Forgive me if my theory of money and credit is a little rusty, but lightning and Liquid are not credit, just money substitutes at worst. Arguably they are extensions of real bitcoin itself, and they have much stronger guarantees than a bank deposit such as ecash or a river deposit (definitely lightning does). It's not as simple as just layers are less secure. It's not equal.
Discussion
Bitcoin like any transparent/traceable system is a social credit system. If you can not see this, wait a little while longer maybe next year or the year after you'll get it.
Are you saying the units on it are not sufficiently fungible to be considered money? Or something else?
Absolutely. BTC was quite fungible in its early days. Also you could always checkout your trade partners address. That's also when Bitcoin took off in Silkroad.
Then Bitcoin got listed on CEX and states demanded KYC which started to deanomyse the chain retroactively.
Nowadays 99% of people come into BTC via KYC (and IOUs). Which gradually increases the amount of known UTXO.
Fungibility is a hard property for money. It's either granted by law (cash) by it's material properties (gold) or mathematical enforceable (privacycoins).
KYC/AML is meant to transform money (be it Bitcoin or fiat bank accounts) into social credit, which by definition doesn't have the properties to work as neutral medium of exchange.
It's impossible to get the entire network onboard with that though, much like it is possible to stamp and track some gold, but not all gold. You're also not counting the bitcoin treasury companies which are creating credit systems with actual credit (not bitcoin) backed by the bitcoin and each entity tracked and registered so that investors can choose which firm to invest in with a high degree of transparency. The ability to track the funds is a feature. Your argument leaves the door open for a large subset of the UTXOs being fully fungible and private, namely paranoid cryptoanarchists like us. Bitcoin is useful for creating a highly transparent credit system, but it is not going to be turned into a single centralized social credit system. A fork of it might be, unfortunately, but there will always be that escape hatch for libertarian radicals who just won't give up.
My view is lightning is a promise to pay Bitcoin, it's like a sort of Collateralized Credit but isn't finalized until the channel state is closed.
There's also no guarantee that those zaps are valid if someone rugpulls the channel against someone without a watchtower as well.
There's no guarantee that someone doesn't take the gold out of your house while you're away if they decide to break in and manage past the locks and find a stash of gold in your house too, but this is both technically and legally surmountable (legally as in libertarian law). The effective technical aspect as it functions in the real world denotes possession and control, which demonstrates its status as a monetary medium. If it is effectively enforceable in essentially all cases such as to be indistinguishable in principle to real bitcoin, then I would call that bitcoin itself for sure, whereas all other cases are perhaps subject to definitions and your standard of proof. OP_CTV assists with this technical aspect too.
A lightning bitcoin payment channel is, at the very least, a strong substitute for bitcoin.
It is Bitcoin-like but it isn’t Bitcoin Proper until finalized on The Blockchain.
Until a lightning channel is closed, it is effectively paper Bitcoin, and only holds theoretical value in lieu of a Bitcoin.
Sure if you want to classify it like that.
All value is theoretical. There is a reason that paper money trades like money. It's all just stuff people value as means to ends.
I appreciate these discussions, and I especially like your technicality in approaching this topic. Thanks!
Thank you, Mr. Bacon, I appreciate your stances on things, you're very reasonable, and nuanced that even if you don't agree with someone you're understanding enough to see their point of view, and understand where they're coming from, or what they mean.
Very few people have that talent unfortunately.
Thank you! That's a very meaningful complement!! ^^
So basically yeah you're right it's sort of a credit system in the way you're leaning, but if it can be called credit, it is the strongest form of credit ever invented. It being a series of distributed ledgers within a distributed ledger with private enforcement all around and no authority, all in the same currency unit with no rehypothecation, it may as well be called real bitcoin, the way I see it.