Quote from: NotATether on Today at 03:35:23 AM

Quote from: n0nce on October 10, 2022, 08:07:39 PM

I think that BrotherCreamy would categorize a sidechain such as Liquid, as a 'Bitcoin bank', too. The distinction being the requirement of trust and ultimately who is in control of the funds.

In my opinion (and hopes), banks (or any other similar service) will not be the main way people use Bitcoin. Instead, upper layers should trustlessly provide users with all the required services, whilst ensuring payments can be settled without 'mass exodus on the Blockchain' or anything similar that brings L1 to its knees. Wink

Off-chain networks are not banks. A bank is something with whom you're at to give you your money. You can withdraw your funds all by yourself on LN. The fact that funds are stored in multisignatures doesn't make it centralized, but rather the opposite.

Exactly! Lightning is therefore not a 'Bitcoin bank', but the Liquid sidechain could be categorized as such, as there is a 'federation' that you need to trust.

Quote from: tromp on October 05, 2022, 07:01:27 AM

Quote from: n0nce on October 04, 2022, 11:50:30 PM

I've yet to study more about sidechains such as Liquid, so I can't say whether those off-chain solutions are trustless, but I'm relatively confident they are; otherwise nobody would use them.

You definitely need to trust the federation that controls peg-outs [1]. From the whitepaper [2]:

> As a sidechain, Liquid supports transfers of bitcoins into and out of the system by means
of a cryptographic peg. Bitcoin pegged into Liquid is referred to as Liquid Bitcoin or LBTC. The forward progress of the Liquid ledger and custody of the underlying bitcoin are
controlled by a federation, and remain secure as long as over 2/3 of its members are honest.

> This option requires no changes to Bitcoin, since the peg is enforced by means of ordinary
multisignature transactions. It does require a consortium to exist, and for participants of
the system to trust that at least 2/3 of the federation is acting honestly.

[1] https://help.blockstream.com/hc/en-us/articles/900001551783-What-is-a-Liquid-peg-out-

[2] https://blockstream.com/assets/downloads/pdf/liquid-whitepaper.pdf