Original article: https://www.forbes.com/sites/digital-assets/2023/05/30/bitcoin-social-network-nostr-creator-fiatjaf-/?sh=66cde06f11c0
Disenchanted with social media options like Twitter, the reclusive Bitcoin programmer tells Forbes how he designed his chat-and-payment service for people who dislike corporate control.
Welsh software developer Ben Arc first encountered fellow developer known to the world only as @Fiatjaf in 2019 while hacking into a Pac-Man arcade game to make it accept bitcoin. After having difficulty using software designed to simplify the process, Arc sent a message to a mailing list for bitcoin developers looking for help. “The only person who wrote back to me was @Fiatjaf.” It was the beginning of a prolific collaboration between a pair who have never met in person.
Their most notable effort is snowballing its way through the social-media world, gaining 18 million users and reflecting rising opposition to networks run by big companies. In his first interview with the press, @Fiatjaf says Twitter’s increasing propensity to ban users had frustrated him. But he was unable to switch to a competitor while retaining his followers. Inspired by Arc’s idea for creating marketplaces where shop owners could move from one e-commerce platform to another, he started developing a new protocol to manage identities—at first for social networks, then for anything else.
The architecture, known as Nostr, lets users take their profiles and their followers to any competitor using the same protocol—a network of interoperable networks. That concept has been gaining traction, with at least a dozen decentralized social-media alternatives accumulating millions of users in recent months, spurred in part by widespread dissatisfaction with Twitter’s policies regarding privacy censorship and civility.
Nostr, short for Notes and Other Stuff Transmitted by Relays, is more a set of instructions for connecting identities than an actual network. It initially generated interest among people sufficiently tech-savvy to be able to figure out how to interact with it. But with only a few hundred thousand users, it came to the attention of Jack Dorsey, co-founder and former CEO of Twitter. He donated 14 bitcoin–then worth about $200,000–to @Fiatjaf, who is distributing the proceeds to developers working on additions to Nostr.
Dorsey’s interest was surprising because when he was still running Twitter he invested $13 million in a similar decentralized social-media project, Bluesky, which is just opening up to users on a million-person waitlist. More unexpected was an additional $5 million Dorsey donated to Nostr this month. Meanwhile, Nostr improvements have made the network easier to access, and it has developed a secret weapon: the ability to transfer bitcoin among users. Already 500,000 daily Nostr users have sent each other 792,000 tiny bitcoin transactions called zaps, worth $1.9 million, with dozens of companies building new applications.
“If today, a giant company started doing things on Nostr to make money, they would take control of the protocol, and it wouldn’t be good,” says @Fiatjaf. “The same thing would happen if the protocol had been created by this large company. But after the protocol gets bigger, then it’s okay for companies to come on the sides and each make their money in their own way.”
This article is based on multiple interviews with @Fiatjaf and the people around the world who have joined him in what many consider a social movement. Of the people interviewed, only one claims to know @Fiatjaf’s real name. Forbes agreed to honor his request for anonymity because he fears for his safety. Some of his personal details were impossible to verify, but whatever we could corroborate checked out.
@Fiatjaf says he was born in 1991 in Brazil’s populous southeastern region. From an early age, his entrepreneurial parents warned him of the harm taxes and regulations had wreaked on their companies. While on a field trip with his school to a local Fiat auto factory, he received a hat with the company’s logo. Years later, when choosing a username for an online game, he saw the hat on his desk, merged it with an older identity, JAF, the meaning of which he declined to share, and resulting in his nom de guerre.
In the early 2010s, while studying economics at an undisclosed university in Brazil, he grew enamored of the Austrian school of economics, which teaches that large economies are too complex to be planned. He discovered bitcoin in 2011, on a website dedicated to a founder of Austrian economics, Ludwig von Mises, when the cryptocurrency was worth about $15. Immediately, he downloaded the software that lets anyone with a computer help audit bitcoin transactions in exchange for the cryptocurrency, a process called mining. “It wasn’t very fruitful,” he says, laughing. “I mined for an entire night, and I got 5,000 Satoshis,” the smallest unit of bitcoin, now worth $0.0003.
After briefly exploring other cryptocurrencies @Fiatjaf took to writing software that bridged bitcoin and other decentralized technologies. A 2018 experiment called Piln, let servers charge small amounts of bitcoin for storing files on a decentralized database. Etleneum integrated bitcoin with smart contracts, letting developers write sophisticated transactions. But his breakthrough didn’t happen until June 2019 when software developer Arc asked for help hacking Pac-Man. Arc shared an idea called Diagon Alley–after a marketplace in the Harry Potter stories–that could theoretically let virtual shop owners move their storefront from Amazon to the dark web and back. Seeing the potential, @Fiatjaf started working on his own version that would work for any kind of identity.
“Months later,” Arc recalls, “when I was reading the protocol, I was like, ‘Dude, this is like Diagon Alley,’ and he said, ‘That’s one of the things which helped influence the creation of Nostr.’ So I instantly had a vested interest.”
Before the year was over @Fiatjaf’s ideas had matured into what he calls the Nostr Manifesto, describing an open, censorship-resistant global social network. Computers that send short messages to each other and comprise the lowest layer of the network are called relays. Applications, like a social network or a marketplace built on top of the relays are called clients. Instead of the public key identifying a token like bitcoin it defines a user, and there is no underlying blockchain. Nostr is just a series of instructions for how to build interoperable applications. “A lot of the things people wanted to see built on bitcoin,” says Arc, “actually could just be built on Nostr.”
A month after @Fiatjaf published his manifesto—completely separately—Dorsey, then Twitter’s CEO, proposed Bluesky with similar goals.
By early 2020, @Fiatjaf had got the attention of his current part-time employer, Zebedee, a Hoboken, New Jersey, video game startup building software that lets game developers give players bitcoin rewards. After much pleading on behalf of Zebedee co-founder Andre Neves, 31, he convinced @Fiatjaf to take a full-time remote job, putting him in charge of an internal project called NBD.WTF, now housing five open-source projects related to bitcoin, and Nostr.
“He will go off and spend a weekend working on some random open-source project created out of thin air because he believes it has value for someone else,” says Neves. “Not because he wants to sell it. Not because he wants to build a product for it. But because he wants to give something to other people, to solve their problems, to improve the world.”
The founding of Nostr was accelerated by a veritable perfect storm of controversial Twitter events. In January 2021, billionaire, Jack Dorsey, banned Donald Trump, the sitting president of the United States from the social media platform. Then, billionaire Elon Musk, bought the company and quickly alienated many of its most loyal users by charging for services they considered vital, like two-factor authentication. Though Nostr had been in development since 2019, he was taking a deliberately unorthodox path. “There’s no company,” says@Fiatjaf. “There was nothing.”
Not even an intellectual property license. Instead, @Fiatjaf opted for an ambiguous disclosure putting the software in the public domain, potentially opening himself and others up to legal attack, if some snippet of code in the protocol is protected by someone else’s copyright, according to Thomas Stanton, partner at Tampa, Florida-based Stanton IP Law Firm. “Then him, as well as any of the users, could be held liable,” he says. @Fiatjaf is unfazed. “I don’t care about this licensing,” he says. “I just want people to use it. I don’t understand these things. And I try to not learn about them.”
Since anyone can build using the Nostr standards, it’s hard to say for sure when the first users of an app built on Nostr signed up. But in April 2022 a slow trickle of new users became a downpour. Bitcoin engineer, William Casarin, 34, launched Vancouver, British Columbia-based Damus (as in Nostr-damus) on the Nostr protocol. Initially, it was a weekend project that simplified accessing Nostr in a Twitter-like environment. He incorporated Damus at the end of 2022, and in January, Apple admitted Damus to its App Store. Casarin, who previously worked at bitcoin infrastructure firm Blockstream devised a way for Nostr users to send the tiny bitcoin payments called zaps via the Lightning network. Shortly thereafter, @Fiatjaf added Casarin’s upgrade to the Nostr protocol, letting anyone build to the same specifications.
That new functionality turned out to be crucial. Until that moment, while many of the developers of Nostr apps were bitcoin enthusiasts, there was little to reflect that in the protocol. After making bitcoin payments accessible Damus grew to an estimated 160,000 users from 10,000 and total Nostr users jumped to 18 million from 10 million. About 25,000 Damus users came from mainland China before the Chinese government banned the app for allegedly supporting content deemed illegal in China. Casarin believes Damus was banned because it’s a free-speech tool. He calls the ban a badge of honor.
Not only are nine Nostr projects now using zaps, the ability to send bitcoin led to support from Dorsey, the CEO of Block, a payment-processing company he also founded. He ran both Block and Twitter until stepping down from the social network in 2021 as an indirect result of banning Trump. Block has become a serious bitcoin investor, with a pile of the cryptocurrency worth $220 million as of December 31, 2022, and is pushing into the burgeoning field of social commerce, where payments and social media intersect. Accenture estimates the social commerce industry will reach $1.2 trillion by 2025.
In early 2021 Dorsey’s attention was brought to Nostr by a Serbian-born developer known as Rockstar. Annoyed that Bluesky CEO Jay Graber failed to mention Nostr in a detailed analysis of decentralized social media ecosystems, he privately messaged Dorsey on Twitter, suggesting he take a closer look. Much to Rockstar’s surprise, a few days later @Fiatjaf received an email from Arnold Jun, a Twitter corporate development strategist. “I read your write-up on Nostr and really like the simplicity of your approach,” wrote Jun. “Would you be open to a call?” @Fiatjaf was not pleased.
“You’re too dangerous,” he wrote to Rockstar on the Nostr Telegram group. “we’re trying to do a grassroots movement here and you talk to JACK?”
Rockstar responded: “Telling you – what’s the life without little excitement… definitely jump on that call, they seem to have too many talkers, not enough coders.”
“I will talk to the guy, but I’m skeptical,” wrote @Fiatjaf.
Dorsey has not responded to requests for comment for this article, but @Fiatjaf says that after the billionaire told the world in a tweet that he was trying to “figure out” how to fund Nostr he sent a private message asking how he could support the protocol.
“I didn’t know how to answer that,” @Fiatjaf says. “I suggested that he could sponsor some dev [software developer] or something like that. But then he said, ‘Oh, can I give you the money and you decide what to do with it?’ He gave me the Bitcoin.” Specifically, 14 bitcoin. @Fiatjaf gave Casarin half. Then, this May, Dorsey gave another $5 million to a non-profit dedicated to supporting bitcoin efforts, specifically to fund Nostr development.
AsNostr matures, it’s important to note that Twitter and Facebook started as relatively open platforms, only restricting access to developers once business interests forced them. Nostr’s business model is far from certain, and threats to centralize are already on the horizon. While traditional social networks generate revenue to support their massive servers by charging for ads and blockchain social networks side-step centralization by paying users in crypto, Nostr developers are looking for a different way to keep the lights on.
Zebedee and Arc’s LNBits are building products that let users charge bitcoin to host their own servers. Damus is experimenting with a tool that lets users directly support the company. Over the first four days the service operated, it brought in an underwhelming $145. If users aren’t willing to pay, Nostr apps will be reduced to philanthropic services. “A lot of advertisers have a lot of power over the platforms,” says Casarin. “If we can find a way to make money and make this sustainable without having to annoy our users, obviously, that’s a big win.”
Further centralization risks come from within. Only insiders admitted by @Fiatjaf have the right to add features to the Github repository. An internal document shared with Forbes shows that he has given seven people the power and few use it. “There are other people that have merge powers here,” he says. “But mostly it’s me.”
So far, the limited number of people allowed to make changes to Nostr hasn’t stopped developers from getting involved—7,500 have built 26 relays to support the network; Android and iOS apps, including a decentralized chess game; a decentralized news site for independent journalists; and several decentralized clones of Twitter and Reddit. There is a plan for a “geolocated service” for decentralized taxis: think Uber without the corporation. Arc is back working on Diagon Alley, rebranded as NostrMarket, letting digital bodega owners move their entire profiles. “The power is with the clients,” he says. “It’s almost a form of activism.”
As for @Fiatjaf, his latest work uses the bitcoin blockchain to let experts place bets on future events, with the goal of providing investors more accurate forecasts. “I have even more ambitions projects.”