Company Name: LNbits
Founders: Ben Arc
Date of establishment: Project: 2019 | Company: 2022
Headquarters location: Fully remote (most developers based in Europe)
Amount of Bitcoin Held in Treasury: N/A
Number of Employees: 6 (+ “a dozen other developers”)
Website: https://lnbits.com/
Public or Private? What is confidential
Five years ago, Ben Arc started with the idea of LNbits – free and open source software that works with any Lightning Network funding source and offers a range of extensions for both personal and business use cases.
The idea for the project came to him in what he describes as a flash of inspiration.
“Christian Russo, the developer of RaspiBlitz, had come to visit me and I remember sitting in the little laundry room where he lived, I just sat on the sofa and went, ‘LNbits, LNbits, LNbits,’” Arc told Bitcoin Magazine. “Then I’d say, ‘I think I’m going to do this project where it can be put on top of any funding source and you’ll get this common API and you’ll have wallets and stuff.’
Soon after, Arc, a Bitcoiner based in Wales, started working on the first project of LNbits, a point of sale (PoS) for his friend Jörg Platzer, owner of the now defunct Bitcoin bar Room 77.
“We were able to install PoS in the bar, and Jörg was amazed at how well it worked,” recounts Arc.
“What they really wanted was like an accountant layer where you can export CSV and import it into different wallets, so you can have different PoS and have different wallets. None of these things were possible in the use of nodes at that time,” he added.
“So, we needed to build that for Jörg, and then I needed to build something so that I don’t have to keep repeating the work when it comes to creating different types of projects.”
That something was LNbits.
LNbits Developer Team Forms
In the following years, some of the most prominent developers in the Bitcoin and Lightning space reached out to LNbits, making contributions that would help put the project on the map.
These developers include Calle, the creator of Cashu; fiatjaf, creator of Nostr; Pavol Rusnak, founder of Satoshi Labs and a host of notable names and pseudonyms including but not limited to dni, Eneko, Vlad Stan, supertestnet and Black Coffee. (Arc also shared that Nostr’s original design “partially came out of LNbits” and that Cashu was “an LNbits project for so long.”)
This makes the LNbits engineering team the Wu-Tang Clan of Bitcoin and the developers of Lightning – an über-talented supergroup whose members do important work both together and individually.
And if the LNbits engineering team is the 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 has come together a little bit because of the main Arc program and more in terms of performance.
“LNbits came out of necessity because most of us were duplicating work,” said Arc.
“Most of us had to do all these different versions of our projects for all these different applications,” he added, making the point that LNbits’ main motivation was to reduce redundancy.
The team really came together when Arc heard that the biggest organizations in the space were starting to use the software. At the Adopting Bitcoin conference in El Salvador, Arc met some team members from IBEX, who said they were using LNbits.
“They said, ‘We love our LNbits. We use them for our products in our bank,'” Arc recalled.
“And I said, ‘Well, it was really buggy beta software. Please don’t use it in your bank,” he added with a laugh.
“At the time, everyone who worked at LNBits was like, ‘Okay, wow, people are using this thing. I think now we need to make a stable version that people can use and access, especially if they’re putting it in their software stacks.’”
Setting up LNbits, Company
Arc’s collaboration with the IBEX team made him realize that the time had come to turn LNbits into a proper business.
“We had to set up a company, where we could pay developers to work at LNbits,” said Arc.
Arc is similar to the relationship between LNbits open source software and LNbits the company on WordPress.org and WordPress.com. WordPress.org is the company that owns and develops WordPress.com, which is an open source software.
LNbits and WordPress are also similar in that anyone can develop extensions that give WordPress websites more functionality just as anyone can develop LNbits extensions.
While it is easy to encourage development in the LNbits extended marketplace by allowing developers to charge for the extension they create, getting developers to work on the software itself is more difficult. So, Arc founded the company.
“By starting a company, we have money to put into the development work, which is not so good, which is not so fun,” said Arc about how LNbits approaches software development.
“You’re unlikely to get people to do that in a free and open source project.”
LNbits currency
Arc was initially nervous about telling the LNbits engineering team that he was going to start a business, although he was surprised by their reaction when he told them the news.
“I was very nervous about our free and open society to tell them that we were going to start a business that would help finance development and so on,” said Arc. “But when we told them, they were all very happy about it.”
LNbits has since raised about $1 million in funding from VCs, an amount and arrangement that Arc is comfortable with.
“I’m very interested in private equity when it comes to open source projects,” said Arc.
He went on to explain how LNbits would have needed to raise between $10 and $20 million if they had built LNbits as a legitimate piece of software. Building it organically is much cheaper, and building with the Bitcoin community in mind has always had benefits, too.
“Having this piece of software and having this community, that you feel like you see, prevents you from making bad decisions,” Arc explained.
Coming out of Beta
Although LNbits has become widely used over the past five years, it has been in beta the entire time. Arc was in no rush to officially release a product that it felt was stable enough.
“In Bitcoin, many projects come out of beta early,” Arc explained.
“It is sad and scary that they want people to trust the software they have produced, but we did not want to do that. We really wanted to maintain the rules,” he added.
In preparation for the release of the first version, LNbits has installed some funding and exchange services.
“In the last release, we added PhoenixD as a source of funds for LNbits,” Arc began, describing the server equivalent of the mobile Phoenix Wallet.
“We added the Breez SDK. We use the Boltz exchange service to get reliable Atomic Exchanges in and out of Liquid. So, it means you can actually fund your LNbits with Liquid Wallet, which totally blows my mind,” he added.
Future LNbits
Right now, Arc seems focused on getting the first version live and then continuing to fine-tune it so that people and businesses can rely on it professionally. Arc wants to make sure the team is focused to “correct the error” if necessary.
Arc and the LNbits team also want to create more educational content by showing people how to use LNbits and how to create their own LNbits extensions.
“That was the success of the project in the first place,” said Arc. “We just did a lot of educational content and everybody was like, ‘Okay, okay, I can try to build something out of this thing.'”
While Arc also seems excited about how LNbits can continue to integrate with Nostr (he’s been toying with using the Internet of Things (IoT) on top of Nostr), the most exciting part about LNbits’ future is that it’s limitless.
Put another way, in just five years, we’ve attracted brilliant developers who made early iterations of their revolutionary technology (eg, Cashu, Nostr) with LNbits, and this is not to mention all the LNbits extension enhancements they have. created.
The question now is who will develop LNbits in the next five years and what will they create?
Although Arc doesn’t say he knows, he’s very excited about what’s next, especially after the first version that goes live.
“Once we’re the first version, that’s when the real fun begins,” said Arc.
“We’re starting to see glimpses of it, because we can just build fun extensions to work and build product services,” he added.
“That’s where the fun really starts with the project.”