Bitcoin Lightning “Bank” Confiscates Funds!

Custodial Bitcoin Lightning Network wallet Alby has started confiscating user funds, labeled as an “inactivity fee”! 😵‍💫

Allegedly, terms of service were recently updated to allow the company to seize customer funds on custodial accounts that haven’t had a payment in 12+ months. Apparently, some customers had funds seized just weeks after receiving an email notification.

Here’s their terms of service:

This is what happens when you reinvent the banking system: you get bank-like inactivity fees and seizures.

Years ago, I predicted that Lightning would both trend custodial, and end up actually being expensive, since infrastructure providers have to pay their bills somehow. Looks like I was right.

And remember: there’s no such thing as fully-noncustodial Lightning, and the closer in that direction you get, the worse the user experience gets.

Here’s the video I did on Lightning turning out expensive a few years ago:

And here’s an article from CryptoSlate on the Alby situation.

Posted Using INLEO