Topic: Does lightning network really solve the scalability problem? - page 2. (Read 1091 times)

Go play with your crayons, grown ups are talking.  

More social drama from franky1. Stop, you always include your replies with FUD that has nothing to do with the debate.


What?? Confusing "scaling with offloading"?? Hahaha.

Plus what a disingenuous way to slip in that IOUs in Lightning are a fact.

You are confusing scaling with offloading.

Offloading:
Bitcoin Blocks can hold a Maximum of ~1.7MB [~7200 transactions] so ~12 transactions per second
LN Network [Thousands of IOUs per second] only limited by hardware & bandwidth of the hubs

Now let's say LN is only processing 50 million IOUs,
and
Bitcoin is maxed out at 12 transactions per second.

If only 1% of LN users wanted to cash out in the same block,
that would be 500000 transactions, which would need ~70 bitcoin blocks and take ~11.7 hours to complete.
Causing the Bitcoin Network to be useless for half a day and the onchain fees to skyrocket.

Scaling:
Imagine
Bitcoin Blocks were holding a Max of 8MB[~33600 transactions] so ~56 transactions per second
Now the 1% of LN users wanted to cash out in the same block,
that would be 500000 transactions, which would need ~15 bitcoin blocks and take only 2.5 hours to complete.

As you can see the 8mb block bitcoin achieves greater scaling than the 1.7mb block bitcoin.
The fact that LN's 3rd party network has higher IOUs transactions capacity , does not increase the onchain scaling. In Fact, If their is ever even a minor exodus from LN once it becomes mainstream , odds are high it drives onchain fees and onchain wait times to undreamed of levels.

If Bitcoin was a Bus and could hold 100 passengers,
and the bus was near capacity , and some of the passengers decided to get off at the bus terminal and take a cab for the majority of the trips, and then returned to the bus terminal for the final trip home.
All they are doing is not using the Bitcoin Bus as it was unsatisfactory and paying the cab operators additional fares. Which the Cab operators don't always go the full distance like the bus does, but require multiple cabs and multiple small fares to reach your destination.

Bitcoin Scaling was not increased (as it is exactly the same number of seats either way),
it's adoption/utility was decreased in favor of increasing LN's adoption/utility.  

Offloading transactions to LN , or even Altcoins by using Litecoin , Doge or Ethereum are the same thing.
All can take up the artificial transactions limitation imposed on bitcoin by it's core developers, which are more interested in LN than they are bitcoin.    

LN can use modern hardware and process thousands of IOU transactions per second,
while bitcoin using modern hardware is limited to ~12 transactions per second.
Kind of makes you wonder how stupid people are to believe that nonsense.

Scaling can only be done Onchain,
Offloading occurs when you transition to any other network because bitcoin can't fulfill your transactions needs.

FYI:
To increase scaling on a Bitcoin Bus with 100 seats.
Either add 100 extra seats so the Bus has 200 seats
or
Drive the Bus twice as fast , so you can get people to their destination in half the time.

Calling Taxis because you refuse to upgrade your Bus capacity ,
is a sure sign that one day all anyone will do is call the taxis and ignore the Bus.

Lightning network ofcourse solves the scalability problem. We can create a dozen of lightning networks if we need it. It's similar to something coinbase has been using within its platform. They were criticised at first for their model but now the whole bitcoin community is embracing the lightning network.

gotta love your tone "plummeting"  you sound like over decades things are ok then sudden cliff edge... maybe worth you checking out some sustainable approaches/scenarios yourself that dont come from the echo chamber of certain devs that are paid by VC's that need LN to make ROI

you dont need to lower blocksizes to jack up fee's
jacking up fee's reduces how many people will want to use something
lowering blocksizes +jacking up fee's = even less wanting to use it

bitcoin utility is declining. even LN devs admit that.. its their whole sales pitch. they hope to gain merchants on the LN network because bitcoin is losing merchants

getting people off the bitcoin network is not scaling bitcoin.

its also not about zero fee.. its about useful fee. EG not an hours labour for 3rd world countries.
this can be implemented EASILY using a fee mechanism.

but
the whole 'free market' is not actually a free market because its a suckers buzzword to just say devs cant be assed to code something so leave it open for it to be unruled and wild west and out of control

here is some tips
fee mechanism: utxo confirm count = score. more confirms= better score= pay less. this then makes spammers pay more so spammers are more incentivised to use LN to save but still spam, and normal users are not penalised by spammers as fee rates are not based on everyone paying average. people can then use the score system to plan priority better too.

blocksize: transaction count increase onchain = more users. = less fee per user but the total combined fee of block adds up to MORE
(must have been fun at your birthday parties as a kid. instead of inviting 30 kids all with gifts, you preferred only 2 to come and they had to bring gifts worth 15x the normal gift value just to be allowed to stay at your party)

more users using bitcoin: more people= more opportunities for pools to sell coins. after all if no one is using bitcoin no one will buy it. thus pools wont get to exchange thus pools die. so again deburdening bitcoin does not help pools
(playing pass the parcel at a party is less fun and doesnt last long if you only invited your mom and dad, and there is only 2 gifts to play with)

Haha. That's cab companies, we are talking about Bitcoin. Usage has increased. Why, do you believe, are the fees high?


I believe franky1 really doesn't understand the game theory, and the present dynamic between the network, the miners, and the users/economic majority. Or he's trolling.

utility isn't declining. the network is drastically expanding. bitcoin is becoming exponentially more useful all the time. the on-chain micropayment niche might be dead, but why do think that is the only metric? maybe we need to find a better solution for micropayments than to alter bitcoin's economic design just for the sake of them?

you seem to be coming from the perspective that we can wait decades to raise fees. next year, the coinbase reward drops to 12.5% of the original reward. but you seem to think users should continue to pay nothing, doing nothing to replace the falling mining revenues, in order to bootstrap the network.

you really think that's a sustainable approach---to let users pay nothing for decades and then lower block sizes to jack up the fees when hash rate starts plummeting in response to no block rewards? i don't think users will have much interest in that. it's a tough pill to swallow but it'll be a hell of a lot easier to do it now with a fee market (especially since it requires no consensus change) than later.

First, the median value would be more relevant for an analysis, because big hubs may be distorting the picture (the last time I checked the network structure it was a mix of the hub-and-spoke and the decentralized model, and there were definitively some big nodes with hundreds of channels).

I don't think that the average person needs more than 2 or 3 channels, often one alone will be sufficient.

Second, why should you open channels monthly if you only transact once a week? Remember that also average persons can receive money via LN, and that's where the potential lies. People would be most likely directly be connected with an exchange so they can "refill" easily, e.g. with their salary.

It depends on "usage patterns", but we can at least do a basic estimation.

Let's say we define an "user persona" that wants to transact one time per day. He normally refills his channel via LN one or two times per month, but each 3 months he needs a "refunding" via an on-chain channel opening transaction.

This would give us approximately x50 scaling (up to roughly about 300-500 tx/s or 25-30 million tx/day): we have about 100 LN transactions each 3 months (3 x 30-31 plus LN refills) and need a new channel opening, whose size approximately doubles a "normal" 1-in-2-out transaction.

With channel factories and taking into account the same "usage pattern", we could reach about ten times more, so we get a potential of hundreds of millions of transactions per day.

However, we have to take into account that we need some space on the blockchain for 1) normal non-LN transactions, and 2) channel closing transactions in the case of scams. I would estimate roughly that this would takes to a capacity of a third to half of the number I wrote above.

if only windfury had a clue
its like he is saying "uber scales the new york yellow cab company"
.. um no. the yellow cab companies customer base is in DECLINE

scaling a network by deburdening the network of utility (facepalm)
hint to windfury: more research, less echo chamber script reading

It will scale the Bitcoin Network, but I believe no one knows by how much. 100x? 1000x? Or maybe less? Because of that unknown, then we simply cannot predict how much it will impact the volume of Bitcoin's usage.

the https://1ml.com/statistics website has stats of
nodes with active channels: <5k
number of channels: <35k
thats an average of 7 channels per active node.

so if your funding 7 channels (onchain data minimum 1 in 7 out) then the close sessions needed at the end of 2in 2out X7(14in 14out)
again for emphasis doing more than 7 transactions onchain(8-15) just to set up and close,
so if someone is only transacting once a week. they are not really benefiting if they are using monthly channels(4 a month)

as for the under $100 stuff..
the fee war is not some technology limit. its a human imposed and enforced thing by those advocating for fee wars.
implement a fee mechanism into bitcoin. and onchain fee's become respectful and people who dont spam daily can use onchain even for smaller than $100 amounts.

but thank you for proving a point. devs choices to not implement a fee mechanism has made people foolishly think that bitcoin cant cope with low fee's and so think LN is foolishly the solution.. the real solution though is an actual fee mechanism IN BITCOIN

It's a rough estimation based on the observation that the median transaction value is about $400 at this moment. See this graph. This is however a relatively high value compared with the last 6 months, at some days the median was even below $100, in this cases you're right.

I am currently not using LN regularly (besides from a little testing), but even now - when we're far from the frenzy at the end of 2017 - between Monday to Friday I often refrain from spending on-chain BTC even if I wanted, because of the high fees.
So no, it's not only for "spammers". I think LN is useful for everybody who wants to move funds of a value of less than $100 more than once per week.

It definitively has drawbacks like the "have to be online problem", that's why I'm still not regularly using it (other simple reason is that almost no BTC-accepting service I'm using accepts LN, but I may search for alternatives).

25%??

ever checked the UTXO set.
not even a few percent actually spend funds daily/weekly. so LN will only be useful for a small percentage, while those remaining on the bitcoin network are drastically effected negatively by the whole dev instigated tx limiter and fee war

not only that but:
LN is a niche for people who spam(spend more than once a day)
by the time someone gets paid. works out how much they want to deposit into LN for spending habits of the month. works out of that share which 'channels' would best satisfy having which amounts to have for the best chance of good efficient service. and then pays the fee's to set it up.
if they are not using it daily they wont want to
have to keep the app open to ensure their counterpart is playing by the rules.
accept/deny random requests from routers asking to use them as a path
worry if they autopilot the app or factory/watchtower it, that route raiders wont empty their channel

How did you come to the number of 25% ?

I believe way more transactions are effectively sending less than 100$.


Did you just 'count' all transactions with inputs of less than 100$ ? Because that would have been a mistake.
IMO it is pretty hard to get an accurate number.

If i have 1 UTXO with 1 BTC and want to send 0.001 BTC, the input will still be 1 BTC and probably not count towards your <100$ transactions ?
1 BTC has been transacted, but effectively only 0.001 because 0.999 went back to me.

We won't have this 'problem' of getting an accurate number when using the LN.


Based on this i believe way more than 25% effectively are <100$ transactions.

In short: LN won't solve the scaling problem on its own, but it is a very important part of the puzzle.

Today, you can open roughly 100000-200000 channels per day. This would obviously not be enough for a really massive adoption, but is more than enough for current Bitcoin usage "as a currency". There is no reason for not using LN for small transactions up to $100 or so, which make up to about 25% of current BTC on-chain transactions.

For a really massive adoption (millions of new users/day) you need either "big blocks" or an intermediate layer, or both. The "intermediate layer" could be a pegged sidechain or a second Lightning-like layer, like the Channel factory guys are proposing. CFs are multi-user channels, where e.g. 10 users open a LN channel, and all members of the channel can open and close "sub-channels" between individual members with off-chain transactions.

Sidechains are basically independent blockchains pegged to BTC - if there is a reliable mechanism has to be studied.

Even if neither sidechains nor CFs work (I hope that's not the case), a "rough" solution could be simply to use altcoins as alternatives. If we had several relatively price-stable blockchain currencies then this could make up an ecosystem which could have enough capacity for a big part of the world population, and LN could be used for "lightweight" swaps between them.

The sidechain idea as an intermediate layer is however the solution which I consider the best one, at the moment, because it shares most properties with "normal" blockchains, so for example the "offline problem" isn't present. Channel factories could complement them.

I don't see why these things need to be connected to a public blockchain. They can all be connected to a private network with a gateway to the public blockchain. I don't think we need much more than 1 node per household or company.

I don't think someone would need to open 5 channels if they only had 30 transactions per month, or even if they made 150 transactions per month. There are enough well connected nodes so 2-3 open channels will be enough IMO. There are several businesses whose primary service is to open many channels with many people, and collect various fees for doing so.

I also don't see any reason why a user would be closing all their channels after only a month. I believe a more realistic use case would be a person is paid by his employer on the 1st of the month, the person pays their various bills and expenses over the next month, and repeats on the 1st of the following month. I can see a person closing a channel after say 6 months if they accumulate so much money, they no longer have enough inbound capacity to receive their paycheck, but even in this case, the person could elect to receive their salary on-chain, and not close their channels.

 

because not all counter parties are guaranteed to b funded or online to make payments for you. you will find you will need to open more than one channel to have a reliable service. so opening costs would be more than $2
also you would have to close the channels eventually.
on average most open 5 channels. so thats $10 upfront with maybe $5 when closing. so thats $15 of fee's just to use LN

now how many transactions in say an average month(average preplan spending habits) do you think you will make
30=average cost $1         60=average cost $0.50        120=average cost $0.25     6000=half(fraction) of a penny
LN is not a solution for everyone as not everyone makes transactions often

...
IOU's can be signed too.. just not settled.
imagine bank cheques untill the cheque is cleared a signed cheque is just an IOU
old bank notes, with signatures from important fed guys are IOU's 'i promise to pay the bearer the sum of..'
credit/mortgage agreements are IOU's

...
as for the whole 2 party sign transaction stuff. seems your reading old 2016 documents about LN. read up about factories, and htlc's. these dont get broadcast.
also realise LN payments themselves are not locked into blocks and community vetted. they are just agreements between 2 parties. we already have cases where parties are opening channels using collateral thats not even bitcoin. but where others if they seen the msat balance would think it was.

...
but getting to the topics point. LN is not a bitcoin network. it is not a feature solely for bitcoin. it actually requires people to drop using bitcoin and use this other network. thus does nothing to scale/adopt bitcoin, but instead to make other networks of commercial gain more attractive
yet people forget the whole fundemental reason for bitcoin
a. independant self control of funding/wealth
b. pay anyone anywhere without barrier
c. no trust required
now lets look at LN
a. requires a counterparty, infact teams of counterparties for routing, all signing get your payment to destination
b. counterparties/routers not online 24/7=barrier.
c counterparty risk they can edit their node to do something unexpected, no guarantee of settlement

This is not how Lightning works.

If you and I open a Lightning Channel, each with 5 BTC in the channel, there will be a funding transaction on the blockchain totaling 10 BTC. Each time we transact, we will both sign a new closing transaction, that we do not broadcast, that would "settle" the channel with the amount of bitcoins each of us will have upon closing the channel. At no time will the closing transaction reflect either of us having more or less than our respective balance, and the total will never be more or less than 10 BTC (less transaction fees).

Anyone, including you or I can write any proposal we want, and can write any code we want, even if we know it would not be a good idea. That person is proposing in a nutshell a way to make loans via the LN.

Yes this is a risk. There is this same risk if I were to buy bitcoins from someone in exchange for my cash; I could receive the bitcoins first, wait for a couple of confirmations, give you my cash, leave and realize the transaction is no longer valid after the transaction I received was double spent after a miner orphaned many blocks.


LN will not allow bitcoin to scale to infinity. The number of channels that can be opened or closed per day is not very high, but once channels are open, a very large number of transactions can take place over the LN network.

Additional technology improvements needs to be done before bitcoin can scale to Visa levels, but there is no need to create a solution that scales this much now because we are far from having that kind of demand. If I am in California, I have no reason to download every transaction someone does in New York, or in Western Europe. Having every transaction recorded on the blockchain is unnecessary.

If the cost to have a transaction confirmed on the blockchain is $2, if I wanted to buy a song on iTunes, or a cup of Coffee at Starbucks, there is no way I would use an on-chain transaction because the cost of a confirmation would be as much as what I am buying. If I already have a LN channel open, I can buy either of these items via a LN invoice that costs small fractions of a cent to pay, or if I do not have a LN channel open, I could pay $2 to open one, pay via a LN invoice, and pay for many other things over time, each costing a small fraction of a penny.

you might want to check into channel factories before assuming the above
you might want to check into channels using alternate collateral before assuming the above.

LN is not a community network where the whole community compare a blockhash of thousands of transactions.
each channel is a private agreement between only 2 parties and they can make their own agreements.
they can even agree to use certain wallet brands that handshake differently their agreements and do other different things, like not penalise the whole channel value or do other things that some other wallets dont.
both parties can both edit their own nodes to a new agreement they both can shake on

for instance some wallets accept just a non backed msat based channel balance which they can open and close and split and move around different channels without having to broadcast a bitcoin sat tx

a question of many points
A. a solution for everyone?
looking at the UTXO set only 2.5% moved in the last month.
for these users that do spend every month, these users have to plan their LN spending habit, and here is a few reasons.
1. some may only want to:
    buy coffee once a day so only need to lock say $3*30($90)
    be coffee routers for thier 5 friends so need to lock say 5*$3*30($450)
2. knowing not everyone wants to be online 24/7, requires:
    spliting/multiplying funds over more than one channel
    and/or
    finding reliable channel parties- usually ends up as hubs (account managers as the co-signer aka bank2.0)

what this leads to is prep work and also bitcoin transactions of multiple channels(outputs)

again with only a few % of coins moving regularly enough to warrant using LN because only a few % spend more than once a month to get some savings on LN vs just making a straight payment to the destination. LN is not really a full solution for everyone.
EG if you only spend once a month. why lock funds into 5(average) channels and hope their all online to spend all your balance once a month costing you a 500byte tx, where you can just send it direct to the destination whether online or offline in one output onchain for less bytes(less overall fee)

---

B. a solution thats better?
many argue LN is better. but think about it without the hugs and kisses. ..
users unable to pay/route if other parties are offline
other routers spending your balance leaving you with less holdings in a channel for yourself
requires counter party signing which is less independence
require preplanning or reliance on large services to act on your behalf (bank2.0)

and to add to this. if your funding 5 channels using 500byte tx to open. the counterparty is also funding them channels. thats 1kb for setup and then closing off is combined maybe 500byte. thats 1.5kb of data just to set up a reliable LN system for 2 people, for on average a month. this can be advantageous datawise for users that do more than 6lean transactions a month. but as shown by UTXO thats less than 2% of the network

---

C. how much scaling does it offer?
based on bytes this could be as much as only 2000 users a block setting up, which is only 288,000 a day or ~8.6m a month IF all tx's were setups and not closings / standard bitcoin onchain transactions.
then closing is again another hoard of transactions needed onchain.
on average if bitcoin was only used for LN to open/close channels based on normal human capability of preplanning their spending one month at a time. only 4-5million people would get to use bitcoin

summary:
with there being 55million UTXO's or 35million blockchain.info wallets. stats 'suggest' there are more than 5m users. so if LN was the 'only way' to make payments in the future for everyone. points A.B.C show LN wont satisfy everyone for many reasons.