220 sats \ 9 replies \ @rblb 17 Dec 2023 \ parent \ on: Liquid is not a scaling solution bitcoin
Thanks for your response. After doing more research, I now have a better grasp of fedimint. I agree that if it's scaled properly, it could be a promising better alternative to liquid, for the scaling and privacy part at least, i believe it is inferior for transparency.
However, I have reservations about the part you mentioned as irrelevant. While it's true that they may not be able to see your balance, my understanding is that they can potentially hold your BTC (not the IOU) hostage. This means they could restrict your trading outside the mint, impose KYC requirements for specific trades, or even compel you to "upgrade" the mint protocol to something else with different rules, as long as all guardians agree.
I recognize that this is a risk in liquid as well. However, the current state of liquid is a decentralized federation not under a specific authority or jurisdiction of entities that have a lot to lose if they were to attempt something. This stands in stark contrast to the PR campaign for fedimint, which encourages small secluded communities. These communities are vulnerable to government overreach or manipulation.
Let imagine a future world in which there are a few "gold chip" fedimints that are widely trusted. What features would those fedimints probably have?
- public known actors
- known history and reputation
- some sort of legal repercussion possible for bad acts
Its hard to imagine how - in practice - those "gold chip" fedimints are going to be materially different than current Liquid federation setup.
To be clear: I'm not against fedimints, far from it...I welcome the development.
Lastly, I think the "magic" of Liquid is the blinded / confidential transactions. I think this renders 99% of potential "censorship" ability of the federation moot.
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Confidential transactions are cool but I'm not sure if there's the risk/incentive of amount-based transaction censorship with regards to each federation (Liquid or a gold chip Fedimint). Blinded amounts mainly seem to help with maintaining privacy among peers while still having an auditable circulating amount.
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I think the most important thing about fedimints is how they verify the supply. What's stopping one mint from inflating the supply?
I'm sure there's a good answer, I just haven't heard it yet.
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you're trusting them with custody, inflation should be the least of your worries
it boils down to if you trust them or you dont
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It really isn't the least of my worries. If I run a business, I don't want to be accumulating sats that were never there. Even if I gathered up the federation members and forced them to pay me out, in this scenario they may not even be able to.
All federations are another flavor of custodial so there's some things we just have to trust regardless of implementation. Whenever you talk about Fedimint, the trust tradeoffs are minimized as if transparency is inconsequential if they can all federations can rug you. For me I'd like to reduce the number of way I could be rugged and Fedimint seems to be able to do it through the additional mechanisms of opaque server side modules and inflation.
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If they can't verify
They can't be trusted
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I find it ironic that to use Bitcoin (a p2p electronic cash with no trusted third party and verifiably limited supply) we apparently have to use a trusted 3rd party that can arbitrarily inflate the supply because it can't be verified. Are you sure this is the way and not an attack?
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Are you sure this is the way and not an attack?
We need some soft forks, otherwise current self-custodial infrastructure will not scale
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It's a bit strange to keep coming across discussions about trusting everything when dealing with a system that was actually designed to replace trust based systems.
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