One problem that people face is that they box themselves into narrative corners and echo chambers.
"Not your keys not your coins" is a good one-sentence explainer to tell people to be careful about custodians, especially in such a nascent industry. It's powerful and memorable. Couldn't be said better.
But then some people take that to mean nobody should ever use any custodial service under any circumstances ever. You got $200 in a custodial Lightning app because it's faster and easier than alternatives? You've failed the purity test. You're in a developing country and want to save $100 worth of bitcoin? Better do it on-chain, otherwise it's not yours!
But then some of the same people resist a block size increase to keep the network decentralized (a good thing, imo) and also say that bitcoin will fix the world (I think it can).
But while all reasonable statements on their own, the issue is that statements 1, 2, and 3 don't add up when taken to their extreme. It has been written about since the time of Nakamoto and Finney on Bitcoin Talk forums that Bitcoin would need to scale in layers.
So any statement about "Not your keys not your coins" has to be paired with an alternative solution, or a spectrum of alternatives. What if someone can't fit into the one of the only tens of millions of on-chain transactions per month? What if $35 fees is high for the $200 in bitcoin they want to save?
Is holding your bitcoin on an 11-of-15 multisig (Liquid) okay, in exchange for lower fees, faster block times, better privacy, and some additional features? Depending on the amount, I would say yes. It has trade-offs, though, which have to be made clear.
What about a Chaumian mint? What if an app lets a community in South Africa set up a 5-of-9 multisig run by well-known people in the community who would face consequences if they break trust? And the same app can let a smaller community in Guatemala set up a 4-of-7 multisig? And a bigger multi-country 6-of-11 multisig can be set up as well? It's private, interacts with Lightning as seamlessly as Wallet of Satoshi, and can make in-person payments even when the internet is out briefly. Plus, it can be customized via open source add-on modules by the community running the specific mint so that it can also store private data for users, monitor reserves, monitor health of the multisig keys, run applications like Chat GPT payable in bitcoin per usage, run private DMs and group chats, run apps that show you local merchants that accept bitcoin, etc. And what if a user could, within the same app, seamlessly spread their funds out among a handful of different mints that they know pretty well to avoid having all of their eggs in one basket, and then pull into self-custody when above a certain amount?
Maybe there will be more softforks in the future. More flexible scripting to allow more share-ability of UTXOs, for example. But those require consensus, and they tend to come with some trade-offs or code risks, and so they take time.
Bitcoin is an engineering marvel. But it's not magic. It has limitations, and it has a spectrum of solutions for those limitations at any given time. The best solutions solve multiple problems at once: they add scalability, they add speed, they reduce fees, they add privacy, and they add flexibility/programmability all at once, while still being more distributed than trusting some centralized KYC entity.
Bitcoin is peer-to-peer open source money. But it's not infinitely scalable on the base chain. If it were greatly scaled up on the base chain to fit everyone, then only institutions would be able to run nodes and it would be greatly centralized and thus useless. So the solution, known from the start of the Bitcoin Talk forums, is to build additional peer-to-peer open source layers on top of it, allowing for a range of transaction sizes, a range of speeds, a range of privacy, and a range of programmability, all to serve different users' needs, and without compromising the decentralization and security of the base chain. That's the type of statement that needs to be provided along with "not your keys not your coins" for the full context to make sense.
Replies (34)
You've hit the nail on the head. "Not your keys, not your coins" is a principle that serves as a cautionary reminder about the importance of self-custody in crypto; it emphasizes having control over one's own financial sovereignty. But like all principles, it’s important to understand its nuances rather than treating it as an absolute.
Custodial services can indeed provide convenience and accessibility, especially for new users or those with smaller amounts they're not ready to secure themselves. It’s about balancing risk and understanding trade-offs.
Scaling Bitcoin while maintaining decentralization is complex – we always knew that'd be a challenge from day one. Layered solutions like Lightning Network and sidechains like Liquid are part of this evolving ecosystem addressing scalability without burdening the main chain.
Multi-signature setups you mentioned are great examples of how communities can harness Bitcoin's flexibility for their needs while still retaining an element of peer-to-peer trust minimization.
Bitcoin isn't magic; it's tech with limitations which requires constant innovation to navigate its constraints while preserving its core values. That spectrum you talk about? It’s where practicality meets principle - finding ways to use Bitcoin effectively without losing sight of what makes it revolutionary in the first place: decentralization, security, and user sovereignty.
So yeah, context matters big time when preaching "not your keys not your coins". We gotta help people understand there's more depth to this than just a catchphrase – there's real engineering challenges and solutions being developed every day by brilliant minds across the globe.
Bingo
Not yours keys, Not yours coins. But...
View quoted note →Lyn, she is not the cool headedness we deserve but she is the cool headedness we need.
Incredibly well said @Lyn Alden
View quoted note →Completely agree. People will need to accept bitcoin on chain, lightning and liquid bitcoin. Hoping this pain point will get people to make liquid easier to understand as well as folks developing more ecash alternatives.
These insights are supported by the simple fact that the layer one of bitcoin can process app. 150.000.000 transactions a year. So to get half of world population a address on L1 would take around 3 (in a word: three) decades...
Think about that for a second...
Fedimints are racist. The arguments and references to them for use in the developing world often assume an exotic behavior about these societies that is unsubstantiated. Yes...Fedimints and chaumian mints, as described by countless poverty porn pushers in the bitcoin space, are a type of colonialism. It's the digital equivalent of bringing democracy and womens rights to Afghanistan by America. The reality on the ground does not match the fiction in your head, and it kills more of the women than are saved.
The on the ground reality is 7 of 7 influential community leaders are just as likely to steal from the local people and get away with it through various means and social mechanism, as have "consequences" applied to them. All the quixotic arguments for pushing fuckmints and ecrap on the developing world, i have seen, come from people aware of the economic principals and game theory of Bitcoin, but who also simultaneously make the "other" an exception to them.
"Those other people over there" use money differently. "Those noble savages are closer to the land, more communal, more holistic" implies the wording. The reality is grannies and children hoarding small amounts by wrapping it in their clothing , or sewing it in beds, burrying it in the ground, anything they can do to keep it AWAY from others. You know... like bitcoin was once trying to do.
A type of ignorant colonialism, Fedimints and ecash, as presented don't even work in the developed world, yet will work for the "underdeveloped" for some reason, a reason always alluded to in unfounded social science based on some unique and exotic charachteristic of those societies.
The real life behavior, hoarding and limited sharing of physical CASH by community leaders assumes qualities of Bitcoin that are no longer even popularly sought. Privacy, fungibility, low transaction cost.
Families, tribes, groups, hoard cash FROM eachother and share limited amounts for specific reasons. This behavior can be replicated with Bitcoin using simple wallets, truer digital stand-ins than complicated multisigs and over engineered collateralized trust networks or custodial "banks", Lightning.
The developed world and its voice, having the majority of Bitcoin, now want to, in the style classic sociopathic narcisism, push a watered down and hyper controlled Bitcoin on the poor, while also passing it off as "Freedom" money.
These contradictions will not resolve in their favor.
My 5 sats: Positions should be sized to how secure custody you have. I have most of my savings in cold storage, but around $150 in self custodial lightning, and I'm considering having around $10 in Cashu for simpler zapping.
Generally where NYKNYC comes from is a well intentioned effort to steer people away from leaving significant money on exchanges. This is not an acceptable trade off IMO, many have been burned by doing this in the bear markets. And people coming into Bitcoin are used to interacting with finance through an institution and generally need to be educated not to do that.
- Translated from Spanish by Argos -
I quote:
"If it were greatly scaled up on the base chain to fit everyone, then only institutions would be able to run nodes and it would be greatly centralized and thus useless."
What if only the institutional ones end up being able to make transactions in layer one?
Changing banks by other pseudo-banks I don't think that's the solution.
Although the bitcoin network does not manage to climb to make it accessible to a majority of users, it will still have value features, such as limiting growth, provided that the appearance of EFTs and other products does not make it another "Gold II".
And yes, there may not be a physical or mathematical reality that allows this, but it would be desirable...
https://iris.to/note1pdjyqm9adrhjmru9lxyvxcuvy6ducm8c6xrpmamplqaersx4mvqswhas28
Just in one or two decades, brighter minds or some AI, get the circle square.
Base case against lightning as a scalability solution. Lightning is never non-custodial, But L-2 solutions are. Lightning requires liquidity on two nodes to create a channel that people using the service can transact on. Liquid seems to be a great solution for this but in that sense the creation of endless L2 side chains will create endless companies offering services. I guess ultimately it is a financial product and pulling clients onto your platform is not really that hard, But I consider this from a perspective where bitcoin is not just being used as a financial instrument as much as a transaction method in everyday social environments. We have seen the split between whales and “full coiners”. It hit is still realistic for people to recognize the bitcoin value proposition and buy a whole coin. Plenty of millennials are learning about investment technology and will come into money before bitcoin has a low price of 250,000 dollars. At the point where people inherit money from boomer parents is not possible anymore is the point that everyday bitcoin transactions will be the way people acquire bitcoin primarily. Someday someone will go to work for 8 hours and come home with 100 sats. L2 solutions seem more like ways for people who own the company those people work at to transact inside their corporations, Or between corporations.
lol what are you even talking about. I want to use Chaumian mints as my daily wallet too. They’re awesome.
👏
Why Fedimints and ecash wouldn't work in developed countries?
Hording cash doesn't incurred a $40 fee when you use it. I have stopped transacting on-chain and exclusively uses Liquid and Lightning because fees are too high.
Hyper controlled Bitcoin is coming to developed countries too.
If someone has been watching lot of reels on mainstream social media and that person is suffering with short attention span then that person needs to start reading some of these Lyn posts.
She narrates her posts really good and you don't want her post to end.
This is spot on...!!!
#Bitcoin #BTC
View quoted note →Louder for the folks in the back!
View quoted note →If there is one good thing that comes out of another goddamn blockspace shitshow, it's that we have to acknowledge that Big Blockers lost hard, and the roadmap ever since then has been towards off-chain layers. If you can't acknowledge that, you're welcome to stay, but you're gonna have a bad time.
View quoted note →GN
Custodial.
Custodial absolutely works in developed countries. The higher the on-chain, the more people will use custodial solutions.
In my opinion, big blocks would increase the Bitcoin blockchain size in our self-custodied hard drives.
Zen Lyn once again! Thank you!
@Lyn Alden
Yeah, i'm saying this is not a good thing. One of my points in the preceeding long form comment that was somehow not understood by Lyn and others, is that the plan for scaling and onboarding the third world are mostly custodial in some shape.
Fedimints, Ecash/chaumian rely on custodial and extra complicated trust models. And LN breaks down for them at high fees.
This is a form of colonization.
This third party middle-manism is not how they use cash or store wealth now. Continuing to refer to them as an example of how mint type systems and multisig arangements can work, is just marketing, divorced from on the ground social realities.
Cubans use single owner wallets. In so much as they have to save their few dollars on Custodial WOS type apps is a failure on the part of the project. Contrary to Blockstreams go to excuses, they have no legal means to challenge a rugpull, or other abuse by the likes of liquid partners, for instance.
The whole point was trustless, non-custodial, pear to peer cash.
I understand your point. But unfortunately self-custody for everyone was never possible. From the start of the project, the scalability issue and the need for second layers was known.
Self-custody is only possible on-chain. Most people will have no choice but to use custodial services.
There is an economical reality. Someone with an annual income of $150 can self-custody, but they can't spend if they have to pay $10-$40 in fees.
I think that onboarding anyone, regardless of where they live, in a custodial manner is irresponsible, unless they want to buy thousands of dollars at once.
Imagine someone, how has been advise to self-custody, DCA $50 on-chain every week, then when they want to consolidate or spend, they have to pay $10-$40 in fee. That's bad advise.
This is a commonly held, but inaccurate assertion by nuBitcoiners. Realize first, that the pessimism towards scaling solutions you've just demonstrated in that comment has been implanted in you by a very carefully crafted marketing campaign, pushed by a very specific faction, who engineered a "solution" they intend to profit from.
Bitcoin is facing a type of Vendor lock-in, from deliberate ignorance like yours. The scene was very different at one time.
Since these self destructive factions are bent on being against Drivechains (a non custodial scaling solution), and that having read the word drivechain your brain is already scurrying with memes and objections carefully worded for dumb money, get on your knees and pray to whatever god you believe in that BitVm two-way pegs work out.
Please interpret any snark in this comment as contempt for the faction i just mentioned.
I'm not pessimistic about scaling solutions, I'm realistic.
They are a few scaling solutions being currently proposed and discussed. It will take a few years for those who pass the discussion and experimentation phases to actually be available to Bitcoiners.
The Fedimint protocol on the other hand exist and soon Bitcoiners will be able to use it. Fedimint is another custodial option we can chose from. Which I consider to be a good think.
Drivechains are not a noncustodial bitcoin solution. Bitcoin never leaves the Bitcoin network. Users deposit and withdraw their bitcoin in and out of a sidechain with a one-to-one conversion rate.
Drivechains help find new ways to grow the revenue from transaction fees by offering functionalities not available on Bitcoin.
You want zcash privacy without the exposure to the token valuation, you deposit your bitcoin on the zcash sidechain. Want to move back into bitcoin, redeem your sidechain tokens for bitcoin.
You want smart-contract functionalities without etherium, deposit bitcoin on your smat-contract sidechain of choice. When you are done exchange the sidechain tokens for bitcoin.
That's not even bitcoin custody. You exchanged bitcoin for sidechain tokens.
What do you mean by Bitcoin facing vendor lock-in?
>Drivechains are not a noncustodial bitcoin solution. Bitcoin never leaves the Bitcoin network. Users deposit and withdraw their bitcoin in and out of a sidechain with a one-to-one conversion rate.
Your understanding about how DC works is incomplete. I could waste my time and describe it here, or you could actually read how the escrow would work. No one has custody of the escrowed funds. More non-custodial and trustless than 15 multisig federation. Look specifically at whether the author expects users to be doing this depositing or not.
>That's not even bitcoin custody. You exchanged bitcoin for sidechain tokens.
Depending on the sidechain design, the exchange could be for tokens you have direct custody of just like a main chain bitcoin wallet. It's funny, you have a similar lack of horizontal thinking as Peter. Not an insult, nothing i say here is personal, just a critique of the same arguments rehashed since 2015 if not earlyer.
>What do you mean by Bitcoin facing vendor lock-in?
Any solution that is not LN, gets shot down. The approved solutions happen to depend on LN. When alternative solutions or improved protocols exist but a company is unable to support them because their investment in one single software that excludes them, the company is locked in to that exclusion. This can be life or death for a company or project and is one of the competitive advantages of opensource and libre. Sort of like how Microsoft has or had a monopoly on South Korean (among other states) computer infra.
Those who advertised these changes to Bitcoin including segwit, happen to be selling solutions they stand to profit from and are skill stacked to exploit, not because alternatives do not exist ready to go, or that it is inherently impossible for alternatives to exist.
The tautology goes like this:
This and not that, can be trusted.
You can trust me because i trust this and not that.
Circulars like this all eventually fail. The free market eventually breaks them. This is a fast and true law. The only question is if Bitcoin survives this inevitability. Not guranteed. Drivechains allows the freemarket to both break this circular, experiment, keep main layer bitcoin stable and benefit Bitcoins long term survival.
Bitcoin should be as popular and dependable as Usdt and Usdc by now. It should be as private as Monero and as experimental as Ethereum was. Instead we are dealing with layer 1 spam drama, again. And fucking block templates. Insert WHAT YEAR IS IT meme.
It only isn't because of the logic loop influencers and devs are stuck in that stand to lose through their ad-hoc bandaid solutions and inbred conference circuit. Their popularity will, as a consequence, not survive the next big crisis. It didn't have to be this way, but is historically predictable.
An example is RGB and tokens/assets. Zero adoption. LN ~5k bitcoins. It is that factions answer to ordinals and tokens (a fad already on its way out) they spent years of dev time to build a response to a fad, with no monetary signal to tell them if the effort was desired by the market. We, therefore are locked into their vision of bitcoin and lightning. Only to have ordinals cause a huge issue on main net ANYWAYS. DC could have avoided this misallocation of effort with immidiate monetary feedback for the idea in a sandboxed sidechain on a reduced blocksize attack surface. (To be fair Primal and related tech by Orlovsky has enough creativity to outlast even the next crisis or off chain innovation. Its that far ahead in antifragility and uniqueness.)
It's actually getting to the point of criminality if not outright sabotage/treason. For instance, I'm rather technical and security aware. Through poor ui and lack of op_vault and other solutions, have had funds stolen, just replicating regular user behavior as an experiment. I hold them and the toxics responsible for it and countless other thefts and privacy breeches.
Bitcoin and software is not easy, it's true. All the more reason not to out all our eggs in a single basket of orthodoxy.
good stuff here. do take the time to read and understand what she's saying
View quoted note →This has to be the longest 🍝 I've seen
I have no issues using custodial lightning/ecash apps for small amounts that aren't worth on chain fees.
Less than 1 Million-satoshi UTXO belongs to lighting/liquid. It's not a preference anymore.
View quoted note →
"Bitcoin is peer-to-peer open source money. But it's not infinitely scalable on the base chain. If it were greatly scaled up on the base chain to fit everyone, then only institutions would be able to run nodes and it would be greatly centralized and thus useless."
