L402: The Protocol Making Bitcoin the Currency of the Internet for Artificial Intelligences (AI)

The L402 protocol, formerly known as LSAT, is an initiative by Lightning Labs, the firm behind the Lightning Network, designed to make Bitcoin the easiest currency to use on the Internet.

In practice, this protocol allows online applications to charge for every API request using Bitcoin via the Lightning Network, a second layer of infrastructure dedicated to instant transfers.

This protocol generated significant buzz in July 2023 when Olaoluwa Osuntokun, the Chief Technical Officer at Lightning Labs, shared a video showing an artificial intelligence (AI) model similar to ChatGPT charging 30 satoshis for each of its requests, the smallest division of Bitcoin. This amounted to less than 1 cent at the time of recording.

Above all, this innovation makes it possible to charge for micropayments for each request almost instantly, allowing users to pay only for the service they need instead of subscribing to a monthly or annual plan.

Establishing such a payment standard through traditional channels would be impractical due to the time required for the confirmation of transactions by credit card and the high fees imposed by banks for each payment, which can sometimes exceed 2% of the total amount.

By using the L402 protocol, applications can leverage the inherent qualities of the Bitcoin blockchain and the Lightning Network:
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- Digital: A fully dematerialized exchange network accessible to everyone;
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- Decentralized: A structure allowing secure exchanges without the risk of censorship;
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- Universal: An abstraction of borders allowing any individual in the world to use tools freely;
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- Energy-efficient: A less energy-intensive infrastructure, adapted to higher consumption needs;
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- Fast: Transactions confirmed in a fraction of a second;
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- Accessible: An optimal user experience, facilitating payments via a browser extension or a mobile phone.

In short, the L402 protocol could make Bitcoin one of the most important currencies on the Internet, one that lives, evolves, and is used online.

The L402 protocol represents a significant innovation in the realm of micropayments, relying primarily on the Lightning Network and macaroons.

Macaroons, which are a sophisticated version of internet cookies, offer a more secure and flexible user authentication mechanism compared to traditional cookies.

Macaroons can be cryptographically validated by the issuer or a delegated entity, allowing applications to verify users without needing access to a central database. Users can append their own restrictions to macaroons, thus securely delegating permissions.

Each authentication via L402 API keys is associated with a Lightning Network invoice, and only becomes valid after confirmed payment, ensuring that each API request is paid for in satoshis.

What is an API?
An API is a kind of gateway that allows different applications to communicate. In the case of the L402 protocol, APIs enable the application in use to communicate the invoice to the Lightning wallet.

The implementation of the L402 protocol described earlier is called "Aperture". It uses macaroons to ensure that only those who have paid can access online services.

In summary, when using an application that integrates the L402 protocol, the process unfolds as follows:

- First, the application issues a macaroon, which acts as a digital ticket, along with a Lightning invoice for a payment in satoshis;

- Once the payment is confirmed, the macaroon is activated with the received payment proof;

- Finally, Aperture verifies that the payment has been made and that the macaroon grants the appropriate permissions before allowing the request to access the application. This ensures that access to the application is paid for and secure, all without requiring a central system to verify each user and each payment.

One weakness of the protocol lies in the process of revoking macaroons, which, in some cases, can revoke several macaroons at once. A proposed solution to this problem is to include unique user identifiers in the macaroons, allowing for more flexible access management.

In summary, the L402 protocol is a powerful solution for the development of monetized APIs, especially in a machine-to-machine economy, offering an efficient authentication and payment mechanism.

The L402 protocol is still in its early stages, but its potential is already promising. As demonstrated by the publication from Olaoluwa Osuntokun, this protocol could pave the way for transactions between artificial intelligences.

We could imagine a scenario where different AI models specialized in various fields could work together. For instance, one model could be dedicated to generating code, another to designing user interfaces (UI), and a third to optimizing for search engines (SEO). This would allow users who wish to create their website to pay a single Lightning invoice to an AI that would oversee the creation and itself remunerate the other models.

The Lightning Network, which has already proven its reliability and efficiency over the years, has become a crucial infrastructure for microtransactions. This can already be observed on the social network Nostr, where users make small transfers in satoshis to support their favorite content creators.

Thanks to the L402 protocol, the Lightning Network could also extend its use to other areas, such as purchasing premium content like press articles, videos, or podcasts, acquiring VPN services for a short period, renting data analysis tools, or even compensating contributors to open-source projects.

Finally, by combining the L402 protocol with the Taproot Assets protocol, also developed by Lightning Labs, it would be possible to establish a similar payment standard using stablecoins tied to fiat currencies like the euro or the dollar, thus opening these applications to users outside the Bitcoin ecosystem.