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Phoenix and Wasabi exit US market amid self-custody wallet crackdown (cointelegraph.com)

submitted 6 months ago by [email protected] to c/[email protected]

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"Recent regulatory action against Consensys and Samourai has instilled fear among other crypto service providers operating in the United States."

Wasabi is the main competitor to Samourai's whirpool mixing service. The only one flying under the radar currently is Joinmarket.
Phoenix is the Lightning network wallet where users keep custody of their funds, but the channel management is outsourced to the company. The only remaining self custodial lightning wallet that remains is Breez.

While this news is deeply troubling, it might push further development to more sustainable trustless self-custodial solutions in the long term.

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[–] [email protected] 0 points 6 months ago (9 children)

Just use Monero. Bitcoin privacy is hard to accomplish, expensive, and easy to mess up.

[–] [email protected] 1 points 6 months ago (3 children)

Monero may be a good option for some individual users right now, but it isn't a long-term solution for bringing financial privacy to the masses. That pretty much has to be done through Bitcoin wallets with privacy features. Bitcoin is already criticized for not scaling well, but Monero is far worse. If I remember correctly, Monero transactions are roughly 4 times as large as Bitcoin transactions, and they don't have any way to do off-chain transactions the way Bitcoin can with Lightning.

[–] [email protected] 1 points 6 months ago (2 children)

How big is a Bitcoin transaction anyway? Because a Monero transaction is about one and a half to two kilobytes and we will soon be adding full-chain membership proofs which if I'm understanding correctly we'll bring it to about three kilobytes per transaction. Keep in mind we have dynamic block scaling so that the blocks will get larger as more transactions come in. It seems like lightning service providers may very well be considered money transmitters and therefore lightning would become even more centralized than it already is.

[–] [email protected] 1 points 6 months ago (1 children)

How big is a Bitcoin transaction anyway?

Bitcoin block 841,308 (most recent as I'm writing this) is 1,615,771 bytes and has 3,148 transactions, for an average transaction size of ~513 bytes.

Because a Monero transaction is about one and a half to two kilobytes

So yeah, about 3 to 4 times as large as an average Bitcoin transaction.

Keep in mind we have dynamic block scaling so that the blocks will get larger as more transactions come in.

That's not a scaling solution, though. Larger blocks provide throughput at the expense of decentralization, since fewer people will run full nodes as resource usage increases. Eventually it gets to the point where it becomes feasible for a government to track down and compromise all the remaining node operators.

It seems like lightning service providers may very well be considered money transmitters

Not sure how much this would matter. Lightning wallets don't care whether their channel partners are registered money transmitters, or just some rando operating through TOR or in a permissive jurisdiction. In the case of Samourai, taking down the backend rendered the wallet useless. Taking out a lightning node just temporarily inconveniences users that were connected to them.

[–] [email protected] 1 points 6 months ago

Storage space is expanding much faster than storage requirements. Bandwidth might be a bit of a bottleneck, but storage is definitely not the problem.This kind of stuff is not consumer-ready at this moment. But here's just some example of what is doable even today.

https://www.nature.com/articles/s41586-023-06980-y.

Even 1PB would store the current monero blockchain 5120 times.

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