📖
Web3 Encyclopedia
  • Welcome aboard!
  • Source
  • 😀Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • đŸ€«[Insider Series] McKinsey x Web3
    • TL;DR 👀
  • đŸ’ČBlockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR 👀
  • đŸŸïžWeb3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: ‘Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR 👀
  • đŸȘ™Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the ‘anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto ‘tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR 👀
  • đŸ›ąïžEthereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade — Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s ‘Data Availability' Problem, and Why Does It Matter?
    • TL;DR 👀
  • 👛Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR 👀
  • 🌕New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR 👀
  • 📈Decentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR 👀
  • 🙈Non-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: HermĂšs vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR 👀
  • 💗Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The “Metaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR 👀
  • đŸ‘ŸCareer in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • đŸŒ±Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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On this page
  • IMPROVING PRIVACY AND SCALABILITY OF BIP47
  • NOSTR PAY-TO-ENDPOINT
  • NOSTR FOR COINJOINS
  • CIRCUMVENTING IP REQUIREMENTS WITH NOSTR
  1. Bitcoin

Learn: The Nostr Privacy Paradox

While Nostr is by no means a privacy protocol, it could bring potential improvements to Bitcoin privacy.

PreviousLearn: Where the U.S. Government Went Wrong in Regulating Crypto?NextLearn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?

Last updated 2 years ago

Nostr, “Notes and other stuff transmitted through relays,” is a new communication protocol developed in 2021 by Lightning Network developer fiatjaf, which evolved out of LNBits developer Ben Arc’s attempt at a fully-decentralized marketplace called . As opposed to other communication solutions, which mostly function via dumb clients and smart servers, Nostr offers smart clients and dumb servers, which heightens censorship resistance for users.

In Nostr, all data is stored locally with users and merely distributed via relays, rather than stored on central servers, such as via Twitter. In the case of social media, Nostr increases censorship resistance, as users are enabled to fully own their own content and profiles. In light of around Twitter’s censorship policies, users began migrating toward the federated communications solution Mastodon. However, in Mastodon, ownership over content and profiles lies with those running the Mastodon servers users signed up with. While federations such as Mastodon offer more censorship resistance than centralized servers — as users are able to simply sign up to another server when censored — has arisen around potential censorship on Mastodon through server owners.

In December 2022, the , which brought unprecedented attention to the protocol. As applications built on Nostr evolved, the mobile client Damus jumped to number one in social networking on the iOS app store in China, . In an apparent effort to contain the #MarchOffTwitter, Twitter CEO Elon Musk , along with bans on other third-party platforms such as Instagram, but to no avail.

While Nostr is not a privacy protocol per se — , clients by default leak users’ IP addresses to relays — the Nostr protocol could bring improvements to Bitcoin privacy.

IMPROVING PRIVACY AND SCALABILITY OF BIP47

is a Bitcoin Improvement Proposal to create reusable payment codes while protecting the privacy of users for recurring payments. Without BIP47, users need to tediously generate new addresses by hand to avoid address reuse. When a user reuses an address for transactions, the user enables anyone watching the blockchain to easily cluster all transactions belonging to the address reused and form a graph of the user’s payment history and net worth. The prevention of address reuse is therefore a privacy best practice in Bitcoin and already implemented in many Bitcoin wallets by default. However, when a user aims to establish recurring payments with another party, such as in a merchant-customer relationship, a frequent generation of new addresses can be inconvenient.

With BIP47, a customer can generate a set of addresses to use for payments for the merchant. If a customer purchases products monthly, the merchant would need to send the customer an address each month. With BIP47, the customer creates a dedicated payment code for the merchant, which functions similarly to an extended public key. This allows the customer to automatically generate new addresses for the merchant, instead of the merchant needing to create addresses for the customer.

BIP47 makes use of notification addresses, which are monitored by HD wallets for outputs. In a notification transaction, the merchant sends the customer a blinded public key and chain code via the OP_RETURN field, together with a shared secret to keep the shared addresses private on the public blockchain. This exchange creates several issues due to the architecture of the Bitcoin network. The first two are economic: A notification transaction consists of 80 bytes, which can become expensive for users when fees on the Bitcoin network are high. Notification transactions, in addition, create unsendable outputs, which bloat the UTXO set over time. This increases the computing load on Bitcoin nodes who, at the time*, need to store the entire UTXO set, meaning every Bitcoin output that has not been used as a new input to ensure the validity of transactions.

A notification transaction creates so-called toxic change. When a user receives change from a notification transaction and spends the change to a third party, anyone watching the blockchain is able to correlate the user’s recurring payments to their non-recurring payments, even when addresses are not reused. A notification address also only exists once for each wallet. If a merchant wanted to establish recurring payments with 10 customers, anyone watching the blockchain is able to gain insight into the merchant’s customer base, as all 10 customers would need to create notification transactions for the merchant to the same notification address.

Instead of using notification transactions to exchange payment codes between merchants and customers, payment codes could be exchanged via Nostr. As opposed to other communication methods, Nostr is suitable for the exchange of BIP47 payment codes as no central authority exists to potentially censor the exchange of messages. At the same time, all direct messages on Nostr are encrypted by default, eliminating the need to compute shared secrets. By making use of BIP47 via Nostr, users can avoid the creation of UTXO set bloat via unspendable outputs and eliminate the correlation of recurring versus non-recurring payments as well as the publication of customer bases through the avoidance of toxic change and the re-use of notification addresses.

*Note: Storing the entire current UTXO set for Bitcoin nodes may potentially be eliminated in the future via the implementation of , which shifts the burden of proving that a transaction spends a valid UTXO to the owner of the UTXO, reducing the storage requirements from gigabytes to kilobytes.

NOSTR PAY-TO-ENDPOINT

In Bitcoin, blockchain analysis services operate the heuristic of “common input ownership” to map transactions to identities. Within this heuristic, a transaction containing different public keys used as inputs is classified as belonging to one person. Due to its UTXO-based architecture, through which inputs and outputs of transactions are linked, the Bitcoin protocol is also prone to subset sum analysis. In subset sum analysis, adversaries are able to calculate the probability of inputs and outputs belonging to the same entity, even when different public keys are used as inputs to one transaction. For example, if a transaction has inputs of 1, 4, 7, 23 and 6, and outputs of 5 and 36, it can be deduced that input 1 and 4 and inputs 7, 23 and 6 belong to the same entity.

Pay-to-EndPoint (P2EP) is a privacy-preserving reinvention of Satoshi Nakamoto’s Pay-to-IP (P2IP) coded into the original Bitcoin client. One form of a P2EP transaction are PayJoins, which are transactions designed to break the common input ownership heuristic. In a PayJoin transaction, both the sender and the receiver contribute inputs to a transaction to break the common input heuristic. With PayJoins, users exchange information about what UTXOs will be used as inputs via any communication channel, such as a Tor Onion, which functions as the end point, to construct a partially-signed bitcoin transaction (PSBT). Once both parties have agreed to the terms and signed the transaction, a PayJoin transaction looks just like any other Bitcoin transaction on chain. Because involved parties act as both sender and receiver, a PayJoin transaction breaks the common ownership heuristic as well as subset sum analysis: parties may contribute inputs of 3 and 5, while the transaction generates outputs of 6 and 2.

The problem: PayJoin transactions are complicated to coordinate, as participants have to be online at the same time when using a clearnet domain or Tor Onion endpoints. If a user initiates a P2EP transaction and, for example, closes their computer or otherwise disturbs network connectivity, the transaction cannot be communicated. In Nostr, communication is asynchronous: users fetch information from relays once network connectivity is restored. By using Nostr keys instead of Tor Onions as endpoints for P2EP transactions, P2EP transactions could be coordinated more easily.

Another implementation of P2EP is the much-debated LNURL. With LNURL, instead of tediously needing to generate new invoices for each transaction, users are able to receive a static endpoint pointing at a web server to automatically generate new invoices. However, because web servers are reliant on the global Domain Name Service (DNS), users of LNURL inevitably reveal their identity to the hosting provider, as well as their IP address to payees if no proper precautions are taken. Wide adoption of LNURL would therefore be a detriment to the pseudonymity of the Lightning Network. Instead of using a web server as the endpoint for LNURL, users could use Nostr keys as endpoints for LNURL transactions to conceal their identities.

NOSTR FOR COINJOINS

While a PayJoin is great to break the common ownership heuristic as well as subset sum analysis, PayJoins are unable to offer privacy to both sender and receiver toward the cooperating party. PayJoins are essentially two-party CoinJoins, limited to two participants — this means that both sender and receiver are aware of their own inputs and outputs, leaving the inputs and outputs of their partner identifiable. Unless a PayJoin is facilitated with CoinJoined transactions, users risk revealing their wallet balances as well as past and future transactions to their PayJoin partners.

In anonymous-amount credential systems such as Wasabi Wallet’s protocol for CoinJoin coordination, WabiSabi, Nostr keys can function as communication endpoints for the coordination of a CoinJoin transaction. This enables the sender and receiver of a CoinJoin transaction to exchange the credentials needed to participate in CoinJoin rounds, essentially enabling a form of discreet payments within a CoinJoin. With the use of Nostr keys as endpoints in CoinJoins, cooperating parties remain unaware of their counterparties’ balances and transactions by hiding in the crowd. At the same time, using Nostr keys as endpoints for CoinJoin transactions helps PayJoin users save on fees by facilitating payments directly within the CoinJoin, rather than CoinJoining to facilitate the payment after.

Another use for Nostr in CoinJoins lies in the discovery of coordinators. While most CoinJoin coordinators run behind Tor to obscure the identity of CoinJoin participants, users are currently unable to easily discover new coordinators to join with the exception of JoinMarket, a CoinJoin marketplace targeted toward more advanced CoinJoin users. While CoinJoin users are able to add custom coordinators to Wasabi Wallet — a trivial task as easy as exchanging a URL in the backend — no way exists to automate the process of updating coordinators due to the lack of a platform for publication. Instead, to discover new coordinators, users must search social media and forums, such as Reddit or Twitter, to add coordinators manually. However, the publication of a coordinator service via social media or forums may pose a risk to coordination providers depending on the policies applied to the service, as certain pages may easily be shut down.

CIRCUMVENTING IP REQUIREMENTS WITH NOSTR

As touched upon previously, the Nostr protocol was originally conceptualized to realize a fully-decentralized marketplace called Diagon Alley. As the Nostr protocol evolved, Diagon Alley became the LNbits extension NostrMarkets: a Nostr-native marketplace which enables merchants and customers to run and interact with online shops via relays. In NostrMarkets, customers can subscribe to a merchant's public key to fetch products from relays instead of accessing a merchant’s site via a webshop. This increases the censorship resistance of online shops, as merchants are not dependent on seizable websites — rather, a merchant’s shop is hosted with all relays the shop sets up to communicate with. Even if the merchant's server were to be seized, its shop could easily be set up at a different location, as all products are stored with relays on the Nostr network. NostrMarkets handles order and payment coordination via encrypted Nostr direct messages, while payments are facilitated through the Lightning Network.

In addition to its censorship resistance, the LNbits extension NostrMarkets enables fully-anonymous marketplaces. Instead of exposing a merchant’s IP to the whole world, both merchants and customers only reveal their IPs to the relays they connect to, which can easily be mitigated by running a client or shop behind Tor. As an upside to fully running a shop behind Tor, which makes a shop only accessible via the Tor browser and .onion web pages, NostrMarkets can run in any web browser or smartphone, improving the user experience of privacy-preserving, client-server communications. Because payments are negotiated via encrypted Nostr direct messages and facilitated via the Lightning Network, payments in NostrMarkets remain comparatively private as long as the shop’s Lightning node runs behind Tor, as a payment coordination direct message is indistinguishable from other direct messages in Nostr.

One such example could be the running of custodial Chaumian e-cash mints, a form of anonymous-amount credential systems. In an e-cash mint, the mint operator does not know the balances or value exchanged by its users. However, due to the current architecture of REST, it does learn the user’s IP address unless running behind Tor by default, such as in the e-cash system Cashu. But implementing and managing Tor support is tedious. With the NOSTREST bridge, projects can easily preserve the privacy of their users. By running an e-cash mint behind Tor using NOSTREST to communicate between server and clients, communication can be facilitated asynchronously, while both server operator and user only learn each other’s public keys, eliminating the risk of identification via IP.

This article was first appeared on Bitcoinist, by L0la L33tz

If Tor is an anonymous remailer, meaning a protocol facilitating the anonymous forwarding and receiving of messages between peers, Nostr can function as an anonymous bulletin board. CoinJoin coordinators can publish their services via a Nostr event type, and CoinJoin wallets can be enabled to automatically pull from those relays to display within their clients. The broadcasting of coordinator servers via Nostr, such as facilitated via and in the Lightning-enabled CoinJoin software Vortex, can eliminate the need to manually search for and add CoinJoin coordinators in CoinJoin clients, helping to further decentralize the CoinJoin coordination landscape.

Another way to circumvent the requirement of IP addresses in server client communication is NOSTREST. REST, short for “representational state transfer,” is part of the software architecture of the world wide web, used to facilitate communication between servers and clients via GET, POST, PUT, DELETE and PATCH requests. But, when a client sends a REST request to a server, IP addresses are revealed, potentially revealing personally-identifiable information. On GitHub, a REST API bridge built on Nostr, called NOSTREST. By using Nostr keys without identification headers, both users and server operators do not need to know the IP addresses of their counterparts. A NOSTREST implementation can therefore improve the privacy of Bitcoin applications using REST as servers do not need the clients’ IP addresses.

đŸȘ™
short for
Diagon Alley
recent controversies
criticism
Nostr community received a 14 BTC grant from Twitter Founder Jack Dorsey
resulting in its ban
shortly banned the publication of Nostr-related content
among other issues
BIP47
UTreeXO
BTCPay’ Servers CoinJoin plugin
proposed
__escapee__
proposed