Company Name: bits-L
Founders: Ben's bow
Date of foundation: Project: 2019 | Company: 2022
Headquarters location: Fully remote (most developers are based in Europe)
Amount of Bitcoin held in treasury: N/A
Number of employees: 6 (+ “a couple dozen other developers”)
Website: https://lnbits.com/
Public or private? Private
Five years ago, Ben Arc first had the vision of bits-L — free and open source software that works with any Lightning Network funding source and offers a set of extensions for both personal and commercial use cases.
The vision for the project came to him in what he describes as a flash of inspiration.
“Christian Russo, the developer of the RaspiBlitz“I had come to visit him and I remember I was sitting in a little cabin where he was staying, and I sat on the couch and I kept saying, ‘LNbits, LNbits, LNbits,’” Arc told Bitcoin Magazine. “And then I thought, ‘I think I’m going to make this project where it can be set up on top of any funding source and you’ll get this common API and then you’ll have some wallets and stuff like that. ’”
Shortly after, Arc, a Bitcoiner based in Wales, began working on the first LNbits project, a point-of-sale (PoS) extension for his friend Jörg Platzer, owner of the now-defunct Berlin-based Bitcoin Bar. Room 77.
“We managed to install PoS in the bar and Jörg was surprised at how well it worked,” Arc said.
“What I really wanted was a ledger layer where you could export CSV and then import it into different wallets, so you could have different PoS and they could have different wallets. None of that was possible in node implementations at the time,” he added.
“So we needed to build that for Jörg, and then I needed to build something so I wouldn’t have to keep replicating work when creating different versions of projects.”
That something was LNbits.
LNbits developer team is formed
In the following years, some of the brightest developers in the Bitcoin and Lightning space approached LNbits, making contributions that would help put the project on the map.
These developers included Calle, creator of Cashu; fiatjafcreator of Nostalgic; Pablo Rusnakco-founder of Satoshi Labs and a host of other notable names and pseudonyms, including but not limited to, DNI, Eneko, Vlad Stan, test supernet and Black coffee(Arc also shared that the initial design of Nostr “partly emerged from LNbits” and that Cashu “was a LNbits project for a long time.”)
This makes the LNbits development team the Wu-Tang Clan of Bitcoin and Lightning developers: a super-talented supergroup whose members do groundbreaking work both together and on their own.
And if the LNbits development team is Wu-Tang, Arc is the RZA, the head of the group who organizes things and helps make business deals happen. That said, the LNbits team came together less for a master plan for Arc and more for practical reasons.
“LNbits came about out of necessity because many of us were replicating the work,” Arc said.
“A lot of us had to create all these different versions of our projects for all these different node deployments,” he added, highlighting that the primary motivation behind LNbits was to reduce redundancy.
The team really came together when Arc learned that major industry players were starting to use the software. At a Bitcoin adoption conference in El Salvador, Arc met up with some of the team members from IBEXwho mentioned that they were using LNbits.
“They said, ‘We love our LNbits. We’re using them for our products at our bank,’” Arc recalled.
“And I thought, 'Well, it was beta software with a lot of bugs. Please don't use it in your bank,'” he added with a laugh.
“At the time, everyone working on LNBits was thinking, ‘Well, wow, people are using this thing. I think we now need to make a more stable version that people can use and access, particularly if they are incorporating it into their software stacks.’”
LNbits Configuration, The Company
Arc’s interaction with the IBEX team made him realize that the time had come to turn LNbits into a proper business.
“We had to create a company that could pay developers to work on LNbits,” Arc said.
Arc drew a parallel between the relationship between LNbits, the open source software, and LNbits, the company, with WordPress.org and WordPress.com. WordPress.org is the company that manages and develops WordPress.com, which is open source software.
LNbits and WordPress are also similar in the sense that anyone can develop extensions that provide additional functionality to WordPress-powered websites, just as anyone can develop extensions for LNbits.
While it's easy to incentivize development in the LNbits extensions market by allowing developers to charge for the extension they create, getting developers to work on the software itself is more difficult. That's why Arc created the company.
“When we started the company, we had some funds to invest in development work, which is not as glamorous or as fun,” Arc said of how LNbits approaches developing its software.
“People are less likely to do that in a free, open source project.”
LNbits Funding
At first, Arc was apprehensive about telling the LNbits development team that he was creating the business, but was pleasantly surprised by their reaction when he shared the news.
“I was very nervous about telling our free and open source community that we were going to create a company to help fund development and stuff,” Arc said. “But when we told them, everyone was very excited.”
Since then, LNbits has raised approximately $1 million in venture capital investment, an amount and deal that Arc is comfortable with.
“I really like private equity when it is committed to a free and open source project,” Arc said.
He went on to describe how LNbits would have had to raise between $10-20 million if it had developed LNbits as a proprietary software. Developing it organically has been much cheaper, and developing it with the Bitcoin community in mind from the start has also had benefits.
“Having this software and also having this community, to which you are in some way indebted, prevents you from making bad decisions,” Arc explained.
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 it did not consider stable enough.
“In Bitcoin, many projects leave beta too early,” Arc explained.
“It's a sad and scary reality that they want people to trust the software they've developed, but we didn't want to do that. We wanted to be very conservative,” he added.
In preparation for the release of version one, LNbits has incorporated some financing and exchange services.
“In the latest version, we added Phoenix D as a source of funding for LNbits,” Arc began, describing the server equivalent of the Phoenix Wallet For mobile.
“We added the Breez Software Development KitWe are using the Pin Exchange service for people without trust Atomic exchanges inside and outside Liquid“That means you can fund your LNbits with a Liquid Wallet, which I find incredibly surprising,” he added.
The future of LNbits
At the moment, Arc seems to be simply focused on releasing the first version and then continuing to refine it so that people and businesses can rely on it in a professional manner. Arc wants to make sure the team is focused so they can “debug on the fly” if necessary.
Arc and the LNbits team also want to create more educational content to show people how to use LNbits and how to create their own LNbits extensions.
“It was a success from the beginning of the project,” Arc said. “We just did a lot of educational content and everyone was like, ‘Okay, cool, I can try to build something with this.’”
While Arc also seems excited about how LNbits can further integrate with Nostr (it has been toying with the idea of running the Internet of Things (IoT) on top of Nostr), the most exciting part about the future of LNbits is its limitlessness.
Put another way, in just five years, it has attracted brilliant developers who have created the first iterations of its revolutionary technologies (e.g. Cashu, Nostr) through LNbits, and this is not to mention all the innovative LNbits extensions the developers have created.
The question now is who will develop through LNbits in the next five years and what will they create?
While Arc doesn't claim to know, he's certainly excited about what's next, especially after the release of the first version.
“Once we get to version one, that's when the real fun begins,” Arc said.
“We're starting to see glimpses of that, because we can create fun extensions to the functionality and develop product services,” he added.
“That’s when the fun really begins for the project.”
