Is Lightning a Big Fat Target for the State? \ stacker news ~bitcoin

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Is Lightning a Big Fat Target for the State?

3578 sats \ 39 comments \ @kepford 27 Mar bitcoin

Is it more likely for Lighting to be attacked by states vs on-chain?

Here's what I am thinking about.

Lightning is far more private
Many services including on/off ramps, miners, and merchants are using it or planning to

I think it would be pretty much impossible for a state to stop peer to peer lightning transactions but I could see them going after Strike, Brains, and any business using Lightning due to the privacy implications.

Still thinking about this. I'm sure plenty of you have already thought this through with your game theory hats on.

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164 sats \ 5 replies \ @tomlaies 27 Mar

No, you can just hide a lightning node behind tor or a vpn or actually really going abroad. Exactly the same as onchain. Bitcoin is resilient against that.

22 sats \ 4 replies \ @kepford OP 27 Mar

I think you are missing my point. I'm aware of how Lightning works.

I think it would be pretty much impossible for a state to stop peer to peer lightning transactions but I could see them going after Strike, Brains, and any business using Lightning due to the privacy implications.

What I'm saying is the Lightning protocol something states will be tempted to regulate/ban? There are plenty of things individuals can do and fly under the radar but a business which operates in the state system can't.

Strike for example is required to demand KYC info. Some businesses will not sell their good to people in certain jurisdictions due to laws/rules. This is the kind of attack I'm talking about.

61 sats \ 2 replies \ @Undisciplined 27 Mar

I think it's likely something like that could happen.

My first thought, though, is that if a business can find suppliers who accept lightning payments, they could essentially have a bitcoin side of the business and not mix that accounting with the fiat side.

41 sats \ 1 reply \ @kepford OP 27 Mar

Yeah, I can think of workarounds too. Not trying to spread FUD.

90 sats \ 0 replies \ @Undisciplined 27 Mar

It's a worthwhile point to bring up. Many businesses wouldn't be able to do that, plus they wouldn't want to advertise that they accept lightning payments. I think it would be a serious friction.

0 sats \ 0 replies \ @Line2Wire 28 Mar freebie

This is something we knew was coming, but it's not specific in any way to Lightning. Any centralised structure serving as a ramp exchanging Bitcoin and fiat will come to a series of realisations:

Bitcoin, where pseudonymity is key, is not compatible with the legacy financial system, where KYC is deemed necessary.
Bitcoin, which offers a public, transparent ledger of all transactions (of which Lightning does not have the liquidity to compete with at this time), is not compatible with the PII-linking that fiat demands.
Centralised exchanges are the targets themselves, ripe for regulatory pressure and capture. Lightning is not. Lightning is a protocol. A protocol is language. Language cannot be viably regulated.
Centralised exchanges which contain PII, rely on centralised, often third-party security, many times out-sourced.

Their business cannot be sustained under the centralised model that the fiat system nurtured, while attempting to provide services to individuals invested in a unique decentralised counterpart of said system.

Think about what happens when that PII is linked to BTC funds in a world where BTC continues to go up and fiat which the majority of people hold goes down, along with an ever-decreasing level of trust in government and an ever-increasing level of stress.

These, and others realisations, in my opinion, will amount to a series of incidents, of which we've already begun to see in the vein of CEX rugpulls over the years, regulatory burdening which Coinbase is beginning to feel, along with Chainalysis and LinkingLion, and now we begin to see with countries making it known they definitely plan to have their hand over any centralised exchange offering a custodial wallet service.

I don't think it's all doom and gloom though, but I do believe there's a harsher fighting period ahead as we disjoin money from state, and as this happens and the general economy goes downhill in fiatland, a lot of people who bought into the KYC nonsense may very well become targets themselves - All it takes is a data breach, internal or external, against that SQL DB that so securely holds all the info mentioned above, and a $5 wrench.

I think BTC will win out, but there will be a period where fiat gasps for air - And that's the most concerning period of all.

In summary, yes, any centralised exchange and its users specifically will become targets, be it in the eyes of government, or in the eyes of thieves and crackers - At least for a period.

The big mistake was creating Bitcoin businesses BASED ON fiat rules. Businesses that are fully bitcoin-only will outlive and outperform.

76 sats \ 3 replies \ @grayruby 27 Mar

One would imagine they could go after large channel providers with money transmitter laws.

32 sats \ 1 reply \ @kepford OP 27 Mar

Exactly, that's what I'm thinking.

96 sats \ 0 replies \ @ZezzebbulTheMysterious 28 Mar

I’m so glad Tor was built into the LN spec!

20 sats \ 0 replies \ @notgeld 28 Mar

Nothing really changes if it happens. Not talking about that, there may exist an entirely separate network of Tor nodes.

193 sats \ 1 reply \ @ambosstech 28 Mar

The concern you state here is a major concern for businesses and the cause for them to not join the lightning network. We want the entire world to move to better financial rails with lightning, but fintechs won't cross the Rubicon if it risks compliance (where they spend their money). Our initial release of Reflex contains the components necessary for lightning businesses to manage their risk exposure when building on Lightning while preserving privacy. It's not a one size fits all approach and allows for each business in their respective jurisdictions to set and operationalize their policies in the absence of clear rules. Reflex will be a much bigger product of which risk management is a small component, but it will unlock access to the world of finance outside of lightning.

30 sats \ 0 replies \ @BlokchainB 28 Mar

After listening to how visa was formed and now this landmark case they lost merchants are chomping at the bit to save money on swipe fees. Bitcoin lightning payments are an obvious no brainer. It is a way better network than visa.

But I honestly think merchants don’t adopt it yet because

Bitcoin still isn’t treated like cash
Bitcoiners really underestimate the Amount of fraud these merchants have to deal with. Who wants to be wiped out in a lawsuit because they accepted bitcoin payments and found liable some spoof.

44 sats \ 0 replies \ @OT 28 Mar

Might be a good thing as it will likely build out a better private channel network.

33 sats \ 2 replies \ @notgeld 27 Mar

Fat? Did you see WBTC? It enables whole DeFi sector.

The situation is more nuanced though and LN has greater network effect.

31 sats \ 1 reply \ @kepford OP 27 Mar freebie

Yeah, its not a Fat target yet. That's fair. I'm assuming adoption by business continues. Honestly, this is a big reason why business adoption is very important. The more that adopt it, the more customers that are doing something the less likely it is for it to be directly attacked.

Many don't know that home schooling your kids used to be illegal in the US. But, because so many were doing it the state has lightened up about it in most states. This is why it is so important to use the tools, respect your privacy, use encrypted tools, use OSS. There is strength in numbers.

0 sats \ 0 replies \ @notgeld 28 Mar

I don't see much adoption yet. My data come from Southeast Asia, though, and is not relevant to Europe, for example.

Albeit in Europe, things aren't going well, unfortunately.

0 sats \ 0 replies \ @justin_shocknet 28 Mar

It absolutely is, that's why it faces constant FUD, and also why projects that undermine it miraculously receive hundreds of millions in funding while real Bitcoin projects face a hard road

All the ECash hype you see is astrotuf designed to install large mints that centralize Lightning flows and integrate non-bolt11 specs as a forking mechanism

The parade of fake L2's is part of it, "Layer 2" become the scammer nomenclature du jour just as "Blockchain" once was.

It's all fog of war tactics, on a digital battlefield, where the weapons are narratives.

0 sats \ 0 replies \ @om 28 Mar

Phoenix and Breeze are likely to get designated as CASPs by EU even if they're non-custodial. They want to prevent people from paying with Bitcoin before CBDC arrives.

0 sats \ 1 reply \ @dhikrullah 28 Mar

The attack can only be perpetrated from within the Bitcoin network itself, bad actors looking for hefty rewards from the state.

10 sats \ 0 replies \ @kepford OP 28 Mar

Nope, the state can go after businesses. The question really is will they stand up for their customers.

0 sats \ 6 replies \ @Coinsreporter 28 Mar

KYC is a state sponsored attack? May be not when they need to ensure AML and ATF for security of their people. I don't see objections worthy of it but for governments, it's impossible to stop p2p, they are just going behind everything they can.

112 sats \ 0 replies \ @kepford OP 28 Mar

KYC is a state attack on sovereignty, privacy, and personal security. For the record.

34 sats \ 0 replies \ @02bcd3eeb0 28 Mar

"security of their people" - that's the most disgusting regurgitation of state propaganda I've seen on here. KYC/AML is about surveillance & control.

0 sats \ 3 replies \ @kepford OP 28 Mar

Are you saying you buy the AML crap is for our good?

0 sats \ 2 replies \ @Coinsreporter 28 Mar freebie

No, that's needed to combat terrorism funding. There used to be a lot of terrorist activities in my country until AML/ATF rules weren't strictly in place.

They aren't good for decentralization of money dream though.

0 sats \ 5 replies \ @joda 28 Mar

It's just not worth the effort.

Individuals can't use it to cash out without paying taxes.

Merchant adoption is approximately zero, as is consumer demand for merchant adoption.

Miners getting paid via lightning? Who cares?

Gov could give the MSM some talking points about it being used for money laundering, just to ensure people don't get interested.

In other words, "still early"

0 sats \ 0 replies \ @nikotsla 28 Mar

Merchant adoption

This is the key at this moment in time.

0 sats \ 2 replies \ @kepford OP 28 Mar

Yes, it is early. Let's say Lightning usage goes up 100x. I'm just thinking about how it compares to on chain with privacy and I could see regulators seeing it as a threat.

10 sats \ 1 reply \ @joda 28 Mar

This cycle there will be all the more centralized later 2s to deal with: Liquid, roll-ups, state chains, etc. Probably easier to target a sequencer than tens of thousands of nodes.

0 sats \ 0 replies \ @kepford OP 28 Mar

Again, not talking about nodes. Talking about businesses.

0 sats \ 0 replies \ @versieboer 28 Mar freebie

Individuals can't use it to cash out without paying taxes.

Whoever wants to cash out their bitcoin is not doing it right. Never sell your bitcoin. If you want to spend it, you can do that using Lightning. Merchants that accept it as payment can decide if they want to hold the sats, or convert it back to fiat and deal with the taxes themselves when they do that.

43 sats \ 0 replies \ @Darthcoin_Cash 28 Mar outlawed

stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.

0 sats \ 4 replies \ @shyfire 28 Mar

deleted by author

33 sats \ 0 replies \ @ambosstech 28 Mar

Learn the tech and see how they operate. Payment privacy on lightning is definitely not compromised. Further, lightning is the most surveillance resistant payment technology in existence that preserves audit-ability.

E-cash and lightning protocol improvements are further nails in the coffin of lightning surveillance.