Introducing Lightning Auctions

by Chris Tramount

Mr. T is a pretty tough guy but even he sheds a tear when his favorite Bitcoin artist sells their work for Ethereum.

Mr. T isn’t a maximalist; he’s just a man of principle. Bitcoin art should be sold according to Bitcoin principles. I’m talking trust-minimized pseudonymous transactions denominated in Bitcoin (period)

The purveyors of BitcoinTalk know something about principle. The Old Guard has been auctioning fine Bitcoin collectibles for Bitcoin on the web 1.0 forum since the Satoshi days.

It works pretty well for Casascius coins and other ancient Bitcoin artifacts. But we think it’s fair to say that an upgrade that remains true to Bitcoin principles could attract much deserved attention to other Fine Bitcoin Goods.

Minimal Fee Accountability On Lightning

A challenge of any auction is keeping bidders accountable for paying their bids. Reputation is one approach to solving the problem but if bad actors aren’t giving up their personal information, they can easily create new accounts to continue well...acting bad.

Another is fully collateralized bids held in escrow until the auction is complete but collateral payments on Bitcoin get rekt by onchain fees, even for bids that are ultimately outbid.

The Lightning Network Solves This

With Scarce City's Lightning Auctions, bidders can (under)collateralize their bids with minimal fee lightning payments. If the winning bidder does not pay up, they lose their collateral and the next highest bidder is crowned the auction victor. Otherwise, all bidders receive their collateral back at the end of the auction, without paying onchain fees.

Here's how we've brought Lightning Auctions to life at Scarce City (YouTube link):

Other Ways Scarce City Makes Auctions Better

In addition to solving auction accountability with minimal cost, we can potentially make art more valuable while saving artists and buyers major headaches:

Authenticity: Art sold through Scarce City Lightning Auctions is NFC equipped with certificates of authenticity that prove authenticity, ownership, and transaction values on Bitcoin.

Secondary Markets: Once an auction is complete, the work is open to offers from other prospective buyers. If the new owner accepts an offer, we coordinate logistics, keep the certificate of authenticity intact, and break off a piece of the proceeds for the original artist so that all parties get the most out of the artwork.

Escrow: We hold winning payments until the item ships to its new owner. The artist gets paid when tracking is verified.

Insurance: And what if the item is damaged in transit or doesn’t show up at all? Since we work with artists to make sure the art is safely packed, we’re happy to take on the meat-space risk.

In sum, Bitcoin auctions just got a whole lot better for everyone.

We think that’s something Mr. T can get down with.

Lightning Auctions will debut soon with a very special work of Bitcoin art. Sign up for our mailing list to be the first to know 👇

Subscribe to our newsletter 💡

Join our mailing list to receive product drop and blog updates