Date: Mon, 24 Dec 2018 11:47:38 +0000
To: Johnson Lau <jl2012@xbt.hk>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Cc: bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Safer NOINPUT with output tagging
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Good morning Johnson,

Indeed, manual operation is risky.

However the intent is to reduce the requirements on commodity wallets in or=
der to integrate them into a combined onchain and offchain UI.

A boutique protocol would reduce the number of existing onchain wallets tha=
t could be integrated in such UI.


If we could make walletless offchain software in such method, *any* existin=
g wallet with an API to programmatically send arbitrary amount to arbitrary=
 address can be integrated into such UI.
This could include hardware wallets.

Regards,
ZmnSCPxj


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=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90 Original Me=
ssage =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90
On Sunday, December 23, 2018 12:56 AM, Johnson Lau <jl2012@xbt.hk> wrote:

> > On 22 Dec 2018, at 10:25 PM, ZmnSCPxj ZmnSCPxj@protonmail.com wrote:
> > Good morning Johnson,
> >
> > > Generally speaking, I think walletless protocol is needed only when y=
ou want to rely a third party to open a offchain smart contract. It could b=
e coinswap, eltoo, or anything similar.
> >
> > I think a third party would be pointless in general, but then I am stro=
ngly against custodiality.
> > The idea is that you have some kind of hardware wallet or similar "some=
what cold" storage that you control yourself, and crate channels for your h=
ot offchain Lightning wallet, without adding more transactions from your so=
mewhat-cold storage to your hot offchain Lightning wallet on the blockchain=
.
> > Then you could feed a set of addresses to the hot offchain wallet (addr=
esses your somewhat-cold storage controls) so that when channels are closed=
, the funds go to your somwhat-cold storage.
> > I also doubt that any custodial service would want to mess around with =
deducting funds from what the user input as the desired payment. I have not=
 seen a custodial service that does so (this is not a scientific study; I r=
arely use custodial services); custodial services will deduct more from you=
r balance than what you send, but will not modify what you send, and will p=
revent you from sending more than your balance minus the fees they charge f=
or sending onchain.
> > Even today, custodial services deducting from your sent value (rather t=
han the balance remaining after you send) would be problematic when interac=
ting with merchants (or their payment processors) accepting onchain payment=
s; the merchant would refuse to service a lower value than what it charges =
and it may be very technically difficult to recover such funds from the mer=
chant.
> > I expect such a custodial service would quickly lose users, but the wor=
ld surprises me often.
> > Regards,
> > ZmnSCPxj
>
> If the users are expected to manually operate a hardware wallet to fund t=
he channel, they might do stupid things like using 2 wallets to make 2 txs,=
 thinking that they could combine the values this way; or =E2=80=9Crefillin=
g=E2=80=9D the offchain wallet with the address, as you suggested. While I =
appreciate the goal to separate the coin-selecting wallet with the offchain=
 wallet, I am not sure if we should rely on users to do critical steps like=
 entering the right value or not reusing the address. Especially, the setup=
 address should be hidden from user=E2=80=99s view, so only a very few =
=E2=80=9Cintelligent advanced users" could try to refill the channel.
>
> If we don=E2=80=99t rely on the user as the bridge between the hardware w=
allet and the offchain wallet, we need a communication protocol between the=
m. With such protocol, there is no need to spend the setup TXO with NOINPUT=
.