change utxos that it will replace
them.  (Though he and anyone doing blockchain analysis can trace the
change coins by the sudoko attack.  But the sudoko attack is irrelevant to
coins that are all the same round number of bitcoin, such as 10mBTC)

He then creates the transaction, and everyone signs it.  If not everyone
signs, everyone can see what the missing utxos were, the ones that
were promised, and not delivered, and blacklist them,
then try again.

People contributing already mixed utxos do not have to pay transaction fees
so get back exactly what they contributed.

People contributing as yet unmixed bitcoin have to pay a portion of the transaction
fee proportional to the number of utxos  contributed and received.  This is good for
them because the free of charge remixed utxos are enlarging their anonymity pool.
making each mixing transaction part of one enormous anonymity pool instead of many
tiny anonymity pools.

If mixing does not work like this, then someone has fucked it up in order to profit from
it, their users will be traced, and *they* will be traced, then arrested.

> > The core of my plan has always been Web 3.0, a privacy social net,
> > and everything else is just monetization, because software never
> > gets done properly or properly maintained without someone making
> > money off it.

> I got what you mean now. Once you reach a point that's indeed a good
> strategy to reinforce value of the network. You offer those
> integrate your service to beat metcalfe's law, your network becomes
> much more stronger. Facebook and some other social networks all
> followed this path via. 'applications' within them.

> > I have been trying to do that, but it is hard to get to the front of
> > the line of all the people who want to tell blockstream why
> > blockstream should fund them and their projects.

> Have you really tried? Adam must have had some fidelity to
> cypherpunks.

I have not tried, but I have been looking for entry points, and
have come up empty.  One has to have an in, and one has
to listen before one speaks.

## the big problem

The urgent important problem that crypto currency has to solve is privacy and scaliing.

But cannot solve it just by creating a currency that is private and scales,
because scaling is not a competitive advantage over ten thousand scamcoins,
five thousand shitcoins, and two dozen altcoins,
until you reach a market capitalization of thirty billion dollars,
which is when scaling started to bite bitcoin in 2016-2017

Further, all the recursive snark libraries are rough around the edges.
Polygon's Poly2 is OK, but though theoretically open source,
it is not exactly open source, there are complications and gotchas.

So, the path is to create a privacy social net tool first.
A tool where you can securely have public and private conversations
without your IP being discoverable.  Bitmessage done right.

A Dao that facilitates stuff done wth crypto currency,
such as Bisq and Particl, needs such a social tool,
and what they have is rather broken.

A Dao can organize over such a tool in ways that flagrantly fail the Howey test.
Which is to say, it can openly organise in a way that is
efficient and transparent to investors, a sovereign corporation,
while existing daos are dancing around the Howey test,
and so are opaque and disorderly.

So, create, not a crypto currency, but an environment for such Daos.
Among them daos for trading crypto currency.
A Dao that facilitates crypto currency transactions needs a trade currency
and dao ownership currency (substitute for shares).
These are apt to be one and the same, to obfuscate the Howey test,
but they need not be and probably should not be.

There are a whole lot of capabilities that a crypto coin needs
-- and we see that even in things that are well funded by many large corporations,
these things are geneally missing.

Blockstream does not have a satisfactory lightning wallet,
and their business plan depends on the existence of a satisfactory lightning wallet.
Litecoin has demonstrated atomic exchange between
Bitcoin, bitcoin lightning, Litecoin, and litecoin lightning,
but does not have a dao in which to do it.  Particl is not quite working,
and Bisq lacks important things and still, after all these years,
has known major bugs which can cause the loss of lots of money.

Blockstream's aqua is sort of a lightning wallet, and sort of not.
It is not quite what they need, and lack.  And very few people are using it.
It is not really a proper connection to the lightning network.
It is what they could come up with in a hurry.

This stuff is hard and takes a long time to write.

My initial business plan was: Plan A: Issue a private and scalable currency --> ????? --> profit

Revised business plan.  Plan B: Issue a privacy social net that conceals IP addresses.
Bitmessage does this OK, but it is abandonware and mighty rough around the edges,
and being written in python, really cannot be fixed.
Large python projects accumulate such technical debt that only the original programmer
can fix them, and become ever more fragile to minor,
obscure, and seemingly irrelevant changes in their environment.

Get early adopters to use it.  One obvious use case is bitcoin mixing.
We have mixers, but the social environments that made them usable have all been shut down.

An important use case for bitmessage was selling services for crypto currency
to people who did not want to reveal their IP address.
This use case becomes a lot more conveniient if we can lift crypto transactions on existing privacy currencies
(Litecoin and Monero) and semi secure currencies (lightning) into the communication channel,
as Nostr does a sort of mostly OK job of lifting lightning
into the communication channel.
First such use, following the footsteps of nostr tips.

Get existing Daos to use it

Get new Daos to use it.  A Dao that wants to openly organise in an efficient manner transparent
to investors is going to want a very private privacy blockchain on which to issue its shares.

And now, it is back to plan A. (almost)  A privacy blockchain
on which anyone can issue a Daocoin.  Or a shitcoin or scamcoin.

But the privacy blockchain does not need to be fully scalable.
It does, however need to be future compatible with the technologies
that make full scalability possible.  But we delay in the hope that by currency time,
recursive snarks libraries do not have quite so many rough edges

> > The size of this project is illustrated by how many other big
> > projects need some key element of this project, and do not have it.

> I'm not sure if I understood that to be honest.

The core of my plan has always been Web 3.0, a privacy social net,
and everything else is just monetization,
because software never gets done properly
or properly maintained without someone making money off it.

And I look at all these people doing Web 3.0 stuff,
or doing projects like particl that really require Web 3.0,
and they are not done.

> Can you double check Keet/Pear.. Holepunch thing? I belive a good
> part of Blockstream funding is coming from Tether. And Tether (and
> their CEO) loves Keet (like his brainchild). Problem is they don't
> have any good use case. I believe a project somehow leveraging would
> easily get funding from Blockstream hence Tether.

I have been trying to do that, but it is hard to get to the front of
the line of all the people who want to tell blockstream why
blockstream should fund them and their projects.

Also, I need to find the keywords needed to get the proposal
past the layer of idiot no men whose job is to protect them
from all those people with bright ideas as to why blockstream should fund them.

What words are they internally using for stuff that really needs to be done?

But some of the stuff I want done, they really need done.
>
> Also excuse me but how it would work if you stays anonymous and pay
> devs to work on it. How can they fund, doesn't it require
> psedenomous organization? Or do you think some can work in psedonmy
> but some can be non-anonymous while working on it?

I think they should promise an L-BTC bounty or lightning Bitcoin bounty
for someone who accomplishes certain goals.
Other people have used this funding model, albeit lightning Bitcoin.

> Even if you have the funding, it is not easy to bring talent on the
> table. What's your plan to find to hire the talent even if you can
> pay them?

Litecoin bounties for contributions that get included in the repository.
(Litecoin being arguably the best existing privacy currency -- at least when you use mweb addresses.

> > And so, all the larger moving parts that have to be part of the
> > ultimate coin, have to be part of something that has more immediate
> > utility, and is part of a business plan that will bring the project
> > closer to completion, and product of that completion closer to
> > getting past the cold start problem
> 100%
>

## collapse and cryptocurrency

>
> Or, do you think it will replace the Gold, nobody would need or want
> to use it.
>
> Today, if you ask me to accept Gold vs. Bitcoin, leaving aside the
> speculative part, I'd go 100% for gold. I'm not sure that would
> change in the future. But also maybe that's because I think I'm
> emotional about it. I always thought Gold is a godly thing, a "gift"
> of god to us punish or reward. No question fiat is a scam, or even
> in a good intent it is an opiod of an ecomy, however I'm really not
> convinced about Gold.

Obviously over the past few years, Bitcoin has risen enormously more than gold.

When it looked like full scale war might break out, bitcoin fell a little,
and gold rose considerably.

If the crisis is nuclear war, Gold, 22 LR rifle ammo, whiskey, tobacco,
and coffee are likely to be considerably more valuable investments than bitcoin.

If, on the other hand, the crisis is state internal collapse and red terror
against whites, straight males, and Christians, bitcoin because you can carry it through an airport,
while gold will be fairly useless

If the crisis is that you are likely to get conscripted to die in Eastern Europe or the middle east or Taiwan,
or all of them simultaneously, bitcoin will be useful, and gold fairly useless.

If the crisis is hyperinflation and collapse of the US dollar,
Gold and Bitcoin both work, but Bitcoin is better because
the primary problem will be transactions over distance.

If the problem is all of the above, simultaneously or in rapid succession, Bitcoin.