Introduction

• The Bitcoin Beach project, like any cryptocurrency project launched into a crypto-naive population anywhere, had several challenges, which were addressed with education, a local champion and a special wallet.
• And while multi-signature wallets are not new, this is a special type of multiple signature wallet, a shared custody model wallet.
• Lastly, I think it deserves special mention for how they executed it not just for security, but for token utility.

source

• But perhaps before we talk about the special multi-sig wallet used on Bitcoin Beach, we should briefly talk about Multi-Sig Wallets.

Multi-Sig Wallets

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• Multi-signature wallets are a type of cryptocurrency wallet with additional security settings that typically require two or more people to authorize an outgoing transaction. Sometimes called “multi-sig,” these wallets are most useful when cryptocurrency or other digital assets are owned by multiple individuals or are held in custody by a company. source

• These cryptocurrency wallets take more technical knowledge to set up and use than a traditional crypto wallet, which only requires one signature. However, the added security benefits make the additional technical requirements worthwhile for those with complex security needs.
  source

• Okay, that's your standard multi-sig wallet.

• It is commonly employed to protect centralized cryptocurrency exchange hot wallets, cold wallets, and frequently DAO treasuries are protected by multi-sig arrangements.

• So lets see how they utilized this here, in a different arrangement.

Body

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• Galoy is the company that created the Bitcoin Beach Wallet.

• They recently published “Bitcoin Banking for Communities: Lessons Learned from Bitcoin Beach” and I suggest you read it here

• The Bitcoin Beach Wallet is an open source solution, which was designed to meet the needs of the merchants and community members in El Zonte, El Salvador, which the location of Bitcoin Beach.

• It utilizes a multisig shared custody model that offers an alternative to the standard non-custodial and custodial solutions that are most widely available today.”
  Source

• What’s this “multisig shared custody model” about? Well, the “capital is pooled and managed by the community.”

• This reduces fees “by batching on-chain transactions” and provides “free and instant “intra ledger” transactions.”

• Plus there’s no fee for opening and closing Lightning channels within the community.

• It also provides benefits to merchants, who don’t have to run servers.

• “Efficient use of online servers means lower costs per user.”
  Source

How does multisig shared custody work?

• “The custody model that we landed on for Bitcoin Beach is what Galoy refers to as “community custody.”

• It is a multi signature solution where the keys for the funds in cold storage are held by established members of the local community.

• This model reduces reliance on centralized companies outside of the community while also reducing friction of onboarding members to the network.”
  Source

• According to Galoy, this is a bridge to self-custody.

• Experienced users tend to eventually move away from the Bitcoin Beach Wallet as they get comfortable and find other solutions.

Source

Last Thoughts

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• Special Shraed Custody Pooled Community Funds Wallet

• Lighning Network to reduce transaction time, transaction cost and enable microtransactions.

• All essential components of any system using bitcoin as a medium of exchange for goods and services at a community level.

• I think this is a pretty remarkable solution to the problem of the steep learning curve for cryptocurrency and cryptocurrency wallets.

• This provides added security over everyone in the community holding their own bitcoin from the start, in a journey which was most likely a steep uphill learning curve, as it would be for any cryptocurrency niave population, anywhere.

• But it added the sophistication and utility of a Lighninh Network, which means microtransactions and microtransaction fees. Plus the centralized supervision that comes with a lovcal lighning network.

• So a truly novel application of technology to take advantage of all bitcoin has to offer.

• I wonder what Hive Bitcoin Lightning Developers think of this arrangement?
  @brianoflondon
  @vsc.dao
  @vsc.bridge

The End.

This post was written by @shortsegments

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