984 sats \ 22 replies \ @calle 21 Jan \ on: Fedimint is Self-Custodial ecash
Great post. I disagree with one very central premise though:
I do think so. Custody is when one or more parties have control of your funds, and you don't. It doesn't matter if it's a single sig, or a multisig. Not your keys, not your coins.
Please let's not start saying that ecash is self-custodial. It is not.
You hold the ecash, we get it. The ecash part is non-custodial, ok. It's been thought of that way since the 80s. It's fine to think that way if you're literally the central bank and the ecash you issue IS THE MONEY AND NOT A REPRESENTATION OF AN UNDERLYING ASSET – only a central bank can do this. Repeat with me: Only a central bank can do this.
Ecash today is a representative of an underlying asset. In Cashu and Fedimint that's BTC. You give up control over that underlying asset. You measure everything in terms of that underlying asset. It is all about the underlying asset. You have NO GUARANTEE WHATSOEVER TO REDEEM THAT UNDERLYING ASSET BACK – ecash systems the way we are building them today ARE CUSTODIAL – please don't make things more complicated than they need to be. Please do not manipulate language and especially, do not confuse noobs who are still learning. I almost want to say that a framing like this irresponsible.
What are you going to say to the noob who wants their Bitcoin back but the federation broke down during an update and the database got completely rekt? How is that non-custidal or self-custodial or whatever the opposite of custodial is.
With all due respect, this is a bad take.
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Hard disagree. Recent excitement is coming from highly technical builders, and a wave of early adopters.
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I'm not disputing that, I'm just saying it feels like it. The wave of early adopters (podcast hosts for example) are mostly non-technical folks, they do not understand what it is they're pushing out and do not know what questions to ask.
Ask yourself - why are these builders pushing something that is pretty much the equivalent of a Wallet of Satoshi with some bells and whistles?
There’s a difference between self custodial and non custodial. Self custodial is only I can spend my funds, non custodial being no one else can spend my funds.
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How is "only X can spend" different from "every non-X cannot spend"?
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A 2of3 multi sig would be an example. No one has self custody but it’s still non-custodial
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The difference is the case where no one can spend at all :)
(Not disagreeing, I also don't really get what is Ben's point there.)
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I'm also saying there's no custody of a currency that you have given up ownership of.
Users custody ecash, not bitcoin. It's not a Bitcoin custody solution.
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I'm not sure I understand what you're saying but it seems very clear to me:
- you give up custody of your bitcoin. it's custodial.
- you hold the ecash yourself. it's noncustodial.
it's custodial bitcoin and noncustodial ecash.
I thought we were talking about Bitcoin custody: it's custodial Bitcoin.
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I am but a young girl unschooled in the ways of war, but...
Isn't it that you sold your btc for the mint's ecash and when you go back on chain you have to buy btc with those ecash tokens?
If I use bitcoin to buy dollars from coinbase, I give them btc and they give me dollars. They aren't custodying my bitcoin for me until I ask for them back. Its their btc now.
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So there is a capital gains tax event incurred? (at least in jurisdictions where there is a tax event when selling/swapping an asset)
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That's a good question. Perhaps something the user has to worry about.
On the mint side, hard to argue having just one of the keys gives them a tax liability when they don't technically own it either.
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