General Information
How are bitcoins on the Lightning Network different from on-chain bitcoins?
They are exactly the same coins. There are no Lightning Network tokens. The only difference is that bitcoins are stored in multi-signature addresses and transactions are settled between two parties without broadcasting anything to the blockchain (except when opening and closing the channel).
There are errors in the General information.
The Bitcoins on the blockchain and Lightning Network are not the same coins.
(They literally can't be as Bitcoins can not leave the bitcoin blockchain.)Otherwise , when LN made
any changes to the amount it would instantly be reflected on the actual blockchain, not waiting for a final settlement transaction to make the two ledgers match.
Incorrect.
LN is a name given to a method of using Bitcoin transactions in one particular way. Bitcoin consists of transactions that can be signed and broadcast over the Bitcoin network. There are many reasons to sign a transaction and keep it offline until a later date, and LN simply takes advantage of this ability. Bitcoin has the ability to create 2-of-2 multisig transactions where you simply delay the broadcast. If you consider this basic usage of transactions a different "coin" then practically every Bitcoin transaction that has happened is a different "coin" and every smart contract that ETH uses that hasn't been broadcast yet is also a different "coin" for some time, which would makes the term fairly meaningless. In terms of cryptocurrencies, using blockchain transactions of said coin that are sufficiently mathematically and cryptographically secured by a specific blockchains should be considered to be of that specific coin. This helps us use the term with relevancy when talking about a coin or alternative coins.
LN is a very cool "smart contract" of plain-old regular Bitcoin transactions on the Bitcoin chain.
LN is a offchain fractional reserve IOU system, that can be used with Bitcoin or Litecoin or anything the LN network is coded for.
Incorrect.
It's important to distinguish a banking IOU or fractional reserve IOU in it's most nasty feature: it can be fraudulently denied or withdrawn and requires trust in the hands of the banker. A major point of LN is that it requires zero trust. It is secured mathematically and cryptographically, since it is using Bitcoin transactions with a protocol that cannot be broken (minus any bugs, but that is the same of any nascent technology). Due to this, you cannot "fractionally" give someone more coins as if you have more coins that you do. This is what banks do.
With LN, you must prove that you own the Bitcoin you are transmitting over the LN by signing the transaction correctly which is then verified by the other node. If you pretend to have more coins than you claim, the LN funding transaction would simply fail (which happens on-chain to prove it).
LN is far from an IOU in that (most critical) sense. You could consider every Bitcoin payment an "IOU" on a magical global ledger, but again the term becomes less useful for the purposes of talking about cryptocurrencies. Since you cannot counterfeit, charge-back, or abandon any promises of payment with Bitcoin transactions through mathematics and cryptography -- it should be considered just hard money. The same is with a LN-type of Bitcoin transaction -- there is no way for a party to perform the same tricks of an IOU of a traditional bank.
LN is not a true part of bitcoin. As Bitcoin can be used without LN and LN can be used without bitcoins.
Incorrect.
LN-implementation of Bitcoin transactions is second-layer technology, and as such, Bitcoin Lightning Network cannot be used without Bitcoin. Bitcoin LN is a particular way of using Bitcoin. LN technology can also be implemented on other cryptocurrencies with the same mathematical security. For example, Litecoin has also implemented LN for their chain.
LN notes/tokens or whatever you want to call them , are only and i repeat only representations of bitcoins or litecoins,
and only exist on the LN network , they transact in IOU of the given representation of value only.
Incorrect.
See above. There is no representing here. It is purely regular Bitcoin transactions, and there are no other blockchains or coins involved in a LN-type of Bitcoin transactions anymore than there is involvement of other coins when doing a pure 2-of-3 Bitcoin transaction or a m-of-n Bitcoin transaction. It's a particular type of multisig transaction, nothing more. It just happens to have a really cool name, and it operates with mathematical and cryptographical security (Zero Trust) without clogging up the chain (yay, scalability!).
There is nothing new under the sun.
*Banks used Gold or Silver, and let people transact with their bank notes and redeem those notes for gold or silver, if they so choose. *
*LN uses any segwit coin and lets people transact with their LN notes/tokens and redeem those note/tokens for any agreed upon segwit coins, if they so choose.*
Incorrect.
Your bcash favoritism seems to have leaked there with your use of "segwit coins". Bank notes have a fundamental flaw in them, in that they require trust. Bitcoin eliminated that need for trust, and further, Lightning Network ensures that we don't lose that hard money security by also not requiring trust. This is where your comparison truly breaks down.
Bitcoin is extremely powerful because of the fact that once I own the private keys, there is NOBODY who can deny me the coins. Lightning Network is powerful for the exact same reason. That once I have made a Lightning Network transaction, there is NOBODY who can deny me the coins. We get the same level of security, with an awesome level of scalability, and even bonus benefits in privacy.Any denial of the above is pure nonsense.
If no one wants the truth to be mentioned, then I suggest locking this topic and restarting with a self moderated one ,
if the intended purpose is nothing more than a public relations hype machine.
G'Day
FYI:
Just to show how LN is nothing more than a Offchain Bank,
Here is Lightning Labs detailing how to swap LN IOUs of Bitcoins for LN IOUs of Litecoins.
At no time do either the bitcoins or litecoins actually leave their own blockchains.
Proving LN IOUs are transacting in pure representations of each coin, and only onchain transactions redeem the IOUs.
https://blog.lightning.engineering/announcement/2017/11/16/ln-swap.htmlCategorizing cryptographically secure transactions that cannot be revoked by others is the furthest away from "offchain bank IOUs" that I can think of in terms of transactions. It's important to understand the security around the technology and the fact that it does not leverage any other chain other than the one it is implemented with.
This reply is not meant for Khaos77 because it seems there is some ulterior motivation for someone to be this incorrect about a technology yet seemingly so confidently wrong. In this case, I'm not here to start an argument - but I simply want to give people a chance to understand Lightning Network on their own. I, myself, may be incorrect about some of these things, and I hope that other Lightning Network experts can chime in. This reply is meant for anyone else watching the thread.
Now, I have to get back to writing code. Have a nice day!
