Topic: Scaling Bitcoin. Is consensus achievable? - page 3. (Read 4041 times)

EG
in a channel between X,Y they deposit 10 publicly on the blockchain to open the channel
X and Y 'spend' the 10 to another active channel user Z
asking Z to not use LN but to use Z's onchain balance address to pay 4.9 each to X,Y ONCHAIN and Z keep the 10 offchain, to spend later


X: i have control of 10 in LN, i have 4.9 personally ONCHAIN too. this is my 14.9 collateral. i can sign a message to my personal 4.9 and a message as part of the LN 10.
now give me a government grant,VC money up to 14.8

Y: i have control of 10 in LN, i have 4.9 personally ONCHAIN too. this is my 14.9  collateral. i can sign a message to my personal 4.9 and a message as part of the LN 10.
now give me a government grant,VC money up to 14.8

they receive VC funding to 29.6btc. where infact X, Y have ZERO LN collateral. and only 9.8 personal collateral.

fractional reserve is not just about money CREATION like (CB) thinks. its also about faking collateral you don't have or moving funds around, to profit from something that you dont have

now lets get back ontopic of scaling bitcoin

is there not some way of operating a demo lightning network either by the testnet or other means that finally puts all this crap to bed? the proof would be in the pudding.

i know there are papers and the occasional youtube video. it would be a whole lot more compelling if anyone could log into to something and experiment.

rofl'ing, hard. Of course I don't know what ridiculous television memes you use, that was the purpose of the comment I've never even seen Game of Thrones, "do you watch game of Thrones" typically elicits my response "I'll be right back..."

My post was a great deal more factual than what you're spouting, and that was my intention, because you are talking nonsense. I notice that you're trying to be witty, however. With your Game of Thrones memes.

Here it is: what if people reading your posts actually go out and research and understand the Lightning Network? They're going to realise you're talking out of your ass.

This should be good , show off that imagined superiority complex you got going for you. 
Waiting to be dazzled.

You can not use BTC not confirmed on LN.

It's not a fractionnal Reserve Banking, because ... at the end of the 10 minutes or LESS, all transactions (with 0-null movment) must be forward to the Bitcoin regular network.

If you have move 100 time your BTC in the LN and lost 10% = at the end of the 10 minutes, you LOOSE 10% on the Bitcoin network.

That's why the Fees of LN is not cheap (for the LN provider) ... because the LN must be withdrawn at the end with the most priority.

You can not use BTC not confirmed on LN.

It's not a fractionnal Reserve Banking, because ... at the end of the 10 minutes or LESS, all transactions (with 0-null movment) must be forward to the Bitcoin regular network.

If we could lower the capital requirement, we'd lower the barrier for
people wishing to run a Lightning Network node.

Here are some thoughts:
   - The trust-based system you're proposing looks like a
   fractional-reserve banking system.
   - Such fractional-reserve hubs will provide lower transaction fees
   (because of lower capital requirements) — so the idea is worth pursuing.

That's why the Fees of LN is not cheap (for the LN provider) ... because the LN must be withdrawn at the end with the most priority.

It's clear from the protocol which you apparently don't even try reading, that LN needs onchain transactions, it can't work without them. Normally each channel produces 2 onchain transactions during it's whole lifetime.

then why don't we just shut down the entire BTC network and move all of the BTC to LN and only use LN for everything.

LN is Offchain Transactions ,

Whether anyone believes it or not , LN will open the door to Fractional Reserve Banking with BTC.

There's a problem with your argument. Do you know what it is?

If you use LN and think it is anything more than a representative trade value of BTC / IOU for BTC, then you are stupid. 

Let me put it this way , the BTC network itself is an energy waster due to ASICS,
if your Delusion was true , then why don't we just shut down the entire BTC network and move all of the BTC to LN and only use LN for everything.
That way we don't even need the miners.

Reason why that won't happen.
1.  BTC never actually leaves the blockchain, (Notice they use the word Frozen or Locked On the blockchain)
2.  BTC design makes sure no one can counterfeit coins or run a fractional reserve from the BlockChain.
3.  LN network design requires that you trust their network, not to counterfeit coins and not to work as a fractional reserve
4.  If we could trust everyone then we would not need BTC, but sadly enough people are untrustworthy that they will take advantage of others.

LN=Bank
Wishin & Hopin & Prayin it is not true , won't make a difference.
Sorry no way around it.

It's clear from the protocol which you apparently don't even try reading, that LN needs onchain transactions, it can't work without them. Normally each channel produces 2 onchain transactions during it's whole lifetime.

if your Delusion was true , then why don't we just shut down the entire BTC network and move all of the BTC to LN and only use LN for everything.

Now seriously. Not only you don't understand how LN is supposed to work. It's OK to not understand it. Even among cryptocurrency enthusiasts most people don't understand it.
But do you believe that so many people (including cryptocurrency experts) are so stupid, that they can't distinguish IOUs from BTC?

Geez ,

Bidirectional payment channel.

Opening the channel.
1) Alice and Bob create transaction tx1 which sends 5 BTC from Alice and 5 BTC from Bob to a multisignature 2of2 output o1, neither party signs this transaction yet.
2) Alice and Bob create secrets Sa and Sb, and exchange hashes of those secrets (Ha and Hb): Ha goes to Bob, Hb goes to Alice. Alice and Bob will need those hashes to create transactions tx2 and tx3 at steps 3 and 4.
3) Alice creates transaction tx2 which spends o1 and creates 2 new outputs: 5 BTC go Alice (o2), 5 BTC go to output o3, which can be spent in 2 different ways: a) Bob can spend it himself, but only after significant timeout of say 1000 blocks; b) Alice can spend it herself, but only if she provides preimage of Hb i.e. Sb. Alice signs tx2 and sends it to Bob.
4) Bob creates transaction tx3 which spends o1 and creates 2 new outputs: 5 BTC go to Bob (o4), 5 BTC go to output o5, which can be spent in 2 different ways: a) Alice can spend it herself, but only after significant timeout of say 1000 blocks; b) Bob can spend it himself, but only if he provides preimage of Ha i.e. Sa. Bob signs tx3 and sends it to Alice.
5) tx1 is signed, broadcast and confirmed.
The channel now is considered open. 5 BTC from Alice and 5 BTC from Bob are now locked in output o1. Both parties however are safe. If Alice disappears, Bob only needs to sign and broadcast tx2 (Alice already signed it), then wait some time, and get his refund from o3. If Bob disappears, Alice can do the same thanks to tx3. Under normal circumstances tx2 and tx3 aren’t broadcast.


Updating the channel (conducting payments).
1) Alice wants to pay 1 BTC to Bob. Both parties create new secrets S2a, S2b, and exchange hashes of those secrets: H2a and H2b.
2) Alice creates transaction tx4 which spends o1 new way: 4 BTC go to Alice (o6), 6 BTC go to output o7, which can be spent in 2 different ways: a) Bob can spend it himself, but only after significant timeout of say 1000 blocks; b) Alice can spend it herself, but only if she provides preimage of H2b i.e. S2b. Alice signs tx4 and sends it to Bob.
3) Bob creates transaction tx5 which spends o1 similar way to tx4: 6 BTC go to Bob (o8), 4 BTC to output o9, which can be spent in 2 different ways: a) Alice can spend it herself, but only after significant timeout of say 1000 blocks; b) Bob can spend it himself, but only if he provides preimage of H2a i.e. S2a. Bob signs tx5 and sends it to Alice.
4) Alice sends Sa to Bob.
5) Bob sends Sb to Alice.
Now the channel is updated. If either party disappears, remaining party will receive his/her refund thanks to tx4 or tx5. But what prevents Alice from broadcasting tx3 which indirectly pays her 5 BTC, instead of her current share of 4 BTC? Tx3 doesn’t immediately pay 5 BTC to Alice, it immediately pays 5 BTC to Bob and creates o5 which Alice can redeem only after waiting 1000 blocks. But Bob now has Sa, and if he sees tx3 on the chain, he can immediately spend o5, because now he possesses Sa, thus taking all 10 BTC from the channel. Please note, that despite tx3 was created by Bob, his version of this transaction lacks Alice’s signature. Normally only tx1 is broadcast yet. This way the channel can be updated many times. After each update, only the last pair of transactions can be safely broadcast to close the channel and receive proper share of channel funds, because all previous secrets are known to respective counterparties.


Closing the channel.
Both parties know, that they can’t cheat each other. So when they decide to close the channel, one of them (let it be Alice) creates a transaction that spends o1 according to the latest state of the channel, signs it, and sends to Bob. He checks that funds are split fairly, signs it and broadcasts it. This transaction is the second and the last to hit the chain, for the whole lifetime of the channel.

Do you understand, that micropayment channels of which LN consists are opened by broadcasting an onchain transaction that locks BTC in the channel? So BTC transfered over LN are very real.
Moreover, LN requires users to freeze a lot of funds in channels. To be able to use a channel one needs to freeze much greater amount of funds than each payment. Therefore it's quite the opposite to fractional reserve banking.

So BTC transfered over LN are very real.