Towards the end of last week, Jack Dorsey tweeted a link to Nodeless without any further explanation. Even though his tweet was enigmatic, the reference seemed to endorse the Lightning payment processor from one of Bitcoin’s renowned supporters. This subsequently generated vibrant enthusiasm while triggering a mixed reaction as to the genuine value of the Lightning payment processor.
What is Nodeless?
In summary, vendors can seamlessly integrate this instrument into their websites to facilitate the convenient acceptance of Bitcoin payments. Precisely, it optimizes transactions using the Lightning Network that offers expedient and affordable payments over Bitcoin – a solution that has earned much applause as the most probable medium via which Bitcoin will gain mainstream adoption.
The anonymous creator of Nodeless, UTXO, said: “Our goal is to make Bitcoin a medium of exchange by making it as easy as possible for merchants to accept Bitcoin.” Despite the benefits of non-custodial usage of the Lightning Network – devoid of intermediaries assuming authority over a user’s resources – adopting it can be a challenge for novice users.
Nodeless’s capabilities, to a considerable extent, are akin to those of OpenNode, yet with a significant distinction – users can avoid disclosing their personal data when commencing payment acceptance using this platform. Consequently, it accommodates a non-KYC (Know Your Customer) service approach.
‘Nodeless’ payments
Typically, ordinary users are required to run their own Lightning node when engaging with non-custodial Lightning transactions. However, this process can prove challenging for individuals with limited technical know-how or insufficient time to accomplish such a task. Fortunately, Voltage and Greenlight platforms have developed one-click solutions that enable users to create a Lightning node with ease and with no ongoing responsibility for node maintenance.
Nodeless chooses to opt for an alternative method. It accomplishes “nodeless” functionality by enabling merchants to receive payments without having to execute and sustain their own Lightning node, which consumes vast amounts of resources including time, expenses, and computational resources.
Although a node plays an integral role in transmitting Bitcoin or Lightning payments, Nodeless utilizes a divergent approach. Instead of having the users run their nodes, the Nodeless node, which relays the payment, executes the transmission. In this scenario, the transactional payment would go to Nodeless first before being subsequently forwarded to the recipient’s on-chain or Lightning address.
“Technically we custody individual payments for several seconds while the payment is in transit. We believe this is a fair trade-off versus the complexities of running a lightning node,” UTXO said.
Per the operational methodology of Nodeless, the platform tends to be categorized as being custodial. Specifically, Nodeless briefly maintains possession of a user’s funds for approximately 60 seconds. However, the platform assures the swift return of the funds to the user. Users are required to furnish either a cold wallet storage Bitcoin address or a Lightning address to which Nodeless should swiftly remit the user’s payments.
Privacy Money
Certain individuals involved in the Bitcoin regime have expressed reservations pertaining to this platform, contending that, with the projected scaling of the company, government KYC requirements will become more rigorous. Additionally, given that Nodeless technically represents a centralized solution, governments may potentially intervene, compelling the company to terminate particular transactions it objects to.
UTXO suggests the possibility for Nodeless to circumvent such regulatory pressures. Nodeless operates within the guidelines of Canadian law, where payments less than $1,000 obviate the requirement for KYC verification. In the meantime, their ultimate intent is to relocate operations to El Salvador, a jurisdiction known for its equally lenient laws toward cryptocurrency transactions. In such an environment, UTXO suggests the business will receive a resolute welcome.
UTXO also said “I also think [governments will] be more interested in the non-KYC custodians before Nodeless,”
