Topic: My conclusions about the Lightning Network and a request for critique by smarter - page 2. (Read 463 times)

1. I never asserted that Bitcoin would remain crippled forever. Regardless, I won't go about defending myself here. You cherry picked one of my words to discredit my questions instead of answering honestly and openly. I never said that LN is the only solution. Obviously, there are many solutions being proposed. My assertion was that layer 2 solutions cannot be used INSTEAD of layer 1 solutions -- only in tandem.

2. I have reviewed all of these aspects. None of them solve the concerns I put forth. Splicing doesn't. Eltoo looks promising but it does require a core Bitcoin update which strengthens my assertion that layer 2 solutions require layer 1 solutions to work. Channel factories would also be beneficial to LN scalability, but I don't think they would solve the issue of "Dust" transactions, nor point 1 or 3.

3. I agree there is the potential for a middle ground. But I see it moving in the direction of hub and spoke. Why do you disagree?

4. Perhaps you're not familiar with some of the information in my argument that led me to this conclusion. I would recommend you look into this: https://medium.com/@peter_r/visualizing-htlcs-and-the-lightning-networks-dirty-little-secret-cb9b5773a0
Feel free to comment with your thoughts afterwards and we can continue our discussion!

I appreciate your response but I find your points unconvincing.

1. I will.

2. This entirely overlooks the argument I made. I'm saying that the way LN is set up today might eliminate that choice to some extent (when transaction quantities are lower than the on-chain fees). Your response wasn't relevant to this point.

3. This also is a flawed response. Just because you can't see a reason for it to happen, doesn't mean it can't/won't. No one thought a bank run would happen before the Great Depression, yet it did. I can imagine several scenarios where this could be a reality. For example, say we saw a dramatic overall economic crash (or a crash of Bitcoin and crypto) and people needed to withdraw their assets to pay for their bills. This could result in a series of panic sellling.

Why do you think that most money entering channels will stay in channels? Regardless, I don't disagree with you. But that's not the point of my comments.

I appreciate your response, but I don't appreciate you not addressing my questions and then stating how I need to be "much better informed."

Appears to be some common false narratives here, that need to be corrected.

1) Bitcoin relies only on lightning to scale which is not something any developer has suggested. Your insinuation that layer one needs to be scaled is something in active development and has always been part of the roadmap thus suggesting "crippling" is simply dishonest

2) There are some deep misunderstandings of lightning in your post that doesn't consider the effects of eltoo, splicing, channel factories.

3) The assumption that lightning will either be decentralized or have centralized hubs. This is a false dichotomy

4) The assumption that highly liquid channels or so called "hubs" even have the ability to censor transactions when in fact they have no idea where the tx is going , where did it start, and who necessarily sent it as designed.  

Sorry for being skeptical , but your post is so misinformed that it leads me to believe you have barely done any research or just deliberately spreading more misinformation to attack Bitcoin. There is no need for a point by point rebuttal as your concerns have already been addressed many times in detail and its clear you have not even begun to research the answers.

op,

Thank you for very clean and to the point analysis and conclusion. In bitcoin core campus people like to remain hopeful and positive about LN simply because there is no scaling roadmap and it would be very disappointing without LN anyway. Proceed confidentially with your results and don't listen to Carlton Banks it is what he does, defending mainstream bitcoin like a knight  

Besides some other LN specific details (like liquidity crisis which is a stronger centralization factor than routing) , it would be also useful to have a bigger picture of the problem:

As the first decentralized, secure and public p2p cash system ever, bitcoin is not just some disruptive technology, it is a revolutionary game changing and historical event with unpredictable socioeconomic and technical impact. It is very unlikely to have another technology (no matter on top of bitcoin as a layer or not) in the same field (electronic p2p cash transfer) just in few years.

My point is, neither LN nor any other comparable payment technology would be ever feasible to exist, no matter what in like a century or so. Meanwhile You can improve bitcoin, (actually you should, lots of flaws out there waiting to be fixed) but you can't put another layer on it without any price, ther is always a price and for bitcoin it seems to be something about decentralization, just like the case with LN.

1. check out lightning mailing list, they're discussing a solution to that basic problem

2. if you don't want bigger nodes to force you into doing something you don't want, don't use them. There are thousands of nodes already, and the total liquidity is still very low. There will be ample opportunity for people with good intentions to run LN nodes, and those people will have their good reputation rewarded

3. why would everyone close their channel at the same time? That would take extraordianry co-ordination of every single person on the LN


Lightning reduces the need for onchain transactions by thousands of times, that increases overall capacity beyond anything that could feasibly be achieved on-chain. Settling off-chain will happen increasingly less as Lightning protocol matures, i.e. most of the money entering channels will stay in channels.

So saying "Lightning depends upon on-chain capacity" is very true now, beacuse 1000BTC is a low amount of BTC to serve everyone's needs. Later on, that amount will be much higher, settling will be less necessary, and so on-chain capacity will barely impact Lightning usability (and on-chain capacity will be massiely freed up anyhow, because small and frequent transactions are cheaper & faster off chain)  

---

you need to become much better informed about lightning before you can attempt the role of providing others with information

I am writing an in-depth article about the Lightning Network. I want it to be comprehensive and balanced, educating people on the state of LN, how it works, as well as on current internal debates over its directions and concerns.

I generally publish on Medium (@noamlevenson).

Currently, I’ve read everything I could on the LN, including criticisms and responses to those criticisms and so on. Before I publish my article, I want to post my conclusions here for anyone to present any counter-arguments. Please do so.

1. The first challenge that I see forming in regards to the LN is the difficulty in maintaining a network “map.” Nodes need a topology in order to route transactions. Problems with this are both the eventual enormous size of the topology and the number of messages that would need to be sent in order to determine the topology. I see two solutions: one, we only use the network for microtransactions and those transactions with few “hops.” Or two, we rely on centralized hubs that maintain the network for us.
* 1.a. However, I also recognize that we might not need to find the most optimal route - “good enough” might work. But can we achieve good enough without relying on centralized hubs? 

* 1.b. How do LN wallets today manage to route messages? Do they maintain a network map? What is the anticipated consequence of a network with millions of users? 

* 1.c. Additionally, what happens if, when using onion routing, an offline node is encountered? Doesn’t the end destination need to be revealed if a new path is to be determined? In other words, won't the onion encryption need to unwrapped?


2. Obviously the hub and spoke model of the network comes under a lot of attack. I do think that to some degree this is an eventual reality of the network. I don’t think this would be the end-all of the LN if it does occur. However, it introduces the following risks:
* 2.a. Rising costs of BTC onchain transactions give hubs more power over individuals. This is especially relevant to any transactions that fall under the “dust” level of BTC (i.e. the cost of onchain transactions). If a transaction falls under this metric, time lock hashes cannot be used and the transaction ceases to be “trustless.” At this point, hubs could refuse to route funds (after the funds were locked), unless certain criteria were met (holding the funds hostage). If the user didn’t consent, they could withdraw their funds, but the user would lose all the money in the onchain transaction (because the whole sum would be "dust" and would go to paying the miner). Additionally, it could be very costly to execute an onchain transaction to open up a channel with a different hub, preventing people from switching to another hub if the hub proved untrustworthy.
    * Splicing is nice for other things, but I don’t think splicing would solve this issue at all. 


3. Fractional-teller-banking presents a serious problem, again highlighting why an unscalable layer 1 will impact layer 2 solutions. If everyone on the LN wants to withdraw their funds (a “run”), the BTC onchain validators would be overwhelmed. Now, this isn’t a huge issue as eventually, the network will process through the waiting transactions. However, if users try to push old “states” from channels onto the main chain to steal from users, then a problem results. Because of the network lag, the counterparty might fail to push a “breach remedy transaction” (i.e. a transaction invalidating the “old” state and preventing the fraud.). But because these remedy transactions must be submitted in a timely manner, a backlogged BTC core layer could prevent the transaction from being processed in time and lead to the success of the fraudulent party.

My conclusion: Ultimately, the LN as a layer 2 solution relies on layer 1: i.e. the BTC core protocol. I think that there is a place for the LN, but it doesn’t remove the necessity of scaling BTC’s layer 1 and ensuring that fees stay reasonable. The LN has solid use cases, but not nearly as many as people think. And ultimately, it is certainly not a solution to a crippled BTC network — but only, in the best case scenario, a complimentary service for niche use cases.
I don't see the LN ever being the global payment network that some people envision.

Looking forward to your responses!