In July, the Lightning wallet team Wallet of Satoshi (WoS) began closed beta testing of a non-custodial version of their app. This feature was developed in partnership with Lightspark — the creator of the Spark protocol.
According to project representatives, the solution will allow clients to control their private keys while maintaining WoS’s simple interface.
“From the very beginning, Spark seemed like the missing piece. It gave us a foundation to seriously consider a non-custodial [version], abstracting away the complex parts so we could focus on the user experience,” they said in a comment to Bitcoin Magazine.
How Spark Works
Spark uses Statechains technology to scale Bitcoin. Users deposit funds into a Spark Entity — a group of operators (Spark Operators) responsible for performing the operations needed to sign and revoke old keys.
Users create a shared address with the operators through a modified version of FROST signatures.
“Spark is not a rollup or a blockchain. There are no smart contracts or virtual machines here. Spark is native to Bitcoin and relies on its payment-oriented architecture,” the project documentation states.
Essentially, Spark is a co-signature protocol layered on top of Bitcoin without bridges, external consensus, or sequencers. Users retain control over funds through pre-signed transactions for one-way exit from the system. These act as a safety guarantee — they can be used to reclaim funds if fraud is suspected.
Similar to the Lightning Network, Spark transactions operate by delegating ownership rights of UTXOs between parties. The difference is that Spark introduces a group of operators for signatures. They cannot move funds without user participation, which is mandatory for any transfer.
On the mainnet, Spark’s state looks like a chain of multisignatures from users and operators. On the second layer, the network functions as a tree structure representing transaction history and real-time balances. The protocol is open source.
Community Criticism
Although WoS positions the solution as non-custodial, some Bitcoin community members disagree with this definition. The protocol requires trust in the Spark operators because users cannot verify which exact code is running on their servers.
Bitcoin Core developer Matt Corallo believes the team is moving the app to Spark to avoid regulatory risks associated with holding funds.
“Spark is certainly much better than a classic custodial wallet — it allows users to unilaterally withdraw funds if the operator shuts down and deletes keys. But you still have to fully trust the operator. If they modify the code on their server and start swapping users’ coins between themselves, they could later steal funds,” Corallo argues.
He noted that overall, it’s great to see WoS move away from the traditional custodial model toward something more advanced. However, it shouldn’t be portrayed as having the same security level as wallets for truly self-custody.
Earlier, fintech company Revolut, in partnership with Lightspark, enabled Bitcoin transactions over the Lightning Network for customers in the UK and several EEA countries.
