I would like to hear the opinion of the Bitcoin community.
While I was researching different assisted wallets for The Bitcoin Hole, I came across a case that I'm not sure how to categorize. Here's the scenario:
An assisted wallet, where the owner and the service provider need both to sign a transaction to move the funds. You can think this a 2-of-2 multisig, where the service provider has one key and the owner the other. However you can also implement this with MPC (Multi-Party Computation). The implementation is not the issue.
I define something as "non-custodial" or "self-custodial" when these two conditions are met:
1- The provider can't move the funds without owner's permission.
2- The owner can access its funds without the provider's permission.
In the previous case, condition 1 is satisfied, but condition 2 is not. So, my conclusion is that this assisted wallet can't be categorized as "non-custodial" or "self-custodial".
Some questions I have in my mind:
- Is my conclusion correct?
- Is there any difference between "non-custodial" or "self-custodial"?
- Since the assisted wallet in this case cannot be considered "custodial" (as the provider cannot move the funds without the owner's permission), how should it be categorized?
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The provider may not be able to move your funds but you are neither, so it's definitely not self-custodial and non-custodial is often used synonymous to self-custodial so I would find it confusing to call this case non-custodial.
The big problem here is that the provider can take your funds hostage. Require a processing fee etc. So while the user can stop a rug pull with 100% of the funds in the provider's pockets, he can't prevent losing his money.
Yes. I agree. This Is something in the middle between custodial and non-custodial.
