Introducing Escher: making every FOSS wallet the cheapest and fastest place to buy Bitcoin
By Leo Zhang
Oct 23, 2019
We believe Bitcoin has the potential to be a superior settlement system to FedWire. But this future will only be realized if transaction costs are significantly reduced.
All economic activity flows into settlement systems. The “application layer” includes such functions as remittance, lending, billpay, point-of-sale, etc. The Fedwire system processes over $2 trillion on a daily basis; much of its marginal profit is siphoned off at every layer on the top. In a distributed settlement network like Bitcoin, these are “features” of one system, not separate businesses. Bitcoin's value accrues in the proof-of-work layer.
Bitcoin Settlement System
Unlike in FedWire, where shareholders need to be chartered Fed banks, anyone can become an ad hoc shareholder via mining. Bitcoin secures its network through continuously increasing computing power, thus providing greater settlement assurance at a potentially cheaper cost than FedWire.
However, at the current stage, there are still few barriers to transacting Bitcoins at lowest possible costs:
Large price spreads
Slow delivery of BTC
Delayed and expensive withdrawals from exchanges
Limits on trade size
Limits on payment methods
Users may not care much about fees today, but when Bitcoin inevitably grows into a foundation for all digital commerce, the fees and delivery time will become a headache for high volume businesses. The real bottleneck is USD settlement. To facilitate a future where all transactions are settled instantly and cheaply, we must answer three vital questions:
How do we reduce USD settlement time?
How do we eliminate minimums and limits?
If successful, how do we achieve greatest impact?
Introducing Escher Hub
At the Lightning Conference in Berlin, we announced our solution: Escher Hub. Escher Hub is a Lightning-enabled BTC-USD on-ramp and off-ramp that can connect to all Bitcoin wallets and Lightning channels to the user's USD bank accounts.
FOSS wallets developers and Bitcoin payment service providers can integrate their products and services directly into Escher Hub to offer instant settlement bridge between BTC and USD. Developers can integrate with Escher Hub through a two-step process: 1) Deep link with the Escher app, and 2) Open a channel with us. The wallet address will appear in the Hub as a deposit destination, and the wallet users can start buying and selling instantly. In turn, the wallet developers will earn BTC for the trading flow generated through the wallet.
For users, Escher Hub is an all-in-one on-ramp off-ramp for all wallets and channels that they control. For small transactions, users can buy up to $2,000 instantly with Zelle and deliver the Bitcoin to a Lightning channel or base layer address. For large transactions, users can also buy up to $2 million same-day through "Turbo ACH".
Escher Hub achieves all of these with no added fees for users, no fees for developers, and no fees charged on moving money. It is compatible with user's bank's multi-factor authentication. The bank credentials never touch our server; they remain on device keychain.
Iterative Capital’s tradings subsidiary is registered with FinCen as a money services business and working diligently to acquire money transmitter status in each state (including a solution for New York!). Escher will be able to provide services to customers located anywhere domestically and internationally.
We believe Lightning Network is an integral part to Bitcoin's future. Through Escher Hub, we provide liquidity to Lightning Service Providers (LSPs), via a dashboard for users' fiat and Bitcoin accounts, and help making moving between USD and BTC accounts fast and cheap.
The power of Bitcoin lies in its grassroots vision, and FOSS wallets are a true representation of the value shared by the community. Unlike some of commercial wallet applications, FOSS wallets are not custodians of the funds, they don't charge fees, and FOSS wallets are built with a lot of craftsmanship and a lot of care.