Combined summary - Human Readable Bitcoin Payment Instructions
The discussion revolves around the utilization of DNS records for simplifying Bitcoin Lightning Network (LN) payments and enhancing privacy.
A suggestion was made to use specific subdomains and TXT records for resolving LN node addresses, aiming to improve privacy and ease of deployment. For instance, users could use a domain like
_bitcoin-payment.mattcorallo.com to obtain a bolt12 invoice via an LN onion message, thus enhancing user privacy under shared domains. This method also simplifies deployment by eliminating the need to integrate a list of LN users into the DNS database, leveraging existing infrastructure for a more streamlined process.
A recent proposal outlined in a GitHub gist and further elaborated in a bLIP by Matt, introduces the
omlookup protocol which aims to streamline Bitcoin transactions by establishing a DNS record that specifies a blinded path to the service provider's operator. This approach reduces operational complexities associated with DNS management and utilizes a single DNS record to host multiple users, directing them through a blinded path for secure payment offer requests. This method signifies a simplification in linking domains to nodes within the Bitcoin Lightning Network and offers a practical solution for providers looking to minimize DNS management tasks while maintaining secure operations.
In terms of Bitcoin Improvement Proposals (BIPs), there's an ongoing effort to address the complexities surrounding lightning-specific protocols. The proposed implementation employs a wildcard strategy to redirect DNS lookups directly to the appropriate node for offer inquiries. While this doesn't necessarily enhance privacy, it maintains generality across various Bitcoin-related methods, including on-chain transactions and emerging technologies. Challenges such as adding on-chain addresses for large custodians are acknowledged, suggesting they could implement necessary technical infrastructures efficiently. Modifications to streamline the process, like incorporating the user/domain directly within the invoice request, are being considered, requiring further discussion within the community.
Furthermore, the demand for human-readable names in cryptocurrency applications has led to a draft BIP focused on standardizing the resolution of user-friendly names into Bitcoin payment instructions using DNSSEC. This system aims to provide universality across all Bitcoin payment methods that utilize a static invoice format, detailed in a rationale section within the draft documentation available on GitHub. Implementing such a system could significantly improve user experience and transaction efficiency within the Bitcoin network by supporting any payment scheme with a defined bitcoin: URI query parameter, as long as it doesn't rely on dynamic invoice formats. This proposal represents an important advancement towards streamlining payment processes within the cryptocurrency landscape.