No, the new Wallet of Satoshi is not "self-custodial" \ stacker news ~bitcoin

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No, the new Wallet of Satoshi is not "self-custodial"

2781 sats \ 10k boost \ 21 comments \ @bluematt 1 Jul bitcoin

For those who missed it, Wallet of Satoshi is transitioning who their custodian is, and making a big deal of calling it "self-custody". Sadly, it is very much not "self-custody", quite the opposite, actually. They're converting a Spark-based wallet (Lightspark's new statechain-based protocol) to avoid their own custodial regulatory risk.

Spark is, of course, much better than a classic custodial wallet - it allows for unilateral exit if the operator shuts down and deletes their keys (once they finish implementing it) - but it still requires fully trusting the operator. If the operator changes the code running on their server and swap coins with folks, they can steal coins going forward.

Its great to see wallets moving off of traditional custodial models onto something better, but lets not try to pretend that this is the same security model as something like Phoenix or a truly self-custodial wallet.

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273 sats \ 0 replies \ @justin_shocknet 2 Jul

It's Trustodial

... can't believe I agree with Matt on something...

and Spark is a fake L2

Where I disagree is that this is not better than regular custodial, it's already a trust violation for them to lie about it

90 sats \ 3 replies \ @grayruby 1 Jul

That's too bad. I will use it regardless for small transactions but I did see them promoting it as self custodial.

124 sats \ 2 replies \ @bluematt OP 1 Jul

Its much better than other custodial systems in terms of trust model, but, yea, don't put all that much more in it than you would any other custodial wallet. Of course if you put too little in it its very much not non-custodial cause you can't unilaterally exit/force close without a fairly high fee.

40 sats \ 1 reply \ @OT 1 Jul

So it becomes custodial when you have more than 10k sats?

91 sats \ 0 replies \ @bluematt OP 1 Jul

I woulnd't say it "becomes custodial" at some threshold (somewhat the opposite, it becomes less custodial after you have enough money to afford the fees), but I would say that every wallet under something like 5k sats is custodial - if you can't afford the fees to punish a counterparty for cheating in an L2, its not custodial.

Spark/the new WoS integration, is not really self-custodial at any threshold, but its also not custodial in the traditional sense (at least if you have enough money to exit).

102 sats \ 0 replies \ @TheBTCManual 2 Jul

Regulatory arbitrage-stodial

0 sats \ 1 reply \ @LibertasBR 2 Jul

Spark is, of course, much better than a classic custodial wallet.

Isn’t it better when nodes are privately run with shared custody? At least in the current models we know which company is behind it — no one’s being misled. In the other model, they lie and hide this. Many have warned about this here.

#1019734

5 sats \ 0 replies \ @bluematt OP 2 Jul

I wouldn't call Spark "shared custody", but the Spark operator is well-known - its Lightspark, they're not trying to hide that. Also, Lightspark's regulated money transmission business is separate from the Spark product, even though its from the same company.

0 sats \ 2 replies \ @021f3af1a6 1 Jul

I thought it is fully Custodial. Thanks for the knowledge 🔥

5 sats \ 1 reply \ @bluematt OP 1 Jul

They just announced a new change to the wallet that they're calling "self-custodial" (upgrading from the existing, fully custodial, wallet). The new one is really not "self-custodial", though its also better than a classic, fully custodial, wallet.

0 sats \ 0 replies \ @021f3af1a6 1 Jul

Okay ok. Got the message! Thank you for the powerful message 🔥

0 sats \ 0 replies \ @supratic 23h

they probably mean we self-custody your sats...

0 sats \ 0 replies \ @d680ecaa8e 23h

It could be a respected decision from them we could respect their decision or simply choose another wallet provider.

0 sats \ 5 replies \ @ZezzebbulTheMysterious 2 Jul

The bar the beat is, can the au government seize the keys? Today, yes, they can take the keys and your sats. The au eo6102 scenario was my biggest concern, but it has not grown large enough, yet.

Anything is better than this. If they are able the maintain the same UX, and remain compliant with whatever regulations get raised, lets go.

Does the Spark protocol prevent eo6102 attacks by states against lightning wallet providers? The wallet provider is not able to modify or push a malicious version -- assume phone vendors block any new malicious version on their marketplaces under this scenario.

1 sat \ 4 replies \ @028559d218 2 Jul

Why don't people just use non-custodial providers? Zeus, Phoenix?

0 sats \ 0 replies \ @ZezzebbulTheMysterious 11h

Oh I do use Zeus. That’s my main mobile Interface. But it was never about me, it was onboarding folks that might not even know what a sat is.

0 sats \ 2 replies \ @ek 2 Jul

probably channel management

0 sats \ 1 reply \ @028559d218 15h

Phoenix does it for you. If you use a Zeus LSP it's what like... one channel?

0 sats \ 0 replies \ @ek 13h

It's still you who decides how big your channel should be, whether you need outbound or inbound liquidity, and who pays for it.

So you still need to understand, at least to some degree, what you're doing to make good decisions with Phoenix and Zeus.

That might not sound like a lot to you and me, but it's a lot for someone completely new to lightning.