Topic: Lightening network sounds class or am i missing something? (Read 827 times)

Well that is good and hope upon implementation, it will improve transaction time and speed. I wish this feature t be sucessful since this is for the enhancement of bitcoin and its services. Looking forward.

ONCHAIN is where the private key holder has sole signing control.

LN is dual signing control. where 2 peers have to work together and agree on what they both should sign/deserve.
(much like a bank/credit union... joint bank account) meaning you are not in sole control.
however they can refuse to sign their part to cause you hassle, but in a joint account/LN you too can also refuse to sign and cause them hassle. so there is (although can be maliciously abused) a economical incentive to both not lose out

exchanges ask you to hand them funds. although exchanges can be social/moral to pay out what is deemed you deserve there is no power by you to refuse, veto them keeping it, and now power blackmail them to sign funds back to you. its literally 100% theirs.
('deposited into MTGox:' "aaannnd its gone!")

exchanges can do fractional reserve. like MTGox, cryptsy, cryptorush, etc. where they pretended to have funds to let people play around on the order books, but the actual bitcoin were else where. (hacked/spent on penthouses who know)

LN is not as straight forward. but yes with the right amount of confidence talking to a naive person you can (not quite) fractionally reserve, but scam your level of collateral to profit elsewhere.

EG
say you paid in 2btc into a LN between you(a) and someone else(b)
you hand (b) 1.999btc for an item. but dont close the channel. meaning you only have 0.001 to your name.. but nothing is showing this onchain. and you now have goods/service to the value of 1.999
now forget about (b) he no longer important...

you then seek out a naive user(c) and because they dont know about LN. you show them the 2btc setup ((a)(b)onchain) tx and claim that as your collateral and saying you have 2btc to your name(yet reality is only 0.001).

you get (c) to open a separate channel with you and request (c) pays in 2btc because you convince them that if they hand you X you owe them Y... (c) pays in and now you hold (c) funds hostage by not signing unless (c) hands you a blackmailed amount.

all because of the myth that you had 2btc collateral.

its not strictly fractional reserve. but its using evidence of funds that dont belong to you to financially gain by faking how much you are actually worth.

Craig wright done this(not as an LN, but as a FIAT banking con/scam). by faking he had 1mill bitcoins to then grab hundreds of millions of australian dollar. even though craig wright didnt own any bitcoin

because in LN the multisig has 2 addresses.. you can sign a message to say that you are involved with that multisig.. which is one confidence layer extra than what craig wright was ever able to do.

again
even if the funds are now technically (b)'s.. showing an outsider the 2btc ONCHAIN exists in a multisig that you can sign a message linked to an address inside the multisig, can get you further than craig wrights 'scam' got him.

No this is all wrong


The way the Lightning payments are strcutured never put your BTC in someone else's possession, you're confusing Lightning with 100% off-chain solutions like Xapo and Coinbase.

Lightning is settled on-chain, Coinbase and Xapo can't do that. All Lightning transactions are processed using the Bitcoin mempool though, which I believe everyone is that bit more familiar with these days. That means LN transactions are all validated by Bitcoin nodes upon entry to their collective mempools; the CLTV (BIP68) feature locks the transactions in the mempool until they are settled on the blockchain. No IOUs. No fractional reserve.

Incorrect. Education for you:

Education for you:

https://bitcointalksearch.org/topic/m.16957687

Thanks for the replies, i think i see the worries, some may be legitimate.  I think i general it sounds like a good idea but its hard to see how these things play out in reality.  If those who want to continue to use on-chain payments want to, then happy days and the companies and those who make thousands of transactions everyday want to use the LN then good for them.  If Dotcom lives up to his promise we might not need the LN anyway. 

or your missing the even bigger picture, the one outside of the box.

dual-signed permission payments that are not same day(usually 10min-hour) immutable transactions as bitcoin.
also requiring prepaid fee's just to use LN and penalty fee's for 'spending' once inside. and penalties of closing the service early or not agreeing to sign efficiently.
(it boggled my mind all the penalties the LN creators are dreaming up to make hubs(bank2.0) profit)

anyway, you need to really look at what the ethos of bitcoin was designed for. and then look at what its being switched into.

and all i bet you can reply with is "it cant compete against visa's 1billion customer base next month without LN".
to which i will reply. we dont and wont have a billion users using bitcoin next month we dont need to be at that rate next month or next year

let alone not having to worry about 1 billion users.. bitcoin is not even accepted in all the locations visa is. so the transaction count is less.

EG Visa handles on average 42tx a month(for each customer) for a billion customers
bitcoin averages people do 1 transaction a week for about 2.5 million bitcoin users.

what we NEED is to get passed the 2.5million average user utility we are limited at, and get to lets say a 5-10million user utility short term. then grow naturally as bitcoin grows.

1mb =2.5m users doing genuine bitcoin transactions
1mb =260,000 users doing comparable transaction utility to visa

2mb base 1.6mb witness(not combined weight) = 9.1m users doing genuine bitcoin transactions
2mb base 1.6mb witness(not combined weight) = 940,000 users doing comparable transaction utility to visa

again bitcoin is not spendable in all retailers so forget the visa stat(42 uses a month). knowing an average bitcoiner only uses bitcoin once a week
moving to dynamic segwit blocks(with a safe 2mb base 4mb weight) allows for 9.1m bitcoiners to do what they do on average.
moving to restricted segwit blocks(with limit 1mb base 4mb weight) allows for 4.55m bitcoiners to do what they do on average.

i would say going to 4.5m-9mill average user capacity while remaining in the 4mb weight, which core deem safe, is an achievable goal short term and allows more users to use bitcoin. or a quarter of current bitcoiners to start spending 10x more often than usual
without hidden fee's and penalties like LN is promising hubs(bank2.0) can profit from

i'm not sure you're right about this...
but now i wonder if you could spend your "LNcoins" on two different/independent channels at the same time....
no wait thats probably what the time lock is for? fuck IDK
ahhhh
LN is scary shit to me.

I don't understand it, I won't try to say I understand it, I likely will never understand it until I take the time to actually sit down and figure out exactly what it is supposed to do.

Essentially it could be a benefit, and I don't know why people are wary of it, but it all comes donw to the fork and how people decide to implement it. Too much control for the devs of the network means that it's no better than using Segwit, and I honestly don't know enough to give a decent opinion.

Think about it,
You will deposit your BTC with the LN network, which is offchain.


Basically every transaction that does not go on the blockchain is basically an IOU from the LN network for BTC, which if you stay in LN offchain , they never have to pay.  

It can work the same as banks,
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, and holds reserves in amounts equal to a fraction of the amount of its deposit liabilities.[1] Reserves are held at the bank as currency and balances in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.[2]

 

FYI:
Others have also made this connection.
https://bitcoinonair.wordpress.com/2016/10/08/fractional-reserve-on-lightning-network/
https://www.reddit.com/r/Bitcoin/comments/56ehi1/fractional_reserve_on_lightning_network/
https://lists.linuxfoundation.org/pipermail/lightning-dev/2015-December/000400.html
http://www.wallstreettechnologist.com/2016/10/03/lightning-network-will-it-save-bitcoin-or-break-it/

FYI2:
Fact: you won't really own the BTC on the LN, just the IOU, which like any exchange or bank they can deny you or confiscate your IOU, since they control the system.
They will have destroyed the promise of BTC freedom, by promising convenience and higher transaction capacity, right back into financial slavery.  
Also if you get sick or die, they will just delete the IOUs and keep the fractional amount of BTC behind it for their selves.
 

where do you get this "LN will open the door to Fractional Reserve Banking with BTC."

sounds unbelievable.

---

my biggest problem with LN is the unintended and unforeseeable consequences.we know bitcoin works, and we know it works well. we have no idea about this LN thing... it appears to be very complex, and very easy for users to make mistakes that could cost them.

my second problem with LN is the idea that its not going to be simple to use.  it was hard enough to get poeple to understand alice sends bob BTC using bobs bitcoin address, asking them to understand and use LN will prove to be a complete failure. I love how segwit could solve the accounting problem of... say... Bitstamps wants to let users move BTC to/from TheRockTradingPost, and they need a way to move 1000's of TX back and forth without using the blockchain and without a trusted 3rd party. but i dont buy that this tech will be useful to the "home user".

my third problem with LN, I dont want to be Forced into using it, by trying to convince that main chain scaling( block size incress) will make bitcoin centralized, and thats why 1MB is "as good as it get", and fees and delays are an acceptable trade off. i call BS on that, i a think there making up excuses to push poeple of chain.


TD;LR   LN is fine, as long as you dont force poeple off chain with high fees on a 1MB block

Offchain transactions are a requirement to scale, using different companies Gift Card systems or internal payment networks would work ,
but would not give them the ability to create a fractional reserve, as all external transactions between companies will require the blockchain.

LN will add direct fractional reserve ability to its network, which puts the people right back in the same situation as they are now with the banking system,
only the stupid or corrupt behind this endeavor will deny this fact.  


 

FYI:
Now we all know why they don't want the simple route of just increasing block size or lowering block speed, neither of those options would let them get away with creating a fractional reserve system like LN will.

Because most people don't like change.

Ans also because some people fail to see the bigger picture, they think every transactions in the world should be stored in the blockchain. How silly? You must seriously lack some vision to think something that stupid.

After closer look at LN,

LN is Offchain Transactions ,

Whether anyone believes it or not , LN will open the door to Fractional Reserve Banking with BTC.
Not at 1st , LN will not dare use FRB in the beginning , however as time progress and their use grows, it will become too temping to resist.

They will monitor the network and calculate how many BTC are kept off the blockchain at a given time
to come to a ratio like LN holds 3 Fake BTC verses 1 real BTC or even a dynamic ratio that changes with market conditions.

Looks like Snidely Whiplash has made his inroads into BTC with LN. 


Sidenote:
LN could increase the fees needed to go on the block chain as a way, to make sure the majority never cause a Bank Run.

A Bank Run on BTC as it is now is impossible because their is no fractional reserves, everyone owns the full amount of their balance.
With LN , a bank run in the future becomes a real possibility.

BTC was an escape from fractional reserve banking, LN will end that. 


 

The initial thoughts leant towards that viewpoint (centralisation danger represented by the largest hubs). But I suspect that the reality will be more nuanced.


If the barrier to entry is simply an appreciable cashflow, then every BTC business will want to operate their own hub. Each business will be served by larger hubs, and that sounds as if those hubs will consolidate into a centralised system.

But maybe that's wrong too, remember that anyone with a cashflow can become a mini-VISA using Lightning, so why wouldn't the owner of the real estate (say a shopping mall) that smaller businesses rent want to tie them into a you-little-hub, me-bigger-hub deal?

It seems rather like permissionless ability to create your own Lightning hub would result in a hierarchy of hubs, not an oligopoly. When the barrier to entry is so low, and the cost incentive to find some other transaction aggregator higher up the food-chain, that outcome seems more likely. Certainly the programmers will be thinking carefully about the type of network topography they are attempting to foster with their respective designs.

Well, the majority of Bitcoiners is in favor of LN and SegWit (which is for itself a great improvement). Only a few people led by former Core developers Gavin "C.Wright is Satoshi" Andresen and Mike "Ragequit" Hearn and supported by the ruthless narcissist Roger "CENSORSHIP!" Ver are actually preferring to scale Bitcoin purely on-chain, thereby destroying network decentralization by making it impossible for most users to run a full node.

I have no doubts that SegWit will activate in the next few months, maybe even at year end. That will increase block capacity significantly and free time for LightningNetwork deployment. As I've read recently, G. Maxwell has even another capacity and privacy improvement for Bitcoin in the works. So in terms of progress in Bitcoin development, I've never been more optimistically than today. There are really smart guys working at Core, who really care about preserving the decentralized nature of the Bitcoin network.

ya.ya.yo!

i don't claim to understand how it's gonna work, i can observe the confusion and objections though.

one of the big ones seems to be surrounding hubs. people seem to think they're all gonna be some type of centralized service a la coinbase. i assume if that was anywhere near true no one would be paying lightning networks any attention.

Yep. It's possible that it won't solve every possible transaction scaling use-case, that depends alot on the design of the most popular implementation (there are something like 5 different attempts to design a Lightning protocol, so we'll have to see how that looks once they're finished and operational).

The main (concrete) disadvantage I'm seeing right now is rollout: apparently it can't be rolled out straight after Segwit activates, which I don't fully understand. It implies there's some other pre-requisite needed in Bitcoin itself, and I thought Segwit was the last one (the CSV and CLTV opcode soft-forks being the previous steps on the road)

Just reading about LN and to me it sounds brilliant, why are people weary of it?  what am i missing? is it because we need Segwit first?

Instant Payments. Lightning-fast blockchain payments without worrying about block confirmation times. Security is enforced by blockchain smart-contracts without creating a on-blockchain transaction for individual payments. Payment speed measured in milliseconds to seconds.

Scalability. Capable of millions to billions of transactions per second across the network. Capacity blows away legacy payment rails by many orders of magnitude. Attaching payment per action/click is now possible without custodians.

Low Cost. By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.

Cross Blockchains. Cross-chain atomic swaps can occur off-chain instantly with heterogeneous blockchain consensus rules. So long as the chains can support the same cryptographic hash function, it is possible to make transactions across blockchains without trust in 3rd party custodians.