Topic: The Lightning Network FAQ - page 40. (Read 33677 times)

Let me throw in my two cents.

franky1 makes some good points. I am also a little bit concerned about large nodes which set the minimum channel funding value to ridiculously high values.

I don't agree with the statement that the Lightning Network as a whole consists of IOUs. I do agree that milisatoshis are backed only by trust, but...

I don't think that's a major issue. Putting the msats value aside, if you are the channel founder then you do not lose any money. The moment you decide to close the channel both balances are rounded down to whole satoshis and the remaining 1 satoshi is added to the transaction fee, which as a channel founder you have to pay anyway. If you are not the channel founder then... well, that's a negligible loss for you. By the time msats become valuable, the number of on-chain decimal places might have been already changed as a result of some hardfork.


While it's true that HTLCs are denominated in msats, they are still enforceable on the blockchain. The moment you send/receive an HTLC to/from someone, you also need to sign a new commitment transaction. Commitment transactions can include not only the current balance of both parties but also offered and incoming HTLCs. Both of these (locked) outputs obviously need to be rounded down to whole satoshis in order for the transaction to be valid.

I think that we have had enough. Please, move to some other thread if you wish to discuss it further. Feel free to quote me there. I will be removing any IOU related posts from now on.

to anyone(sems theres a few above) still confused about a few truths of LN
lets just use one bit of code example that debunks their thoughts and clears up the issue quick

confusions of some people
a. LN is for bitcoin only 'cos bitcoin'
b. values in LN are measured in things that bitcoin recognises


first note that it allows both pegging iou tokens to bitcoin and litecoin
then note that for:
bitcoin pegged iou
the measure of 50sat/vbyte is 125sat/byte = INSIDE LN 12500 msat tokens

litecoin pegged IOU
the measure of 200sat/vbyte is 50sat/byte = INSIDE LN 50000 msat tokens

heck github has soo many examples of the network being separate and functional for many pegs
and hundreds of examples of the tokens being a different denomination to the peg

..
atleast the liquid network can admit their tokens(L-BTC) are pegged tokens and not play the silly promo fluff of LN which pretends to be bitcoin itself

edit to respond to below
its not just that HTLC are in a different denomination.
but also requiring a separate contract(comitment) to make funds bitcoin network recognisable. where there is a separation between a 'commitment' and a 'HTLC'. where the HTLC is completely different and not bitcoin.

and then also the whole point of the 'dont trust zero confirms' of the commitment(settlement)
meaning a HTLC is 2 'layers' away from being a guaranteed settlement, and just a 'promise of 'i owe you x''

the funniest part is. i am a bitcoin(btc) maximalist. i dont want to go playing on other networks or made/forced to use other networks just to spend my value FAIRLY.
but the few trolls that think LN is bitcoin have also been saying that other altnets(crapcoins) which do have bitcoin compatible transactions that CAN BE REPLAYED on the bitcoin network, have been deemed NOT bitcoin.. very hypocritical and reveals they have no clue. and just trolling their hypocrisies by saying an altnet that CANT be direct replayed.. is bitcoin!!?.

The man is Hyperventilating - give him a brown paper bag and some room to breathe!

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I'm pretty sure the whitepaper for Bitcoin alludes to having the capacity for more zeros being added onto the number (already at eight decimal places) that bitcoin can have.

Exchanges have for a while now have enabled traders to trade in bitcoin for alt crypto at nine and even ten decimal places - have you ever noticed those evil exchanges doing such a terrible thing??

Have you ever received a letter in the mail (usually from a council or utility (power/water etc)) and noticed that even in this day and age their franked stamp is in a tenth of a cent postage paid?

I'm sure there's other pesky examples out there how you're being diddled by extra zeros without even knowing it's occurring.

signing a contract that is measured in millisats is not signing a bitcoin transaction

having a bank note saying "we promise to pay the bearer 10pounds of silver" is not actually silver

but as you say doomad
having Kyat and exchanging it for a more valuable currency
is what happens in LN
have millisats and then exchange it for bitcoin
(converting a htlc into a close session bitcoin transaction)

when you can understand the concept of an payment in millisats(htlc).. being a separate thing to an exchange to a bitcoin transaction at a different time. then you might understand that the HTLC(msat) payment (agreement of who owes what) is not the same as a bitcoin transaction.

you seem soo obsessed to the point of being misleading by only wanting to point at the close session exchange and broadcast part.. and completely arrogantly and ignorantly not thinking about the IN LN payment part

but for once. accept this topic is about what happens WITH IN LN at the payment of HTLC

seems you have been mis-informing windfury about the onchain(btc) gold. being exchanged for an offchain
token(msat)
where a protocol is 'trusted' to convert/exchange.. however.. as with all bitcoin principles:
unconfirmed transactions are never guaranteed. never accept zero confirms..
definitely dont trust(think its guaranteed) payments in converted/exchanged units of measure bitcoin does not even understand

..
its actually much safer to tell people the truth about the flaws and isssues and risks of LN so people can make informed decisions about using it. rather then being hyped up to use it and learn the hard way
telling people the risks and letting them try it. is more trusting than fluffing up and misguiding them and seeing them fall fowl to the risks

No one is disputing the existence of millisats.  You aren't "countering" anything.  We're disputing your total lack of logic in jumping to the completely flawed and asinine conclusion that a difference in the number of decimal places = IOUs.

Get hold of some Uzbekistani Som or Burmese Kyat and then try exchanging it for a more valuable currency.  Watch the rounding occur because there aren't enough decimal places to cope with the conversion.  Try and apply your same broken thinking there and your argument completely falls apart.

you mention words like trust and signed.
there are LN walets out their that create channels before a bitcoin transaction is confirmed and locked
there are probably wallets that are using elthree where the channels 'collateral' are not bitcoin transactions
but just purely a balance authorised by a factory where users have to request that balance to be converted to a bitcoin if they ever want to truly exit LN

friends in my neighbourhood know i have lots of funds and am good for it to give them money.
but i can sign anything and show them a bank statement that proves im worth it.
but what im signing is not actually the bank account.
there is still the trust that LATER i will pay what thy are OWED

a contract of whats owed is not the same as a confirmed settled onchain transaction

signing something measured in millisats is not signing a bitcoin transaction

you really do not know all the flaws do you.

devs can make LN wallets that can agree on any silly thing or ignore any silly thing they like. as LN is not a network wide audited payment system.. its just an agreement within the 2 individuals. where those and only those 2 individuals agree on their own terms

i could have channels of(im B)
     C  D
     | /
A--B--E
     | \
     G  F
where BA uses one protocol. where our agreements are measured in millisats
where BC uses another protocol where our IOU are measured in sats
where BD uses another protocol where our IOU are measured in bits
where BE uses another protocol where our IOU are measured in L-btc
where BF uses another protocol where our IOU are measured in furballs
where BG uses another protocol where out IOU are measured in memes

where by when its time to settle/exit LN then we convert the HTLC into a bitcoin transaction
much like HTLC converts millisats to sats

please learn about HTLC's it might really help you out

also each channel can do as many silly or trusted things between us as we can imagine.
as long as we agree on it.
heck it doesnt even matter if the 12 decimals are called millisats or kitten furballs..
it doesnt even have to be 12 decimals. we could use 24 if we wanted.

we dont even have to sign a htlc. we can instead decide to agree on using cat emoji's
the LN network of 32k peers is not auditing our payments within the channel
heck we could be using units of measure of kittyfluff if we want to.

secondly you obsess about the blockchain locks but you dont wish to understand the stuff happening inside LN


the in channel HTLC is not a bitcoin transaction. the denominations the format just dont fit into bitcoins onchain rules. try to understand that then all previous posts might make sense to you
HTLC do not and cannot be broadcast to the bitcoin network
please for the hundredth time.. learn this stuff

the other thing is take any historic IOU. 1890's bank notes dont need countersigning. but were an iou of gold
a cheque doesnt need countersigning. but until its cleared its not settled and thus an iou
even a unconfirmed bitcoin transaction is an IOU(spoiler dont accept zero confirms)

heck i have a raw TX here with gmaxwells address on it..
i signed my transaction..
but its not actually in any mempool or blockchain. soo the question "does it really exist and will gmax ever actually get it" (spoiler:no)
i know he might like to argue that on this forum i have just announced he is owed something.
but .. ofcourse.. not on blockchain=not real

lastly HTLC's get renegged all the time. thats the point. people renegotiate how much each other owes them without actually settling

im surprised it takes you years to even understand these basic concepts of trade, negotiations, contracts.. as its pretty common life stuff

But it’s NOT the same. No one signed, and issued a worthless piece of paper in Lightning, trusting the counterparty’s ability to pay. In Lightning, you literally need an onchain transaction to open/fund a channel, so you are not sending anything worthless to the counterparty.

so as you say IN LN you hold IOU

as for asking me about my LN usage
i am not a fangirl that uses LN for its intended use with its limited scope of trying to show off how it works
EG making penny value transactions for silly forum avatars just to show off LN
instead i have used it to see where the flaws are. i have looked at the code i have studied it and i have done many things.

unlike some

the bitcoin funds on the blockchain that are locked are the collateral
the millisats on LN or the L-BTC tokens on liquid are just pegged tokens and not the collateral.

EG 1950's bank notes were not the collateral of gold.. gold is the collateral of gold. and bank notes are just the IOU that can be redeemed for gold 70 years ago

there are no bitcoins in LN or liquid

atleast most liquid devs can be honest about calling the tokens, tokens. shame some people in this topic like doomad and windfury who are not even devs cant grasp the concept


the IN LN payments have no penalties..
what doomad and windfury keep talking about is the settling up/close session stuff

ill give them another example
you WIRE TRANSFER funds into paypal. and then you make paypal balance payments to ebay
when they can understand the paypal-ebay balance stuff is not the same as a bank wire deposit/withdrawal
then you might understand the differences between inside LN and outside LN

seems too many people are too hard pressed to either admit the difference or understand or even see the difference between a bitcoin transaction and a LN payment

so its no wonder they have no understanding

as for doomads usual superman to the rescue defence of windfury.. yet again doomad flew in too fast and tried to throw punches too fast without realising what he was doing.

so one more time
THIS IS NOT ABOUT THE BITCOIN ONCHAIN SETTLING TRANSACTIONS

this is about the IN LN PAYMENTS
they are measured in millisats and those contracts CAN BE RENEGGED ON in multiple ways
hense the IOU
an IOU is a contract that has not been settled

why.. well thats easy ..because the LN HTLC IN MILLISATS are not the same format or denomination as a bitcoin settlement transaction. and the funds are not settled/cleared/guaranteed to clear
there are many ways to reneg on the IOU
not just within LN
not just at the countersign of the settlement
not just at the broadcast
not just at the mempool

doomad can say all the BS he wants but i quoted something from the devs of a LN wallet from the LN wallet github that counters doomads fluff

so get the hint.. from the LN devs themselves: read it and weep
[/quote]

if you are still unsure.. try reading the code first. there are many examples but i showed the most layman version because it seems alot of people cannot read  anything more difficult that a glossy promotional advert graphic

and yes even i cant believe that doomad after 4 years is still saying the same fluff without checking
its as if he doesnt want to be truthfull. he just wants to be loyal to his wife windfury

I like this analogy, but you got it slightly wrong. In LN, you hold collateral over your friend. If he doesn't fulfill his IOU, it will cost him more, so he has a reason to be honest and it's very unlikely for you to lose your money.

Bad comparison: back when we still used checks, they had a guaranteed amount. Why else would anyone accept it?

You mean 3: the "m" is a standard metric prefix for 1/1000^th.

M stands for 10⁶, m stands for 10^-3, and you use both in the wrong way. Talk about irony.

@franky1: how often have you actually used the LN to make payments? Maybe you should just try it a few more times, and see for yourself that all the things you worry about aren't happening.

And LN hubs can refuse transactions.

It was one of the attacks listed in my post, that Rath deleted just because LoyceV called me a troll and asked to have my post deleted. If you want to know now, google it.

Any Offchain transaction is an IOU, until confirmed ONCHAIN.
Denying that is intellectually dishonest.

I guess it couldn't last, you're back to spouting nonsense again.  There's a crucial distinction you appear to be neglecting.  Whether that's deliberate on your part or not, I suppose only you will know for sure.  

IOUs can be reneged upon.  Cheques can be reneged upon.  This is not the case when you receive a payment via LN.  Once the other channel participant has signed over a transaction and you have acknowledged it, the only way they can possibly back out on that payment is by attempting to spend from an outdated commitment state, which puts them at serious risk of losing their entire balance within the channel.  Provided you are online to monitor it and don't make any mistakes, you will be able to redeem any balance sent to you via LN.

If the other party became unresponsive before signing over their transaction, then that's equivalent to them becoming unresponsive before sending an on-chain transaction.  Either way, you don't get paid.  Yet you keep insinuating other people can use LN to withhold funds from you in a way they can't do on-chain, but this is untrue.  You can close the channel and broadcast it to the blockchain at any time, providing you are using the latest commitment state.

In fact, the bigger issue is if they become unresponsive when you are trying to pay them.  If that situation arises, you may have to wait for the timelock to expire before you use those same funds to make another payment to a different merchant/business/service/whatever.

I'm pretty sure you know all this by now, since I've been telling you the same thing for what feels like half a decade now, so why continue to be so disingenuous with your choice of words?  It's not an IOU.  It's not anything like an IOU.  You can certainly continue to call it one, but I'll continue to insult your intelligence/integrity (still honestly can't tell which one I'm supposed to be calling into question, perhaps you'll clarify that one day?).

No doubt you'll reply with "bUt FaCtOrIeS!!!111", but will once again neglect to mention that those will be completely optional for those who may wish to utilise them.  And "bUt MiLlIsAtS!!!111", but you seem to be the only person who has ever somehow perceived that as a problem in the history of ever, so yeah, who cares?  I'm going to be laughing if we ever do have a hardfork that increases the number of decimal places in the base protocol.  What would you rant about then?

Just stop.  Please.  You're an embarrassment to yourself and the entire community.  

when you are at a bar. and to do a favour for a friend.. you and the friend agree on an IOU.
however its an IOU and remains an IOU until its actually 'paid up' and settled..

heck other factors you need to consider(as its obvious you have avoided)
regarding the close session transactions
everything unconfirmed in a mempool is just waiting to be settled but no guarantee it will confirm
again. dont accept zero confirms. is a principal thats been around forever in bitcoin


its like writing a cheque. yes you signed it.... yes you might also have a debit card thats used as a 'cheque guarantee card' to prove you have worth.. but knowing the cheque is not going to be cleared that same hour. allows the other party to mess around and spend his funds elsewhere. making what you are owed.. not arrive in the end
..

now take a breath. because the bit below is about the internal payments within LN. which are not to be confused with the close channel transactions.
..
note:
a close session/commitment transaction or htlc. are not the same thing.
payments within LN use Msat
where they do not conform to the bitcoin network format

where msat units 4 significant figures different than bitcoin sats
and where a payment using msats wont be accepted by the bitcoin network
then you realise that doing payments in msats wont get confirmed. until you later convert the iou into something bitcoin will accept(msat divide by 1000)


if you cannot tell the difference between an Msat and an sat. then dont reply
msats. aka LN denominated tokens are not bitcoin satoshi's
LN payments on the LN network use Msats
before settling to broadcast.
a LN tokened payment needs to be converted to a bitcoin native sat amount.

in short and in very layman terms
a LN payment in Msat. is an IOU. that needs to be converted into a different 'note' that can then be settled

If Lightning transactions are made up of IOU’s, then what entity issued those IOUs? Or is it actually NOT the same as the IOUs in the real world that the issuer can NOT pay the holder of said IOU? Because, you are NOT sending anything worthless in Lightning. They are actually SIGNED TRANSACTIONS that have not been included in the blockchain yet.

The whole point of Bitcoin is, as being said by the whitepaper, to prevent payments from being sent through a financial institution. Its point is that two parties can transact without the need of a third party that will move the money. While that sounds like LN, it's not.

Satoshi was very clear with the problem he was struggling to solve.

The lightning node isn't like bank; you don't trust it your money. The maths speak for themselves. You surely lose a part of your privacy due to the knowledge of the node for every transaction you make, but isn't the same with SPV? Why hasn't this being said for electrum servers too? Not to mention that off-chain transactions aren't publicly announced and no weirdos can analyze your pocket.

I'd also like to read why LN transactions aren't irreversible.

You've just described how the majority of people use on-chain Bitcoin transactions. They don't run their own full node, but instead rely on centralized nodes to make a transaction.

Maybe I can make you an offer: you send 2 mBTC to my LN wallet, and in return I'll send you 1 mBTC on-chain. Since you believe your 2 mBTC payment can be reversed, you're free to do that, and keep my 1 mBTC too! That's an easy profit, right? Unless of course the LN transaction isn't so easily reversed, in which case I get to keep the 2 mBTC.
Put your money where your mouth is

Isn't this obvious? In a multi-signature address, X out of Y signatures are required to be able to spend. The fact that I lock them under these circumstances doesn't make it centralized. Again, the lightning node can do nothing to my funds; we're just both in agreement of transacting between other people.

If I somehow lose the private key from a 2-of-2 multi-sig address, the funds are gone for good. Will the bank behave similarly if I passed away? Clear it up and stop trolling. The fact that you didn't reply to DooMAD's post makes you a troll.

Stop the BS; you aren't close to the bone if that's your purpose.

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Let me ask you a question, if you signed a transaction, but didn't broadcast it, would you feel that you own the funds or that it's an IOU?

That's misleading.  It makes it sound as though they are in complete control of the transaction (which is no doubt why you deliberately elect to word it that way).  A more accurate description would be to say that both participants within the channel are in control of their own portion of the funds contained within it.  Maybe that's too technical for you to grasp, though.  If you're still unable to differentiate between a transaction on LN and an IOU, despite several different people having explained to each of your various troll accounts on multiple occasions, there's probably not much more we can do to help you understand.  

I don't get why it's referred as something “centralized”. Should we define that word? Because when someone calls a payment method centralized I'm thinking that there is an administrator among the rest who is responsible for my funds safety; he holds my money and gives me an IOU. Banks, for example, operate centralizedly.

But, when we talk about a network of computers each one running autonomously without being forced to do anything, I can't call it centralized. So, we can't compare LN to a centralized payment processor, because they're two distinct things. Visa is a company, while LN is a protocol; a set of rules computers around the world follow.

Even if there was only one LN node, the method would still not be centralized. I'd have full control over my funds and no IOUs.

The bank can do whatever they want with my gold; the lightning node nothing.