The Lightning Network FAQ - page 53.

darosior

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Quote from: LoyceV on November 08, 2020, 07:07:32 AM

LN is a bit like a spoke-hub: instead of making a connection from anywhere to anywhere, everyone makes only a few connections.

That's just plain wrong. The Lightning Network is completely distributed at its core.

It may be right for some services built on top of the Lightning Network, such as mobile wallet providers easing the flow by providing a gossip source or even a custodial wallet.
But that must not be assimilated to the Lightning Network as defined. There were some previous models based on an *actual* hub-and-spoke architecture for payment channels, and they are very different from the Lightning Network.

LoyceV

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Quote from: Pmalek on November 08, 2020, 06:35:09 AM

How is the connection strength and the connectivity measured? Are there stats that one could look at before deciding which route to take to make sure that the payment goes through?

I'm not sure.

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Apparently it can happen that a payment doesn't go through. Is there a reason it's made this way

LN is a bit like a spoke-hub: instead of making a connection from anywhere to anywhere, everyone makes only a few connections.

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and not like regular Bitcoin transactions, where everyone can send to every other person on the world?

That exists already Wink

You can of course just use a normal on-chain Bitcoin transaction.
The problem with this is scalability: currently every Bitcoin node sees all transactions. That works fine for a few transactions per second. LN will be able to handle much larger transaction volumes, without storing all transaction data on the blockchain forever.

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Quote from: LoyceV on November 07, 2020, 05:37:56 AM

Snip

How is the connection strength and the connectivity measured? Are there stats that one could look at before deciding which route to take to make sure that the payment goes through? Apparently it can happen that a payment doesn't go through. Is there a reason it's made this way and not like regular Bitcoin transactions, where everyone can send to every other person on the world?

LoyceV

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Quote from: Timelord2067 on November 07, 2020, 06:46:01 AM

Just ensure you write down the 24 word mnemonic seed passwords/phrase in a secure location when prompted to do so (and create an on-chain wallet first *and then* create a Lightning Wallet)

In BlueWallet, you can create a LN wallet without creating an on-chain wallet. The LN-wallet uses a different backup system.

Here's a BlueWallet LN backup holding 100 sats:

Code:

lndhub://667c9c47fa0ac23c2844:11c65745b9b050dd731b

First one to restore this backup can move it to his own wallet.
Warning: don't use this wallet to receive funds, it's obviously compromised.

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Quote from: Rath_ on November 07, 2020, 05:39:42 AM

That's why Loyce suggested using a custodial wallet. BlueWallet doesn't require you to open your own channels. You can start receiving coins over the Lightning Network right after you create a wallet. You don't have to worry about inbound/outbound liquidity since it's managed by someone else.

Just ensure you write down the 24 word mnemonic seed passwords/phrase in a secure location when prompted to do so (and create an on-chain wallet first *and then* create a Lightning Wallet)

Rath_

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Quote from: Pmalek on November 07, 2020, 05:27:00 AM

I would then be able to make a direct connection with the grocery store without going to any other node?

That's correct.

Quote from: Pmalek on November 07, 2020, 05:27:00 AM

I understand that this is a a test you are suggesting.. I am just saying that using LN for an one time thing doesn't save on fees or improves the speed of confirmation.

That's why Loyce suggested using a custodial wallet. BlueWallet doesn't require you to open your own channels. You can start receiving coins over the Lightning Network right after you create a wallet. You don't have to worry about inbound/outbound liquidity since it's managed by someone else.

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Quote from: Pmalek on November 07, 2020, 05:27:00 AM

For the sake of simplicity, let's say they aren't using a third-party for their payment needs, and will keep the Bitcoin. I would then be able to make a direct connection with the grocery store without going to any other node?

Yes.
And if the grocery store's node is well-connected, you'll be able to pay your local bookstore too without opening another channel.

Quote

I am just saying that using LN for an one time thing doesn't save on fees or improves the speed of confirmation.

I think of LN as a Bitcoin niche market: it's still small, but has the potential to grow a lot. My one time testing lead to currently having several wallets installed, each with a few bucks worth of LN sats in there. Whenever a site (such as a webhost) accepts LN, I use it to help increase it's usage.

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Quote from: Rath_ on November 06, 2020, 07:06:57 AM

You could open a channel with either payment processor's node or any other well-connected node which would be able to route your payment. The routing fee should be negligible in the latter case. You wouldn't be able to connect directly to the grocery store since in this scenario, they would be using a third-party to handle your payment.

For the sake of simplicity, let's say they aren't using a third-party for their payment needs, and will keep the Bitcoin. I would then be able to make a direct connection with the grocery store without going to any other node?

Quote from: LoyceV on November 06, 2020, 07:22:05 AM

If you haven't tried it yet, just try

A custodial wallet is easiest though, and if you post a payment request for 100 sats, I'll fund it so you can send a few sats to a casino to test it.

I don't see any benefits in using LN one time only, or for testing purposes. It is good to test things to see how they work. But opening the channel requires a standard on-chain transaction with normal fees. Closing it as well. If I were to send multiple payments a day/week/month, it would make sense.

I understand that this is a a test you are suggesting. I am just saying that using LN for an one time thing doesn't save on fees or improves the speed of confirmation.

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https://bit.ly/387FXHi lightning theory

Quote from: LoyceV on November 06, 2020, 07:22:05 AM

Quote from: Pmalek on November 06, 2020, 06:33:27 AM

How do I establish the connection to the grocery store in this scenario? I send LN payments to the node operator. The node operator opens a channel to the grocery store?

That's the "magic" of LN: the network finds a route to send your payment. As long as the node is connected to someone who (is connected to someone who) has a connection to the node you need, it should work. It sometimes fails though, but I assume that gets better over time.
If you haven't tried it yet, just try

A custodial wallet is easiest though, and if you post a payment request for 100 sats, I'll fund it so you can send a few sats to a casino to test it.

I'm about to bump my testing thread in lending so I can help with this too if necessary.

Quote from: Rath_ on November 06, 2020, 07:06:57 AM

Quote from: Pmalek on November 06, 2020, 06:33:27 AM

You lost me here. How do I establish the connection to the grocery store in this scenario? I send LN payments to the node operator. The node operator opens a channel to the grocery store?

You could open a channel with either payment processor's node or any other well-connected node which would be able to route your payment. The routing fee should be negligible in the latter case. You wouldn't be able to connect directly to the grocery store since in this scenario, they would be using a third-party to handle your payment. Usually, payment processors offer a few different ways of withdrawing money, so the grocery wouldn't necessary need to use the Lightning Network at all.

I'm considering a payment processor might for close channels on the light Ing network too to maintain their funds so it might be interesting to see how that is dealt with (unless the funds get sent to another channel but thatight need inbound capacity - I say might because things might be changed and the ln is a decentralised protocol so they can change their own thing individually if it's just them connecting to them).

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Quote from: Pmalek on November 06, 2020, 06:33:27 AM

How do I establish the connection to the grocery store in this scenario? I send LN payments to the node operator. The node operator opens a channel to the grocery store?

That's the "magic" of LN: the network finds a route to send your payment. As long as the node is connected to someone who (is connected to someone who) has a connection to the node you need, it should work. It sometimes fails though, but I assume that gets better over time.
If you haven't tried it yet, just try

A custodial wallet is easiest though, and if you post a payment request for 100 sats, I'll fund it so you can send a few sats to a casino to test it.

Rath_

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Quote from: Pmalek on November 06, 2020, 06:33:27 AM

You lost me here. How do I establish the connection to the grocery store in this scenario? I send LN payments to the node operator. The node operator opens a channel to the grocery store?

You could open a channel with either payment processor's node or any other well-connected node which would be able to route your payment. The routing fee should be negligible in the latter case. You wouldn't be able to connect directly to the grocery store since in this scenario, they would be using a third-party to handle your payment. Usually, payment processors offer a few different ways of withdrawing money, so the grocery wouldn't necessary need to use the Lightning Network at all.

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Quote from: LoyceV on November 06, 2020, 06:03:57 AM

A channel gets funded when it gets opened, so it makes sense to be opened by the person who has to pay the other person.

Yeah, that makes sense.

Quote from: LoyceV on November 06, 2020, 06:03:57 AM

Correct. But as a customer buying groceries, that should be fine. If you're a supplier selling something to the store it's a different story.

In that scenario, they would have to be the the ones who open and fund the channel since they are paying and sending me Bitcoin.

Quote from: LoyceV on November 06, 2020, 06:03:57 AM

However, if a supermarket accepts Bitcoin Lightning payments, they'll most likely use a payment processor to handle the transaction. So you can open a channel to any well-connected node, and the shop doesn't have to worry about anything.

You lost me here. How do I establish the connection to the grocery store in this scenario? I send LN payments to the node operator. The node operator opens a channel to the grocery store?

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Quote from: Pmalek on November 06, 2020, 05:43:17 AM

I can conclude that the grocery store would be able to receive Lightning payments as soon as the channel was opened.

Correct.

Quote

But I have to be the one who opens the channel, not them?

A channel gets funded when it gets opened, so it makes sense to be opened by the person who has to pay the other person.

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Sending payments in the opposite direction would in this scenario not be possible. The grocery store can't send me anything, because "my bottle is full" and I first have to empty it by sending funds to them.

Correct. But as a customer buying groceries, that should be fine. If you're a supplier selling something to the store it's a different story.

However, if a supermarket accepts Bitcoin Lightning payments, they'll most likely use a payment processor to handle the transaction. So you can open a channel to any well-connected node, and the shop doesn't have to worry about anything.

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Quote from: Carlton Banks on November 05, 2020, 02:09:14 PM

...because if you open a channel directly to the grocery place, then your outgoing capacity is their incoming capacity. For that channel only.

So it would be no problem in that case,

So from your response, I can conclude that the grocery store would be able to receive Lightning payments as soon as the channel was opened. But I have to be the one who opens the channel, not them? Sending payments in the opposite direction would in this scenario not be possible. The grocery store can't send me anything, because "my bottle is full" and I first have to empty it by sending funds to them. Did I understand it correctly?

@Timelord2067
This is only a made-up scenario I though of. It didn't happen. I am just trying to figure out some specifics about the LN network. I found the part of the FAQ that mentioned that funds couldn't be accepted immediately with the opening of the channel unusual.

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Quote from: Pmalek on November 05, 2020, 01:19:20 PM

We open up a payment channel,

Did you wait for the transaction (to open a channel with the other side) to confirm *before* you tried to send funds to that person? And, was the channel opened directly with that other side, or through a third party? What LN wallets are you both using?

Carlton Banks

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@Pmalek

the key phrase in your explanation is here:

Quote from: Pmalek on November 05, 2020, 01:19:20 PM

We open up a payment channel

...because if you open a channel directly to the grocery place, then your outgoing capacity is their incoming capacity. For that channel only.

So it would be no problem in that case, but the grocery place would get some info about your on-chain funds (i.e. how much change you received from the tx that opened the channel to them)

jackg

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https://bit.ly/387FXHi lightning theory

I don't know if someone can confirm this and I ought to try it but I assumed if you have a channel opened with you by someone else, that part of the funds also become inbound capacity.

It'd make sense for a grocery store to do this as it'd also mean you don't need Internet to be able to spend your funds (you still need to sign a transaction but only they need Internet in order to process it)...

At the moment when you open a channel, you're the only one who funds it. There's a chance this'll change but for now that's how it is.

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I am sorry if this has been discussed before. This thread is huge and has 27 pages, it's hard to keep track of everything.

Let's consider the following scenario.
I finally persuade my local grocery store to accept crypto payments. Because of the scalability constrains, we can't use regular on-chain transactions. I have no intentions to wait at the cashier's for 10+ minutes for the transaction to confirm. I am also not interested in paying $10-20 in fees for a fast next-block confirmation, and I need to go and put the damn beer in the fridge. The store on the other hand, won't take 0-confirmation transactions because they know about the dangers of double spending.

The solution - the lightning network.

We open up a payment channel, I do my weekly grocery shopping and make my way to the cashier. When I try to pay, I realize that I cannot do it because:

Quote from: Rath_ on June 26, 2019, 05:06:04 PM

Why can't I receive coins?

Quote from: https://lightning-wallet.com/using-lightning-wallet#using-lightning-wallet

In order to receive Lightning payments, some conditions must be met:

1. Nothing can be received immediately after creating a new payment channel, as ‘room’ for incoming funds has to be made by spending some funds first. A payment channel can be thought of as a full bottle of water: in order to pour something in one first has to pour something out.

1. How do I pay for my groceries if the store can't immediately accept LN payments?
2. Has this been changed and configured differently in the meantime?
3. Are the bottles full at both ends of the payment channel or whose bottle is empty as soon as the channel is created?

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Quote from: Timelord2067 on November 01, 2020, 04:00:34 AM

Quote from: DaveF on October 31, 2020, 08:11:04 AM

So I have a lightning node with 0 funds, I want to open a couple of channels but would 1st have to send funds to the node wallet.
Can I just run importprivkey in wallet that my node uses and then open channels with those funds? I don't see why it would not work but I'm not sure.

If you need to recharge a node I've got ~ $1,000 in a half dozen channels and would be willing to do a 1:1 swap for on-chain funds.

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Since the mempool is still pretty full I figure it would save me some tx fees.

We could discuss a deferred "repayment" via the block-chain at a later date when the TX fees stop mooning.

Thanks for the offer but I need to open some channels between my own nodes not use other channels.
I should have enough funds in the wallet to open the channels to do the testing that I want at the moment.

-Dave

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Thank you PrimeNumber7

That was a useful overview that gives some direction

Sounds like we all may want to keep one eye open for lightning scams on the horizon.......

Topic: The Lightning Network FAQ - page 53. (Read 32053 times)