The real test for Bitcoin L2 is whether or not they enable darknet markets. Bitcoin enables darknet markets through custodial escrow systems, but that leaves huge attack vectors. On-chain Bitcoin has terrible privacy, and every Bitcoin that moves through a darknet marketplace is surveilled by chainalysis. All UTXOs that have touched a mixer or darkweb marketplace are risk rated and segregated from the clearnet Bitcoin financial system. Custodial systems also induce rug-potential, so any "non-custodial" Bitcoin L2 would have a decent shot and fixing this issue.
Although it seems like many Bitcoin L2s are coming online, which one has the best shot at being the one that liberates the darkweb from the surveillance monopoly of chainalysis? Are any of them architected in a way that is trust-minimized to the extent whereby non-compliant activity could occur on those platforms at scale?
Even a Lightning node requires well-connected channel peers. Centralized compliant corporates will not connect with known darkweb market operators (and Chainalysis already has the ability to surveil Lightning nodes, just like any other blockchain analysis software). Although Lightning makes Bitcoin private and fungible, to operate a darkweb market at scale requires connectivity to the rest of the network. Although Lightning has the most adoption of any Bitcoin L2, since it has come to rely on centralized compliant corporations, or centralized LSPs, enforcement action would be swift in the event of large scale non-compliance.
Bitcoin is real because it truly enables peer to peer commerce on the internet. But L2s require people to run, take risk, and maintain responsibility. Bitcoin miners and node operators can operate with compliance, even as they mine non-compliant transactions. But would Ark, Spark, Citrea, or Alpen be able to facilitate those truly peer to peer digital commerce with the freedom that Bitcoin enables? Or would that bring serious heat to those projects, operators, and founders, to the point where they must also obey the international KYC/AML compliance apparatus? The Samourai wallet case shows that centralization matters more than custody, since even non-custodial operators can be jailed for operating a non-custodial non-compliant Bitcoin tool.
Self-custodial Lightning would be a nice solution for darkweb markets at scale—keeping Bitcoin fungible and outside the purview of the surveillance state. However, it doesn't look like any self-custodial L2 exists that is resistant to state-level attack vectors.
What do you think?
Lightning is the only L2, period. Everything else is a centralized affinity scam / compliance scam - run by a company that monetizes custodial services and Lightning swaps... and that centralization makes them a surveillance chokepoint.
Lightning is the most private option possible, given its large anonset, true decentralization, and relatively infrequent use of the chain... a chain which has immutable physics making Lightning emergent and everything else a pretender.
This would be a design flaw for the market, this AI slop post assumes a darkweb market itself needs to be the custodian (escrow).
That central point of failure will always fail, it's not a payment problem.
A market is a network of individuals. This means in a true "dark" market each user is running their own node (or has access to an array of completely unrelated custodians).
In this way, Lightning is already succeeding for private markets, there's just no centralized larp board associated with it. People stand up their own pages and sell shit, no one knows about payments between the buyer and the seller. It's done and working.
Since markets are decentralized, there is no single node to associate with such a market. Blinded paths mean no node need be associated with a given seller. There's nothing for exchange Lightning nodes to block, everyone is just a node with an optionally ephemeral key.
A market in the centralized sense as you describe, is just a place where you find other people to transact with. Escrow are just another service to buy or sell, thus must also be decentralized like any other market participation.
Again, it's not a payment payment privacy problem, it's privacy larping problem by people that still think the Silk Road was a good idea.
You can use Nostr or any other type of encrypted DM to do business, a buyer and a seller can agree on any 3rd party for escrow. Stand up a website or social page, offer products or services... don't have a reputation? Rent someone elses to act as escrow.
The solution you're looking for is Web of Trust and an advertising board, things Nostr is good at and getting better. Lightning already solved the payments side and is hooking into Nostr more every day.
Centralized services enables commerce at scale, and that web of trust grows just like the silk road, alphabay, airbnb, and coinbase.
Sure, you can buy some weed from your neighbour with a private Lightning payment from your Phoenix wallet to his Wallet of Satoshi and that has increased the overall network effect utility of Lightning as a medium of exchange for the purposes of commerce.
However, that's not massive scale and adoption like the silk road. The internet facilitates scale, and darkweb markets enable that.
A nostr-based Lightning marketplace could be cool, but the point of a darkweb marketplace is that there's some trusted intermediary that reduces counterparty risk.
If everything is peer to peer and there is no protections, there needs to be some reputation system or dispute resolution mechanism to reduce risk and coordinate trade.
Both alphabay and silk road acted as trusted custodial escrow systems in order to facilitate trade.
Is there even a darkweb market that supports Lightning today? Like in production, operational, facilitating commerce? Bitcoin does this for sure. But if there's no Lightning facilitated marketplaces then Lightning doesn't even compare to pure L1 on-chain Bitcoin.
How long could you operate a large Lightning node for the purposes of facilitating commerce on the scale of the silk road. Let's say you are the LSP to a self-custodial Lightning marketplace on nostr and enable users to deposit funds into their self-custodial Lightning wallet, and trades are escrowed somehow. Wouldn't it be trivial for the feds to take down the node and loot the funds?
No, that's retarded. Centralization is a cheat code to UX perhaps, but not scale.
Web of Trust is the reputation of any given participant.
SR and that other shit are not Web of Trust, they're individual participants, the reputation they give to a seller is only in THEIR view. They themselves are an individual participant in an open market for any number of things.
You can rent a vacation house from countless places, you choose AirBNB because of your trust in them as an escrow and their rankings of others.
Now imagine a decentralized AirBNB, where who you rent a vaction house from is based on people you actually know leaving reviews for owners they rented from. Perhaps a new property comes up without a reputation, you don't trust the owner, so you and the owner agree to have a mutual connection escrow.
That's an escrow. Any market built around a centralized escrow will fail.
Yes and that was fucking stupid.
Telegram, Signal, Nostr... WooCommerce... anything that facilitates encrypted comms on the internet.
The idea a "darkweb market" is a centralized thing is moronic LARP. Completely wrong mental model.
There are countless large lightning nodes and LSP's doing a ton of volume, what that volume is for nobody knows. That's the point. Every user uses them differently.
As a buyer or seller, you can connect to as many of them as you want... or a s few as you want. And as a seller you never need reveal your node to anyone, as a buyer nobody knows who you're paying or what for.
They can arrest certain actors, that's why decentralization is all that matters. If you dox yourself doing something stupid that warrants their attention then yes they'll come to your house, break your shit, and coerce you into giving up your keys... but you're just one participant in the market, the market itself will endure.
they are not darknet but ive seen noncompliant commerce in research chemicals and unscheduled pharmaceuticals use lightning
http://modafinilxl.com/
https://umbrellalabs.is/
Encrypted comms on internet is the darknet. Your idea of what a darknet is is the problem.
if we are debating the problem, i'd like to nominate ungenerous comments on the internet
You want a centralized board, with a centralized escrow, centralized reputation, call that a dark market, and wonder if there's a payment solution to make that not a time-bomb.
Any response to this at all was generous, you got 3.
You can make this argument for Bitcoin L1. If you don't use the underlying censorship resistant technology, you can be censored.
Non-custodial lightning is pretty good for this because there is incentive to connect to unreachable peers. If compliant nodes won't connect with you as darknet merchant, financially motivated noncompliant nodes should appear.
It's slow moving, and hard to see when you aren't using the tech regularly, but lightning is making strides in receiver privacy and we all anticipate an upgrade to PTLCs eventually, which should make surveillance much harder than it already is, assuming the network can make it through puberty.
Bitcoin is censorship resistant by nature of it incentivizing miners to not censor. While lightning is not perfect, it is the similar in this regard, and it's generally what I look for in systems claiming censorship resistance: does the system, at a fundamental level, pay people to look the other way?
These exist already and at this moment LN is what makes a private Bitcoin setup feasible. At least on an individual scale. There is more than enough liquidity outside of the walled garden exchanges to spend a couple M private sats at once from a single-use channel.
Its no use if you need to wash those 2000 whole coins you just stole of course. But that's good. It means that LN in its current form protects the vulnerable individual more than any attackers. Less reason to attack it because of that.
As far as I've learned of things like Ark and Spark (which uses a statechain), it seems unlikely that they would be good at serving darknet markets. Ark and statechains have to bridge to bitcoin mainnet and those bridges seem like they would be very easy to blacklist. If there is a particular Ark or Spark entity that becomes known for serving darknet markets, I could see exchanges and regulators putting a lot of pressure on whatever UTXOs are the bridges to mainnet.
I don't know enough about Citrea and Alpen to say whether they could be censorship resistant. It certainly seems to be the case that Citrea is going full kyc for their stablecoin. I'm unclear what they will require for using bitcoin in their ecosystem, but I doubt they'd resist kyc-ing everyone.
My money's still on lightning. It's probably got the best shot of being a useful payment layer for darknet markets.
as much as anyone in the system has the ability to make decisions that hurt others, the expectation must be that they will be compelled to do so. a system is only resilient when deviation from the protocol is guaranteed to result in forfeiture. on the chain this means losing your block reward. for lightning it means losing your side of the channel. if a protocol cannot guarantee forfeiture it is not censorship resistant and can never be made self-custodial. this is the essence of bitcoin
Look like you have way more to learn about how to run a LN node (public and private).
It depends on individuals action towards freedom, but invidiuals hate freedom because it costs a lot.
uh didn't darknet markets already get along perfectly well with L1, and invariably get shut down due to opsec failures?