Oddbean new post about login | logout I think people are referring to self custodial lighting. You’re right that everything works well when you’re using a custodial solution. Most people are going to use custodial solutions. It’s the unfortunate reality. Most people will never have a UTXO or independently manage their own Lightning channels and liquidity. Yes, bitcoin and Lightning will scale but just not in the way that we would all prefer.
Can be self custodial - Like Breez, and allow liquidity in larger LSP’s The difference (imo) is that the trade off is some centralization of LSP’s because of efficiency, while keeping them honest through the free market. (Ie - if they raise prices too high, people flee to competing solutions.
I don’t view Breez as self custodial. They appear to manage liquidity by being a “man in the middle” for payments. It seems like they don’t custody payments for very long, but for a brief period they take possession of your funds. I think it’s great that they do so because self-custodial Lightning is difficult to manage. I just don’t think they should say they are self-custodial when they aren’t 100% self-custodial. I maintain that we’re moving now into a custodial world for most people. We’ll need to limit the custodial touch points and risks through smart technology (like Breez) and geo-distributed federations. https://image.nostr.build/3c5de55e420a17323c36cae0bf0520ac9f65234c77c851145f6099a5a47f140c.jpg
We intercept the payment, we don't have access to the user funds. You're also confusing trust and custody.
You only don’t have access to user funds because you choose not to access them, correct? It seems from your knowledge base that your software could change the payment details to access funds if you wanted. Anyway, sounds like a cool and useful solution but my point is that if you have control over funds it’s not self custodial. Perhaps “trust-minimized” would be a more accurate term. I haven’t dug into your source code so I might be totally wrong about whether your software has control over payment funds. Please let me know if I’m wrong about that.
Technically, any lightning node can intercept htlcs, it they can't access the funds because they don't have the preimage. So it's incorrect. There's an optional trust with using zero-conf channels (post interception). If users are choosing to use zero-conf channels, they trust the LSP not to double spend till confirmation. However, this is just one option of the LSP model.
I'm not a techie. Would a large increase in individuals running a node lead to better scaling?
Unfortunately no. I understand why you might think so but running a node is primarily for your own benefit. Running a node helps you to verify your account balances and transactions while preserving your privacy. It doesn’t increase the overall transactional capacity of the bitcoin network. I’m happy to drill down into these concepts if you would like further detail. Just let me know!
thanks, I appreciate the help I get that there's a benefit running my own node as a self custodial thing. that does interest me I thought that by opening a channel using my own liquidity, I'd be increasing the scaling of the network (if ever so small degree,)
Apologies, I realize from your question that I gave your a partial answer. I assumed that when you said “node” you were referring to a node on the bitcoin network. I see from your question that you’re thinking about a Lightning node. Yes, if you open up a channel with your own liquidity you are slightly helping the network. To make a difference you will need to open multiple channels to other relevant nodes so that your node is a relevant participant in the network. You should also get the other side of the channel to add liquidity too so the channel is more balanced. Your Lightning node will need to be online and reliable to make a difference (so you can’t just run it on your phone). I’m not a Lightning node expert so perhaps others can weigh in here.
I guess one of the questions about running a node, is do I put the asset at risk of hacking? does a noob get themselves into trouble with maintaining security?
Running a bitcoin node does not put your bitcoin at risk. Running a lightning node does put your bitcoin at risk. It is quite difficult right now to run a lightning node. The biggest risk seems to be forced channel closings that consume bitcoin as fees. This post explains some of the gotchas that happen when you’re running your own Lightning node: https://blog.mutinywallet.com/mutiny-wallet-faq/
The first improvement needs to be the default for every non-custodial Lightning wallet with zero funds in it, to receive payments just as easily as a 0 BTC address.
