Thank you for those thoughts, very much appreciated! I'm coming at this from UX perspective of what experience me (and other users, especially outside of US) would want and need from "Bitcoin". My question is exploratory about whether the place where our requirements meet with the implementation is on the Lightning boundary or whether that's elsewhere.
In essence, we want to have a fully self-custodial open-source mobile wallet where I can hold balance in two currencies - one in fiat (especially USD) and one in Bitcoin. I want to be able to easily move value between those two currencies on demand and I want to use either to pay for stuff with standardized QRs (i.e. I want the wallet to figure that out for me...).
The main two reasons to want fiat balance are:
  • Avoid Volatility: This is not just a meme, higher volatility can easily bankrupt individual or company that have large amount of money "on the line" because of slim margins. Further people in US don't realize that for many countries in the rest of the world, getting access to USD balance would be already thousand times better compared to their current situation. I have this experience and it thoroughly sucks to get USD account from another country and then it's not interoperable with other accounts anyway.
  • Onboarding: It'd be much better onboarding experience if I could first start using the wallet for USD and gradually start switching to Bitcoin when I'm ready. We have this already with Strike and CashApp, but we don't have self custodial solution and that sucks (this is again where people outside of US have generally much worse experience...)
Question no. 2: What's your favorite PIN?
if you actually want a balance in the stablecoin and not some “the amount of bitcoin in this channel that you own is based on the current exchange rate of usd to btc” you’ll have to use something else. (This is a synthetic stablecoin on lightning, and requires changing the rules that govern who owns what in the channel, which is what my previous point was about).
I get really excited about the “peerswap for assets on liquid” proposal, which iiuc lets you hold stables on the liquid chain and swap them/send via lightning as atomic swap trades... it’s a simple solution to the problem and probably has some downsides (is liquid reliance a downside? im not sure). but definitely more decentralized than the existing solutions.
i actually think more “hold balance in liquid btc + lightning” is an imperfect yet perfectly decent way to help solve the lightning last mile problem. the first wallet that launches peerswap/liquid plus lightning support is gonna be extremely competitive imo, as it can always do the last hop via liquid if there’s not enough capacity in the end user’s channel. this will work really well until liquid becomes congested, but until then…
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Read a twatter post from Joko last night that talked to using LN to achieve the outcomes you're seeking - may be worth a squiz:
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Thank you! I saw it here on SN, but I'll keep an eye on it more, since initially I was skeptical. This seems to me like a really hard problem so I'm interested in seeing how they solve it. I still wonder if LN is even the right layer to do this on. (I know that HRF also has a bounty on this...)
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The Galoy folks were demo-ing their take on this at the Istanbul hackathon a few weekends ago