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Topic: The Lightning Network FAQ - page 68. (Read 31920 times)

legendary
Activity: 2828
Merit: 7315
February 04, 2020, 07:36:23 AM
Pardon my ignorance guys, But any of you heard about this so called: LSATs: Pseudonymous Authentication using Bitcoin Lightning Payments? What's your thoughts about this one? Good idea or what?

https://medium.com/tierion/lsats-pseudonymous-authentication-using-bitcoin-lightning-payments-459e209b4b36

The idea is a bit weird, but quite interesting. But there are 2 things that hinder this idea
1. The cost to open/close LN channel to perform authentication, low on-chain transaction (1 sat/byte) condition doesn't happen all the time. While you could route the transaction to lower the cost, it's not always possible.
2. If user is being careless, the service could collect some metadata which reduce overall privacy
legendary
Activity: 3430
Merit: 3068
February 04, 2020, 05:10:10 AM
why are you focusing on just 1 dimension of this issue



Sorry, couldn' resist.


Cheesy
legendary
Activity: 2114
Merit: 15144
Fully fledged Merit Cycler - Golden Feather 22-23
February 04, 2020, 05:02:43 AM



My point is indeed that isn’t even an opportunity cost.
Staking reward is something that is completely orthogonal to bitcoin protocol.


Opportunity cost definition, https://en.m.wikipedia.org/wiki/Opportunity_cost

Quote

When an option is chosen from alternatives, the opportunity cost is the "cost" incurred by not enjoying the benefit associated with the best alternative choice.[1] The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen."[2] In simple terms, opportunity cost is the benefit not received as a result of not selecting the next best option.


If only you read the actual content of your links instead of posting them mindlessly:

why are you focusing on just 1 dimension of this issue



Sorry, I couldn't resist.

legendary
Activity: 3430
Merit: 3068
February 04, 2020, 04:40:41 AM
some people will happily eat the opportunity cost as a way to pay for the privacy benefits lightning channels can offer.


We don't know that. The asset used for opening channels are scarce, and when the demand for inbound capacity increases, the fee market will play out.

correction: _you_ don't know it, but only because you're mindlessly repeating your original (frankly, superficial) point without attempting to understand a subtler counterpoint


I will be quite happy to undercut prevailing relay fee levels precisely in order to attract inbound capacity to Lightning nodes I operate, and the aggregation of all channel owners behaving the same way will distort the fee market downwards, pushing possible profit margins for all other node operators as close to zero as they can withstand. even just regular differentiation of operating costs will cause such an effect. even just the plain utility of cheap fees to send BTC will cause regular people to run nodes without profiting from relaying, the alternative is to pay far more in on-chain fees.
 
it's very simple, this is how all free markets play out, a race to the bottom. Your conception is that of a controlled market for Lightning channels, not of a free market.




why are you focusing on just 1 dimension of this issue, and the only dimension that can lead you to such a pessimistic overview? you're oversimplifying in a way that leads to a very poorly defined analysis. Are you ok? you're normally quite good at balancing positive and negative perspectives
legendary
Activity: 2870
Merit: 1794
February 04, 2020, 12:42:59 AM
You HAVE to earn something.

no


please listen, I am telling you the following for the second time:

some people will happily eat the opportunity cost as a way to pay for the privacy benefits lightning channels can offer.


We don't know that. The asset used for opening channels are scarce, and when the demand for inbound capacity increases, the fee market will play out.


My point is indeed that isn’t even an opportunity cost.
Staking reward is something that is completely orthogonal to bitcoin protocol.


Opportunity cost definition, https://en.m.wikipedia.org/wiki/Opportunity_cost

Lightning fees will not be consistently low?

It makes sense: Bitcoin fees only went up because there were more transactions than the blockchain can process. With LN, that shouldn't be a problem. If there's a free market, nodes can charge whatever they want. And if fees get too high, others will join the market to compete with lower fees.


But the asset for opening channels is scarce. No one will, or can, "just join".

legendary
Activity: 3262
Merit: 16303
Thick-Skinned Gang Leader and Golden Feather 2021
February 03, 2020, 08:51:36 AM
Lightning fees will not be consistently low?
It makes sense: Bitcoin fees only went up because there were more transactions than the blockchain can process. With LN, that shouldn't be a problem. If there's a free market, nodes can charge whatever they want. And if fees get too high, others will join the market to compete with lower fees.
If the LN networks works well, wallets should take the cheapest possible route, which incentivizes nodes to be compatitive.
legendary
Activity: 2114
Merit: 15144
Fully fledged Merit Cycler - Golden Feather 22-23
February 03, 2020, 08:44:24 AM
You HAVE to earn something.

no


please listen, I am telling you the following for the second time:

some people will happily eat the opportunity cost as a way to pay for the privacy benefits lightning channels can offer.


please stop beating this horse, it was dead before you began (although perhaps you could explain why you don't want to listen to anyone?)
My point is indeed that isn’t even an opportunity cost.
Staking reward is something that is completely orthogonal to bitcoin protocol.
legendary
Activity: 3430
Merit: 3068
February 03, 2020, 07:51:42 AM
You HAVE to earn something.

no


please listen, I am telling you the following for the second time:

some people will happily eat the opportunity cost as a way to pay for the privacy benefits lightning channels can offer.


please stop beating this horse, it was dead before you began (although perhaps you could explain why you don't want to listen to anyone?)
legendary
Activity: 2870
Merit: 1794
February 03, 2020, 07:03:18 AM
I edited my post to make the point clearer. Opportunity costs are missed occasions to earn more for your working capital, your Bitcoins, because they are commited somewhere else, staked/locked in Lightning.
legendary
Activity: 2114
Merit: 15144
Fully fledged Merit Cycler - Golden Feather 22-23
February 03, 2020, 06:54:07 AM

This statement, straight from Alex Bosworth. He is Lightning Lab's lead developer of infrastructure for those of you who don't know.

Lightning fees will not be consistently low?

https://twitter.com/alexbosworth/status/1223999520532463617

Quote

I'm glad a lot of routing nodes have wound up setting their fees to high rates. When LN was first launching I worried that we'd see a repeat of the magical thinking from the on-chain days that no fees would exist. A realistic future fee market will include low fees and high fees.


On chain fees are the result of a market for the space in the block.
Off chain fees are the result of a market for fast confirmations and UTXO privacy.

I have no problem with fees (on or off chain) being significantly away from zero.
I have problems with someone "setting" fees (on or off chain) high (or low, for what it is worth).


Off-chain fees are a result of Bitcoins, a scarce asset, staked/locked in channels to provide liquidity in Lightning. There's an opportunity cost.
Not sure where is the opportunity cost. Which one are you referring to? lending bitcoins? this is something very risky. Opportunity cost has to do with risk-free (or near-risk free) alternatives.

legendary
Activity: 2870
Merit: 1794
February 03, 2020, 06:50:56 AM

This statement, straight from Alex Bosworth. He is Lightning Lab's lead developer of infrastructure for those of you who don't know.

Lightning fees will not be consistently low?

https://twitter.com/alexbosworth/status/1223999520532463617

Quote

I'm glad a lot of routing nodes have wound up setting their fees to high rates. When LN was first launching I worried that we'd see a repeat of the magical thinking from the on-chain days that no fees would exist. A realistic future fee market will include low fees and high fees.


On chain fees are the result of a market for the space in the block.
Off chain fees are the result of a market for fast confirmations and UTXO privacy.

I have no problem with fees (on or off chain) being significantly away from zero.
I have problems with someone "setting" fees (on or off chain) high (or low, for what it is worth).


Off-chain fees are a result of Bitcoins, a scarce asset, staked/locked in channels to provide liquidity in Lightning. There's an opportunity cost for staking/locking the asset, which is also your capital. You HAVE to earn something.
legendary
Activity: 2114
Merit: 15144
Fully fledged Merit Cycler - Golden Feather 22-23
February 03, 2020, 05:44:07 AM

This statement, straight from Alex Bosworth. He is Lightning Lab's lead developer of infrastructure for those of you who don't know.

Lightning fees will not be consistently low?

https://twitter.com/alexbosworth/status/1223999520532463617

Quote

I'm glad a lot of routing nodes have wound up setting their fees to high rates. When LN was first launching I worried that we'd see a repeat of the magical thinking from the on-chain days that no fees would exist. A realistic future fee market will include low fees and high fees.


On chain fees are the result of a market for the space in the block.
Off chain fees are the result of a market for fast confirmations and UTXO privacy.

I have no problem with fees (on or off chain) being significantly away from zero.
I have problems with someone "setting" fees (on or off chain) high (or low, for what it is worth).
legendary
Activity: 2870
Merit: 1794
February 03, 2020, 02:50:10 AM
--

The coins you collect from routing fees can support the expenses/costs of running your Lightning node? Hard to believe, but that's good.

It's not hard to believe that the fees you collect from forwarding can support your paying fees. You just need to not connect to 4999ppm fees charging peers...
Moreover I've no infrastructure cost. And not doing altruistically takes the service or instant non-censurable payments into account Wink.

Plus do you think that Lightning's fee-structure now is in its final form? It won't increase depending on demand? Because it's very hard to assume that it won't if the economic cost is scarce.

I'm not sure so.. I don't know.


Visualize this. Bitcoin's adoption rate reached 10% of the world's population, the Lightning Network is the standard for instant payment, demand for inbound capacity has increased exponentially, economic cost for it is a scarce/valuable asset.

Ok, I think (/hope?) that at some point the demand will switch from inbound to outbound capacity.


This statement, straight from Alex Bosworth. He is Lightning Lab's lead developer of infrastructure for those of you who don't know.

Lightning fees will not be consistently low?

https://twitter.com/alexbosworth/status/1223999520532463617

Quote

I'm glad a lot of routing nodes have wound up setting their fees to high rates. When LN was first launching I worried that we'd see a repeat of the magical thinking from the on-chain days that no fees would exist. A realistic future fee market will include low fees and high fees.

legendary
Activity: 2198
Merit: 2973
February 03, 2020, 02:09:50 AM
Great thread!!

This post  ( or maybe more so the medium article ) would make for a nice addition to the OP IMO.  At the very least I’ve never seen LN explained so simply so I wanted to share here.. https://bitcointalksearch.org/topic/m.29271658

Cheers
legendary
Activity: 1876
Merit: 3131
February 02, 2020, 11:26:57 AM
If for some reason, i happen to just leave house or the neighbor's kid decide to pull on the lines, would that mean forced channel closure leading me to pay on-chain fee unnecessarily?

A forced channel closure occurs when one of the parties wants to close the channel without any negotiations. This is mostly used when the other party is offline. You misunderstood one thing. It doesn't happen automatically after 24 hours. You can be offline for months and nothing will happen as long as the other party doesn't close the channel while you are absent.

Most of the people who run LN nodes don't close offline channels forcefully the moment they go down. I used to wait a couple days before doing so. Once one of the parties decides to close the channel, you have (by default) 24 hours to come back online in order to check if the other person didn't broadcast old state of your channel. I don't think many people know how to exploit it intentionally.

I am not sure about other implemantations but LND allows you to set up a watchtower which checks if the channel is closing and if the other party didn't cheat. You can set it up on a cheap VPS, but you don't have to worry about it if you don't have much money locked up in the channel.

Note: The other party can't simply steal all of your money. You would have to push the coins to their side by for example buying something and then receive payment from someone through that channel. In the meantime, the other person would have to make a copy of the channel's state.
legendary
Activity: 1876
Merit: 1157
February 02, 2020, 10:18:26 AM
-snip

That's an overkill for a simple Lightning Network node. By default, one have 24 hours to bring back one's node online before forced channel closure (old channel state might be broadcast to the network).
I followed the discussion for a few pages but couldn't find the question that came to my mind on seeing this. My ISP has these issues where the connection could be gone for more than 24 hrs. (In reality, the ADSL lines are lying exposed on the ground and the hand-twisted connection frequently gets sheared by passing cars, marauding kids and I'm not even joking). If i run an LN node and open a channel by putting some Sats and making a funding transaction, does the onus now lies on me to ensure that it is always online (or online atleast once in 24 hours)??

If for some reason, i happen to just leave house or the neighbor's kid decide to pull on the lines, would that mean forced channel closure leading me to pay on-chain fee unnecessarily?
Sorry if i have not googled for this. I'd like to read more about the challenges and roadmap of LN.
legendary
Activity: 3388
Merit: 6072
Crypto Swap Exchange
February 02, 2020, 09:16:36 AM
Hi Dave,
Well that is annoying. I can't believe that nobody thought someone might not want to have some unknown node open a massive channel to them.

Why not ? A channel opening to you does not require anything from your side (apart few bytes of RAM but....), people usually strive to have big inbound channels.

99% of the time it probably would not matter. I was doing an test of some stuff during the week [yeah I know use testnet for testing] and 3 places had opened MASSIVE channels to me. I thought / figured at the time it was a mistake. In the time I have been playing around with LN in TOTAL I have not sent & received in total as much as any one of those channels. And then an hour or 2 later they closed them.

I mentioned it to someone Friday who said, "yeah I had the same thing happen a week or 2 ago" he also mentioned that it did not appear on 1ml or other LN explorers. I did not check on mine. Just big open followed a bit later by a big close. So somebody is playing around with something. Which is fine but, I just did not expect it and was wondering if there was a way to prevent it.

Seems to be something that should be looked at. Unless I am missing something it does seem to open up the possibility of abuse.
FWIW it worth that's again somehing that can be done with C-lightning plugins, it's called the `openchannel` hook.

That is probably what I am look for. Thanks.

-Dave
legendary
Activity: 2534
Merit: 1655
February 02, 2020, 08:55:38 AM
Pardon my ignorance guys, But any of you heard about this so called: LSATs: Pseudonymous Authentication using Bitcoin Lightning Payments? What's your thoughts about this one? Good idea or what?

https://medium.com/tierion/lsats-pseudonymous-authentication-using-bitcoin-lightning-payments-459e209b4b36
sr. member
Activity: 279
Merit: 435
February 02, 2020, 06:59:19 AM
Hi Dave,
Well that is annoying. I can't believe that nobody thought someone might not want to have some unknown node open a massive channel to them.

Why not ? A channel opening to you does not require anything from your side (apart few bytes of RAM but....), people usually strive to have big inbound channels.

Seems to be something that should be looked at. Unless I am missing something it does seem to open up the possibility of abuse.
FWIW that's again somehing that can be done with C-lightning plugins, it's called the `openchannel` hook.

If someone opens a channel that eats up your entire node's sending capacity, shouldn't that be handled by routing fees? Those should be high enough to pay for rebalancing your channels.
But a channel opening to you doesnt eat your sending capacity ?.. It just increases your receiving capacity (and potentially the number of routes we can reach you through).
legendary
Activity: 3262
Merit: 16303
Thick-Skinned Gang Leader and Golden Feather 2021
February 02, 2020, 05:23:23 AM
Well that is annoying. I can't believe that nobody thought someone might not want to have some unknown node open a massive channel to them.
Seems to be something that should be looked at. Unless I am missing something it does seem to open up the possibility of abuse.
If someone opens a channel that eats up your entire node's sending capacity, shouldn't that be handled by routing fees? Those should be high enough to pay for rebalancing your channels.
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