ELI5 request: Lightning wallet refund \ stacker news ~bitcoin

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11 sats \ 2 comments \ @chungkingexpress 22 Dec 2022 bitcoin

Can someone ELI5 about lightning please:

Say I have a Blue Wallet etc Lightning balance, and something happens to force close the channel or it goes offline (not my Lightning node), will that balance be refunded to my main chain wallet address I originally funded the lightning wallet with? Or does something else happen?

Thanks!

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1024 sats \ 1 reply \ @cryptocoin 23 Dec 2022

Say I have a Blue Wallet etc Lightning balance,

Each wallet app can do things in a unique way. So there's no "etc" / general answer to that. From what I know about Blue Wallet, here's how I believe it works (I might be off though):

With Blue Wallet specifically then, the default for an LN wallet is a custodial "hosted channel" (HC) wallet. So Blue Wallet is then the custodian and you will have an LN "account" with them. What happens with channels as far as them being forced closed or whatever is nothing that affects you, as you have an account with Blue Wallet, and not a channel. Channels are maintained by Blue Wallet. Now if they have a problem with their node that they use to service user's HC accounts, well then you as a Blue Wallet user have a problem -- where you cannot receive or send. This has happened before.

And this is only regarding their LN wallet only. For on-chain, that is a non-custodial wallet (i.e., your keys and thus your coins). Or for LN even you can use your own node, and thus wouldn't be using a Blue Wallet LN "account".

25 sats \ 0 replies \ @chungkingexpress OP 23 Dec 2022

Thank you. This makes sense. I am not running the lightning infrastructure myself, so it makes sense blue wallet are the ones "managing this" as a custodian.