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Is Blockstream Green Self-Custodial for Lightning?
1407 sats \ 1 comment \ @spiderman 3 Sep bitcoin_beginners
So, for lightning transactions, I am primarily using the Blockstream Green wallet on my phone, which, obviously, connects to the Blockstream node for payment and channel management.
So the question is, can I say it is a self-custodial wallet, or does Blockstream have the custody of my lightning sats here? If the company goes down tomorrow, are my lightning sats gone? Or does self custodial mean running my own lightning node and managing my channels?
Related, I also have a few sats in my CoinOs account. I assume that is totally non-custodial, as in, I do not have any seed phrase to access the coins anywhere else other than CoinOS? Can I say, in that sense, Blockstream is a bit more self-custodial (within my control) than CoinOs?
If it is not clear, in this post I am talking strictly about lightning sats, not on-chain.
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100 sats \ 0 replies \ @freetx 3 Sep
A helpful way to think of LN: (what I'm writing is not technically how LN works, but I'm explaining it in this way to help you understand the implication to your question).
Imagine we wanted to come up with an off-chain way to move bitcoin. One method would be.
  1. You create a new wallet and fund it with bitcoin
  2. Send me the seed phrases via email
  3. I recreate the wallet from seed phrases, now I have control of the wallet.
Obviously this scheme would never work in practice, but conceptually this is sorta how LN works (not really but its in the general ballpark).
When you "lock" funds into LN from onchain, you are creating a special multi-sig transaction. Then you can do offchain transactions with that special wallet...when closing that wallet to get your funds back onchain, some cryptographic magic happens so the close transaction holds whatever the funds of the last balance state were.
So the TLDR is, as long as the underlying wallet is non-custodial (ie. you hold the keys), then your LN transactions are also non-custodial. The 'greenlight' service of Blockstream is the server that is hosting the LN (ie. offline) portion, doing liquidity management, keeping last state, etc. However technically at any time you can force a channel close from mainnet and retrieve your funds. No funds on Blockstreams servers can be moved or accessed without your private key.
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