* change wallet categories into wallet quadrant
The original categorization was not perfect. It was not ideal. It was sort of misleading. It sort of implies that a "Full Node & Wallet" is not a "Non-Custodial Wallet" because they are 2 different categories. It also states that a "Non-Custodial Wallet" uses "3rd-party node" for LN Node which is not the true definition.Things were getting mixed up here and we are not communicating a clear message.
The term "Custodial Wallet" is independent of which LN Node is used.
We should rethink this table and categorization.
I wrote an Issue about it #176 .
The Quadrant seems to be more useful and certainly more accurate.
Then I explained the terms "Lightweight" and "Node" because these terms were suddenly used, out of nowhere with no explanation.
* various improvements
- Following suggestions from @Roasbeef
- worked in his commentaries, ideas
- also added a bit more details
* added BIPs to Neutrino
Co-authored-by: Rene Pickhardt <rene@rene-pickhardt.de>
@ -36,20 +36,46 @@ If users decide to outsource some functionality to a third party they usually gi
Finally, those seeking simplicity and convenience, even at the expense of control and security, may choose a custodial Lightning wallet. This is the least technically challenging option, but it _undermines the trust model of cryptocurrency_ and should therefore be considered only as a stepping stone towards more control and self-reliance.
In <<lnwallet-categories>> we see the three broad categories of lightning wallets and the relative degree of control they offer to the user.
There are many ways wallets can be characterized or categorized.
The most important questions to ask about a specific wallet are:
- Does this Lightning wallet have a full LN Node or does it use a third-party LN Node?
- Does this Lightning wallet have a full Bitcoin Node or does it use a third-party Bitcoin Node? footnote:[If a Lightning wallet uses a third-party Lightning node, it is this third-party Lightning node who decides how to communicate with Bitcoin. Hence, using a third-party Lightning node implies that you as a wallet user also use a third-party Bitcoin node. Only in the other case, when the Lightning wallet uses its own Lightning node, does the choice "full Bitcoin-node" vs. "thrid-party Bitcoin node" exist. ]
- Does this Lightning wallet store its own keys under user control (self-custody) or are the keys held be a third-party custodian?
At the highest level of abstraction, question 1 and 3 are the most elementary ones.
From these two questions we can derive four possible categories.
We can place these four categories into a quadrant as seen in Table <<lnwallet-categories>>.
But remember that this is just one way of categorizing Lightning wallets.
| *Self-Custody* | Q1: High technical skill, least trust in 3rd parties, most permissionless | Q2: Below medium technical skills, below medium trust in 3rd parties, requires some permissions
| *Custodial* | Q3: Above medium technical skills, above medium trust in 3rd parties, requires some permissions | Q4: Low technical skills, high trust in 3rd parties, least permissionless
|===
Q3, quadrant 3, where a full LN node is used but the keys are held by a custodian is currently not common.
Future wallets from that quadrant would let a user worry about the operational aspects of their node, but then delegate the access to the keys to a third party which may use primarily cold storage.
Lightning wallets can be installed on a variety of devices, including laptops, servers, and mobile devices. To run a full Lightning node (one that participates in "gossip" and creates its own map of the network for path finding and routing) you will need to use a server or desktop computer, as mobile devices and laptops are usually not powerful enough in terms of capacity, processing, battery life, and connectivity.
The category "Third-party Ligntning Nodes" can again be subdivided into:
- Lightweight: means that the Lightning Node is operated by a third party and that the wallet obtains the required information through an API that connects wallet and third-party LN node.
- None: means that not only is the Lightning Node operated by a third party but most of the wallet is operated by a third party in the cloud such that the wallet does not even need to make calls on a Lightning node API.
These subcategories are used in Table <<lnwallet-examples>>.
Other terms that need explanation in Table <<lnwallet-examples>> in column "Bitcoin Node" are:
- Neutrino: Neutrino is a specific implementation of a protocol to get data from Bitcoin as outlined in BIP 157 and BIP 158. The Bitcoin Node is run by a third-party and accessed via "neutrino".
- Electrum: This means the wallet connects to an Electrum Server. The Bitcoin Node is run by a third-party and accessed via the "Electrum" protocol.
- Bitcoin Core: implementation of Bitcoin full node
- btcd: another implementation of Bitcoin full node
In <<lnwallet-examples>> we see some examples of currently popular Lightning node and wallet applications for different types of devices.
// TODO: Add a lot more wallet/node examples, confirm the details for correctness
@ -58,13 +84,13 @@ In <<lnwallet-examples>> we see some examples of currently popular Lightning nod
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