With ACINQ continuing to deliver features (splicing lately) to his amazing non-custodial Phoenix Wallet and many more to come (blinded path, taproot channels incoming), Breez Wallet working well enough, and the Blockstream Greenlight solution coming live soon, we can all witness self custody on lightning becoming more more user friendly.
With all these non-custodial things becoming more handy, I was wondering at which point continuing to deliver an only custodial LN wallet (Wallet Of Satoshi, Blink and others) will be considered to be a suspicious choice, not to say a bad actor's choice.
So I asked on Twitter to Blink (former Bitcoin Beach Wallet) and WoS "when non custodial version of your wallet ???" My vision was ideally for custodial LSPs to ASAP move to a hybrid version inside their app bringing the best of the 2 worlds. Self custody would be proposed (and the benefit of it clearly explained) alongside all the features allowed by custodial services (always on payments, LN addresses and more), with an easy switch between the 2 wallets.
To my surprise the Blink team immediately answered that it was pricesly their goal eventually and they were already thinking about it, sending me this Bolt Fun article written just few days before (nothing yet from WoS though lol) https://bolt.fun/story/on-how-we-get-to-self-custodial-custodians--920
So what do you think, will in a near future full custodial LN wallets considered as bad actors if they do not make it easy and handy to take self custody of our coins "in a click" ? And will one day the UX of non-custodial LN wallets be good enough for any pleb or no coiner to be onboarded in a non-custodial way by default ?
Yes. This is totally the plan I have for my Lightning Box concept, which I will integrate deeply into Blixt Wallet and that other wallets can trivially support via LNURL.
Open source should slowly sand the edges until the experience is frictionless. Looking at where we were with Lightning just 36 months ago to now is kind of insane. Proved so many naysayers wrong. Long ways to go, but where will be in 36 more?
I hadn't thought about custodial LN wallets getting branded as bad actors in a world of hybrid custody that's as fast, cheap, easy, and safe as custody. Your point there is fascinating, and since user empowerment is a principle of open source, I'd say that a wallet that can in a click, but won't, is a bad actor.
If we get the hybrid model rocking on L2, then DEX's (Robosats, Bisq, et al) are going to enter a rapid growth phase, as will the 0auth platforms like LNMarkets, etc.
Yep exactly. With a ridiculous amount of users devs and ressources, what we already achieve in the Open Source LN space is very bullish I agree 💯 In spite of all critics (who may be right sometimes) we are on a very good path IMO Next steps once self custody is more common in the space, will be improving privacy to avoid LSP to spy on users, but work is already being done in that sense so bullish again
Non-custodial wallets are still more used by more experienced users that understand how liquidity works. Is still a dream that normies will be able to use a full LN node or a private LN node as Phoenix, Breez, Blixt, Electrum, OBW, Bluewallet, Bitkit, Mutiny. Also some of them have still way to get out from beta versions.
If you want to help now normies I suggest to be yourself a "LN bank" for your friends and families. But yes, you MUST have good knowledge about what are you doing and being able to manage their LN funds. Here you have a guide https://darthcoin.substack.com/p/bitcoin-private-banks-over-lightning
I was precisely focusing on LSP based non-custodial cause they are much more user-friendly compared to Blixt, OBW, Mutiny etc. ...
My hope for the near future is for custodians to implement a self-custody option within their apps based on the Blockstream Greenlight model. They could push for their users to take full custody all along the life of the wallet, while still allowing features only available on custodial wallets.
But yes for my family and friends they'd rather use my LNbits instance, or I could take the time needed to explain why self custody is important, and set them up a Phoenix wallet with good inbound.
Sounds like a decent idea. Its just one hop away actually...
Imagine a self custodial unannounced channel using WoS's connections on the back end.....
Well done 👍
Wrote about it last week in the federated wallets section. I think doing both is key, but fedimint not full single party custody. https://tonygiorgio.com/lightning-everywhere/
So I'm not sure, because the fees are a deterrent. For this reason, I think if we had channel factories (which we need at some point anyway) I could much more confidently go on a full on crusade against custodial lightning lol.
Covenants would also help this process along with things like CTV tress non-interactive channels (which would to be fair mean more on-chain payments but people adjust what they decide to do based on whatever fees are so I think it can have a place and time)
You can check more about CTV based covenants here: https://utxos.org/uses/
But yeah, its amazing the UX improvements from just scripting things out has gained us, but there are limits to what can be done, and so we should be looking at softforks to help expand beyond those limitations.
What you are looking for is Fedi.
Fedi's still a fully custodial system where the bitcoin is held in their federation multisig. Their "2nd-party" phrase is more of an attempt at differentiating the sorts of relationships you would have with your custodian.
Imo, things like Phoenix/Breeze are superior because users ultimately control the main chain keys and the only thing blocking full custody is your ability to broadcast a channel-close transaction and get it mined.