tank on Nostr: I’ve been giving this a lot of thought after the Lightning Summit in Tuscanny. I ...

I’ve been giving this a lot of thought after the Lightning Summit in Tuscanny. I understand the concern. But stablecoins on Lightning and (the attempt) to regulate LSPs are both inevitable given massive incentives. These are also not things we can control. I think it’s more helpful to focus on things we can control.

First of all we can all learn to run open source code. Regulators can capture fiat rails easily because banks ultimately require access to a central clearing house. But anyone can spin up a lightning node, a LSP or a Fedimint. Lightning is a permissionless system after all.

Secondly we can focus on driving broad adoption of BOLT12 to improve receiver privacy. That way the sender does not know if they’re paying a recipient running a self-custody wallet, a Fedimint, or some random raspi on tor. BOLT12 is also an essential building block to enabling async payments for offline receive on self-custody mobile wallets. This should further reduce reliance on custodial Lightning solutions and centralized points of failure.

quoting note10lk…nf3t

As much as I think this is a useful development for a lot of people, especially in the developing world - it’s also a huge banner for regulators that says “CHECK HOW OBVIOUSLY MONEY TRANSMITTING WE ARE!”

If Lightning is left to only bitcoin, I think it can be more easily argued that it is separate and unique in construction and should also be in the regulatory framework. But if it’s being used to move dollars around, I think we lose a massive edge in maintaining that perception. All they will see is a dollar payment network where they cannot see into all of the accounts, can’t KYC every user, and can’t freeze the payments. And they will do everything they can to gain that level of control, and far worse likely, if they have such a clear target. note1c7y…3yc7