‘Their KYC Fell Apart’
In comments on the first episode of Let’s Talk Bitcoin! in 2018, the educator said AML/KYC obligations exchanges face are incompatible with the nature of Lightning, which recently launched a limited yet rapidly-growing mainnet implementation.
The upgrade to the Bitcoin network promises vastly reduced transaction times and fees, yet its tentative 230-node launch is still experimental, with various parties warning users not to use it until suitable advances have been made or face losing money.
“I don’t think Coinbase will run Lightning, and I think there are many reasons why we’re not going to see regulated exchanges run Lightning Hubs,” ANotonopoulos told host Adam B. Levine earlier this week.
Chief motivator for his perspective is LN’s security setup: a transaction can make as many as 20 ‘hops’ between nodes to reach its target, yet no node in the chain even knows which position it is fulfilling.
“Imagine this from Coinbase’s perspective,” Antonopoulos continued.
They have a fully KYC/AML-ed customer on one end of their connection, but if they receive a payment that’s going to that customer over the Lightning Network, they have no idea whether that customer’s the final destination… If they receive one coming in from that customer, they have no idea if that customer’s the origin… Which means their KYC just fell apart – completely fell apart.
Lightning ‘Enthusiasm’ Goes Into Overdrive
The prospect of exchanges avoiding Lightning to stay on the right side of the law will likely deflate the hopes many existing Bitcoin users have that the technology will be Bitcoin’s ‘killer app.’ […]