Can USDT transactions or wallets be censored on Lightning like Tether likes to do on shitcoin chains?
Discussion
Yes. The transactions are on lightning rails, but USDT is still issued by Tether, and can be seized/ācensoredā by them, no matter the rails.
How?
Ethereum and Tron have special smart contracts that allow specifically to freeze wallet addresses.
USDT on Liquid canāt be frozen, for example.
Tether can freeze any account balance, invalidating it from being traded. Tether can flag any account to say it isnāt convertible to USD. Then the wallet software would pick that up, say itās no good, and stop any transactions.
Tether is centralized. Just because the rails arenāt doesnāt make the USDT suddenly un-censorable.
You're saying it confidently, but halting a natively issued Taproot Asset in a lightning channel has the censorship resistance of Bitcoin.
It isnāt about halting the transaction. Itās about what happens when you want that USDT to be worth something when you need to spend it. Tether needs to know where each of their USDT tokens is. You break the law, they can invalidate your tokens. Thatās how the system works.
Putting things on Bitcoin doesnāt magically make them un-censorable. Tether is still a centralized company and asset.
Any response? What am I missing?
You're missing the fact that invalidating the tokens held within a lightning channel is impossible while the channel remains open. There is no possibility to invalidate them without reversing botcoin transactions.
You can continue to spend and receive lightning transactions in USDT even though Tether would be (likely) obligated to invalidate them, but would lack the means to do so.
So youāre telling me that USDT on lightning will be able to avoid all the current confiscation abilities Tether currently has on other chains? That Tether, the company, will have to honor any USDT tokens exchanged on lightning for actual USD?
Yeah, thereās no way. USDT on lightning will have the same confiscation abilities available to other chains.
Want to put some sats on it? I will bet you 10k sats that any wallet that has USDT abilities on lightning will be censorable. You say it wonāt. 10k sats on it.
nostr:nprofile1qqsrjxqeute0zwusetrjp9qeadt5aa7q686wsxr8lsjvg73uuh52yjqpremhxue69uhkummnw3ez6ur4vgh8wetvd3hhyer9wghxuet59uq3vamnwvaz7tmjv4kxz7fwd45kcmm49ekx7mp0wm2k4w letās make it 50k sats. What do you say?
I do love betting but I'm just not interested in this as a bet and I'm already dedicating my company to serve related purposes.
My main interest in this realm is informing as I learn more.
Additionally, there are sufficient bounds for this to be table even if I were interested.
Simply because it would not be possible at launch doesn't rule out future developments that would enable some revokable feature.
Iāll go out on a limb and say, day 1, this will be the case. Remove any ambiguity. Any wallet that accepts USDT on lightning will be censorable, and there will not be a single wallet which can accept USDT without the company being able to invalidate the tokens.
I understand and appreciate you being dedicated to your company. But I think you spoke with such conviction, stating it was I who was wrong, to now go back and say āIām here to learnā is a cop-out.
Day 1 of what? USDT being issued on lightning or a new wallet adopting it?
What does it mean to be censorable versus an actual enforcement action mandating censorship?
USDT on lightning is live today on speed wallet, but it's a custodial wallet. You could say it's censorable because of its custody design, but not due to the protocol.
You're putting money on cynicism without bothering to define extremely vague terms. The burden then falls on me because I understand the tech. I don't see a way to objectively validate a censorship event, which won't be public, (I'll be under NDA,) or will be a public accusation but it's impossible to validate that a lightning transaction occurred or didn't occur.
This is a stupid bet and I'm not interested. I don't mean to bring these things up to get you to define them. I'm not interested.
Itās simple: if you cannot transfer it for something you value, and it still have value to the individual you transferred it to, it is censorable.
Good luck with your company and NDA. Tether will never be uncensorable (as defined above).
