"So does Phoenix LSP. If they go down users can’t make payments." Sure, if you are using Phoenix Wallet, and their infrastructure goes down, you can't make payments. Same for lots of other providers, I agree here.
"They also know where you send to and when you receive." This is horrible misinformation, where did you get this idea? Please check this simple explainer on privacy in Lightning (generously authored by myself): https://docs.megalithic.me/the-lightning-network/how-private#lightning-is-very-private
Phoenix does NOT know who you are sending to. At best, they have a node id (public key) of the final hop --but that really provides NO provable data about where the payment goes to -- Phoenix has NO IDEA where you are sending to.
Not only that - when you RECEIVE a payment, Phoenix has NO IDEA where that payment has come from.
The amount of misinformation floating around about this is just horrible.. to some extent I blame Roy @ nostr:npub1jugar2agq6369p0l86razavs9shj2p6pscxecevs8j94ap37hkqsjlfc28 -- who previously was a proponent of Lightning and now goes around making totally dangerous claims about how proprietary APIs like Breez or LightSpark could somehow be used instead of the Lightning network.
Regarding "Any LSP that does the route finding for a user knows the destination of the payment." -- This isn't how it works. Lightning is "source-routed". The PAYING node constructs the route, not the LSP.
And even if you use a proprietary service like Phoenix, again, that service only know the public key of the last hop.
Compare this to the dire situation of one Blitz user sending a payment to another Blitz user, using LightSpark's token and API..... LightSpark sees the entire transaction, the transaction never touches Bitcoin, LightSpark sees BOTH the ENTRY and the EXIT IP address, entirely within their own token ecosystem.
Fucking terrifying.
At any time, David Marcus could export a spreadsheet of Blitz users, their IP addresses, the IP addresses of other Blitz users they made payments to... it's like Chainanalysis but 1000x easier for spying!
