Topic: [2019-10-24] Lightning Network User Reportedly Loses 4 Bitcoin: What Happened (Read 372 times)

Nice to see that all ended well. Even more so considering it seemed like it wasn't a person who could afford to lose so much.

@hatshepsut93. That also argues for my point on postponed settlements. Something similar to theft, fraud or loss might occur because payments are not final.

Well, he wasn't just some guy who wanted to experiment with Lightning and decided to put 4 BTC on mainnet into his channels - he was running a gambling service and could/did profit from it, so the risk and stress could be justified.

And there was no bugs or theft here, the guy just used dangerous functionality, but luckily for him the funds weren't lost in the end.

@hatshepsut93. However, was the stress worth it? I reckon, no.

This might be the first lesson that introducing postponed payments on bitcoin might open it to unsound transactions because of bugs and maybe also theft.

The guy himself made a new thread on reddit today: https://wr.reddit.com/r/Bitcoin/comments/e4gjpx/im_the_guy_who_lost_4_btc_on_lightning_network/

Great news, with the help of the community he recovered most of them already! Turns out it's not as easy to lose your coins as some people thought.

Sure and that's understandable, same with making all sorts of mistakes when dealing with/sending altcoins/tokens, time is money and there's no reason for a company to waste and pay for their employees time every time someone makes a mistake and accidentally loses $20 worth of coins/tokens.

In 2011-2013 there were more pools that did that as such mistakes were common (I would dare say depending on the payment method employed the vast majority of pools would try to return the money), including at least one case when individual miners returned a substantial percentage of bitcoins lost to an erroneously high fee transaction from a P2Pool block. Back then most people hanged out on bitcointalk and on several freenode irc channels so it was easier to reach a large percentage of the community. I mentioned P2Pool as an extreme case, IIRC that person was lucky that several larger miners returned the extra coins they made from that block, in another case less less than 10% were recovered but there were way more miners working on that block (399) after Bitcoin has attracted a lot of people during the two rallies that year: https://old.reddit.com/r/Bitcoin/comments/1syu3h/i_lost_all_my_bitcoins_in_an_erroneous/?sort=new


I've heard of quite a few cases, so unless you put effort into making a well-sampled poll, you won't know what are the odds of getting the bitcoins back.

And if someone has sent bitcoins to a wrong address, that's also often rectifiable if it's someone they know well enough, or a non-scammy cryptocurrency company (exchange, gamblign website, whatever), you just have to contact them. It's not the same thing as sending to 1BitcoinEaterAddress(...).

Agreed on cartlon banks that the not smart should be careful, however, I disagree with discouraging experiments in the cryptospace. I reckon that we might not have a cryptospace if all people thought like you.

no, I think that was slush's pool that returned the accidental 100 BTC transaction fee (the original thread was here on Bitcointalk, cannot remember when though). P2pool would've been a nightmare to get overpaid fees refunded, there were usually 100-200 payouts per block, where the 50 or 25 BTC reward (don't think p2pool survived past 12.5 BTC) got paid to that many addresses. They'd all have to have been paying attention (and be sympathetic to the mistake too) to refund it all! Slush's pool is still pretty big last I checked.

I don't think it's common nowadays because probably people are more careful and there are often warnings if the fee is set too high, but at least with high fees I remember people even getting a lot of their money back from transactions mined by P2Pool, as unlikely as that sounds.

Sending Bitcoin to the wrong address can happen to anyone, while paying 1BTC in fees is purely the result of people messing around with raw format transactions which they shouldn't. I did it once myself to find out that I sent a low dollar single input transaction with like 0.2BTC in fees due to wrong configuration.

New thread about this story on reddit: https://wr.reddit.com/r/Bitcoin/comments/dn5520/how_4_btc_on_the_lightning_network_is_likely_not/

Seems like there was no 4 BTC loss, as there was no penalty transactions related to this node of lightning casino on blockchain, and seems like the user can even recover his funds (if the OP is correct). If the owner would manage to recover his coins, it would be a good sign that LN technology becomes more safe and robust for users.

It's like all these cases I read about people accidentally sending 1 BTC or 10 to the wrong address, accidentally paying 1 BTC fees, or all these accidents.

I have not once made a mistake in over 3 years of transacting, and I don't mean to say that I never will, we all are human after all, but if I'm careful sending a few dollars for a tip, I'd be damned sure I know what I'm doing if I'm playing around with 4 BTC!

Anyway, if the other side of the channel closed it, they got it, right? They can send it back nicely I'm sure=p

It's from reddit originally.


And if that's not the worst, some of the money he lost wasn't even his:

"Sold my apartment and should work few years more to bring those money back... because some of them are not mine."

https://old.reddit.com/r/Bitcoin/comments/dlvokv/how_i_lost_4_btc_on_lightning_network/f4upr7t/?context=3

I can come up with plenty of cases to try Lightning. It's important to take into consideration that no one is forced to use Lightning. If you use Lightning anyway, then you should bear any losses that may be either your own incompetence that lead to that happening, or due to an actual bug, because you're dealing with beta software at the end of the day.

What job do they do well? Scaling into oblivion without any real world demand for their block space? The transactions they are currently processing are all automated applications trying to make their network look busy while in reality nobody is using it.

There is no case to try out buggy new experiments when good old proven BitCoin works fine.

Bitcoin SV does the job like a champ

Don't fuck up the DNA that made it all happen

Scale it

Use it

Damn, I just had to give you 1 merit for that answer, because it was 100% spot on.  

As a previous victim of credit card fraud, I can tell you that credit cards and debit cards are more prone to losses, because they only need to get a 3 or 4 numbers at the back of your card to empty it.

I recently also had a friend who got his debit card stolen and someone just used the "tap to pay" function and tapped it 9 times without the need for the pin and withdrawn a large amount of money.    --> He only realized that the card was gone after a few days has past.

One thing is sure no media will ever cover the story of "fiat network loses 40,000 euros after they burn the money while trying to start a campfire" because that would not be interesting at all but they can be all ready to publish a similar story that took place using Bitcoin or maybe any cryptocurrency for that matter. Media crypto-related or not are always vying for eyeballs so they need to use attention-getting headline and story as much as possible. But I guess we already know this.

Well, the story above is a clear indication that some people are not really attuned with their free and always available common sense. Why would you risk using 4 Bitcoin for a transaction like that using LN when you can use a small amount (as what LN is designed to do). Some people can really be a little stupid and we can all celebrate that stupidity in the media and even in this forum (so we can learn the big lessons).

they're almost all CLI programs, we can safely assume this particular casino operator was not running their wallet using Zap desktop.

and when you're running CLI programs, the warning is implicit: you are using potentially dangerous tools that are powerful enough to let you do something calamitous, and so you must assume full responsibility for every action you choose. If you don't understand everything you're doing, that's fine, many people do not, but you're still responsible for everything good bad or indifferent that happens once you press the enter key.

this person could've accidentally dd wiped their server disk (not an uncommon mistake) containing the whole website. Should dd come with warnings to back everything up and check which device/partition is being written to? Certainly not.

I've read this story on reddit yesterday, apparently the guy was running a lightning casino and closed a lot of channels simultaneously, which together resulted in 4 BTC.

Imo it's kinda sad when a software can lead to such catastrophic events just by doing regular user actions. I haven't used any LN client wallet in a while, but I think they all should have a warning with big red letters saying that you'll lose your funds if you try to close a channel and it happen to be stale.

That's a huge money to risk. He shouldn't have done that because Bitcoin network right now is not that congested. Besides few people are using Lightning Network because they know the risk or even the normal transactions. They're irreversible. I don't know that Bitcoin is using Lightning Network now. Thestakes on the user's end. Not the network itself. Maybe he send to a wrong address and didn't even check if it's the correct address.

You could use these analogies:

How much cash do you take with you in your wallet? $500 max really, anything can happen, and everyone can see the giant stacks of high value bills every time you open it if you do

How big a credit card limit do you agree to when it's 1968 when credit cards are brand new? Not so big, it's new tech, and you're responsible for the tab if anything goes wrong


So when it's one new form of tech (Bitcoin) with another riding on top (payment channels), AND everyone tells you it's inherently risky too, well, I'm not sympathetic to this person, let's put it that way

It doesn't even make any sense to use LN with that big amount. You should only use LN for coffee purchases (by coffee I mean all the crap which sells for ~$5-10.)

Max. you should put on LN is $500 and that's if you are a risk taker. Normally $200 would do great. If you are putting 40k on that thing you are insane or dumb or both.

Thank you for the TLDR, I wonder if they'll publish a story every time someone does something stupid.

e.g.  Person using the euro fiat network loses 40,000 euros after they burn the money while trying to start a campfire.

tl;dr

• user wanted to close a channel
• user sent the wrong tx, an old one (always use the newest to close any channel)
• the other side of user's channel automatically assumed this was a cheating attempt
• it's in the smart contract that you lose everything if you close using an old tx

moral of the story: don't sign a smart contract if you're, uh, not smart

seriously though, even one of the Lightning devs did this accidentally one time, although I don't think 4 BTC was lost (really, 4BTC? this person was taking the whole reckless thing too far)

It's from Dash. And at the top it clearly says "Opinion". (Nothing wrong with Dash, but maybe the news would look better if it came from somewhere else.)

Dr. Darren Tapp Research Assistant Professor at Arizona State University Blockchain Research Lab explains what happened to the users reported loss of 4 Bitcoin when using the Lightning Network.

A Lightning Network user reportedly lost 4 Bitcoin, but don’t call it weird.

The original design of Bitcoin had a user submit a transaction to any node. That node would share the transaction around the whole network, and the transaction would almost always be included in a block that is secured with proof of work. Subsequent blocks would be found, each one increasing the amount of work needed to reverse the payment. This setup created an abstractly beautiful game theoretic solution where a bad actor would have incentive to support the network instead of attack the network. In the literature we have called information that is included in a block as part of a growing blockchain to be under a Nakamoto Consensus.

The Lightning Network supports metadata associated to the blockchain, though this metadata is not secured by a Nakamoto Consensus. In theory, this metadata could be secured and updated on chain from time to time. In practice, this can be costly/difficult due to on chain restrictions of Bitcoin.

How the Lightning Network works