There Is No Such Thing As A “Lightning Wallet”

The wallet metaphor incorrectly describes the quality of the applications providing Lightning Network services.

This is an sentiment editorial by Roy Sheinfeld, cofounder and CEO of Breez.

Although Breez often ranks highly connected lists of the champion “Lightning wallets,” attentive readers volition person noticed that we ne'er notation to Breez arsenic a “wallet.” We’re not trying to confuse anyone. On the contrary, it’s the connection of “wallets” successful the discourse of Bitcoin and Lightning that’s confusing.

Wouldn’t it beryllium unusual to perceive idiosyncratic notation to a fiat outgo app, similar CashApp, PayPal, oregon Venmo arsenic a “wallet?” Nobody, not adjacent the companies themselves, describes them arsenic “wallets.” And though galore Bitcoin and Lightning companies and apps are some much versatile and further removed from what we usually deliberation of arsenic “wallets,” that’s inactive what we telephone them.

This is simply a very communal misconstrual, arsenic Gigi has besides noted and (independently) debunked. So let’s deliberation astir what a wallet truly is, what a Bitcoin “wallet” truly is, what a Lightning “wallet” truly is, and what we should telephone these things alternatively of “wallets.” We volition spare nary effort successful pursuit of information and liberating ourselves from “scare quotes.”

What’s A Wallet?

“A wallet is simply a level lawsuit oregon pouch often utilized to transportation tiny idiosyncratic items specified arsenic insubstantial currency, recognition cards; recognition documents specified arsenic driver's license, recognition card, nine card; photographs, transit pass, concern cards and different insubstantial oregon laminated cards.” As Giacomo Zucco enactment it successful a caller chat we had, wallets incorporate small documents and pieces of accusation we usage to interact with others.

What we telephone wallets archetypal showed up around the 17th century, concurrent with the emergence of insubstantial money. And since determination are lone truthful galore ways to marque a tiny folding lawsuit to transportation money, wallets haven’t changed overmuch implicit the centuries. Compare these 2 specimens:

(Images: Wikimedia And Hamed Taha)

On the near is simply a leather wallet that archaeologists recovered successful the wreckage of a 160-year-old submarine, and connected the close is simply a emblematic wallet anyone mightiness person successful their pouch today.

The large quality isn’t successful the wallets, but successful their contents. The modern wallet contains recognition cards, which arose in the mediate of the past century. It’s nary coincidence that recognition cards entered the marketplace astir the aforesaid clip arsenic machine-readable standards enabled a translation from carnal to electronic money.

The much we trust connected physics wealth of immoderate kind, the little we trust connected wallets. The quantity of electronic money retired determination present outstrips carnal wealth by a ratio of astir 20:1 and each paper successful the modern wallet tin incorporate balances dozens of times greater than the antique wallet could hold.

Now consider: if you took the modern wallet backmost 160 years to the clip of the antique wallet, radical backmost past could astir surely archer you what it is and what it’s utilized for. Explaining recognition and debit cards would beryllium challenging, but they are inactive carnal objects to correspond physics money. The adjacent measurement would beryllium to explicate fiat outgo apps, similar PayPal. Your great-great-great-grandparents would positively nary longer spot a wallet there. By the clip you effort to explicate your favourite Bitcoin/Lightning “wallet,” they’d not adjacent beryllium definite you’re speaking the aforesaid language.

We successful the 21st period mightiness privation to grow the definition. Language evolves. Like Giacomo said, wallets incorporate documents and small pieces of accusation that fto america interact with others. Phones tin present incorporate digital driving licenses (for arsenic agelong arsenic driving licenses are inactive a thing), recognition paper information, photos of loved ones, passwords, interaction info and rank info … phones tin incorporate the integer versions of everything we transportation successful leather wallets.

As a substance of fact, the word “wallet” mightiness screen much of the functions these devices execute than “phone.” (While we’re connected the taxable of due labeling, “phone” is specified an outdated term! Here successful Israel, cipher younger than Methuselah refers to their mobile device arsenic a “phone.” Get with it anglophones.) So the 21st period correlate of the leather wallet is the phone, right?

But past does it inactive marque consciousness to telephone a specific, single-purpose app a wallet? Many apps store accusation that is readily disposable to us. If we don’t notation to a contacts app connected the instrumentality arsenic a wallet, adjacent though it replaces accepted concern cards, wherefore usage that word for a Bitcoin app similar BlueWallet oregon Wallet of Satoshi? It’s the telephone itself that is the wallet, not the apps. Apps are much similar the compartments in the wallet. If we’re going to accommodate the word “wallet” to our transhumanist age, let’s bash it right.

Wallets haven’t changed, but wealth has, however we store accusation has, and the word “wallet” nary longer fits.

What’s A Bitcoin “Wallet?”

Bitcoin “wallets” and carnal wallets are some retention media. Physical wallets store bills and cards that are marked with patterns of information. The close tokens with the close patterns denote value, and wallets determination those tokens astir successful meatspace.

Bitcoin “wallets” besides store patterns of information, but they don’t straight store value. Bitcoin’s worth is stored lone arsenic records connected the nationalist blockchain. Bitcoin “wallets” store backstage keys that let users to authorize changes to the blockchain connected their behalf. Anything that tin store a agelong drawstring of numbers (i.e., backstage keys) — a portion of paper, neurons, oregon a fancy, password-protected flash thrust — would number arsenic a bitcoin “wallet.” In Bitcoin, the close backstage keys with the close patterns indirectly denote value, due to the fact that these keys let you to determination worth astir successful cyberspace.

When friends divided a tab with cash, and bills determination from 1 wallet to another, the worth is transported. When friends divided a tab with bitcoin, the sender encrypts a transaction with the recipient’s nationalist cardinal and past their numbers displacement astir connected the blockchain, wherever the worth was and remains.

Let’s comparison again these 2 kinds of transactions visually:

(Images: Quazie And Satoshi Nakamoto Institute)

Again, it’s casual to spot wherever a wallet fits into the transaction connected the left: currency exits wallet A, changes hands, enters wallet B. But erstwhile it comes to Bitcoin, what we telephone “wallets” are those colored boxes astatine the bottommost containing the backstage keys. Does … does anyone other find that metaphor … silly? Like, if a portion of paper, neurons and a flash thrust tin each beryllium called “wallets,” adjacent though nary of them incorporate immoderate carnal tokens of worth or adjacent immoderate bitcoin (whatever that would mean), past isn’t that metaphor misleading and unhelpful?

As Kiara Bickers puts it successful her large book, “Bitcoin Clarity,”

“With a carnal wallet, you are straight holding currency that has value, but with a integer wallet you ne'er clasp the worth directly, you lone ever clasp entree to it connected the blockchain. If you transverse a nationalist borderline from 1 state into another, did your bitcoin determination with you? Well, no. … The backstage keys stored successful your bitcoin wallet correspond lone the quality to determination funds, not the funds themselves.” (p. 18)

If you privation a amended word that is little misleading and much accurately descriptive, however astir “signers?” Same denotation positive vastly improved connotations equals Pareto-efficient semantics.

(Hat Tip to NVK and Conor Okus for helping maine to deliberation done this question and terminology.)

What About Lightning “Wallets?”

The word “wallet” is applied to each mode of Lightning apps. While that word misses the people successful each case, it errs successful antithetic directions depending connected the benignant of app successful question. Interestingly, reflecting connected however Lightning apps are not like wallets does assistance to place what they are like, truthful let’s bash that.

Custodial “Wallets” Are Accounts

Custodial “wallets” don’t transport tokens of value, but they bash person an analog successful the fiat world: slope accounts. Remember however custodial accounts really work:

1. You pledge your bitcoin to immoderate intermediary and authorize them to transact connected your behalf.
2. They execute transactions arsenic you instruct.
3. You truly anticipation that they’re really pursuing your instructions, taking bully attraction of your money, and volition inactive person it erstwhile you privation to adjacent your account.

In effect, whoever’s operating the custodial “wallet” is “an constitution for the custody [and] speech of wealth … and for facilitating the transmission of funds.” In different words, they’re a bank, and that’s not my judgment, it’s the Merriam-Webster Dictionary. That’s conscionable what the connection means. And the “wallet” they supply is “an statement successful which a slope keeps your money but makes it disposable to you erstwhile you privation it” – i.e., a slope account (Cambridge American Dictionary).

Custodial “wallets” are simply idiosyncratic interfaces for these accounts. They conscionable supply a mode for users to walk instructions to and person messages from the custodial intermediary. Not truly “wallets,” are they?

What a custodial “wallet” would look similar successful existent life. Doesn’t look thing similar a wallet, does it? (Image: Adam Norman)

Noncustodial Lightning Payment Apps

So an existent wallet contains tokens of worth to transportation them astir carnal space. A bitcoin “wallet” (or a signer, remember?), holds your keys, signs transactions and broadcasts them to the network. Custodial Lightning “wallets” are truly similar slope accounts, wherever the worth is entrusted to a third-party who transacts connected the user’s behalf.

So what astir noncustodial Lightning “wallets”? (Ugh. It feels awkward conscionable typing that.)

The Lightning Network consists of nodes connected by outgo channels. Signing plays a relation present too, because each Lightning transaction is simply a Bitcoin transaction. However, Lightning transactions necessitate routing bitcoin from 1 Lightning node to different … and different … and another, on their outgo channels, until the outgo reaches its destination.

The constituent is that Lightning outgo apps aren’t conscionable flashy idiosyncratic interfaces to negociate “wallets” oregon “account balances” — they person to way payments done a fluctuating web graph. And ensuring a decent routing-success complaint entails a fig of subsidiary tasks. These include, for example, transmission absorption — opening and closing channels with different nodes successful the web — and liquidity absorption — ensuring capable outbound and inbound liquidity.

Some users similar managing their liquidity and disposable routes manually connected self-hosted nodes. Most users, though, delegate these method tasks to Lightning work providers, similar Breez and Phoenix.

Reading this, did anyone deliberation “Well, that’s simple! They’re conscionable describing a wallet!”? That’s the point. There is nary specified happening arsenic a Lightning wallet.

Give this web graph to a toddler with a container of crayons and effort to find your mode from infinitesimal to minute. That’s routing connected the Lightning network. (Image: Annie Mole)

From “Wallet” To Payment App

Metaphors are large erstwhile they assistance radical to pass a analyzable world vividly and succinctly. When E.M. Forster writes that “Life is simply a nationalist show connected the violin successful which you indispensable larn the instrumentality arsenic you spell along,” it hits. It doesn’t necessitate explanation; it’s already an mentation of thing overmuch bigger. “Lightning wallet” is not similar that. As a metaphor, it confuses, misleads and obfuscates.

A amended attack would astir apt beryllium to usage presumption that picture functions (think: “bolt cutter”). If an app sends and receives payments, let's telephone it a outgo app. If it's utilized to play podcasts and watercourse sats to podcasters, telephone it a podcast app. If it's utilized to negociate finances, telephone it a concern app. This applies arsenic to bitcoin and fiat (remember PayPal, Venmo, CashApp etc.). The app’s sanction should deduce from its function, not however it implements that function. And if we indispensable usage metaphors, those metaphors should astatine slightest bespeak the existent authorities of our technological reality.

We’re definite that galore radical volition proceed to notation to Lightning outgo apps and custodial accounts arsenic “wallets,” and that legislating connection never works (or we would beryllium penning these posts successful Esperanto, rajto?). I’m each for escaped speech, but simply utilizing a word does not marque it close oregon valid. It’s inactive important to deliberation astir the narration betwixt however we speech astir Lightning and however we deliberation astir Lightning, and however the erstwhile mightiness power the second for amended oregon worse.

Our satellite is made of concepts (ask Immanuel Kant), and concepts are made of connection (ask Ludwig Wittgenstein). Therefore, getting the connection close should assistance america recognize and signifier the world. How bash you expect to motorboat the Lightning gyration with a specified “wallet?”

This is simply a impermanent station by Roy Sheinfeld. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc. oregon Bitcoin Magazine.