The Lightning Network FAQ - page 50.

hv_

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Quote from: amishmanish on December 24, 2020, 04:06:18 AM

Quote from: Wind_FURY on December 24, 2020, 12:51:35 AM

But it is happening, https://blockstream.com/liquid/

There are more than 20 exchanges in the "federation". The trade-off is "OK" for exchange to exchange transfers if you ask me, doesn't need your Bitcoins to be traded to altcoins for "faster/cheaper transfers".

Liquid is a very enterprise kind of solution. Its between exchanges and the only thing you can trade L-BTC with is stablecoins and assets on their chain. For most people, other bitcoin pegs are becoming more of a norm. Like tBTC, renBTC etc.

Liquid is just something that Blockstream did because they can. If anybody else did that, they would have been denounced (and were so) by almost the whole bitcoin community as a centralized solution.

.. they 'can'. Whatever they to, 100% SEC / CFTC et al will shut it down, even after 7 + years. No way doing such (bigger) without engagment with regs

Tech doesnt solve that - get real

amishmanish

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Quote from: Wind_FURY on December 24, 2020, 12:51:35 AM

But it is happening, https://blockstream.com/liquid/

There are more than 20 exchanges in the "federation". The trade-off is "OK" for exchange to exchange transfers if you ask me, doesn't need your Bitcoins to be traded to altcoins for "faster/cheaper transfers".

Liquid is a very enterprise kind of solution. Its between exchanges and the only thing you can trade L-BTC with is stablecoins and assets on their chain. For most people, other bitcoin pegs are becoming more of a norm. Like tBTC, renBTC etc.

Liquid is just something that Blockstream did because they can. If anybody else did that, they would have been denounced (and were so) by almost the whole bitcoin community as a centralized solution.

hv_

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Quote from: Wind_FURY on December 24, 2020, 12:51:35 AM

Quote from: DaveF on December 23, 2020, 07:07:46 AM

Quote from: Wind_FURY on December 23, 2020, 02:23:02 AM

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

The other side of that is that can cause exchanges to become more "bank like"
All you need is of of them to start.
There will be no BTC transferred till certain limits have been hit or till the end of the day everything else would just be a journal entry.

Think about it. If I am going to send from a to b all they have to do is note it in their database someplace.
Then if you send from b to a it's just notes BTC going the other way and deducts from the total owed.
Overnight they settle up, and send in one tx.
Unless the amount goes over over a certain level, then they trigger a settlement.

You now have Chase and CitiBank but with BTC instead of $.

Others want to join in. Look banking 2.0 same as 1.0 just with BTC.

OK it's a worst case scenario and probably not going to happen but.....

-Dave

But it is happening, https://blockstream.com/liquid/

There are more than 20 exchanges in the "federation". The trade-off is "OK" for exchange to exchange transfers if you ask me, doesn't need your Bitcoins to be traded to altcoins for "faster/cheaper transfers".

Big player with proper (cyper-) risk & compliance ppl will never allow such - they ll go industrial central clearing / custody. LN is a joke

Wind_FURY

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Quote from: DaveF on December 23, 2020, 07:07:46 AM

Quote from: Wind_FURY on December 23, 2020, 02:23:02 AM

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

The other side of that is that can cause exchanges to become more "bank like"
All you need is of of them to start.
There will be no BTC transferred till certain limits have been hit or till the end of the day everything else would just be a journal entry.

Think about it. If I am going to send from a to b all they have to do is note it in their database someplace.
Then if you send from b to a it's just notes BTC going the other way and deducts from the total owed.
Overnight they settle up, and send in one tx.
Unless the amount goes over over a certain level, then they trigger a settlement.

You now have Chase and CitiBank but with BTC instead of $.

Others want to join in. Look banking 2.0 same as 1.0 just with BTC.

OK it's a worst case scenario and probably not going to happen but.....

-Dave

But it is happening, https://blockstream.com/liquid/

There are more than 20 exchanges in the "federation". The trade-off is "OK" for exchange to exchange transfers if you ask me, doesn't need your Bitcoins to be traded to altcoins for "faster/cheaper transfers".

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Quote from: DaveF on December 23, 2020, 07:27:03 PM

Because in the case of exchanges it starts to tie up more funds.
If 2 exchanges have large channels open between them then they can't use those funds for regular on-chain withdraws.
Then you add on a 3rd and 4th and you tie up even more funds.

Lets say exchange 5 opens, but does not have lightning. But it has a price higher enough or lower enough to make a lot of people want to move. Do you start closing channels. That makes for more TX fees. And I see a logistical nightmare.

And....for security a majority of the exchanges funds should be in cold or multi-sig wallets. Lightning by definition is a hot wallet.

-Dave

There could be reasons other than arbitrage that exchange customers will want to move their coin between exchanges. For example, one exchange might offer particular trading pairs that another exchange does not, one exchange may have different lending markets, or betting lending terms than another, one exchange may allow for fiat withdrawals under better terms, among other reasons.

Exchanges charge for withdrawal fees today, and they may charge transfer fees when transferring via LN that are in line with what the exchange will anticipate paying for closing tx fees divided by the number of transactions the LN expects to be able to make before having to close the channel.

Exchanges should keep most of their coin in cold storage, and you are correct coin in an open LN channel is part of a hot wallet. They could have the closing transactions go to their cold storage wallet, even if this will add minimal additional security. Having open LN channels will be something exchanges would have to manage.

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Quote from: PrimeNumber7 on December 23, 2020, 07:19:07 PM

Quote from: DaveF on December 23, 2020, 07:07:46 AM

Quote from: Wind_FURY on December 23, 2020, 02:23:02 AM

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

The other side of that is that can cause exchanges to become more "bank like"
All you need is of of them to start.
There will be no BTC transferred till certain limits have been hit or till the end of the day everything else would just be a journal entry.

Think about it. If I am going to send from a to b all they have to do is note it in their database someplace.
Then if you send from b to a it's just notes BTC going the other way and deducts from the total owed.
Overnight they settle up, and send in one tx.
Unless the amount goes over over a certain level, then they trigger a settlement.

You now have Chase and CitiBank but with BTC instead of $.

Others want to join in. Look banking 2.0 same as 1.0 just with BTC.

OK it's a worst case scenario and probably not going to happen but.....

-Dave

Exchanges are generally profitable, and should have assets in excess of their customer deposits if their business is run well. If an exchange has 10,000BTC in their various wallets, but their customers have a total of 9,500BTC on deposit, would you be concerned if the exchange accepted up to, say 400BTC from another exchange that was not actually received until the end of the day? The exchange would be able to process all customer withdrawals if everyone withdrew all of their bitcoin.

I would be more concerned if exchanges did what you describe and it resulted in fractional reserves.

IMO, exchanges should use large LN channels amongst each other to facilitate transfers between exchanges. Exchange A could allow their customers to send coin to their accounts at Exchange B instantly, and the two exchanges could instantly settle the transaction via their open LN channel. There would be no need for the customer to generate/provide a LN invoice, only their account details of their other exchange account.

Because in the case of exchanges it starts to tie up more funds.
If 2 exchanges have large channels open between them then they can't use those funds for regular on-chain withdraws.
Then you add on a 3rd and 4th and you tie up even more funds.

Lets say exchange 5 opens, but does not have lightning. But it has a price higher enough or lower enough to make a lot of people want to move. Do you start closing channels. That makes for more TX fees. And I see a logistical nightmare.

And....for security a majority of the exchanges funds should be in cold or multi-sig wallets. Lightning by definition is a hot wallet.

-Dave

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Quote from: DaveF on December 23, 2020, 07:07:46 AM

Quote from: Wind_FURY on December 23, 2020, 02:23:02 AM

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

The other side of that is that can cause exchanges to become more "bank like"
All you need is of of them to start.
There will be no BTC transferred till certain limits have been hit or till the end of the day everything else would just be a journal entry.

Think about it. If I am going to send from a to b all they have to do is note it in their database someplace.
Then if you send from b to a it's just notes BTC going the other way and deducts from the total owed.
Overnight they settle up, and send in one tx.
Unless the amount goes over over a certain level, then they trigger a settlement.

You now have Chase and CitiBank but with BTC instead of $.

Others want to join in. Look banking 2.0 same as 1.0 just with BTC.

OK it's a worst case scenario and probably not going to happen but.....

-Dave

Exchanges are generally profitable, and should have assets in excess of their customer deposits if their business is run well. If an exchange has 10,000BTC in their various wallets, but their customers have a total of 9,500BTC on deposit, would you be concerned if the exchange accepted up to, say 400BTC from another exchange that was not actually received until the end of the day? The exchange would be able to process all customer withdrawals if everyone withdrew all of their bitcoin.

I would be more concerned if exchanges did what you describe and it resulted in fractional reserves.

IMO, exchanges should use large LN channels amongst each other to facilitate transfers between exchanges. Exchange A could allow their customers to send coin to their accounts at Exchange B instantly, and the two exchanges could instantly settle the transaction via their open LN channel. There would be no need for the customer to generate/provide a LN invoice, only their account details of their other exchange account.

DaveF

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Quote from: Wind_FURY on December 23, 2020, 02:23:02 AM

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

The other side of that is that can cause exchanges to become more "bank like"
All you need is of of them to start.
There will be no BTC transferred till certain limits have been hit or till the end of the day everything else would just be a journal entry.

Think about it. If I am going to send from a to b all they have to do is note it in their database someplace.
Then if you send from b to a it's just notes BTC going the other way and deducts from the total owed.
Overnight they settle up, and send in one tx.
Unless the amount goes over over a certain level, then they trigger a settlement.

You now have Chase and CitiBank but with BTC instead of $.

Others want to join in. Look banking 2.0 same as 1.0 just with BTC.

OK it's a worst case scenario and probably not going to happen but.....

-Dave

Wind_FURY

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Quote from: PrimeNumber7 on December 19, 2020, 09:39:25 PM

Quote from: LoyceV on December 18, 2020, 12:31:39 PM

Quote from: Rath_ on December 18, 2020, 11:41:37 AM

Kraken has just announced that they are going to enable withdrawals and deposits over the Lightning Network in the first half of the next year.

They still have to start hiring a team to start LN implementation, but it's something Wink

I'm curious what limits they'll choose: they probably don't allow withdrawing very low amounts and I don't expect very low fees either. They don't even allow trading cents for performance reasons.

I would think the opposite. An exchange facilitating LN deposits/withdrawals will want to keep the amounts low because large transactions have the potential to make LN channels become unbalanced, and will need to be closed. Very small transactions may be prohibited to avoid database bloat.

I don't think exchanges will have especially high fees either. Deposit/withdrawal fees charged by exchanges are generally in line with actual costs associated with receiving/sending a deposit/withdrawals.

Quote from: LoyceV on December 18, 2020, 12:31:39 PM

Quote

Do you think it will set off a chain reaction among other exchanges?

Probably not, but if that happens arbitrage trading is going to be fun if you can make large-transfers between exchanges in a few seconds.

I don't think LN will cause much additional arbitrage trading. Today, traders can hold both BTC and USDt on both exchange A and exchange B, execute trades on both exchanges once the price deviates by a predefined threshold, and transfer coin between exchanges after both arb trades are executed.

Plus if they are willing to accept the trade-off. I believe exchanges that want large transfers between them should join the federation of BTC-issued tokens in the Liquid sidechain.

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Quote from: LoyceV on December 18, 2020, 12:31:39 PM

Quote from: Rath_ on December 18, 2020, 11:41:37 AM

Kraken has just announced that they are going to enable withdrawals and deposits over the Lightning Network in the first half of the next year.

They still have to start hiring a team to start LN implementation, but it's something Wink

I'm curious what limits they'll choose: they probably don't allow withdrawing very low amounts and I don't expect very low fees either. They don't even allow trading cents for performance reasons.

I would think the opposite. An exchange facilitating LN deposits/withdrawals will want to keep the amounts low because large transactions have the potential to make LN channels become unbalanced, and will need to be closed. Very small transactions may be prohibited to avoid database bloat.

I don't think exchanges will have especially high fees either. Deposit/withdrawal fees charged by exchanges are generally in line with actual costs associated with receiving/sending a deposit/withdrawals.

Quote from: LoyceV on December 18, 2020, 12:31:39 PM

Quote

Do you think it will set off a chain reaction among other exchanges?

Probably not, but if that happens arbitrage trading is going to be fun if you can make large-transfers between exchanges in a few seconds.

I don't think LN will cause much additional arbitrage trading. Today, traders can hold both BTC and USDt on both exchange A and exchange B, execute trades on both exchanges once the price deviates by a predefined threshold, and transfer coin between exchanges after both arb trades are executed.

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Quote from: LoyceV on December 18, 2020, 12:31:39 PM

Quote from: Rath_ on December 18, 2020, 11:41:37 AM

Kraken has just announced that they are going to enable withdrawals and deposits over the Lightning Network in the first half of the next year.

They still have to start hiring a team to start LN implementation, but it's something Wink

I'm curious what limits they'll choose: they probably don't allow withdrawing very low amounts and I don't expect very low fees either. They don't even allow trading cents for performance reasons.

Quote

Do you think it will set off a chain reaction among other exchanges?

Probably not, but if that happens arbitrage trading is going to be fun if you can make large-transfers between exchanges in a few seconds.

Just because of what I said before about fees I can't see them just walking away from the profit center of withdrawal fees like that.
That or there are going to be some stilly restrictions and rules put in place.
Or there is another angel I am missing.

-Dave

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Quote from: Rath_ on December 18, 2020, 11:41:37 AM

Kraken has just announced that they are going to enable withdrawals and deposits over the Lightning Network in the first half of the next year.

They still have to start hiring a team to start LN implementation, but it's something Wink

I'm curious what limits they'll choose: they probably don't allow withdrawing very low amounts and I don't expect very low fees either. They don't even allow trading cents for performance reasons.

Quote

Do you think it will set off a chain reaction among other exchanges?

Probably not, but if that happens arbitrage trading is going to be fun if you can make large-transfers between exchanges in a few seconds.

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Quote from: Wind_FURY on December 15, 2020, 12:26:14 AM

Shower thought. The reason why exchanges have never/will never implement Lightning for lower fees is not because of UI/UX issues, or the absence of business development for Lightning. It's because exchanges want more altcoin usage, and to collect fees from trading.

Kraken has just announced that they are going to enable withdrawals and deposits over the Lightning Network in the first half of the next year. Do you think it will set off a chain reaction among other exchanges?

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Quote from: DaveF on December 15, 2020, 07:19:45 AM

Show me an exchange that will do a withdraw for less then .0005 even when the mempool is empty.

At the moment:
https://www.coinplaza.it/: 0.00119815LNBTC gives 0.001BTC on-chain.
https://fixedfloat.com/: 0.00108384LNBTC gives 0.001BTC on-chain.
That's 8384 sat fee for the cheapest, including the 1% exchange fee. Just don't use big exchanges for this.

I'm not sure if it's the intended result, but the fees on exchanges make me keep funds there for a long time in order to avoid paying the withdrawal fee.
Amazingly, most exchanges don't charge a fee on small deposits, while those lead to higher consolidation costs. Most payment processors on the other hand add enough to make the user pay for their consolidation. I remember paying something small in 2017, and later saw my payment being consolidated together with many others at a $6k fee. That's huge, but for exchanges this cost is included in the withdrawal fees.

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Quote from: Wind_FURY on December 15, 2020, 12:26:14 AM

Shower thought. The reason why exchanges have never/will never implement Lightning for lower fees is not because of UI/UX issues, or the absence of business development for Lightning. It's because exchanges want more altcoin usage, and to collect fees from trading.

Also, the issues of dealing with people who have their wallets not setup properly. Probably some other issues too.
Don't forget most withdraws on exchanges also are a profit center.
As of now 7:15 AM EST 15-Dec-2020 25 sat/b will get you into the next block more or less.
To sweep one of my wallets at that will cost me 0.0000455 (3 inputs -> 1 output)
Show me an exchange that will do a withdraw for less then .0005 even when the mempool is empty.

-Dave

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Shower thought. The reason why exchanges have never/will never implement Lightning for lower fees is not because of UI/UX issues, or the absence of business development for Lightning. It's because exchanges want more altcoin usage, and to collect fees from trading.

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Quote from: Carlton Banks on December 07, 2020, 05:47:03 AM

Quote from: DaveF on December 06, 2020, 07:56:14 PM

Does anyone know if there is a simple way to do an IFTT for opening and closing channels?
I think it would be nice to be able to deal with the opening and closing of channels when onchain fees are low.
So set and IF suggested fees are lower then "X" then open / close these channels.

For now I just keep an eye on what is going on, but would like to automate it a bit.

there's a c-lightning plugin that does that, it automates quite alot (including channel re-balancing and soliciting incoming channel liquidity)

it's available only as C++ source for now, from the ZmnSCPx character's github (I may have spelled the name wrong....)

you basically start the plugin, and it more or less runs your node for you (but it's still possible to intervene manually)

Playing with it now. Seems interesting. I have been running LND so getting c-lightning running took me a while.

On a separate note: I finally have everything running behind TOR, so locally I can connect on my local network IP while out in the world I use TOR.
But, does anyone know of an Android wallet with built in TOR that works? As of now I am using Orbot & Zap but would prefer and all in one.

-Dave

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Quote from: DaveF on December 06, 2020, 07:56:14 PM

Does anyone know if there is a simple way to do an IFTT for opening and closing channels?
I think it would be nice to be able to deal with the opening and closing of channels when onchain fees are low.
So set and IF suggested fees are lower then "X" then open / close these channels.

For now I just keep an eye on what is going on, but would like to automate it a bit.

there's a c-lightning plugin that does that, it automates quite alot (including channel re-balancing and soliciting incoming channel liquidity)

it's available only as C++ source for now, from the ZmnSCPx character's github (I may have spelled the name wrong....)

you basically start the plugin, and it more or less runs your node for you (but it's still possible to intervene manually)

DaveF

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Does anyone know if there is a simple way to do an IFTT for opening and closing channels?
I think it would be nice to be able to deal with the opening and closing of channels when onchain fees are low.
So set and IF suggested fees are lower then "X" then open / close these channels.

For now I just keep an eye on what is going on, but would like to automate it a bit.

-Dave

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Quote from: PrimeNumber7 on December 05, 2020, 12:18:54 AM

Quote from: Wind_FURY on December 03, 2020, 03:18:11 AM

Quote

There will be no need for rounding down millisatoshis on channel closure once we increase the number of decimal places on-chain. It is bound to happen some day.

That would be bigger than the scaling debate.

I would be surprised if this was the case.

Increasing the max block size was one solution to a technical problem that it was unclear was an actual problem in the present. Increasing transaction value precision will be the only solution (that I can think of) to a problem, and it will be very obvious if it is a problem, as it would be reflected in the price of bitcoin.

Bigger than the scaling debate, or not, I believe it will still be a "big debate", simply because it will require a hard fork. But unless, maybe, if Bitcoin surges to an 8 digit valuation or more, which is very crazy, even for me, then maybe everyone can agree for it not to become a contentious hard fork.

Topic: The Lightning Network FAQ - page 50. (Read 33677 times)