The Impact of Wallet of Satoshi’s Departure on Lightning Adoption
Key Points:
– Wallet of Satoshi’s decision to stop serving customers in the United States creates a void in the Lightning toolbox for American Bitcoiners.
– While custodial tools have their place, they come with risks of losing control over funds and compromising privacy.
– The solution lies in adding limited covenant to Bitcoin or creating more decentralized custodians.
– The idea of friends, families, and social circles running Lightning nodes and serving each other can be a cost-effective and practical alternative to centralized custodial arrangements.
– Running a full Lightning node is possible, even for non-developer power users, and node-in-a-box solutions make it more accessible.
– Wallet of Satoshi’s departure highlights the need for alternatives in the Lightning ecosystem, encouraging individuals like Uncle Jim to step in and fill the void.
The Evolution of Lightning’s Use as a Consumer Tool
The recent decision by Wallet of Satoshi to stop serving customers in the United States brings us to a crossroads in the evolution of Lightning’s use as a consumer tool. While it is trusted and custodial, Wallet of Satoshi has been invaluable in giving casual users a functional and reliable tool for small value payments made across the Lightning Network. This departure from serving the US will leave a massive hole in the Lightning toolbox for American Bitcoiners.
The Risks of Custodial Tools
Custodial tools are not ideal for larger sums of money, but they do have a place in the Bitcoin ecosystem. However, relying on custodial arrangements means surrendering control over funds and compromising privacy. Users must trust the custodian to act honestly, with little recourse if anything goes wrong. Additionally, increasing fees may force more individuals into custodial relationships due to economic pressure.
The Need for Limited Covenant in Bitcoin
The real solution to the custody problem lies in adding limited covenant to Bitcoin. Without such a feature, users are left with options that introduce trust in the form of entity co-signing transactions or federated custody of coins. However, these solutions come with their own drawbacks, including regulatory scrutiny and restrictions on users’ financial autonomy. Activating covenants on Bitcoin is the ideal long-term solution.
Exploring Alternative Custodial Arrangements
One alternative to centralized custodial arrangements is creating more decentralized custodians. PLEBNET demonstrated that non-technical Bitcoiners can successfully run full Lightning nodes, establishing a network of individuals who trust each other within groups of friends, families, and wider social circles. While this may not be as cost-effective as large custodial services, it offers practicality and increased privacy through available tools like LNBits, LNDHub, and Cashu.
The Power of Distributed Custodianship
Imagine thousands of individuals running small Lightning nodes and serving a dozen or so close friends and family members. This decentralized approach to custodianship is not practical for enforcement by authorities and offers a strong public perception of trust and resilience. It negates the risk of relying on a single entity and makes it harder for regulators to restrict individual Bitcoin users.
The Current State of Lightning
The reality is that Lightning is not yet ready for widespread self-custodial use unless users are willing to bear the higher economic costs and increased technical complexity. However, the situation is changing, and there are options available for dedicated power users who want to run their Lightning nodes. Node-in-a-box solutions like Citadel and Umbrel make it more accessible, and the support for LN Bits in their app stores enhances user experience.
In Conclusion
Wallet of Satoshi’s decision to stop serving the United States has created a void in the Lightning toolbox for American Bitcoiners. While custodial tools have their place, it is important to explore alternatives that preserve control and privacy. Uncle Jim and other individuals can play a crucial role in filling this void by embracing decentralized custodianship. By establishing networks of trust within communities, we can create a cost-effective and practical solution, powered by Lightning, that empowers users while maintaining the core principles of Bitcoin.
Our Hot Take
The departure of Wallet of Satoshi from the US market underscores the need for innovation and decentralized solutions in the Lightning ecosystem. While custodial tools have served a purpose, they come with inherent risks and limitations. It is time to explore new avenues, such as limited covenant integration in Bitcoin and distributed custodianship within trusted communities. By embracing these alternatives, we can unlock the full potential of Lightning as a consumer tool while preserving control, privacy, and financial autonomy.
