Company name: LN bits
Founders: Ben Arc
Date of establishment: Project: 2019 | Company: 2022
Location of the head office: Fully remote (most developers are based in Europe)
Amount of Bitcoin in Treasury: n/a
Number of employees: 6 (+ “a few dozen other developers”)
Website: https://lnbits.com/
Public or private? Private
Five years ago, Ben Arc first had the vision for LN bits — free and open source software that works with any Lightning Network funding source and offers a range extensions for both personal and business use.
The idea for the project came to him as a flash of inspiration, as he describes it.
“Christian Russo, the developer of the RaspiBlitzhad come to visit and I remember sitting in this little laundry room where he was staying, and I was just sitting on the couch and I just kept going, ‘LNbits, LNbits, LNbits,'” Arc told Bitcoin Magazine. “And then I was like, ‘I think I’m going to make this project where it can be set to any funding source and you get this common API and then you have some wallets and stuff.'”
Shortly after, Arc, a Bitcoiner from Wales, started working on the first LNbits project, a point of sale (PoS) extension for his friend Jörg Platzer, owner of the now-defunct Bitcoin bar in Berlin. Room 77.
“We got the PoS into the bar and Jörg was amazed at how well it worked,” Arc said.
“What he really wanted was some sort of accounting layer where you could export CSV and then import it into different wallets, so you could have different PoSs and they could have different wallets. None of that was possible in the node implementations of the time,” he added.
“So we had to build that for Jörg, and then I had to build something so that I didn’t have to do the same work over and over again when I had to make different versions of projects.”
That ‘something’ was LNbits.
The LNbits developer team is formed
In the years that followed, some of the best developers from the Bitcoin and Lightning worlds came to LNbits, making contributions that put the project on the map.
These developers included Calle, creator of Cashu; lightermaker of Us; Pavol Rusnakco-founder of Satoshi Labs and a host of other notable names and pseudonyms, including but not limited to to dawn, from me, Vlad Stan, super testnet And Black coffee(Arc also shared that the original design for Nostr “came partly from LNbits” and that Cashu “was an LNbits project for so long.”)
This makes the LNbits development team the Wu-Tang Clan of Bitcoin and Lightning developers: a super-talented supergroup whose members are doing groundbreaking work both together and on their own.
And if the LNbits dev team is Wu-Tang, then Arc is the RZA, the head of the group that organizes things and helps set up business deals. That said, the LNbits team came together less because of a master plan from Arc and more out of practicality.
“LNbits was born out of necessity, as many of our work needed to be duplicated,” Arc said.
“A lot of us had to create all these different versions of our projects for all these different node implementations,” he added, emphasizing that the primary motivation behind LNbits was to reduce redundancy.
The team really came together when Arc noticed that large entities in the space were starting to use the software. At an Adopting Bitcoin conference in El Salvador, Arc ran into some of the team members from IBEXwho indicated that they used LNbits.
“They said, ‘We love our LNbits. We use it for our products in our bank,’” Arc recalls.
“And I thought, ‘Well, it was really buggy beta software. Please don’t use it in your bank,’” he added with a laugh.
“At that point, everybody working on LNBits thought, ‘Okay, wow, people are using this thing. I think now we need to make a more stable version that people can use and have access to, especially if they put it in their software stacks.’”
LNbits setup, the company
Arc’s interaction with the IBEX team made him realize it was time to turn LNbits into a real company.
“We needed to build a company that could pay developers to work on LNbits,” Arc said.
Arc compares the relationship between LNbits the open-source software and LNbits the company to WordPress.org and WordPress.com. WordPress.org is the company that maintains and develops WordPress.com, which is open-source software.
LNbits and WordPress are also similar in that anyone can develop extensions that add extra functionality to WordPress websites, just as anyone can develop extensions for LNbits.
While it’s easy to incentivize development in LNbits’ extension marketplace by having developers pay for the extension they create, it’s harder to get developers to work on the software itself. That’s why Arc founded the company.
“By founding the company, we have some money to invest in development work, which is not so glamorous and fun,” Arc said of LNbits’ approach to software development.
“People are less likely to do that with a free and open source project.”
Financing LNbits
Arc was initially hesitant to tell the LNbits development team that he was going to start the company, but he was pleasantly surprised by their reaction when he shared the news.
“I was really nervous with our free and open source community to break the news to them that we were going to start a company to fund development and stuff like that,” Arc said. “But when we told them, they were all super excited.”
LNbits has now raised around $1 million in investment from venture capitalists. Arc is pleased with this amount and this arrangement.
“I really like private capital when it’s tied to a free and open source project,” Arc said.
He went on to describe how LNbits should have raised between $10 and $20 million if it had built LNbits as its own piece of software. Building it organically was much cheaper, and building with the Bitcoin community in mind has also had its advantages.
“When you have this software and then you have this community that you’re kind of connected to, it prevents you from making bad decisions,” Arc explains.
Coming out of beta
While LNbits has become more widely used over the past five years, it has remained in beta the entire time. Arc has been in no rush to officially release a product that it felt wasn’t stable enough.
“With Bitcoin, many projects come out of beta too early,” Arc explains.
“It’s just a sad and scary reality that they want people to trust the software that they’ve developed, and we didn’t want that. We wanted to be really conservative,” he added.
In preparation for the release of version one, LNbits has included a number of financing and exchange services.
“In the latest release we added PhoenixD as a funding source for LNbits,” Arc began, as he launched the server equivalent of the Phoenix wallet for mobile.
“We have the Breez SDKWe use the Bolts exchange service for trustless Atomic swaps in and out Liquid. So it means you can actually fund your LNbits with a Liquid Wallet, which is really mind-boggling to me,” he added.
The future of LNbits
Arc seems to be focused on getting version one live and then fine-tuning it further so that people and companies can rely on it professionally. Arc wants to make sure that the team is focused so that they can “debug on the fly” if necessary.
Arc and the LNbits team also want to create more educational content that teaches people how to use LNbits and how to create their own LNbits extensions.
“That was a success of the project in the beginning,” Arc said. “We just created a lot of educational content and everyone was like, ‘Okay, cool, I can try to build something on this.’”
Arc also seems excited about further integrating LNbits with Nostr (he’s been toying with the idea of running the Internet of Things (IoT) through Nostr for a while), but the most exciting thing about the future of LNbits is its limitlessness.
In other words, in just five years, it has attracted brilliant developers who have created the first versions of their revolutionary technologies (such as Cashu and Nostr) via LNbits. And that’s without even mentioning all the innovative LNbits extensions that developers have created.
The question now is who will develop through LNbits in the next five years and what will they create?
Arc doesn’t claim to know, but he’s certainly excited about what’s to come, especially now that version one is live.
“Once we have version one, the real fun starts,” Arc said.
“We’re starting to see glimpses of it already, because we’re just able to build nice extensions to functionality and build out product services,” he added.
“That’s when the project really starts to get fun.”