Topic: The Lightning Network FAQ - page 40. (Read 32053 times)

While I appreciate the information, I am bitterly disappointed to report my up-to-date Eclair is reporting "failed to open channel: Incompatible features"  (which is pretty much what almost all non-onion addresses come up with when I try to add a channel/node.

I expect if I tried with Zap, I'm going to get the same "incompatibility" error.

They are running bfx-lnd0 and bfx-lnd1 nodes. They even have a dedicated Lightning statistics page on which they share some interesting information. They have over 950 active channels, ~52 BTC incoming capacity and ~175 BTC outgoing liquidity.

There is no "we" here.

Some people want to know these kinds of things for a variety of reasons including being able to figure out growth or whether they might be able to make money by investing in a related business and even attempting to compare the good of one system compared to another... Maybe even wanting to improve one system versus another - or destroy (even though destroy comes off as negative).



People will still attempt to make estimates to the extent that it is feasible to attempt.  For example, if I started a cookie selling business and I was trying to figure out if it was worth it for me to attempt to use LN, I might set something up, and then compare it to my other options and maybe I am able to do both, or maybe I have to choose one path or another for logistical or manpower reasons.  There might be ways that I measure from my business, or I might ask someone if they are able to tell me the information that I need so that I do not have to expend resources that might be limited for me.



Various people know different things, and they have a variety of theories about what they know, too, whether it is the exact number of dollar users or the number of people using bitcoin, lightning network, coinbase, or some shitcoin.  Some people have better information than others, and sometimes they are able to make decisions and/or choices based on what they know or what they believe that they know.


Sure, there is a difference between transferring funds, such as bitcoin, between users within an exchange, such as coinbase or some other centralized exchange and if they are transferring coins off of (or onto) the exchange.  Even fillippone's post showed differing ways to transfer in and out of exchanges that may or may not be very traceable on the individual level to figure out quantity of coins moving back and forth, absent some kind of voluntary disclosure from an insider who might even be fudging the numbers if there is no way for us to be able to verify those representations (to the extent that they matter to one person versus another).

What LN node are they using?  I just did a search at https://1ml.com/search and came up with three different results.  All of which haven't been active in the last two to three years.  I thought I might try adding some exchanges to my Zap wallet to see if I can kick start it back to life.

I can think of a few reasons:
Back when I was testing Eclair, I noticed the channel reserve went up and down with on-chain Bitcoin fees. So I closed my channels when on-chain fees were low.
Since then, I'm only using BlueWallet (custodial) and Phoenix Wallet (from the same creator as Eclair: ACINQ). Obviously BlueWallet doesn't make me worry about channels, and in Phoenix Wallet I have several empty channels by now. If I close them, I lose the incoming capacity, while there's nothing I get out of it. So I have no reason to ever close them. But as long as I don't receive new LN-funds on those channels, the other party (the ACINQ node) has all funds "stuck" and can't use them anymore. So at some point I assume they'll want to close the channel.

Why should we know the number of users? I guess that on a decentralized network like LN, you can't know the exact number, you can't even approach it. But, is this a downside? Do we know the exact number of dollar users?

Correct me if I'm wrong, but Coinbase doesn't create on-chain transactions if you transact with someone using Coinbase wallet. They just change some variables in their database; some would say an IOU.

Instead of losing your privacy, the signatures could be encrypted using one of your derived private keys and then be uploaded anywhere you want. You'd remain private and you could access the signatures using the private key that is derived from your seed phrase.

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I have another question to make regarding LN; why would you ever need to close a channel? In the reality of El Salvador, people open a channel and each one transacts instantly using the channel's liquidity. If we assume that the liquidity is always enough to transact, why would someone want to close his channel?

I'm surprised by the size of the LN transactions: on average 0.011BTC per transaction is a lot more than I expected. And I would have expected more withdrawals than deposits, since on-chain withdrawal fees are high, while (most) exchanges don't charge a deposit fee. I can imagine the lack of incoming capacity limits how much users can withdraw (for now).
It's promising though, it's more than I expected.

An interesting tweet by Paolo Ardoino, the italian CTO of Bitfinex, summarising sidechain usage for deposits and withdrawals.



https://twitter.com/paoloardoino/status/1404724609602232323?s=21

A couple of Considerations:

• LN Usage: under review. Low fees and the fact that LN is seen as a transactional feature of BTC have hindered adoption for trading activity. For sure 1% of liquidity is not much, but going forward I see this %age to grow substantially.
• LIQUID: It might be a little bit off topic here, but liquid is a big loser here as in practice it was born only for this: withdraw and deposit on exchanges. Of course, liquid has many other features, such as confidential transactions, but it seems to me that given the premises, perhaps we could have expected more. Among other things, while for LN the excuse of low transaction fees works (if I have low fees, what is the use of LN?) For liquid this reasoning does not make sense, since it is not a question of fees, but of efficiency. In short, liquid loses big vs Stablecoin.

If you have a bitcoin seed phrase, all you need to do is backup your seed, and your money is protected if you lose access to the device you are using to access your wallet (as long as you have access to your backup). With LN, in order to keep your money safe, you need both your seed and every signature you receive from your channel counterparty. Signatures received from channel counterparties are not especially sensitive, as there is nothing an adversary can do with them if they obtained non-exclusive access to them (there would be a result in a loss of privacy), so storing signatures received from channel counterparties could potentially be backed up via some kind of cloud storage, such as google drive.

With services such as BlueWallet, the number of users could (and probably does) exceed the number of open channels they have. Some of these users may have a "balance" on their BlueWallet account, and have zero coin on any settled bitcoin address.

This is getting off topic, and we can create a divergence split topic if you want....You mention the number of coinbase registered users. There was a time in which coinbase did not require any kind of KYC in order to create an account, and during some parts of that time, they also gave monetary incentives for people creating accounts. Most of the registered accounts on coinbase probably do not have any kind of balance, and probably have made very few trades, if any. A more meaningful metic would be "active" accounts that meet some kind of trading or balance threshold.

there is a limit of bitcoin hoarding/ peg vaulting and thus other network token/htlc utility
lets go with the cheapest fee/lowest denomination to get a max utility number
of users

so lets start
onchain fee imagine 1vbyte=1sat
2in 2out ~209vbyte. needing one spend to open one to close. so 418sat min onchain for LN membership/inclusion/access
(rough numbers dont knitpick)

people want to beleive in fee's being 1% of denomination they want to move. so min denomination would be
41800sat they would have per tx

this is then ~2392 denominations per btc(100000000/41800)
imagine all 21mill coins are active circulation and not dead/burned/lost
so thats 50,239,234,450 sharable denominations
50 billion oppertunities to spend/vault

it might seem alot. but if users were to make only 10 spends or vault up 10 allotments to have 10 peg/channels open thats only 5 billion users.

but even more so with life. things are unfair where some citizen earns minimum wage of 1 allotment some manager/ceo is earning 100x an allotment

so if there are say 25million ceo with 100x allotments it only allows for 2.5billion with 1 allotment
thus only 2.525billion users.

which is 33% of population where 2.5bill population only has 10 channels or 10 allotments EVER
at todays price
thats like having 3rd population only have $160 of crypto each

..
i made some lowball assumptions just to show best case EG if fees were 10sat/byte then its only ~250m users. with $1,600 each of crypto ever.. and having a $16 openclose fee to vault.unvault

yep less than population of just america only getting to play with a months labour salary or crypto is not much

ill leave others to do some maths on splitting circulation by population.

Of course, it seems that mostly exchanges whether we are talking about Coinbase or otherwise have incentives to overstate their number of users.

I suppose that if we have different folks attempting to analyze the number of lightning network users, there are going to be some folks who have incentives to overstate that number and other folks with incentives to understate the number of users... .It seems increasingly difficult to really place solid numbers on that, and probably some of the reasons that status quo institutions including governments and status quo rich people (aka no coiners or under-invested precoiners) are feeling quite a bit of uneasinesses about the growth of bitcoin in these various more difficult to track arenas.


I don't know Loyce.  Probably, the question about your owning the $10 bill or how many $10 bills that you own or might own could matter depending on the issue that we are trying to figure out, and likely our conceptions about these kinds of matters will also change with the passage of time... especially bitcoin has some differing preservation of dynamic values that could incentive some people to want to know about bitcoin, even though they give few shits if you hold $10 or even $50k, and of course, if you happened to hold a few million dollars (or the equivalent in value), some people might start to care.. especially if you are able to move it around easily... or you could even use it in small increments without anyone really being able to detect that you have more of those rather than just the one you injected into the system to buy your slurpy after finding out they accept dollars.



Seems that I was making a bit of a different point about the non-binary nature of counting bitcoin value.  So, I think that they are quite different to count, even if you are able to create threshold levels on the bottom.. but it becomes a bit amorphous to be counting the same for those who own fractions of a bitcoin or satoshi and those who own 10s of thousands and then attempting to compare their abilities to own more or are they maxed out.  I don't consider those to be very easy questions, even if there are ways of attempting to make those kinds of counts and to measure and sure there can still be meaning, depending on what kinds of questions that you might be trying to answer...including active users versus hoarders.. if you can.. and gosh did not realize that Joe was sitting on a fortune.. and maybe joe did not realize it either.


You seem to be making part (if not all) of my point for me.  Thanks for that.   

 


Of course, it is not easy to stay on topic exactly because some of these various topics do overlap, and especially if we might be trying to consider how easy it might be to count users on the lightning network or if those users might end up transitioning in and out of bitcoin, but then with exchanges allowing for lightning channel movements, there could develop more questions regarding if some of these lightning-related matters or adoption matters are just passing fads, or maybe something BIGGER is going on, and it ends up starting through lightning rather than through more traditional bitcoin on chain on/off ramps.

Forget about "Chase Bank", BlueWallet is already offering all this functionality! I assume transactions to other BlueWallet users are indeed only a change in their databse (so the 0.3% they charge is a well-deserved profit). But transactions to other wallets are really sent on the LN network, where fees are paid to nodes on the route.
Considering how small the Lightning Network still is, the number of different LN wallets out there is really amazing. Chase Bank is late to the party, a few dozen others all try to be early adopters. I'd still like to see Chase Bank join though

I haven't seen any claim from Coinbase stating how many users have Bitcoin in their account. Many accounts will probably be empty, or only have some altcoin.

But that's okay, right? For years, I've had a 10 dollar bill. I don't live in the US, so I can't use it. I'm basically just holding it until I go to a place where I can use it. Does that make me a dollar user? I don't think it matters, just like it doesn't really matter how many people own Bitcoin.

For household appliances, owning the device is enough to be counted. Even if I don't use my dryer for months, I still own it. That would be my starting point for measuring Bitcoin adoption too.

So if I own one Bitcoin, and spend all of it on a car. Would I still count as a Bitcoin user, even though I'm broke?

I'll get back on topic: whoever hasn't tried LN yet: just try it Install a wallet, see if you like it. If not, try a different wallet

Loyce, maybe I am misunderstanding you, and maybe we are deviating from the topic of the thread a bit to be figuring out number of users and level of adoption and then maybe considering if that information is more obscured or less obscured by lightning network.  Seems to be more obscured, just like the quantity of coins held by an exchange, even if there might be points that claims are sent back to individuals on line with an exchange or channels are closed though lightning.

In any event, your acknowledgement of Coinbase potentially having 56 million users (as they seem to claim) and your earlier description of 37 million funded bitcoin addresses seem to contradict your point about the number of funded bitcoin addresses as being the "upper limit" in regards to the number of bitcoin users, because even Coinbase's claimed number of users (of 56 million) exceeds the number of funded addresses of 37 million.

Sure those coinbase users count, but we hardly know anything about them.  Coinbase knowns quite a bit about them.  With lightning, how much are we going to know about those users?  I don't claim to be technical enough, and sure some folks running nodes and compiling information probably have better ideas about the kind of users and number of users, but they are likely guessing, while at the same time the value that goes through the lightning network is going to have a lot of variance between users in terms of their whole bitcoin value (how many bitcoins they own as compared with how many they might be using to facilitate lightning network transactions).

We seem to have a lot of black holes in trying to figure out both number of bitcoin users and how many coins that they might own (even if held and gatekeepered by a custodian).

There are also various ways to attempt to figure out if some of the members are just dabbling in bitcoin, yet those dabblers have way more potentiality to put way more value into bitcoin, so surely there are no coiners and there are way the hell underfunded bitcoiners.  Probably, there are not too many Michael Saylors in the world, because he seems to be ok with putting a real high percentage of his wealth and the wealth of his company into bitcoin, but even his extremeness can be contagious and show that otherwise folks who we considered to be well funded in bitcoin having 10% to 30% of their wealth in bitcoin, might be ready, willing and able to invest way more into bitcoin, even if they already have a decently large stake in bitcoin.

I personally suggest that normies (and I do not see any reason that normies, rich peeps or institutions should be very different in this regard) invest between 1% to 10% of their investment value into bitcoin, but if they model after guys like Saylor they could become way more bullish about how much they put into bitcoin.   There are also likely a lot of people who do not have very much stored wealth in anything, but they start to dabble into bitcoin, and their ideas might change, which would include some of the increased adoption in El Salvador which also seems to have some increased uses of the lightning network that might cause some of the lower paid people and the less likely to adopt bitcoin people to start to dabble more and more in bitcoin and start to add value to the both the adoption quantity of persons and the percentage of their wealth in bitcoin may start to increase, too.

Of course, there are governments too, that are considering dabbling in bitcoin in terms of considering if they might want to hold some reserves in bitcoin, and that could become complicated if they start to act like Saylor rather than acting like a currently hesitant no-coiner considering dabbling up to 1% into bitcoin, and again the seemingly increased uses of the lightning network in El Salvador might get them thinking about bitcoin in one kind of way in terms of the utility of usage (including increasing economicalness of remittances), but then cause some of these governments to consider keeping more and more on its balance sheet in bitcoin, whether those are more prudent conservative levels such as 1% to 10% or they end up going full Saylor.. which gosh who knows?  50% or some seemingly ridiculous leveraged amount that seems to even be approaching more than 100%.

So, of course any assertion of 100x increase in adoption from here (such as the one that you made, Loyce) has a lot of vague aspects concerning "what do you mean by adoption exactly", but then also if we think about some of the increased use cases and then how consciouses can be changed in terms of using lightning network causes them to have more and more ideas about increasing their storage of value into bitcoin, then 100x from here seems likely conservative rather than overly zealous as a near to medium prediction.. and maybe super conservative if we are talking 10 years from now, but I still am not sure about how we go about measuring adoption level like we might measure whether a house has a microwave, fridge, dishwasher, fax machine, and/or washer/dryer.  

Even measuring internet connection seems easier than measuring binary ideas of adoption of bitcoin or not, but bitcoin is not binary in that category... In the case of the internet, there maybe materially less significant even if there might be redundant ways of person x to connect to the internet from his/her own home versus when out of the home, but bitcoin there are so many gradients in terms of level of adoption and how bitcoin is used can cause incidental adoption.  Accordingly, attaching value to an asset (bitcoin) seems to be a bit of a different kind of cat as compared to material items.. and digital value - a concept that peeps are still trying to grok.. (those paying attention).

Yes, it's possible. It has never happened to me, though. You should be fine as long as you have a decent backup strategy.


You can lose money in two ways if you go offline for too long:

1) A malicious third-party can force-close a channel using an old commitment transaction. If you come back online before the timelock expires, you can publish a penalty transaction. The timelock is negotiated before you fund the channel. I believe that LND and c-lightning allow you to modify it when the channel is active. Most nodes accept timelocks up to 2016 blocks by default.

2) If you are in the middle of forwarding a payment which reaches the payee successfully, eventually, the node to which you offered an HTLC is going to claim it through an HTLC-success transaction. Since you are offline, you cannot use your HTLC-success transaction to claim the HTLC offered by the node which asked you to route the payment, and you can't sign a new commitment transaction with them.


Payment routing is a little bit more complex than what most people think. It is possible thanks to HTLC (Hash Time Locked Contracts). HTLCs in commitment transactions are divided into HTLC-success and HTLC-timeout transactions. There is hardly any information about them and yet they are crucial.

In this case, Charlie generated a secret and made a hash of it. The hash was included in the payment invoice which Alice paid. Alice offered an HTLC to Bob. Then, Bob offered another HTLC to Charlie and let's say he lost power at the same time. Normally, Charlie would spend his HTLC-success transaction (payment secret is needed for that) and he would sign a new commitment transaction with Bob. Bob would do exactly the same with Alice.

Since Bob could have sent HTLC-timeout to Charlie after the timelock of Bob's HTLC had expired, Charlie had to force-close their channel (he didn't know if Bob would come back online before the timelock expired). Alice simply retrieved her coins through an HTLC-timeout transaction after the timelock of the HTLC she had offered expired.

Note: This is my current understanding of the HTLC-timeout and HTLC-success transactions. I am still doing a thorough research on them. I might be missing something here or be completely wrong. Please, let me know if something sounds wrong or confuses you.


You don't need to run your own Lightning Network node at all. There are a few non-custodial light wallets (Eclair Wallet, Phoenix Wallet, Blixt Wallet) which should be good enough for most people.

Depends on how banks do it too.
If I have to use the "Chase Bank Lightning App" to use my funds held by Chase. Same way I would have to use there app or webpage to Zelle someone money then adoption might be quicker. Yes the purists like us might be screaming a bit. But if Chase opens a bunch of channels between other places and the app just checks that my account has enough BTC and then sends the coins then I could really see it taking off.

Kind of like now. If I put my paycheck into a banks and then use their online bill pay. Chase might:
1) If it's another Chase account then it's just a few digital entries in a database to them.
2) If the people getting the money have the ability to accept ACH then that's how it's done
3) If the people getting the money can't ACH then they send a paper check.
4) Some utilities just get 1 wire transfer and then the bank sends a separate file with a list of accounts and amounts.
other....

Same with this, if someone puts BTC in and pays someone with BTC. Do they really care about the back end.

WE DO as a group.
Most others will not. So 'generic local coffee shop' using BTCPay get's their lightning funds the second I click send payment.
Starbucks, might just be willing to accept a 'promise to pay at then end of the day' from Chase, knowing that they are going to get 1 TX for all their shops, but all we see on the app is a BTC payment leaving our account.

-Dave

I think you missed (and confirmed at the same time) my point: the number of funded addresses is an upper limit for the number of Bitcoin owners. I own more than one funded address, and if every Bitcoin user has a few on average, that quickly reduces the number of individuals holding Bitcoin to (very rougly) give or take 10 million.
The number of users on exchanges is much higher: Coinbase seems to have 56 million registered users, and I can only assume many of them must keep some amount of Bitcoin in their (custodial) account. I used to think those users shouldn't be counted (because "not your keys, not your coins"), but then I realized it's "normal" to keep your investments at your broker. You can't buy Gamestop stock on paper and keep it in your own cold storage. So it's not surprising many people do the same with Bitcoin.

Even if there are currently 10 times more people "owning" Bitcoin on exchanges than there are people owning the private keys to their own Bitcoin, those people aren't using it to make purchases. If they start using a LN wallet for small payments, I don't think going from 10 million to 1 billion active users is that far fetched.

Does the number of funded addresses matter? I could fund 100,000 addresses that are all owned by me. You can't know the Bitcoin adoption rate just like Internet's or any other consumption spread in households. Even these statistics approach the correct percentage, but I doubt if you could find the total Bitcoin users in an approaching scheme.

I agree that it can be a steeper increase in households comparing with the Internet, but I have my doubts for being 100 times bigger.

I'm okay with that If you want to run your own node, by all means: do so! But if you just want a convenient payment system in which you trust a company with a few dollars: good for you, LN can offer that too!

There's about 100 billion dollars worth of Bitcoin stored in exchanges. Keeping coffee money in a custodial mobile wallet isn't going to get anywhere near those numbers.

Global internet adoption took longer than that:
1990: 2.6 million users
1995: 44.4 million users
2000: 412.8 million users
2010: 1.992 billion users
2020: over 4.5 billion users

With just 37 million funded addresses, I'd say Bitcoin is like the internet in 1995: it can get 100 times bigger the coming 15 years.

To compare:

I don't know, but I feel that if more countries behave similar to El Salvador, we may see the adoption growing faster than the internet's. The 90's was the decade when it started, but it became popular and someone could say globally adopted 10 years later. History repeats itself with Bitcoin, but this time it'll change the way people transact value. I like thinking it that way.

That is also a possibility. I recently read that Texas state clarified that banks can custody bitcoins. Sure, the centralized services might find their chance to enter this new system updated. And you shouldn't forget that sometimes people need a third-party. We've all struggled to get rid of it, but sometimes it's important to exist.

We shouldn't devastate the system that existed before just because we've found a way to transact our value with no third parties; remember, some people don't want to be responsible for their own wealth.

But, that's not your fault, right? Your mobile for example could go caput anytime and that may result to loss of money. Same thing could happen in Bitcoin if there weren't things like seed phrases and everything was saved into your hard drive.

In the example you are citing, someone goes offline for a time greater than the amount of time transactions are locked when a channel is unilaterally closed. In order to prevent this from happening, you should use a watchtower that will broadcast a penalty transaction if an old channel state is used.

The primary risk of losing funds when using LN is if you do not properly backup signatures received by your channel counterparty after every step of changing the channel state, every time the channel state is updated.

You don't need to run a LN node locally in order to use LN. You can run a LN node at home while using LN at Starbucks, using some kind of "light" LN wallet software that connects to your at-home LN node. Or you can run a LN node on a VPS or remote server somewhere, and connect to it whenever you want to transact using LN.