Can Lightning network work decentralized ? - page 5.

sjefdeklerk

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Quote from: achow101 on January 02, 2018, 04:33:15 PM

Actually he doesn't. B pays C at the exact same time that A pays B. So there is no lending as B is never short of his money. As soon as the hash preimage for an HTLC is known to the world, all parties in a route are instantly paid because the HTLCs can be then settled at the same time.

Ok the traditional definition of lending wouldn't apply here, agreed. However that doesn't change the problem that everybody in the route needs to have the amount of money that you are sending in his account, freely available.

Quote from: sjefdeklerk on January 02, 2018, 02:59:13 PM

If I have two BTC total split across 4 channels and I want to buy something for 2 BTC, I can send 0.5 via Channel 1 to merchant A, 0.5 BTC via Channel 2 to Merchant A, and so on. Merchant A will get 2 BTC from either one channel or from multiple channels, Either way, he gets paid 2 BTC and I spent 2 BTC and the transactions are guaranteed.

That is if all your channels are connected to the Merchant AND everybody in those channels has at least the amount freely available that you want to send.

Spendulus

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Quote from: achow101 on January 02, 2018, 04:33:15 PM

Quote from: sjefdeklerk on January 02, 2018, 02:59:13 PM

If person A wants to buy something, person B is in the middle and Person C is the receiver, then B first pays C, so he actually 'lends' money to A

Actually he doesn't. B pays C at the exact same time that A pays B. So there is no lending as B is never short of his money. As soon as the hash preimage for an HTLC is known to the world, all parties in a route are instantly paid because the HTLCs can be then settled at the same time.

Quote from: sjefdeklerk on January 02, 2018, 02:59:13 PM

But the key here is that average Joe doesn't have a lot of money to finance payments for others (average Joe takes credit, he doesnt give it). So that's a huge problem in the decentralized mesh. I honestly don't see how this could work without any big centralized nodes like banks. In fact I think that's just the natural way it will evolve: people will open payment channels with big parties (=banks) to ensure that they can actually pay people. You don't want to divide your money over 20 channels and only have 5% of your money per channel. So it seems only natural that banks would become central in LN, it's both more efficient and effective.

Joe can pay the same person using multiple channels.

If I have two BTC total split across 4 channels and I want to buy something for 2 BTC, I can send 0.5 via Channel 1 to merchant A, 0.5 BTC via Channel 2 to Merchant A, and so on. Merchant A will get 2 BTC from either one channel or from multiple channels, Either way, he gets paid 2 BTC and I spent 2 BTC and the transactions are guaranteed.

If I funded a channel with say 0.5 bitcoin, how long might it operate independent of the blockchain? because whenever there is a clearing of the transaction routes back to the blockchain, there is a nightmare of a fee to pay.

achow101

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Quote from: sjefdeklerk on January 02, 2018, 02:59:13 PM

If person A wants to buy something, person B is in the middle and Person C is the receiver, then B first pays C, so he actually 'lends' money to A

Actually he doesn't. B pays C at the exact same time that A pays B. So there is no lending as B is never short of his money. As soon as the hash preimage for an HTLC is known to the world, all parties in a route are instantly paid because the HTLCs can be then settled at the same time.

Quote from: sjefdeklerk on January 02, 2018, 02:59:13 PM

But the key here is that average Joe doesn't have a lot of money to finance payments for others (average Joe takes credit, he doesnt give it). So that's a huge problem in the decentralized mesh. I honestly don't see how this could work without any big centralized nodes like banks. In fact I think that's just the natural way it will evolve: people will open payment channels with big parties (=banks) to ensure that they can actually pay people. You don't want to divide your money over 20 channels and only have 5% of your money per channel. So it seems only natural that banks would become central in LN, it's both more efficient and effective.

Joe can pay the same person using multiple channels.

If I have two BTC total split across 4 channels and I want to buy something for 2 BTC, I can send 0.5 via Channel 1 to merchant A, 0.5 BTC via Channel 2 to Merchant A, and so on. Merchant A will get 2 BTC from either one channel or from multiple channels, Either way, he gets paid 2 BTC and I spent 2 BTC and the transactions are guaranteed.

sjefdeklerk

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Quote from: achow101 on January 02, 2018, 02:50:07 PM

Quote from: sjefdeklerk on January 02, 2018, 12:58:01 PM

everybody lends his money to the next guy in the chain, up the guy at the end of the chain who wants to pay for something.

There is no lending of money. It is not an IOU system, there is no lending. All money exists and is accounted for on the blockchain.

If person A wants to buy something, person B is in the middle and Person C is the receiver, then B first pays C, so he actually 'lends' money to A

Quote

It isn't a chain, it is a route. The graph of nodes is not the extremely degenerate case of a linked list or hub and spoke model. Sure the maximum amount is limited by the smallest amount in the route, but if that amount is too small, another route can be chosen that allows for more money to be transferred if necessary. Furthermore, each route is for one use only, they aren't permanent and do not always have to be used for payments to the same person.

But the key here is that average Joe doesn't have a lot of money to finance payments for others (average Joe takes credit, he doesnt give it). So that's a huge problem in the decentralized mesh. I honestly don't see how this could work without any big centralized nodes like banks. In fact I think that's just the natural way it will evolve: people will open payment channels with big parties (=banks) to ensure that they can actually pay people. You don't want to divide your money over 20 channels and only have 5% of your money per channel. So it seems only natural that banks would become central in LN, it's both more efficient and effective.

Just trying to grasp this whole concept. The whole idea of bitcoin was decentralization and now with LN it seems it's going the other way again.

achow101

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Quote from: sjefdeklerk on January 02, 2018, 12:58:01 PM

everybody lends his money to the next guy in the chain, up the guy at the end of the chain who wants to pay for something.

There is no lending of money. It is not an IOU system, there is no lending. All money exists and is accounted for on the blockchain.

Quote from: sjefdeklerk on January 02, 2018, 12:58:01 PM

The maximum payment amount in this scenario is determined by the guy who has the least amount of money freely available in that chain.

It isn't a chain, it is a route. The graph of nodes is not the extremely degenerate case of a linked list or hub and spoke model. Sure the maximum amount is limited by the smallest amount in the route, but if that amount is too small, another route can be chosen that allows for more money to be transferred if necessary. Furthermore, each route is for one use only, they aren't permanent and do not always have to be used for payments to the same person.

sjefdeklerk

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I really don't see how LN is supposed to work decentralized. In this scenario there would be a huge chain of people where everybody lends his money to the next guy in the chain, up the guy at the end of the chain who wants to pay for something. The maximum payment amount in this scenario is determined by the guy who has the least amount of money freely available in that chain. This effectively would mean that it can only work decentralized for very small payments. Even payments bigger than a few dollar could already be problematic.

Whereas in a centralized scenario, it could perfectly work, but it would effectively turn into a regular banking relationship as people have now, just with a different name (account at your bank vs payment channel with your bank). Or am I missing something here?

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