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0 sats \ 11 replies \ @kr 3 Apr \ parent \ on: Coinbase Selects Lightspark for Lightning bitcoin
how could a lightning integration possibly mean “more ways to scam”?
Lightning is just a tool, can be used for good and for bad. Like Bitcoin. If a scam is run on Bitcoin, that doesn't make the scam less scammy.
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Come on kr you are intelligent. If they increase their usebase because of adding lightning, obviously the scam becomes bigger.
And it's not just suspected fractional reserve, Coinbase is a bad actor in general, DarthCoin already put you a list of bad things this company already did: #78930
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Coinbase is a bad actor yes, but if a bad actor no longer prevents access to Lightning, how can this be net bad?
I think you think they have some elaborate scheme planned but to me it looks more like they accepted that Lightning is here to stay. I think you think they are smarter than they really are. If Coinbase is doing fractional reserves, Lightning will make bank runs easier.
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You don't get it. Everytime there is high demand of bitcoin, like on FOMOs or during big dips, Coinbase stops operating. Recently it happened, but happens everytime those conditions met. The main reason a bank does that is because they don't have enough liquidity and they fear a bankrupcy, which means they are using fractional reserve. Why would you froze withdraws otherwise?
It doesn't matter if they use lightning or not, the amount of liquidity in lightning is always going to be minuscule in comparison with onchain, because ln is a payment system, not a thing to store big amounts of money. So lightning would not avoid bank runs.
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The main reason a bank does that is because they don't have enough liquidity and they fear a bankrupcy, which means they are using fractional reserve.
Is illiquid cold storage fractional reserve?
So lightning would not avoid bank runs.
That's not what I said. I said lightning makes it easier since faster and cheaper withdrawals brings them easier to the point where they have to stop withdrawals due to missing liquidity (insolvency). Imo, this is the definition of a bank run. So I didn't say lightning avoids bank runs, quite the opposite actually.
What would "avoids bank run" even mean? That they are not fractional reserve and everyone can simply withdraw everything?
If so, I think you did this in your head:
not fractional reserve => no bank runs
and then concluded the following
bank run => fractional reserve
But my point is that
bank run => liquidity issue
and that you're mixing insolvency and bankruptcy.
I think this goes back to my point above: does every liquidity issue point to fractional reserve? I don't think so. Just because one ATM runs out of money doesn't mean the bank is running a fractional reserve. They probably still do but ATMs running out of money aren't what you should be looking at.
However, "lightning makes bank runs easier" depends how many funds are in lightning vs onchain to begin with.
You don't get it.
Maybe I don't but I think the main issue was how Coinbase integrating lightning makes them even worse than they already are such that the positive effects like more users on lightning (the existing Coinbase userbase) and demand for lightning tech can be ignored. Which I definitely don't get.
You mentioned this here:
If they increase their usebase because of adding lightning, obviously the scam becomes bigger.
I agree. More users on Coinbase means the scam gets bigger. But were users on Coinbase waiting for lightning? Were people not joining Coinbase because they didn't have lightning?
Imo, that's not the case. Most people joined Coinbase because of their shitcoin marketing. So I don't think they are adding lightning because the users they target want it.
Out of interest: Would you prefer Coinbase to drop bitcoin? Would that be better for bitcoin?
I guess the answer also depends on what future we want for bitcoin.