Below is a live excerpt of Marty’s Bent Issue #1264: “Don’t underestimate human creativity.” Sign up for the newsletter here.
Just what they say: Bear markets are for construction. Here’s a good example of that via the Sphinx team showing that their Lightning button is taking advantage Lightning Signator Validation architecture, separating keys from the Lightning node using a dedicated signing device. That’s what it looks like in the picture above: a small device that hangs out of a wall outlet.
“Why is this important?” Very good question, heck. Up until this point (actually earlier this year when Nodl came out with Nodlito project), running a Lightning Network node is a very complicated process since 100% uptime is required to facilitate payments. This uptime demand has prompted many enterprise-grade Lightning users to run their nodes in the cloud using server farms that can meet the uptime demand. This is a bit unsettling as it results in these Lightning buttons looking like sitting ducks. Since the practice up to this point has been to store the node and keys that grant users access to their Lightning channels in the same hardware, it would be trivial for an attacker to have an incentive to identify and confiscate them. Dedicated Lightning hardware collectors are located in server farms around the world, allowing attackers to effectively seize users’ bitcoins.
Import programs like Nodlito and Validating Lightning Signer, bringing a new way to market. Instead of housing keys and buttons in the same hardware, thus creating a central point of failure, these projects aim to equip users with the means to separate the two functions and give those users full control. control their bitcoins by ensuring that they can own their keys using specialized hardware that communicates with a node running in the cloud. Yes, the hardware running the node at a particular server farm can be turned off, but users will still have their keys and, therefore, access to their bitcoins.
Here’s how the Authentic Lightning Symbology architecture looks like:
If this type of Lightning node setup becomes popular, it could really open the door for more individuals to participate in building the network without having to worry about running their own node hardware. Obviously, the most sovereign way to participate in the Lightning Network is to run your own node, but the need for uptime to become a legitimate node operator prevents a large number of full participants. To me, this seems like a reasonable trade-off to get more people running their node software in the cloud. Yes, those cloud providers are centralized entities. However, if you can keep your keys, you can operate with the peace of mind that you always have access to your funds. And with more freedom-focused cloud providers like Nodl coming to market, the options available to Bitcoiners appear to be expanding.
Regardless, this type of architecture is highly recommended to see and it highlights something that I think many Bitcoin critics and many hardcore Bitcoin miners overlook: The creativity of the builders Building on Bitcoin, Lightning and any other part of the stack will continue to amaze us. There’s no one on the planet who can tell you what the stack will look like and what exactly it will deliver in the future. This is why I often find it silly when people take a snapshot of the entire day’s activity and try to predict future activity on the network. We don’t know what we don’t know. And what we don’t know will continue to drive the design landscape of what can and will be built on top of Bitcoin in the future. And that future seems very bright!