LynAlden on Nostr: One problem that people face is that they box themselves into narrative corners and ...
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.
https://bitcointalk.org/index.php?topic=2500.msg34211#msg34211
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.
"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.
https://bitcointalk.org/index.php?topic=2500.msg34211#msg34211
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.