There is actually a very widespread misconceptions about privacy benefits Lightning. If you use custodial, you have no privacy (from your wallet). If you use noncustodial, the receiver has bad privacy. For the sender, you may have good privacy, but there may be an active surveiller if they are doing active routing surveillance.

It's definitely a good thing to have around. No need to keep money in e-cash form though, but it's there if you want to, let's say donate to something really sensitive, get some e-cash, send it to them, (through signal or Nostr DM,) they cash it. I guess that's the thing, you text message or nostr post or email someone a cashu note. There's no chainanalytics or off-chainanalytics (Lightning surveillance) that can be done on it.

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Got it, thanks. But there is trust involved at some point?

Correct, it’s custodial. The mint holds the funds until they the redeemed.

They are*

I actually wonder though how harmful trust becomes when the custodian has almost no information. We're no longer trusting them to not spy or censor because they can't do those things anymore anyways.

Yeah but custodial means there's always the risk of getting rug pulled.

Not saying cashu is bad because of this. I'm just saying all custodial solutions come with that risk involved and it's good to keep that in mind.

This is a helpful breakdown.

Where can I find more info about why the receiver in a self-custodial lightning transaction lacks privacy?

Custodial lacks privacy for both sender and receiver, as the wallet sees everything. self-custodial mostly lacks privacy for the receiver.(you have to know where to send it)(But there's always a chance that the node routing your payment could be a secret spy node working for chainanalytics and figre out the sender too.)

This is a really good resource.

https://abytesjourney.com/lightning-privacy/