Topic: Comparison of Offchain Solutions for Crypto Coins - page 7. (Read 1225 times)

my answer to this is. its not the basement dwelling hobbiest who sets up a node that allows 8000+ connections to be a good 'hub'. as thats then just socio-political risk of getting caught if they dont register as a custodian/msb.
plus these hobbiest hubs wont have the liquidity to honour their promises of funding say $60 each for 8000 users ($480,000)

its the established businesses that self declare they are regulated custodians and are publicly advertising that for X fee they offer quality trustable service and best online % uptime, best liquidity of routes and best chance of route success. all available in exchange for some registration/basic ID requirements

.. after all why do you think things like coinbase.com are so popular even with kyc headaches and 1.5% fee's..
because people think that regulation=protection/trust/honour

after all.. in a world where paper money is still a thing. why do you think people even bother using a bank.
its never truly about 'force' its about planting the utopian thought that something is great if you use a commercial service/ network which has restrictions/limitations/headaches, but its fluffy cloud utopian benefits outweigh peoples freedoms
thus people voluntarity give over thir id.
(facebook is great example of Id/lifestory grabbing service, in exchange for some fluffy service/benefit)

Franky1 already did, sadly you don't have the background to understand it,
https://bitcointalksearch.org/topic/m.50325896
Maybe you should actually read his post, instead of just clicking reply,
also google everything he listed and actually read it.



I have no need of your assistance with Pursuer, he is just another guy that thinks he knows more than he does.
Which is why I just ignored his personal ignorance, until you made a spectacle of it.

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I would imagine the LN hubs would be forced into compliance the same way as the exchanges were.

There was an article discussing how coinbase would never activate a LN hub as it would break their KYC/AML standing with the government,
however since LN hub can literally select which hubs they will partner with, they could open an LN hub and follow KYC/AML regulations while only allowing their hub to connect to other hubs following KYC/AML regulations.  Most users would not care as long as it worked.
Any hubs refusing to follow KYC/AML regulations would be ostracize by the major players and using them would cost more as more hops would be required.

I get you think LN hub are invulnerable to government intervention , time will tell.

How do you force people globally to adhere to KYC/AML regulations, if they are part of one huge decentralized network? Do you think people hosting Tor nodes would give a damn about some government that wants to force them to identify themselves? They could not stop other similar P2P networks ...so why would they be able to do this with the Lightning Network?

Plan B, would be to bump the Block sizes and to abandon the Lightning Network, if they did find a way to stop it. < Bitcoin is also a P2P network and it has been around since 2009.  >  Bitcoin was developed to be unstoppable. 

Can you explain how that would be possible? Are you telling everyone who reads your post that Bitrefill is issuing "Lightning pegged IOU tokens"?


Let's not turn this topic into a mudslinging debate for the newbies' sake.

I am interested in Lightning Network, this year I see that there will be a lot of development. especially in increasing security, maximizing liquidity, high privacy, and also simplifying UX with the aim of being more user friendly. So, I see the advantages of lightning networks will be more dominate .

Franky1 has explained it to you multiple times, I am not wasting any time on you.

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I'll be working up a comparison at a later date,
based on most likely amounts locked in each of the 3 solutions and how many offchain transactions are really available,
after a glancing look, the thought that thousands of transactions will occur per deposit on LN appears to be extremely overstated except possibility for micro-payments of less than a penny, before new funding is required.

Some preliminary thoughts are a person deposit $200 in their account and spending the entire amount.
Exchange:  1 onchain transaction and possibility a 2nd (optional) onchain transaction withdraw by vendor
Gift Card :  only 1 onchain transaction required
LN          :  2 onchain transaction required per party

In a normal US person, a funding of $200
would allow $40 transaction for gas, $120 transaction for electricity , four $10 restaurant visits =$40

$200 on Exchange , spent on the above
1 onchain to fund account and 1 onchain withdrawl by gas station and 1 onchain withdrawal and 4 onchain withdrawals by 4 different restaurants.

So we have a possible 7 maximum onchain transactions,
however, since withdrawals can be grouped from multiple users at a weekly or monthly basis,
by only withdrawing large amounts, the total onchain transactions can be reduced greatly


$200 on Gift Cards , spent on the above
Only 1 onchain transaction required, the other transactions occur on the gift card network
(For the Purpose of this example the gift card is a Refillable Visa Debit Card accepted at multiple vendors)


$200 on LN , spent on the above
2 onchain transactions Person,  2 onchain transactions Gas Station, 2 onchain Electric Company, 8 onchain transactions from 4 separate restaurants  
6 offchain transactions total

When you look at the above it becomes apparent that gift cards are superior in reducing the # of onchain transactions
over Exchanges and LN.  In the above Scenario :
Gift Cards: 1 onchain transaction required
Exchange : 7 onchain transactions , if none of the companies group their withdrawals with others
LN           : 14 onchain transactions

Just using the onchain blockchain alone and paying the gas station, electric company, 4 separate restaurants directly onchain,
requires 6 onchain transactions.

So anyone really wanting to cut down on the # of onchain transactions would use gift cards over exchanges and LN.  
Other Factors may be more important for the individual on which they choose , but gift cards win decreasing onchain transactions hands down for the normal individual.

You also notice that anyone using LN for normal life purchases such as gas, electricity , restaurants,
end up generating more onchain transactions by trying to use LN offchain network,
than if they just paid the vendors directly onchain.    

FYI:
For 1000 transactions to take place on LN, from a $200 deposit
each transaction would have to be worth no more than 20 cents each offchain transaction.

Which brings up a question, what are people buying that is only worth 20 cents?    
* Even a single 20oz bottle of coke cola is ~$2.00 *

If a person only used LN to buy meals at the same restaurant, of no more than $10 per visit,
you can squeeze 20 offchain transactions out of it, using only 4 onchain transactions, saving 16 onchain transactions,
however if those visits were to 20 different restaurants,
those 20 offchain transactions would be using 40 onchain transactions, a loss of 20 onchain transactions verses paying onchain only.

The above brings an interesting development, LN users that don't consciously plan their transactions to maximize offchain transaction over onchain transactions could actually generate more onchain transactions than if they paid directly onchain and potentially nullify any transactions reduction that LN could have provided.

*Note onchain transactions reduction would still be far more if you used a gift card instead.*    

fractional reserve on LN. it has begun

https://www.bitrefill.com/buy/lightning-channel/

500,000 sats capacity You pay 0.000403 BTC
2,000,000 sats capacity You pay 0.001341 BTC
4,000,000 sats capacity You pay 0.002011 BTC
8,000,000 sats capacity You pay 0.003753 BTC
16,000,000 sats capacity You pay 0.004825 BTC

until windfury understands a millisat is not a sat.(payment contract vs broadcast tx 2 different things)
until windfury understand a signed payment channel is not a signed bitcoin transaction
until windfury understand the concepts of factories, watchtowers.
until windfury understands that what happens inside a channel is not a blockchain
until windfury understands the LN is not bitcoin
until windfury understands LN is not community audited, regulated, consensused
until windfury understands LN does not have the byzantine gnerals solution
until windfury actually spends more time researching LN before promoting it.

then there is no point

wind fury. lets get back to basics.
imagine just the bitcoin protocol
if there was a bitcoin signed tx. but it is never broadcast, never relayed never enters anyones mempool...
is it a settled transaction paid in full?

if someone wrote you a cheque for $1billion. its signed. but has not ben submitted to the banks to be cleared.
is it a settled transaction paid in full?

knowing channels are just 2 party, no community oversight. where if you paid me $1 i would open a channel with you to credit you with 2btc channel. (obviously ur happy with the deal as its me at risk, not you)
and due to the privacy stuff. the routers dont blockchain check every nodes balance. they just htlc request 'can you handle 2btc' to which you would say yes. alot of things can get messed up in LN.

you really need to go research this stuff and not just spout out the utopian sales pitch

Away from how the comparison took place and which I did not understand its purpose. However, the lightning network is still under development and much can change "You can add some better solutions than Lightning Network to compare them like Schnorr signatures or [There is a new off-chain network similar to the lightning network but I have not read the details]".

There are a lot of people who have reported losing their money by putting them in the lightning network.[1]

No. But once the channel is established, the parties can update their values.

The purpose of lightning network is Micro-Payments, anyone can wait 5 minutes to exchange $200 for $ 1 as fees.

[1] Reports Of Lost Bitcoin On Lightning Network Due To Bugs

this is Segregated Witness and 2017 all over again but this time with Lightning Network. and FYI OP is the same person who has been spreading the same false information about SegWit back in that time too under a different account. the same way they were trying to convince everyone that your funds in a SegWit address can be spent by anybody they are now trying to say funds in an LN channel can be spent multiple times!

That would be a massive failure on the Lightning Network. What would be the use for the project to contnue if it was technically proven to be true, and possible?

With some adjustments this can be called an Advantage: "a thousand LN offchain transactions still only require 4 onchain transactions".

I was going to ask the same thing. As far as I know, it's not possible, as each LN transaction requires signatures.
However, without knowing the details of how LN works, I'm now wondering if it would be possible for a LN-hub to use the same funds to sign different transactions with different users, more commonly known as double spending. Kinda like how I can sign different transactions from a legacy address, and as long as I don't broadcast them for on-chain confirmation, they can all be valid. I sure hope this isn't possible.

Can you explain how this is a possibility in Lightning? Because I have seen this being lobbed around as an attack on Lightning without any explanations, or examples of how technically it could happen.

This is not a challenge, I'm really curious.

I can't speak for him, but I think what he meant is that the comparisons are ultimately pointless because it's not like each example listed can use a different off chain solution. Heck, while it could be true, it even feels weird to call the first two off chain solutions. For exchanges, people usually just say transfers are facilitated off chain (they're just updating balances internally after all), and the second barely has anything specific to do with crypto.

...or at least that's what I thought when I stumbled into this topic.

Thanks updated the above OP.

As some crypto coins transaction fees increase , they actually drive their-selves out of the micro-payment system.
So that price increase removes those transactions from the onchain blockchain due to economics.
LN does give them the opportunity to rejoin the micro-payments eco-system.

Do you believe LN hubs will always be able to avoid KYC/AML regulations
or
do you feel it is a matter of time before they are forced into compliance?

Just remember that the transaction size might increase as better funded Lightning Network nodes are funded, but the main purpose of the Lightning Network was always to remove smaller micro transactions from the on-chain Blockchain to alleviate the congestion.

The centralization and regulation of both exchanges and Gift cards both require strict KYC/AML regulation and this is not necessary with the Lightning Network.   

The thing they all have in common is that all 3 act as offchain solutions
ie: offloading transactions from the onchain blockchains to another system.

If that is beyond your scope of understanding, have a nice day and don't let the door hit you where the good lord split you.

You also missed the point , this is a generalized discussion of the 3 examples using any crypto,
your specific reference to btc shows you were not paying attention.

 
Exactly Coinbase is an Exchange with offchain transactions , so it falls under exchange advantages & disadvantages.

you can't compare anything with anything! they have to have something in common and "gift cards" and even "Exchanges" have nothing in common with bitcoin! you might as well say a Lamborghini has the advantage of being fast and disadvantage of being expensive and in comparison a potato has the advantage of being used to make chips that are tasty and disadvantage of making you fat. and that is exactly what your comparison looks like

Offchain transactions have existed even before the Lightning Network was created. To eliminate transaction fees some 3rd party wallets like Coinbase have offered their clients until now a offchain based transaction without the addition of transaction or network fees. The result is the user will be able to send their BTC instantly for free. The only catch is you need to have the same wallet (Coinbase to Coinbase wallet) for this to work.

Comparison of Offchain Solutions for Crypto Coins

Exchanges

Gift Cards /Visa Cards

Lightning Network

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Exchanges offchain transactions
Advantages:
Offchain transactions, allowing any of the exchange's cyptos to be used in a Micro-Payments
Speed :  Instant
Transfer Fees : extremely low or none
Transfers to user name instead of long crypto address
No limits on amount deposited or transferred
No Time Locks , amount can be withdrawal immediately
Any coins stored on the exchanges can be used, no segwit needed.
Funding can occur as fast as the individual coin blockchain allows
Unlimited Transactions offchain, with no requirement for any Onchain transactions (User could transact forever offchain)

Disadvantages:
Centralized Management
Fractional Reserve & Counterfeiting possible until Withdrawal confirms ownership
Exchange can steal all funds stored, (only recourse is legal action)
All people that you transact with , must be members of the exchange
KYC/AML regulation per Kakmakr

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Gift Cards /Visa Cards, once purchased or funded
Advantages:
Able to purchase items and services in the standard fashion and uses existing equipment most vendors already own.
Transfer fee limited to 1 transfer of the specific coin used to buy the gift /visa card funds
Easy to refill
No worries of Fractional Reserve or Counterfeiting
Uses the Gift /Visa Card's network to offload additional transactions from Onchain
Only 1 onchain transaction needed to purchase funds per fill-up
Actually use Visa Network to have access to their Offchain Scalability 


Disadvantages:
Limit of $2000 purchased per day
IDs must be shown on very large purchases
Limited to specific vendors accepting Gift / Visa Cards
Some cards lose value with monthly fee or yearly inactivity fees
KYC/AML regulation per Kakmakr

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Lightning Network
Advantages:
Offchain transactions, allowing segwit cyptos to be used in a Micro-Payments  
Speed : Faster than onchain transactions
Transaction fees : lower than onchain
Funds are harder to steal, and usually revert to the original owner after time lock expires
Move transactions offchain to avoid updating onchain capacity
No KYC/AML regulation currently required. per Kakmakr


Disadvantages:
Requires both parties fund a channel ,
Requires 2 time locked Onchain Transaction per Party , meaning a single LN offchain transaction requires 4 onchain transactions
Fractional Reserve & Counterfeiting possible until Withdrawal ONCHAIN confirms ownership
Only works with coins with segwit in their code
The more hubs required to make a connection, the addition of a fee per hub to complete.
Other User must be part of the LN network , unless they are using a 3rd party Custodial LN Wallet
Can’t Handle Large Transactions Yet (large transactions amount listed at over $200)

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The Goal of this topic is to explore exactly the advantages & disadvantages of these offchain options.
So please share your opinions and if you are exploring an additional offchain solution, please detail it with it's advantages and disadvantages.  

Also for the sake of this discussion , it is understood that LN can be used with any crypto coin running segwit code,
so any advantages or disadvantages listed should be generalized to all crypto and not specific to one.