447 sats \ 9 replies \ @steepdawn974 11 Sep 2022 \ on: Standard Sats against Fedimint Hype bitcoin
The biggest flaw in the Fedimint narrative is that there will be all these community fedi mints. The underlying assumption is that users prefer a distributed, potentially anonymous federation over single centralized is just wishful thinking and has no bearning in reality.
Running a bitcoin core or an LNbits node for a few friends is one thing, but Fedis are taking actual custody over people's money. This is a completely different ball game. No one would just entrust their money to a bunch of Anons on the Internet who you might not get hold of if something goes wrong.
If I am forced to give up custody of my coins and entrust them to a third party, then I am much more likely to go with one professional player that knows what they are doing, instead of a "group of friends" who might have the best intentions but not the resources or skills to guarantee availability, security, disaster recovery, customer suport etc. etc.
Like, if you want a profesionally operated federation, why not use Liquid?
All that means that at the end of the day only professional, known player (most likely incorporated companies) can offer viable Fedimints. And there goes your decentralization. They'll be very easy targets for regulators as they'll have a phone number and the people behin them; they are probably required to get money services businesses or even banking license and of course fall under KYC/AML rules.
Congratulations, we have built banks 2.0.
So, I doubt we will see any of the benefits that the Fedimint hype trainer folks promise us.
I am truly confused how that sort of custody is suddenly OK, while Hosted Lightning Channels on the other side receives all the "oh but it's custodial" FUD.
Of course, HCs have trade offs and they are well documented, but they offer very decent amount of privacy, are proven and available today, and are natively on the Lightning network and not some extra software stack on top
The biggest flaw in the Fedimint narrative is that there will be all these community fedi mints. The underlying assumption is that users prefer a distributed, potentially anonymous federation over single centralized is just wishful thinking and has no bearning in reality.
Why would anyone NOT prefer a federated solution over a custodial one?
This whole critique paints Fedimints in most dis-favorable light, yet tries to compare it with a solution that is effectively worse on every single metric (HC), justifying it by Fedimints not being "perfect".
Yes Federations are not some golden bullet, and federated custody is a compromise comparing to a zero-custody solution, but in exchange the users gain: entirely anonymous and private off-chain solution, great scalability, great on chain anonymity set, possibility of amazing UX, and possibility of integrating of all sorts extra technologies and solutions.
I have nothing against HCs, and I find them useful and promising, and wish well open Standard Sats in all applications where they work well, but I think in this post and in some comments, not only authors have very narrow vision of possible use cases, but also commit serious logical errors.
I am one of Fedimint devs. I see plenty of possibilities for them, so I quit my previous job to work on them full time in August, and I honestly think they are the most promising and needed Bitcoin project right now. I think we have great documentation that is really honest about the tradeoffs. If you still have any questions, feel free to hit me up on Twitter (@dpc_pw) or join the Telegram group and talk it out. We're very busy building the project, so please be patient but we love to engage and educate with interested people.
reply
This is an important point: while in general custodial solutions are seen as usable for small amounts only, in the case of Fedimint they are being advertised as the main and only method people will have to use and hold Bitcoin, and then the narrative kinda breaks.
reply
I see the model as trying to make something like Bitcoin Beach be turnkey, and with better privacy and less custodial risk. Less “get together with some friends and run a bank”, more “a bank for your town/community”
reply
However the Bitcoin Beach and Bitcoin Lake folks do actually like the fact that users of the system are known and have usernames, which is incompatible with the perfect privacy of chaumian ecash.
reply
I wonder if they'd still pick that if they had the option of a Chaumian ecash system?
It seems like the place where you really want attribution is on the system operators. In the "community bank" model, you want to be able to go find the operators if they collude and abscond with the bank's money. It's not obvious to me that you need that kind of attribution for users/customers of the bank.
reply
I think Fedimint is good because they're making complicated federation code available publicly to be run by anyone, but I am skeptical that the "perfect privacy" is actually a thing people want. Lightning privacy such as provided by hosted channels is enough, specially because the sheer majority of transactions of Fedimint users will be through Lightning to and from external entities, not inside the federation itself.
reply
Like, if you want a profesionally operated federation, why not use Liquid?
That is exactly what I want but with 2s instead of 2m delays and more privacy. I think it would be awesome if the Liquid guys would run a Fedimint too.
They'll be very easy targets for regulators
That's why Liquid is "politically diversified".
reply
It is 1 minute delay in Liquid.
reply
But finality in achieved in 2 blocks.
reply