Bitcoin node connection shuts down: BlueWallet users urged to withdraw funds

[Oshosondy]

Not your node not your coin, Bluewallet wants users to start connecting node directly.

BlueWallet is sunsetting its lightning node connection to Lndhub, according to an official statement. BlueWallet will cease custodial lightning operations, meaning that BlueWallet users of the Bitcoin (BTC) Lightning Network must connect to nodes to continue using BlueWallet lighting services.

“The account is shutting down, not LndHub or Bluewallet itself. The account here is hosted by the BlueWallet team and they don’t want to do this anymore.”

If you are using Bluewallet lightning node (connection to Lndhub), withdraw you bitcoin. To red more about this if you are using Bluewallet lightning node:

https://twitter.com/callebtc/status/1628748275942625282?s=20

What does BlueWallet sunsetting LndHub mean for you?

- If you use BlueWallet for on-chain bitcoin: ✅ nothing
- If you use other LndHub services (like LightningTipBot, LNbits, Alby): ✅ nothing
- If you use the Lightning account hosted by them: ⚡️ Move your sats out

Continue to read:
https://twitter.com/callebtc/status/1628748275942625282?s=20
https://cointelegraph.com/news/bitcoin-node-connection-shuts-down-bluewallet-users-urged-to-withdraw-funds

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[DaveF]

It's bad in the fact that it was a somewhat easy to use LN wallet.

It's good for the fact that falls into the not your keys not your coins so this makes people more responsible for their own funds. And I sure it takes pressure off of the BlueWallet developers for keeping other peoples money safe. And managing channels and everything else.

Would like to see a pop up in the wallet next time I open it about this so we know they are not just posting about it online where people may or may not ever see it.

-Dave

[tbct_mt2]

I don't think people store most of their bitcoins on Lightning network but this shutdown of Blue wallet is still a bad and very shock news.

Lightning Network grows a lot since 2020 and this event from Blue wallet can impact total channels and sum of channels value in near future. Currently I did not see big changes for both total open channels and sum of channels value. They actually decreased since early 2023 but we have yet seen impacts of Blue wallet event.

Let's wait how people will react with this and how it will impact Lightning Network in next one or two months.

https://txstats.com/dashboard/db/lightning-network?orgId=1&from=now-5y&to=now

[rby]

It's bad in the fact that it was a somewhat easy to use LN wallet.

It's good for the fact that falls into the not your keys not your coins so this makes people more responsible for their own funds. And I sure it takes pressure off of the BlueWallet developers for keeping other peoples money safe. And managing channels and everything else.

Would like to see a pop up in the wallet next time I open it about this so we know they are not just posting about it online where people may or may not ever see it.

-Dave

I wish Franky1 could see this post. He is always an advocate against offchain bitcoin related transactions. According to him those are not bitcoins if it doesn't exist on the bitcoin blockchain. Lately I'm beginning to buy into the ideology of Franky about bitcoin and its usage.

[franky1]

oh i seen it. i could say alot. but it speaks for itself

but if you want my opinion. here it is
you give them your bitcoin and they then have to use ALOT more of their locked value in alot of channels to allow users the ability to spend the msat funds over routes. funds in any which direction the user wants. problem is it meant bluewallet needed to have alot more balance than the users deposited to keep the channels liquidity available which has not shot them in the foot. so they had to stop that service

i mentioned it a few times before about liquidity issues and this is not the first company to sever its custodial service due to this problem. nor would it be the last

EG imagine 10 users deposited 0.001 each (0.01combined)
simple numbers for simple explainer

blue wallet has 20 channels to 20 super nodes(hubs)
but blue wallet doesnt know when and how much users will spend through any of those 20 supernodes as routes

so blue wallet would need to have equivalent of 0.2 total meaning 0.01 per supernode channel just in case all users wanted to use the same pathway (route) at the same time

thus blue wallet had 0.01 in deposits but needed 0.2 to service those 0.01 deposits.. and eventually. yea math, economics, and common sense shows its not sustainable

[DaveF]

According to here
http://lndhub.io/
and here
https://1ml.com/node/02c3be1b43f90f089fddeff84014dca38fd0f6ab4224dbf6c18a5e36d55d7917cc

There is a fair amount of BTC in their node. But considering the number of users that they have it's probably not that much per.
Add in a few people with a lot in there and it drops even more.

Lets see how it winds down over the next few weeks.
And how they handle the people who screwed up and left funds there after the official shutdown.

-Dave

[mendace]

It's really a shame, I liked BW but I understand that managing others' btc and channel balancing complexity is not easy, so they took some work out for them.  In fact, this morning many users were unable to move funds because probably the channels were unbalanced after all the withdrawals.  In my case using little LN and holding few sats I will use a custodial I think Wallet of Satoshi or Alby.

[AverageGlabella]

I don't think people store most of their bitcoins on Lightning network but this shutdown of Blue wallet is still a bad and very shock news.

Relying on a 3rd party is not good even if it is the lightning network. Not your node not your coins is the same as not your keys not your coins. I think Bluewallet are making the correct decision and suspending future nodes which hold their clients funds. It was a disaster waiting to happen and it shows how trustworthy bluewallet are because they have made this decision because they probably feared the eventual attack where they would lose peoples btc. I think this is more reason to trust bluewallet and not lose faith in them because they made a decision that does make using them less convenient.