wallet/docs/manifesto/SWIFT.md

---
title: >-
	Let’s 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 total order broadcast channel with open entry, without centralization.

I am using “total order 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 total order 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.

This more or less corresponds to the Celestia blockchain --
 atomic broadcast and data availability without a massively
 replicated state machine.  Transactions being somehow achieved somewhere else.

Celestia is an Ethereum data availability layer, which is in some respects the
opposite of what we want to achieve -- we want a privacy layer so that people
can communicate and transact without revealing network addresses where valuable
secrets that could be stolen reside, but the underlying technological problems
that need to be solved are the same.

Celestia uses erasure coding to achieve scaling.

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 polynomial 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.

# Plan

For a dex, one needs a  a social net that
 allows end to end encrypted conversations and allows
pseudonymous identities to conceal their network address, since if
one is doing trades of blockchain currencies on
a dex, exchanging one crypto currency for another,
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 human to human 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, grail, and liquid) bitcoin, tether, and level
three (liquid lightning) bitcoin needs a
privacy social net.

For a  liquid lightning network to exist, needs a dex, the dex needs
to have a privacy social net.  But that would make the dex just one little
island.

Rather the dex needs to be *in* a privacy social net, which can have
many dexs

To handle swift volumes, we  need a liquid lightning network to
exist, for it to exist there has to be
a liquid lightning dex that mediates the exchange of liquid lightning for
other crypto currencies,, and such a dex needs a mechanism for communicating
publicly and privately without revealing one's network address.

Therefore, need a privacy protocol that is an update to bitmessage,
with additional capability of zooko names and total order broadcast, reliable in the cryptographic sense.

This messaging functionality is the crypto currency equivalent of that provided by SWIFT to the banks.

A total order 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 and should.and Particl lack.

# The big problem

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

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, and privacy alone
is not an advantage over Monaro, Litecoin, ZCash, and Grin.

Further, all the recursive snark libraries are bleeding edge and rough around the edges.

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 with 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, not a dao, 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 generally 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.

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 convenient if we can lift crypto transactions on existing privacy currencies
(Litecoin and Monaro) 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 (which is to say in violation of the Howey test) is going to want a very private privacy blockchain on which to issue its shares.  Such a dao
(a sovereign corporation) will
want to organise over a privacy social net, and its shares to be a privacy coin.

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 well funded
projects need some key element of this project, and do not have it.

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.

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.