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Is there any rationale for LN? As I understand the situation: Bitcoin has a hardcoded limit for the number of transactions that can be processed every 10 minut

by 3dfan 11y ago

Is there any rationale for LN? As I understand the situation: Bitcoin has a hardcoded limit for the number of transactions that can be processed every 10 minutes. Having such a limit is a good thing, because nobody can stress the network with an unlimited number of transactions. But the limit should be close to the normal usage of the network. So the hardcoded limit should rather be a setting that gets updated from time to time. So there are the Bitcoin Unlimited guys who propose a client that has a setting for the limit. And there are the LN guys, who propose a whole new layer on top of Bitcoin. Why?

pstrateman 11y ago
Lightning (which is shorthand for Hash Locked Bi-Directional Payment Channels) is a trust-less net settlement system built by leveraging the smart contracting capabilities of bitcoin. Such a system enables transactions to occur between a limited set of participants without the requirement that the entire world know about them. Avoiding telling the entire world reduces the cost of transaction processing by many orders of magnitude (something on the order of 1,000,000 times cheaper).
- 3dfan 11y ago
  reduces the cost of transaction processing I never heard anybody complain that the transaction processing is too expensive. Both miners and users seem to be quite happy.
  - tdryja 11y ago
    Check out /r/Bitcoin sometime for users complaining about transactions fees :) (Actually more the threat that some day there will be significant fees) Unfortunately Bitcoin has often been oversold as being "free"; but if transactions are free, and there's a fixed number of coins to mine, who pays for this whole network in 30 years? The motivation behind the design of LN is to minimize the number of transactions which need to be globally verified (which has a cost) while still adhering to the general model of Bitcoin (decentralized, pseudonymous, etc). You're right though that with tx fees being on the order of ~0.05 USD, you don't really need LN yet. I've long assumed that fees would become significant, pushing out some use cases. That's already happened with e.g satoshidice.
    - 3dfan 11y ago
      Uh oh ... for all I know, r/bitcoin is not a free community but gets heavily censored. A more balanced perspective can be found on r/btc: https://www.reddit.com/r/btc https://www.reddit.com/r/btc So you say LN is to solve future problems. Because transactions are free and in 30 years nobody will do the mining for free. Well, thats why bitcoin has fees. And a mechanism to let the market decide on those fees. This has been planned from the beginning. From what I can see, all is fine with bitcoin. And there is no need for the complexity LN brings.
      - josephpoon 11y ago
        It's already infeasible to directly make a single spend of $0.0001 on the blockchain itself (transaction fees are $0.02-$0.05).
        3dfan 11y ago
        What is the use case of spending $0.0001?
        deleted 11y ago
        [deleted]
        Taek 11y ago
        Downloading a webpage, for example. Sending an email, giving someone an upvote, making use of a caching service. Basically any sort of payment you would want to do at the machine level. If I'm uploading a file to you, I would want you to pay per MB because I'm not sure if you're going to leave after you have 50% of the file.
    - freework 11y ago
      > who pays for this whole network in 30 years? Why pays to seed torrents? Who pays to run NTP servers? Who pays for running game servers? Its is wrong to assume that something has to be profitable in order for it to exist.
  - everlast32 11y ago
    For the past month there has been a backlog of 6000 to 10,000 transactions in the mempool. This is causing nodes to go offline. There are about 500 to 1000 rasberry pies operating as full nodes on the network and their 1 GB of ram is not enough to hold the backlog of tx. Blockstream is proposing to raise the limit to 2MB 2 years from now. That would be a disaster for the network.
tdryja 11y ago
"Bitcoin Unlimited" has no maximum block size, hence the name. There are many problems which arise from unbounded transaction rates in Bitcoin. The most fundamental is that long term the coinbase reward is zero, and transaction fees are the only reason to create new blocks. Without artificial scarcity of block space (artificial in the sense of beyond what hardware can support) transaction fees would tend to zero, and mining would no longer generate revenue. LN is proposed to allow many users and many transactions (when nodes cooperate) while keeping the security properties of Bitcoin (when nodes don't).
- freework 11y ago
  Mining does not need to be profitable. People always make the mistake in thinking that if mining ceases to be profitable that mining would suddenly stop. That is simply not how it works. It is more economical to buy tomatoes at the grocery store, but that doesn't stop people from growing tomatoes in their backyard.
  - maaku 11y ago
    Mining costs millions of dollars per day in electricity costs. I guess we can just expect a few people to burn a hole in their pocket for the good of the network?
    - Taek 11y ago
      Sorry to be pedantic, but I do believe the daily cost of mining is closer to $250,000 - $750,000. Not a small number, but also not millions per day.
      - maaku 11y ago
        I'm a physicist so naturally I do all back-of-the-envelope calculations to one-significant figure with rounding at each step. :) My own estimation is between $400k per day (hard lower bound) and $800k per day depending on assumptions about hardware efficiency, although around $100k / day was added in the last week in a trend that is continuing, so $1MM/day will very quickly be accurate.
martindevans 11y ago
Roughly: LN allows you to transact instantly, but with a limited group of people (it takes one normal bitcoin transaction to setup your group, but then transactions are instant). Whereas bitcoin allows you to transact slowly (block confirmation time, i.e. ~10mins) with anyone.
- pstrateman 11y ago
  Actually it lets you transact instantly with anybody you can construct a route to. That should be essentially everybody with even a pretty loosely connected graph.
  - mrblockchain 11y ago
    How do you know? There isn't even a working prototype yet!
TD-Linux 11y ago
The lightning network paper at https://lightning.network/ https://lightning.network/ addresses the rationale for its creation.

by 3dfan 11y ago

pstrateman 11y ago

Lightning (which is shorthand for Hash Locked Bi-Directional Payment Channels) is a trust-less net settlement system built by leveraging the smart contracting capabilities of bitcoin. Such a system enables transactions to occur between a limited set of participants without the requirement that the entire world know about them. Avoiding telling the entire world reduces the cost of transaction processing by many orders of magnitude (something on the order of 1,000,000 times cheaper).

3dfan 11y ago
reduces the cost of transaction processing I never heard anybody complain that the transaction processing is too expensive. Both miners and users seem to be quite happy.
- tdryja 11y ago
  Check out /r/Bitcoin sometime for users complaining about transactions fees :) (Actually more the threat that some day there will be significant fees) Unfortunately Bitcoin has often been oversold as being "free"; but if transactions are free, and there's a fixed number of coins to mine, who pays for this whole network in 30 years? The motivation behind the design of LN is to minimize the number of transactions which need to be globally verified (which has a cost) while still adhering to the general model of Bitcoin (decentralized, pseudonymous, etc). You're right though that with tx fees being on the order of ~0.05 USD, you don't really need LN yet. I've long assumed that fees would become significant, pushing out some use cases. That's already happened with e.g satoshidice.
  - 3dfan 11y ago
    Uh oh ... for all I know, r/bitcoin is not a free community but gets heavily censored. A more balanced perspective can be found on r/btc: https://www.reddit.com/r/btc https://www.reddit.com/r/btc So you say LN is to solve future problems. Because transactions are free and in 30 years nobody will do the mining for free. Well, thats why bitcoin has fees. And a mechanism to let the market decide on those fees. This has been planned from the beginning. From what I can see, all is fine with bitcoin. And there is no need for the complexity LN brings.
    - josephpoon 11y ago
      It's already infeasible to directly make a single spend of $0.0001 on the blockchain itself (transaction fees are $0.02-$0.05).
      - 3dfan 11y ago
        What is the use case of spending $0.0001?
        deleted 11y ago
        [deleted]
        Taek 11y ago
        Downloading a webpage, for example. Sending an email, giving someone an upvote, making use of a caching service. Basically any sort of payment you would want to do at the machine level. If I'm uploading a file to you, I would want you to pay per MB because I'm not sure if you're going to leave after you have 50% of the file.
  - freework 11y ago
    > who pays for this whole network in 30 years? Why pays to seed torrents? Who pays to run NTP servers? Who pays for running game servers? Its is wrong to assume that something has to be profitable in order for it to exist.
- everlast32 11y ago
  For the past month there has been a backlog of 6000 to 10,000 transactions in the mempool. This is causing nodes to go offline. There are about 500 to 1000 rasberry pies operating as full nodes on the network and their 1 GB of ram is not enough to hold the backlog of tx. Blockstream is proposing to raise the limit to 2MB 2 years from now. That would be a disaster for the network.

tdryja 11y ago

"Bitcoin Unlimited" has no maximum block size, hence the name. There are many problems which arise from unbounded transaction rates in Bitcoin. The most fundamental is that long term the coinbase reward is zero, and transaction fees are the only reason to create new blocks. Without artificial scarcity of block space (artificial in the sense of beyond what hardware can support) transaction fees would tend to zero, and mining would no longer generate revenue. LN is proposed to allow many users and many transactions (when nodes cooperate) while keeping the security properties of Bitcoin (when nodes don't).

freework 11y ago
Mining does not need to be profitable. People always make the mistake in thinking that if mining ceases to be profitable that mining would suddenly stop. That is simply not how it works. It is more economical to buy tomatoes at the grocery store, but that doesn't stop people from growing tomatoes in their backyard.
- maaku 11y ago
  Mining costs millions of dollars per day in electricity costs. I guess we can just expect a few people to burn a hole in their pocket for the good of the network?
  - Taek 11y ago
    Sorry to be pedantic, but I do believe the daily cost of mining is closer to $250,000 - $750,000. Not a small number, but also not millions per day.
    - maaku 11y ago
      I'm a physicist so naturally I do all back-of-the-envelope calculations to one-significant figure with rounding at each step. :) My own estimation is between $400k per day (hard lower bound) and $800k per day depending on assumptions about hardware efficiency, although around $100k / day was added in the last week in a trend that is continuing, so $1MM/day will very quickly be accurate.

martindevans 11y ago

Roughly: LN allows you to transact instantly, but with a limited group of people (it takes one normal bitcoin transaction to setup your group, but then transactions are instant). Whereas bitcoin allows you to transact slowly (block confirmation time, i.e. ~10mins) with anyone.

pstrateman 11y ago
Actually it lets you transact instantly with anybody you can construct a route to. That should be essentially everybody with even a pretty loosely connected graph.
- mrblockchain 11y ago
  How do you know? There isn't even a working prototype yet!

TD-Linux 11y ago

The lightning network paper at https://lightning.network/ https://lightning.network/ addresses the rationale for its creation.