Are you asking about lightning or the wrapped stuff?
Discussion
lightning, specifically.
Assuming you’re using a noncustodial wallet, they’re not IOUs. The btc isn’t backed by anything, you have full possession of it. I’ll try an analogy, hopefully it’s helpful.
Bitcoin on lightning is kind of like bitcoin loaded on a bullet train. Once it’s on, it can go anywhere really fast, but you can only get it off at a station (going back to base layer).
And while it’s on, it can change owners any number of times
ah interesting. Thanks. that's helping me make some sense of it
there’s technically no minimum channel size- it’s just pointless to open small channels cause you get fucked by fees on mainnet when you open/close the channel.
lightning bitcoin is bitcoin in a multisig wallet, shared effectively trustlessly w a single counterparty (can be anyone). the funds between you are accounted for with commitment transactions so you can’t cheat each other.
you could get fucked if you’re computer/node goes down and your counterparty posts an old state to mainnet before you can post the most recent commitment transaction (you usually get 24hrs to a week to contest)