The only way I know of that will let you do this is with virtual utxos, which means locking up an on-chain utxo and promising parts of this utxo to many people.

Ark has a solution that accomplishes this, but the ugly path is too ugly without covenants.

Covenants in general would sort of accomplish this, if you could enforce a user to spend with a particular change output. Then you could have users swap vtxos around on a layer 2, and if things get ugly, the covenant restricts everyone to exit with only their share of the utxo.

Any side chain solution is an implicit block size increase, as the total network must store more data in order to validate your holdings.

Also, lightning is not limited to HTLC payments. There may be other channel configurations worth exploring.

Wrong. Totally wrong. Please read my guides.

One of the most interesting topics to learn. Thank you

I'm trying to research this as well. These concepts are hard to understand.. but here is my current list:

Phoenix Wallet is easy.

Use an opendime/satscard or similar device. You can have true self custody and transactions (passing the device physically from one person to another) happens completely off chain. There’s no telling how many times a utxo has changed hands once you factor in transfers of this nature.

If there were ~100M people in the world instead of ~10B, on chain + lightning would be enough for a global savings and payment system.

On the plus side, we have decades to scale only another 100x, since the population is not going anywhere fast.

Can you own gold without owning gold? Not sarcasm; think about all the ways people "own" things.

There are some unique properties to Bitcoin which allows for clever things like Lightning, but every scaling layer will either introduce trust or complexity or both, and reduce security (more code, more attack vectors and more potential bugs).

For everyone to own, really own, Bitcoin would require a different consensus mechanism, which would degrade the security or increase the trust required. Scaling the base layer. It's a trade-off most other cryptocurrencies make.

To be fair to Fedimint technology, the creators are very explicit. The goal is not to match Bitcoin's security, but to utilize the unit values of Bitcoin and provide a custodial layer for those who cannot / choose not to use the main chain HODL methods.

Follow-up If I had been clearer to my point, I would express that I mean with Bitcoin if you securely store your seed or private address, you can never look at it again and provided all goes well with the network, your funds will always be there, without having to trust anyone except the Bitcoin network itself.

Can this be done with Bitcoin on another 'layer' or any kind of known mechanism, real or theoretically?

Far as I can tell, all current solutions seem to involve a security trade-off / additional trust and continuous maintenance.

Self-custodial means inside the main chain. Lightning uses actual Bitcoin UTXOs and is currently the ONLY layer that does this in a way where the user can enforce the rules and doesnt need to trust if they do. Everything else is mostly bullshit, trusted stuff.

No.

Bit Risky but not self-custody

Aren't WBTCs (Wrapped Bitcoin) off chain solution for self custodial Bitcoin?

When you say self-custodial bitcoin outside of the main chain, I think of Zeus, Mutiny, Blixt, etc. Would love to hear others’ opinions on these.

RGB Protocol and Taro Protocol are ways to enhance self-custody within the Bitcoin ecosystem. RGB takes a unique approach, building a smart contract system on top of the Lightning Network. This enables you to create and transfer various assets via Lightning channels without sacrificing full ownership control. Your wallet software enforces ownership rules locally, preventing fraud even though Lightning nodes facilitate the actual movement of assets. Taro, on the other hand, leverages the Taproot upgrade to "commit" assets onto the Bitcoin blockchain. Through advanced scripting techniques, assets become governed by rules you define, ensuring no one but you can authorize movements. Both protocols promote self-custody by minimizing reliance on trusted third parties.

This is a really important topic. When the world hyperbitcoinizes the onchain fees will raise a lot. The onchain fee for opening a lightning channel would be crushing for poor people. We need a solution for them to self custody anyways.

In my opinion Ark like solutions are the most promising for scaling self custodial bitcoin. This video gives a good technical explanation of ark.

I see ark as promising for self-custody but less promising for use in payments.

You are asking if you can have highly secure self custody of off-chain Bitcoin. The answer is no. NYKNYC.