Topic: Will LN Hubs require a Banking License / Banking Cartels will take over Crypto - page 2. (Read 1513 times)

LN isn't a bank per se, thus won't be eligible for a license... Wouldn't laws regarding banks have to change in order to be able to give licenses to dedicated LN hubs? From the government point of view, a LN hub wouldn't operate with money, so it wouldn't be possible to give a license, or am I wrong?

Yes, that is, in my understanding, like it's supposed to work.

(There was more text here, but after a re-read of the LN proposal I realized I wrote bullshit. Your concerns are valid.)


Yes, but IOU-based online wallets like Coinbase de facto are banks even today. They will continue to work the same way with LN. But also in the case of hybrid online wallets like Blockchain.info, they can choose to sponsor the commit transaction fee to get you to use their node as hub. That would be already a bit different from banking, I would call it "semi-centralized", because they in no situation can run away with your money if you have a copy of all your private keys.



As far as I understand, as a node you could do that, but it's very possible that you'll have a hard time against the competition. What is possible is that if e.g. government actors use LN, they could be forced to use such a "trusted" LN node, but for the general public it should be impossible to force that.


The big difference is that centralized actors like banks, in theory, can close down and lock or run away with your funds*. With LN, this is not possible, as you - in theory - would be able to retire the complete funds of the channel after the HTLC timeout if your counterparty is trying to scam you.

My problem with LN - and the reason why I personally would only use it for small amounts - is the danger that there could be attacks by nodes that act as hubs and after opening a channel and have a few transactions broadcast an old settlement transaction and then try to disconnect their counterparties from the network (e.g. by DDOS attacks) to avoid that you retire all the coins before the CSV timeout occurs. I don't know if there is already a solution for this problem or if I am understanding something wrong.


*well, with "official" registered banks you mostly have insurance against bank insolvency up to a relative large amount (e.g. 100000 EUR in the euro zone) but the problem remains for larger funds and because a generalized bank failure would lead to severe problems for the financial system.

So suppose I own 2 BTC, and I want to pay someone 0.5 BTC.  Like now, I put in his address, and I take the option "try to do it with LN" or I don't know how it will present itself.  So what happens ?  

In a kademlia-like way my client goes looking whether my payee has an open channel on the LN, and looks at a possible routing through the network from the list of peers available ?  So I then propose to open a channel to whatever node happens to be chosen by that algorithm, with the hope of keeping it open long enough to have many transactions through it, locking in automatically my 2 BTC and hoping that this unknown partner on the network will keep open this link and his node active ?

I'm somewhat sceptical about this being able to work, because it seems to me that this will lead to a lot of savage settlements.

But that sounds a lot like a bank account.

Mm, could I require, for instance, to get an e-mail with personal information (KYC/AML), or with the purpose of the transaction, and decide upon that information whether I accept to transmit it or not ?
(I'm trying to find out how much power the nodes can have over the transactions)

Well, that's what I'm trying to understand: whether this is just a smarter way of transmitting transactions, or whether this sounds awfully lot like banking.   It is not clear to me, and I know too little about it.

The fact that we're even having this discussion should tell people something VERY critical:

LN is centralizing by nature if you try to implement it as a primary scaling solution.  It is not the p2p scaling solution it is sometimes advertised as.  LN will not solve all the scaling problems.  We still need massive on chain scaling. 

Most probably the GUI client will hide all that hassle. The way it would work (as far as I know) is that you would do the first transaction just as if it was on-chain, but the client would search a "route" across nodes that support LN if the receiver also uses LN - so the "opening" of the channel would be totally automated.

That is the "decentralized" LN model, that some think may work but others think a "centralized" model with a few hubs is more realistic. We'll see.

Yes and Yes - but the second one is not mandatory, in theory you can use a LN channel as long as you want, you only have to close it if your counterparty is trying to scam you.

I guess it's the sender, like with on-chain transactions. But I can imagine that some online wallet providers could "sponsor" the fee if they also act as LN hubs and are for-profit businesses.

I think yes, but your conditions (e.g. a maximum fee) must match the conditions of the node to whom you're opening a channel and all nodes you want to route through.

I think that is one of the reasons why most people probably will tend to open channels to known "hubs" because they think they won't disappear that fast. But let's wait and see.

BTC Core shills will force people to use SegWit? Tell me, how do those people force other people to do anything? The
only people I see that are forcing others to do something is the BU miners with their hash power. This is a bunch of crap, and you know it.

If anything like this happens, people will just resort back to a Alt coin where SegWit or the LN is not applied. The network will quickly adapt to the new coin and the old Bitcoin will be dead.

Miners will stop mining it and move over to the new Alt coin.

Attitudes, Belief's and Behaviors

The previous picture and poem is a clear example of propaganda which is a form of persuasion used to influence people's attitudes, beliefs, and behaviors. A working definition of propaganda is the spreading of ideas, information, or rumor for the purpose of helping or injuring an institution, a cause, or a person. While propaganda has been around for almost a thousand years, only recently (last 100 years) with the advent of technologies that allow us to spread information to a mass group has it evolved to a scientific process capable of influencing a whole nation of people. While propaganda is most evident in times of war as in the poster, it is constantly being used as a political and social means in even less obvious ways to influence peoples attitudes. This is currently evident with all the election commercials on TV, where the candidates are using propaganda techniques to elevate themselves above their competitor. Another place propaganda is being exploited is by the use of the media in its portrayal of countries that have nuclear technology.

Modern propaganda uses all the media available to spread its message, including: press, radio, television, film, computers, fax machines, posters, meetings, door-to-door canvassing, handbills, buttons, billboards, speeches, flags, street names, monuments, coins, stamps, books, plays, comic strips, poetry, music, sporting events, cultural events, company reports, libraries, and awards and prizes. It is most likely that some of these media uses are surprising, but that only serves to show how easy it is to not even recognize propaganda as such. For the purpose of our paper we will focus on mainly the usage of the press in their tactics of shaping people's opinions. The press (newspapers and magazines) is important because the most current news and issues are spread every day through them. The Dune affect is a term we coined--after the movie Dune--which explains that those who control and have access to media have access to and potential control of public opinion.

Indeed, propaganda is so powerful because everyone is susceptible to it. This is true as explained by Robert Cialdini, an expert in influence, because people exist in a rapidly moving and complex world. In order to deal with it, we need shortcuts. We cannot be expected to recognize and analyze all the aspects in each person, event, and situation we encounter in even one day. We do not have the time, energy, or capacity to process the information; and instead we must very often use our stereotypes, our rules of thumb, to classify things according to a few key features and then to respond without thinking when one or another of these trigger feature are present (Cialdini 6). While this makes people highly susceptible to a propagandist who understands persuasion, in general it is the most efficient for of behaving, and in other cases it is simply necessary. Additionally, propaganda includes the reinforcement of societal myths and stereotypes that are so deeply embedded within a culture that it is often difficult to recognize the message as propaganda.

For example I just used a persuasive technique that propagandist use all the time by introducing Cialdini as an expert. The heuristic this follows is the obedience to authority and is a rule that when someone credible and in this case by title of an expert, a person will automatically believe the information to be correct. "Titles are simultaneously the most difficult and the easiest symbols of authority to acquire. To earn a title normally takes years of work and achievement. Yet, it is possible for somebody who has put in none of this effort to adopt the mere label and receive an automatic difference" Cialdini 181). After all, what really makes Cialdini an expert?

Hello,

I'm a new poster here but I've been lurking on this forum for a long time before making an account.  I try to understand this lightning network thing somewhat better, you seem to be knowledgeable about it.  I also had the impression that it looked like banking, but then I don't really know.

Tell me if I understand it correctly.  The LN is supposed to handle much more transactions than can be put on the blockchain.  So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?  Is there a transaction on-chain to set up the link ?  Is there one to settle ?  Who is going to pay the fee ?  Who gets the LN fees and how do I determine them ?  Can I put my conditions for using the channel ?

I think I more or less understood what a LN channel is (details lacking) but I am missing details.  How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

How is LN practically supposed to work ?

Instant Payments.
Bitcoin aggregates transactions into blocks spaced ten minutes apart. Payments are widely
regarded as secure on bitcoin after confirmation of six blocks, or about one hour.
On the Lightning Network, payments don't need block confirmations, and are instant and atomic. Lightning can be used at retail point-of-sale terminals, with
user device-to-device transactions, or anywhere instant payments are needed

So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?

Is there a transaction on-chain to set up the link ?  Is there one to settle ?

  Who is going to pay the fee ?

Who gets the LN fees and how do I determine them ?

Can I put my conditions for using the channel ?

How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

Licenses are typically issued by a national banking regulator to applicant corporations that meet its banking requirements. The requirements may include minimum capital requirements, minimum number of directors, residence of shareholders, spread of shareholdings, disclosure of beneficial shareholders, besides other matters. These requirements may differ between jurisdictions, and may differ depending on the type of license being sought. Some jurisdictions, sometimes called tax havens, have a reputation for lax or corrupt standards in bank licensing, granting a license, for example, to shell companies, or to companies with nominee directors, or with dummy shareholders, etc.[citation needed]

The granting of the license may involve a long, complex and expensive procedure, which may depend on the type of bank license being sought. There are a number of sectors in which banks may be involved. The general bank license allows a bank to engage in all banking activities, such as retail banking, merchant acquiring, cash management, asset management and trading. An applicant can apply for a limited banking license, such as an offshore banking license.