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The lightning network has no security (protection against double spend) on it's own. It relies on the underlying blockchain for that.

by rj123 9y ago

DINKDINK 9y ago
>The lightning network has no security (protection against double spend) That's not true. By locking funds into a Lightning Network payment channel you solve the double spend problem _in the channel_ (the person receiving your payment knows that in order for you to double spend the channel, the payment recipient would need to approve the double spend). The risk of being double spent still exists on the underlying blockchain though, which is solved with a smart-contract structure that allows the counter party to the perpetrator of fraud to revoke a fraudulent double spend.
- nosuchthing 9y ago
  What's a practical use case? It sounds like you have to deposit a balance into a lightning channel, meanwhile wait for the block to be accepted, and once the funds are in the channel any activity still needs to be verified by another block being processed and accepted into the main chain.. This process effectively doubles the required amount of transactions and time spent for the 'lightning' transaction to take place?
  - rj123 9y ago
    The main use case is small payments. You open a channel locking X amount of funds, and then can send or receive small payments to/from other parties on the network without broadcasting those transactions to the blockchain or paying fees. The only thing that is required is a route connecting payment channels from sender to recipient. For example, if A has a channel with B, B has one with C, and C with D, then A can transact with B, C or D.
  - AgentME 9y ago
    No, once the channel is open, any number of transactions can happen within it as long as the net transfer from a party is less than the amount they committed to the channel. (I've made another post in this thread with a fuller explanation.)
  - mikekchar 9y ago
    In Japan there are cards (and, indeed, your cell phone) that work exactly the same way. Debit cards don't really exist in Japan. Instead you buy a smart card (often the ones used for paying train or bus fares). You put some money on the card using a machine (you insert cash and it encodes the money on the card). Then you can flash the card onto a reader to pay for things (often train or bus fares, but in the past 10 years it has extended to vending machines, convenience stores, etc, etc). Lightning is exactly the same way. You set up a contract with the payment processor. This requires the transaction to be accepted into a block. Then you make as many smaller transactions (which require no blockchain transactions) with the payment processor as you want. At any time, the payment processor can terminate the contract by cashing in the amount of money you have spent. This requires a transaction to be accepted in the block chain. After that the channel is closed and only the amount spent is transferred (the remaining amount is freed up). If it goes beyond the contract length without the payment processor cashing in, then the contract is cancelled and the total amount is freed up. So basically it allows you to make many transactions through a payment processor, while only making 2 transactions on the block chain. Anyone can be a payment processor, but the protocol requires the payment processor to have capital equal to the transactions in process (they have to transfer funds to a third party before they get paid -- although they are guaranteed to get paid by the end of the contract). It's actually a pretty slick protocol. Their website has a video with implementation details that explains exactly how it works: https://lightning.network/ https://lightning.network/
    - Nursie 9y ago
      Only two blockchain transactions, still costs multiple dollars right now.
- rj123 9y ago
  I think you misread my response, or maybe I wasn't clear, since I agree with you. I said the lightning network has no security on it's own. It requires an underlying blockchain on which to lock funds. Those underlying locked funds are what effectively secure the payments made on the lightning network channel.

The lightning network has no security (protection against double spend) on it's own. It relies on the underlying blockchain for that.

by rj123 9y ago

The lightning network has no security (protection against double spend) on it's own. It relies on the underlying blockchain for that.

DINKDINK 9y ago

>The lightning network has no security (protection against double spend) That's not true. By locking funds into a Lightning Network payment channel you solve the double spend problem _in the channel_ (the person receiving your payment knows that in order for you to double spend the channel, the payment recipient would need to approve the double spend). The risk of being double spent still exists on the underlying blockchain though, which is solved with a smart-contract structure that allows the counter party to the perpetrator of fraud to revoke a fraudulent double spend.

nosuchthing 9y ago
What's a practical use case? It sounds like you have to deposit a balance into a lightning channel, meanwhile wait for the block to be accepted, and once the funds are in the channel any activity still needs to be verified by another block being processed and accepted into the main chain.. This process effectively doubles the required amount of transactions and time spent for the 'lightning' transaction to take place?
- rj123 9y ago
  The main use case is small payments. You open a channel locking X amount of funds, and then can send or receive small payments to/from other parties on the network without broadcasting those transactions to the blockchain or paying fees. The only thing that is required is a route connecting payment channels from sender to recipient. For example, if A has a channel with B, B has one with C, and C with D, then A can transact with B, C or D.
- AgentME 9y ago
  No, once the channel is open, any number of transactions can happen within it as long as the net transfer from a party is less than the amount they committed to the channel. (I've made another post in this thread with a fuller explanation.)
- mikekchar 9y ago
  In Japan there are cards (and, indeed, your cell phone) that work exactly the same way. Debit cards don't really exist in Japan. Instead you buy a smart card (often the ones used for paying train or bus fares). You put some money on the card using a machine (you insert cash and it encodes the money on the card). Then you can flash the card onto a reader to pay for things (often train or bus fares, but in the past 10 years it has extended to vending machines, convenience stores, etc, etc). Lightning is exactly the same way. You set up a contract with the payment processor. This requires the transaction to be accepted into a block. Then you make as many smaller transactions (which require no blockchain transactions) with the payment processor as you want. At any time, the payment processor can terminate the contract by cashing in the amount of money you have spent. This requires a transaction to be accepted in the block chain. After that the channel is closed and only the amount spent is transferred (the remaining amount is freed up). If it goes beyond the contract length without the payment processor cashing in, then the contract is cancelled and the total amount is freed up. So basically it allows you to make many transactions through a payment processor, while only making 2 transactions on the block chain. Anyone can be a payment processor, but the protocol requires the payment processor to have capital equal to the transactions in process (they have to transfer funds to a third party before they get paid -- although they are guaranteed to get paid by the end of the contract). It's actually a pretty slick protocol. Their website has a video with implementation details that explains exactly how it works: https://lightning.network/ https://lightning.network/
  - Nursie 9y ago
    Only two blockchain transactions, still costs multiple dollars right now.
rj123 9y ago
I think you misread my response, or maybe I wasn't clear, since I agree with you. I said the lightning network has no security on it's own. It requires an underlying blockchain on which to lock funds. Those underlying locked funds are what effectively secure the payments made on the lightning network channel.