Cashu vs custodial Lightning \ stacker news ~bitcoin

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1254 sats \ 25 comments \ @phaedrus 17 Sep 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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310 sats \ 13 replies \ @k00b 17 Sep

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

391 sats \ 10 replies \ @Scoresby 17 Sep

This pretty much nails it. Here it is as a table in case it's easier to compare

feature	ecash	custodial lightning
can be rugged	yes	yes
can recover from lost keys	no	yes
can get your account closed	no	yes
can receive offline	yes	yes
is illegal in US/EU	yes	yes
privacy from outside observers	yes	yes
privacy from mint/custodian	kinda	no

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).

102 sats \ 0 replies \ @k00b 33m

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).

This interop is nice, but it's worth noting that this is not a quality of ecash specifically but a consequence of mints using a standard protocol. Someone could create an LNBits client that interacted with multiple LNBits instances for example. It's unlikely LNBits does this though because it's not designed assuming custodians will rug with high frequency.

202 sats \ 3 replies \ @pillar 17 Sep

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.

135 sats \ 0 replies \ @oomahq 18h

What you describe doesn't sound really much different from old school bearer gold certificates, i.e. gold-backed paper money.

We know the game theory leads to EO 6102.

10 sats \ 1 reply \ @ek 17 Sep

A mint can ask for KYC when you want to withdraw ("shotgun KYC") and then rug selectively

0 sats \ 0 replies \ @pillar 17 Sep

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?

102 sats \ 1 reply \ @ek 17 Sep

can recover from lost keys | no | yes

with that you mean you don't have keys you can lose when using custodial lightning?

33 sats \ 0 replies \ @Scoresby 17 Sep

yes, i probably could have found a better way to put it, but I was trying to make the table look nice.

102 sats \ 1 reply \ @SatsAndSports 17 Sep

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?

0 sats \ 0 replies \ @Scoresby 17 Sep

Yes, running a mint or a custodial service without licensing and kyc is illegal in most western countries. Being a user is not (yet).

0 sats \ 0 replies \ @79c9095526 17 Sep

Are there meaningful fee differences between the two? For example Wallet of Satoshi vs. something like Minibits?

0 sats \ 0 replies \ @SwapMarket 17 Sep

Coinos accounts are private if you use VPN.

0 sats \ 0 replies \ @hasherstacker 17 Sep

300 sats \ 1 reply \ @SwapMarket 17 Sep

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...

0 sats \ 0 replies \ @phaedrus OP 43m

Valuable answer - haven't heard this one before. Thank you!

0 sats \ 2 replies \ @cascdr 17 Sep

@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

69 sats \ 0 replies \ @CHADBot 17 Sep

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

21 sats \ 0 replies \ @CHADBot 17 Sep

You have summoned CHADBot. Please zap this post 21 sats to receive service.

Made with 🧡 by CASCDR

0 sats \ 0 replies \ @phaedrus OP 37m

A follow up question since most people are calling out the advantages of ecash. Are there any advantages of custodial Lightning over Cashu/ecash?

I believe with Lightning the biggest advantage is that nobody can rug pull you, you can always force close the channel and keep your funds. But that's not the case with custodial Lightning.

Maybe there are none?

0 sats \ 1 reply \ @phaedrus OP 39m

From my friend Damian:

With Cashu you can select which mint you use/trust. As @SwapMarket pointed out, you can't pick mint when you receiving ecash token but you can move it to another mint. Single Cashu wallet can use many mints. Lightning wallets are typically limited to single server provider.

Also, ecash can have spending conditions.

0 sats \ 0 replies \ @SwapMarket 3m

but you can move it to another mint

When (not if) I move it, I do the LN payment (and wait/pay the fees). So cashu payment is just a lightning payment with extra steps.

Cashu wallet can use many mints.

But they will all milk your incoming payments, same as a custodial lightning provider.

Also, ecash can have spending conditions.

Why would I want that? Any use case examples?

So far, I cannot imagine a scenario where cashu is useful. But then again, I think running a non-custodial lightning setup is easy.

0 sats \ 0 replies \ @standard_sats 17 Sep

Minimal, if custodial lightning meant to be a hosted channels provider.

0 sats \ 0 replies \ @d680ecaa8e 17 Sep

I remember cash u is a system of payment in the past providing credit card except there is new cash u product or website.

0 sats \ 0 replies \ @hasherstacker 17 Sep

This comes timely. I've also been wondering how these 2 differs.