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Apple's ‘wallet garden’ versus Nostr and the open Bitcoin protocol
In restricting lightning network payments on the Damus app for nostr, Apple is choosing its own in-app financial system over Bitcoin.
In 2014, videos circulated online of Bitcoiners shooting their iPhones with high-powered rifles.
Apart from some sweet target practice, the purpose of the demonstration (in typical American fashion) was to protest a wave of “delisting” of Bitcoin wallet apps in its App Store. This included popular wallets like Blockchain.info, Coinbase, and many others.
At the time, smartphones were an integral part of the Bitcoin experience, but not fully necessary. At the time, I remember not updating the phone in order to keep the wallet (which I used as my hot wallet), but doing most of my Bitcoin activity on my computer.
I had another option, and I used it. Thousands of others did the same, or they fully moved to Android phones.
Fast forward to 2023 and experiences on both iPhone and Bitcoin apps have remarkably improved. There are now hundreds of fully functional Bitcoin on-chain and lightning wallets that exist in iOS stores, while Apple Pay, Apple’s own financial rail, can now be found within thousands of apps that offer in-app payments.
Since that winter of 2014, Apple seemed to have softened its stance on apps for sending and receiving Bitcoin.
But that narrative changed when an iOS app for the new decentralized messaging protocol Nostr, called Damus, began getting rejections from App Store updates in June 2023.
Launched in January 2023, Damus has served as a very popular Nostr client for iOS and MacOS users, combining the soft, friendly UX of Apple with the sleek and uncensorable Bitcoin-native awesomeness of messaging on Nostr.
Over the past few weeks, Damus developer and founder William Casarin, also known as jb55, has revealed that App Store moderators demanded that zapping (sending small amounts of sats over lighting for individual users’ posts) be curtailed in order to comply with Apple’s policies on “payment for content.”
Rather than being able to zap a Nostr note 5,000 sats for being witty or funny, the compromise would stipulate that zapping can only happen on direct profiles rather than individual note events.
While it’s not the end of the world, it does bring to an end the beautiful marketplace of likes and value swapping on individual posters’ notes on Damus on iOS.
This is not a problem for Android nostr apps that implement zaps, nor any nostr web client where you’re free to zap your heart away (snort.social, primal.net, etc.)
But it does reveal the larger battle Apple is mounting against those that challenge its financial (wallet) walled garden it has spent years developing.
As many Apple users are aware, Apple Pay has now become a standard for most services and apps that allow payments, including at retailers in-store.
Apple Pay works through the “Wallet” app, where users can upload their credit cards, bank accounts, or debit cards, and pay using NFC technology at any PayPass terminal.
It’s incredibly convenient for those who don’t want to carry batches of credit cards with them, and that’s kind of the point. The Wallet app also scrambles the actual number of your credit card at the point of sale, so it offers a layer of protection as opposed to physical cards.
Apple, much like Elon Musk’s X.com plans for Twitter’s financial ecosystem, wants its users and developers to use their own payment rails where they can control the infrastructure. Plus, they can reap the benefits of all that financial data and the 30% cut that comes with any in-app purchase.
That 30% cut taken by Apple for in-app spending has been the focus of several high-profile antitrust lawsuits in the U.S., including Epic Games, the makers of the popular game Fortnite (who ultimately lost).
It also became the target of several U.S. Senators who introduced the “Open App Markets Act” to allow third-party app stores to exist alongside native App Stores — a direct shot at Apple. The EU’s own legislation will require sideloading of apps in the next version, so all this may not even be applicable to EU Apple users.
While the wheels of governments and courts will be incredibly slow, and likely make the situation even worse, there are some bright spots.
For one, Bitcoiners already have a rich and comepetitive ecosystem to choose from. Whether on Android devices (especially on GrapheneOS or CalyxOS), progressive web apps that run in the browser, the web itself, or via noncustodial lightning wallet connecting apps like Zeus, there are ways Bitcoiners can route around the roadblocks Apple is erecting.
For Apple’s sake, it’s quite clear why they want to maintain their financial walled garden and why Bitcoin, for the moment, isn’t compatible with that vision.
But in this circumstance, Apple should absolutely see the opportunity of allowing in-app purchases with Bitcoin.
Rich, western countries with liberal democracies make up the vast majority of Apple Pay users. Folks are willing to pay hundreds of dollars for iPhones and likely still will regardless of the walled garden.
But the developing world, where Android reigns supreme, there is still an opportunity to allow innovation at the base layer with both cheaper iPhones and a more open ecosystem. Rather than dealing with just one financial system, they’ll have to deal with dozens. That may compel Apple — through market forces — to soften their stance.
Or perhaps not.
Whether through Voice, meaning via complaints to Apple’s developers from users and developers, or via Exit, with millions of Bitcoiners opting for Android devices, Apple should know that the Bitcoin protocol is here to stay and they will have to bend at some point.
Bitcoin is the internet’s native currency, and its openness will create yet more value for millions as they continue to engage with the network.
If Apple wants to prioritize its own fiefdom, then Bitcoiners will just have to do as we always do: route around it and find a solution. How else will we fix the money?
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