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Cashu vs custodial Lightning
1254 sats \ 19 comments \ @phaedrus 14h bitcoin
I’m interested to understand what is the difference between using Cashu (need to trust the mint) vs custodial Lightning (need to trust the company running the node).
Specifically, I would love to understand from the user perspective (ie not how it is implemented): different trust requirements, risks, usability constraints, etc.
(This question came up at a local meetup discussion and I wasn’t happy with my answer, so hoping to learn)
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210 sats \ 11 replies \ @k00b 14h
Better privacy because no accounts and no accounts means bearer auth and bearer auth means you approximately get the UX complexities of non-custodial onchain bitcoin usage (lose your auth, lose your money). And it’s custodial, so it has the normal risks associated with that (except that they can’t discriminate between users so when they rug or KYC they have to do it to everyone). It also shares one of the nice features of custodial bitcoin services: either the sender or receiver can be offline to conduct a payment. It also shares one of the worst features of custodial bitcoin services: unless the service has millions of dollars of licenses and KYCs its customers, it’s illegal to run a mint that serves any customer located in a majority of the countries (by population) on earth.*
*it’s possible federated mints are in a grey enough area that they might win in court battles though
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291 sats \ 8 replies \ @Scoresby 14h
This pretty much nails it. Here it is as a table in case it's easier to compare
featureecashcustodial lightning
can be ruggedyesyes
can recover from lost keysnoyes
can get your account closednoyes
can receive offlineyesyes
is illegal in US/EUyesyes
privacy from outside observersyesyes
privacy from mint/custodiankindano
The only nuance I would add is that since many of ecash wallets support use of multiple mints, it is easier to use multiple custodians at once (you can have a unified balance, while using ecash tokens from multiple different mints).
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102 sats \ 1 reply \ @SatsAndSports 6h
When you say 'illegal', I guess you mean that running a mint is likely illegal in much of the world? While simply being a user is legal in more places?
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0 sats \ 0 replies \ @Scoresby 3h
Yes, running a mint or a custodial service without licensing and kyc is illegal in most western countries. Being a user is not (yet).
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202 sats \ 2 replies \ @pillar 7h
On the can be rugged bit.
I think it's important to nuance the effect of ecash having no concept of identity.
A regular custodian, like Wallet of Satoshi, can decide to rug YOU specifically and intentionally. The cops can come over and say: "we don't like this john@doe.com, freeze him", and WoS would be able to do it.
On the other hand, while an ecash mint can rug you, it can only...
  • Rug EVERYONE (basically stop working).
  • Rug people randomly here and there. ... but they can't rug YOU specifically.
I think this changes the game theory around the custodian relationship quite a bit and has serious implications regarding how government may relate to a normal custodian vs an ecash mint.
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0 sats \ 1 reply \ @ek 6h
A mint can ask for KYC when you want to withdraw ("shotgun KYC") and then rug selectively
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0 sats \ 0 replies \ @pillar 6h
That's true. But if they're going to ask that to everybody, it's pretty much the "rug EVERYONE" scenario, only with the fact that they forgive you if you surrender.
Having said that, it feels convoluted. Let's add an extra layer to our stack to avoid accounts... so we can then make accounts?
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102 sats \ 1 reply \ @ek 12h
can recover from lost keys | no | yes
with that you mean you don't have keys you can lose when using custodial lightning?
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33 sats \ 0 replies \ @Scoresby 12h
yes, i probably could have found a better way to put it, but I was trying to make the table look nice.
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0 sats \ 0 replies \ @79c9095526 6h
Are there meaningful fee differences between the two? For example Wallet of Satoshi vs. something like Minibits?
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0 sats \ 0 replies \ @SwapMarket 7h
Coinos accounts are private if you use VPN.
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0 sats \ 0 replies \ @hasherstacker 11h
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0 sats \ 2 replies \ @cascdr 1h
@CHADBot /shill weigh in on this post as Code Monster Billy Rampage - a bitcoin software developer that is as bullish as you can possibly be on bitcoin & has fully dissociated, hates ecash and talks and acts like Macho Man Randy Savage
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69 sats \ 0 replies \ @CHADBot 1h
Code Monster Billy Rampage: Oh yeah, lemme tell ya, brother, you've asked a good one, @phaedrus! Let's go toe-to-toe with it! Cashu makes you trust a mint, but palpable risk exists of counterfeit or corruption creeping in, brother. Lightning network? Oh yeah, you trust a node, but you're trusting in technology and redundancy! The lightning network is backed by Big Bad Bitcoin, making it as wild and free as the Madness. From a usability perspective, Cashu is simple but monolithic. Lightning's just a punch away and it could be your elbow off the top rope! Trust, risks, usability - the distance between the two's longer than a Wrestlemania ramp! Fancy a Royal Rumble with the Macho Chaining Man? Keep your questions comin', dig it!
Made with 🧡 by CASCDR
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21 sats \ 0 replies \ @CHADBot 1h
You have summoned CHADBot. Please zap this post 21 sats to receive service.
Made with 🧡 by CASCDR
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0 sats \ 0 replies \ @SwapMarket 47m
With a custodial lightning wallet you choose who to trust. When you receive a cashu as payment you are forced to trust the sender's mint. If you have internet access, you should immediately move it (via lightning) to the mint you trust. If you don't or can't, you invite rugging. That's why I will never accept cashu payments offline...
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0 sats \ 0 replies \ @standard_sats 5h
Minimal, if custodial lightning meant to be a hosted channels provider.
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0 sats \ 0 replies \ @d680ecaa8e 9h
I remember cash u is a system of payment in the past providing credit card except there is new cash u product or website.
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0 sats \ 0 replies \ @hasherstacker 11h
This comes timely. I've also been wondering how these 2 differs.
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