Topic: Lightning Network | A boon or A bane? (Read 425 times)

Reducing the hashing power pointed at BTC only makes sense if there's a viable alternative to point it towards to. Otherwise you just have expensive paperweights and lose out on millions of dollars each day. This makes withholding hashing power just for the sake of trying to pull off a 51% attack somewhere later down the road rather unprofitable. And those ASICs are the only machines of potentially doing such an attack. And those ASICs that you would be withholding, will already be obsolete in 10 months' time the latest, so time is playing against you.

Put differently: In practice less hashing power only means less security if there's other hashing power somewhere hidden away that could try to pull of an attack. Bitcoin's hashrate 2014 was much smaller than it is today, yet in practice the network was just as secure.

Miners getting shut down because they are not profitable anymore is a regular part of the process. It's been happening for years every time a new generation of miners hit the market.




I haven't followed BCH's scaling plans, but if they really want to handle 50,000 transactions per seconds using on-chain scaling that would require the equivalent of 7,142 MB blocks per 10 minutes -- or say, 714 MB blocks every minute. Now even assuming they'd manage to compress transactions down to, say 20% in size -- something that BTC could likely also do, if such a solution were to exist -- we'd still be looking at 1,428 MB blocks every 10 minutes. Unless they fundamentally change the way Bitcoin works this is not going to end well.

Of course BCH's scaling approach could turn out to be more viable. And of course that could reflect in price and thus hashrate. Right now, however, BCH is -- by your very own definition -- incredibly insecure. It oscillates at only around 10% of global SHA256 hashrate, making it an easy target for double spend attacks should BTC miners collude and decide to do so. And unless BCH's scaling approach blows BTC's scaling approach out of the water -- which I personally highly doubt -- that won't change anytime soon.

What is needed is for miners to reduce their hashing input. Less hashing power less security.

Miners could go to BCH. BCH has only been around  6 months or so. Craig Wright has been researching on chain scaling for several years now. To me that approach seem very risky, but who knows it may work, even if it is only for the time being. He has said BCH will do 50,000 TX per second this year.  Will that happen? I don't know. Is he delusional? Maybe he is. Maybe he is not.

The lightning network will be trialed this year. Will it work out? I don't know.  Could it be a failure? maybe. Could t take a lot longer and disappoint people. Maybe.

If, and it is an if, the lightning network runs into serious problems or is delayed then people may become fed up with bitcoin. This has already happened to some degree. Bitcoin will likely lose support and value and hashing power. If this happens and Bitcoincash comes out with some big news or demonstrates something like 50,000 TX per second, then it could easily gain more support value and hashing power.

Will this happen. I don't know, but it is one possible scenario for this year.

1) Miners will still receive transaction fees, just not as astronomical ones as in the last 6 months.

2) A Bitcoin blockchain that runs at half capacity will still provide more transaction fees than an alternative blockchain that is barely used at all.

3) To make Bitcoin less secure you'd need an alt that shares its PoW algorithm and is about as profitable as BTC. Where else were miners to go? BCH came close during the hashrate fluctuations caused by its EDA but could never sustain it so far. Keep in mind that unlike other cryptos BTC only competes for ASIC miners, not GPUs.

4) And as sad as it is, but if people cared even remotely about blockchain security 99% of alts would be left in the gutter.

But if miners move away from bitcoin because the "fees" are split with off chain solutions then that will make the network less secure, which could make it less attractive to use, which would probably make the price go down which would possibly continue to have domino effect. It can't be good

That seems like a false dichotomy.

there are plenty of people who don't hate it but just think it won't work

Thank You for this post. KInda Informative it opens me to Lightning Network. what I don't like in Lightning N. is
"Centralization" as it is opposite of Bitcoin. If its centralized then it would be the  BANK FINANCIAL REVOLUTION...
IMO 

The main advantage that everyone expects naturally is the low cost of bitcoin transactions. For new people, due to high commissions, the importance of bitcoin was lost. People would pay attention to bitcoin cash.

If we are looking at the cons of every development, nothing will get done. The phones we have today is a con to the post office and letter writing but still we are using it. The most important thing is, does the pros outweigh the cons and in this case, its surely does. The argument that there is less incentives for miners is even lame, because the whole of the existence of bitcoin has relied on the miners for too long where they are quick to switch to any more profitable coin within seconds. In short, they are pure capitalist and not because they love bitcoin so I don't see how what will make the crypto more useful be put on hold because of then not getting higher share.

Lightning Network is a boon and that is what we should continue to propagate with less focus on the bane it could cause to the community.

Will consider more on a positive side as a end user as people who had to send some fractional btc where just helpless as the fees where way higher than the actual payment and above that you would have to wait for days for the confirmation. Now with this the transaction is getting faster delivered with lower fees so much beneficial thing for the users.

Exactly. If LN underperforms as a scaling solution, we can always rely on a different protocol layer instead -- whatever that alternative may be. If we simply increase blocksize however, there's effectively no turning back. And while increasing the blocksize may seem like the simpler solution, it's one of the approaches where the benefits are obvious, but the downsides are fairly subtle and thus more dangerous.

The theory is that the Lightning Network will be the scaling method that would trigger mass adoption. Many services were waiting for this scaling solution to launch their Bitcoin backed businesses. These businesses would not have been profitable with the previous scaling solution.

If you add these new services and the people who would be opening and closing channels to these services, then this will increase the transactions on the Blockchain. Some miners might even run Hubs to supplement their income from normal operations.

Most important pro in LN (for me at least) is not it's obvious technological elegance compared to simply increasing block size, but rather the fact LN will be OPTIONAL to use. If for any reason I will be too scared to put my money in LN or I somehow needed exactly the privacy Bitcoin offers now - I can simply use oldschool on-chain transaction. In fact I don't need anyone to create my own lightning 2.0 and complete with LN because blockchain will remain 100% independent from LN.

Agree on the part that it's just a short term occurrence. I see people get excited about how the fees have gone down, where they celebrate it like the 'problem' has almost solved itself, but they completely ignore the fact that the calm market and less network spamming is the direct result of the lower fees. As soon as the market gets active again, the more people will start to get active as well, which will then cause the fees to shoot up to previous highs. Honestly speaking, the most we can expect to happen is off-chain scaling. If there was another viable option, it would have been worked out and implemented already. At least for now we have SegWit to utilize further, which thus far lacks actual usage, but I hope that will change when the next Core client update becomes available.

"Who needs it" isn't really a Con though, given that the underlying Bitcoin protocol itself remains unchanged and isn't exposed to technological risk by Lightning Network. You can use Bitcoin as is and ignore LN just like you would normally ignore Counterparty or OMNI unless you are transacting tokens on the respective protocol layer.




So far I tried HTLC.me, Eclair and the Lightning Desktop App by Lightning Labs.

I loved being once again able to send tiny amount of coins, with incredibly low fees and pretty much instantaneous confirmation. My enthusiasm was a bit dampened by connectivity issues, expired payment requests, not being able to receive Lightning payments on Eclair and skepticism whether the concept of payment channels is all that intuitive. To make matters worse I recently gave a complete newcomer an introduction to (regular) Bitcoin wallets which reminded me of how many possible pitfalls and new concepts onboarding a crypto nub entails. Take the complexity of Bitcoin wallets, add the complexity of payment channels on top and I see a hard sell for everyone who isn't interested already. Once people are used to it, it's no problem at all, but the steps to get there still take some commitment.

I'm aware that LN is still in early alpha though. And like I said -- it largely depends on the implementation. Given a solid foundation I'm fairly confident that pretty much every form of complexity can be wrapped up in a pleasant user experience. We still have ways to go though.

That being said, thanks for the link, I indeed haven't tried the current zap wallet yet!




Be grateful for the respite, but don't expect it to last. The sooner Bitcoin has a stable long term scaling solution up and running the better.

It may not matter now that BTC mempool size and fees are almost back to normal:
https://dedi.jochen-hoenicke.de/queue/#3m

Please point out the last time in history when banks did not rip us off and these hubs that charge fees and interest on the BTC lent out to us
are banks, make no mistake about it and they are being ran by people that have the hardware and the BTC to finance the channel and these
are miners so cast your mind back to those same people who were charging us $55 per transaction a few weeks ago and you have the answer.

I´ll add a few:

Pros:

• (re)enables certain use cases (e.g. micropayments, cheap subscription models, sub-satoshi payments)
• potential increase in privacy, because the huge amount of transactions using the LN that is to be expected will be harder
  to analyze than transactions on the BTC main blockchain
• no forced expiry of a channel, you basically can keep it open forever if all parties agree, which saves fees for funding transactions = great for long-term relationships of parties
• probabilistic payments
  

Cons:

• the possibility of undiscovered bugs (the BTC main blockchain has been battle-tested for nearly a decade and has stood
  the test of time in spite of huge incentives for people with nefarious intentions to find bugs/loopholes, Lightning
  Network is comparatively new)
• If Bitcoin´s main use case is being a censorship-resistant store of value... who needs a Lightning Network?
• some level of monitoring is necessary to prevent people from cheating - this is different on the main blockchain where
  transactions are completely irrevocable (this is compensated by the fact that LN allows no double spends)

Have you played around with some of the already available software?

I don´t think that software like zap is worse than most current Bitcoin wallets:
https://zap.jackmallers.com/


edit: given the fact how many threads in Development & Technical Discussion are related to
the LN, I really think that it deserves its own subforum

I still don't quite believe that negative lightning fees will be a thing in practice. However the boon of lowering on-chain transaction fees combined with the ability to amortize opening / closing fees across multiple transactions can indeed not be understated.



Mining will always reach a profitability equilibrium.


To add some of my own:

Pros:

1. The ability to scale non-linearly increases Bitcoin's long term viability without giving up its core properties such as censorship-resistance

2. An increase of Bitcoin's long term viability is positive for both consumers and miners. For consumers in terms of price stability, for miners in terms of long term business prospects

3. Adds new use cases to Bitcoin as it makes micro payments viable again


Cons:

1. Depending on the implementation the user experience may suffer and make handling Bitcoin transactions even more cumbersome for the average consumer than it already is

How is this a con? Once your connected to lightning, optimally you'd want to keep all/most of your hot wallet funds if adoption is high. Your funds are not trapped either, so it's essentially the same as keeping it in your wallet.


To expand on this: Low fees, non existent fees or negative fees (if your transaction helps rebalance channels).


I don't think "low" is a good enough word - Lightning transactions happen in seconds, or near instant. Another pro is that there are no double spends.

People are quite anticipated with the lightning network and we clearly have two different sets of people either who support it or the ones who hate it due to its centralization. But what I have seen is that most of people don't even know about it properly. So here is a video that will help you learn a bit about it.
https://www.youtube.com/watch?v=rrr_zPmEiME

Now after watching this I have this list of pros and cons

Pros:
1. Less Traffic over the blockchain.
2. So low fees.
3. Low transaction times.

Cons:
1. Less Incentives for miners as more transactions will happen off chain.
2. Deposits of some funds will be required to create channels to operate.

Please add to these pros and cons if I am missing something.