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On-Chain Payments

While Lightning enables instant micropayments, on-chain Bitcoin transactions remain essential for larger amounts and long-term storage. Nostr's Taproot-native design makes on-chain integration seamless.

When to Use On-Chain​

Use CaseRecommended Method
Tips under $10Lightning (Zaps)
Payments $10-$1000Lightning
Large payments $1000+On-chain
Savings/HODLOn-chain (cold storage)
Smart contractsOn-chain (Taproot)

Nostr + Taproot: Native Integration​

The Key Insight​

Nostr keys and Bitcoin Taproot keys are cryptographically identical:

This means:

  • No bridges - Direct key usage
  • No wrapping - Native Bitcoin
  • No intermediaries - Pure P2P

Deriving Your Bitcoin Address​

From any Nostr public key:

import { bech32m } from '@scure/base';

function npubToP2TR(npub) {
  // Decode npub to get raw pubkey
  const { words } = bech32.decode(npub);
  const pubkeyBytes = bech32.fromWords(words.slice(1));

  // Encode as P2TR address (witness version 1)
  const words5bit = bech32m.toWords(pubkeyBytes);
  return bech32m.encode('bc', [1, ...words5bit]);
}

// Example
const npub = 'npub1...';
const btcAddress = npubToP2TR(npub);
// Returns: bc1p...

Payment Flows​

Simple Payment​

1. Alice wants to pay Bob on-chain
2. Alice looks up Bob's profile (kind 0)
3. Bob's profile contains bitcoin address
4. Alice sends Bitcoin to bc1p... address
5. Optionally: Alice posts receipt on Nostr

Payment with Verification​

1. Bob creates payment request event
2. Alice sees request with amount + address
3. Alice pays and gets txid
4. Alice replies with txid as proof
5. Bob verifies on-chain

Proposed Event Structure​

{
  "kind": 9000,
  "content": "Payment for consulting services",
  "tags": [
    ["amount", "100000", "sats"],
    ["address", "bc1p..."],
    ["network", "mainnet"],
    ["expires", "1735689600"]
  ]
}

Profile Integration​

Adding Bitcoin Address​

Include in your kind 0 metadata:

{
  "kind": 0,
  "content": "{\"name\":\"Alice\",\"bitcoin\":\"bc1p...\",\"lud16\":\"alice@getalby.com\"}"
}

Multiple Addresses​

For privacy, rotate addresses:

{
  "bitcoin": "bc1p...",
  "bitcoin_xpub": "xpub...",
  "bitcoin_derivation": "m/86'/0'/0'"
}

Transaction Coordination​

PSBT via Nostr​

Share Partially Signed Bitcoin Transactions:

{
  "kind": 9001,
  "content": "<base64-encoded-psbt>",
  "tags": [
    ["p", "cosigner-pubkey"],
    ["purpose", "multisig-spend"],
    ["expires", "1735689600"]
  ]
}

Multi-Signature Workflow​

Privacy Considerations​

Address Reuse​

Avoid Address Reuse

Posting the same Bitcoin address repeatedly links all payments to your identity. Use fresh addresses when possible.

Solutions​

  1. HD Wallets: Derive new addresses from xpub
  2. Payment Codes (BIP-47): Reusable payment codes
  3. Silent Payments: Proposed for enhanced privacy

Coinjoin Coordination​

Nostr could enable decentralized coinjoin:

1. Users signal intent to coinjoin
2. Coordinator collects inputs
3. Collaborative transaction building
4. Coordinated signing
5. Broadcast

Escrow Services​

Nostr-Based Escrow​

Using 2-of-3 multisig:

Escrow Contract Example​

const escrowAddress = createTaprootMultisig([
  buyerPubkey,   // From buyer's npub
  sellerPubkey,  // From seller's npub
  arbiterPubkey  // From trusted arbiter's npub
], 2); // 2-of-3 threshold

Fee Estimation​

Current Fee Market​

Display real-time fees in Nostr clients:

async function getFeeEstimate() {
  const response = await fetch('https://mempool.space/api/v1/fees/recommended');
  return response.json();
  // { fastestFee: 20, halfHourFee: 15, hourFee: 10, economyFee: 5 }
}

Fee Selection UI​

PriorityTargetTypical Fee
HighNext block20+ sat/vB
Medium~30 min10-20 sat/vB
Low~1 hour5-10 sat/vB
EconomyEventually1-5 sat/vB

Implementation Guide​

For Wallet Developers​

  1. Parse profiles - Extract bitcoin addresses from kind 0
  2. Validate addresses - Support bc1p (P2TR) format
  3. PSBT support - Enable multi-device signing
  4. Fee estimation - Real-time fee data

For Client Developers​

  1. Display addresses - Show bitcoin field from profiles
  2. QR codes - Generate BIP-21 QR codes
  3. Payment verification - Link to block explorers
  4. Transaction history - Track on-chain payments

Best Practices​

Security​

  • Verify addresses - Always double-check before sending
  • Use hardware wallets - For amounts over $1000
  • Backup seeds - Multiple secure locations
  • Test first - Small test transaction

Privacy​

  • Fresh addresses - New address per transaction
  • Avoid consolidation - Maintain UTXO privacy
  • Consider timing - Broadcast timing can leak info

UX​

  • Clear labeling - Distinguish Lightning vs on-chain
  • Fee transparency - Show estimated fees
  • Confirmation tracking - Display confirmation count

Resources​

Taproot Advantage

Pay-to-Taproot (P2TR) addresses starting with bc1p offer the best privacy and lowest fees for on-chain transactions. Since Nostr keys are Taproot-compatible, your identity can natively hold Bitcoin.