5 ms·

The author is just assuming an expiry time of the payment channels of one month, which is not realistic in an hypothetical scenario in which layer2 protocols st

by knocte 9y ago

The author is just assuming an expiry time of the payment channels of one month, which is not realistic in an hypothetical scenario in which layer2 protocols started to become prevalent in the cryptocurrency space: the more people trust this new software stacks, the longer the expiry times people will give to their deposits, because they will not mind locking money which will be just useful in the Layer2 area, if most of the merchants move to this layer as well, and because the longer your expiry dates are, the less fees (blockchain fees) one will have to pay.

EGreg 9y ago
So basically, we are back to a federated system :)
- deleted 9y ago
  [deleted]
- knocte 9y ago
  I don't understand your point, please elaborate.
  - EGreg 9y ago
    Banks have a federated system. The internet is a network of networks. Same here. People tend to do the most business inside local communities. And then cross-community payments use the internet. It is not totally distributed and peer-to-peer. There are trusted intermediaries.
    - knocte 9y ago
      The big difference between Layer2 and the banking system is that Layer2 is still a trust-less protocol in the same way Layer1 is. There's no counterparty-risk in Layer2. Yes, most supernodes in Layer2 will probably be big payment-insitutions, but nothing will prevent you (or anyone) to become a Layer2 node as well, either.
      - EGreg 9y ago
        But in practice, the supernodes can freeze your money. Similarly if the five big mining pools blacklist your bitcoin address then your "permissionless" currency becomes just like a frozen bank account in Cyprus, no? You may not think those gatekeepers care about you, but that's one reason the banking system doesn't rush to adopt bitcoin. They don't want to be at the mercy of the mining pools when it comes to moving billions of dollars between banks. That's why they are instead adopting Ripple and Hyperledger.
        knocte 9y ago
        > But in practice, the supernodes can freeze your money. What? What part of "there's no counterparty-risk in layer2" didn't you understand? The only thing they could do is become uncooperative, and the worst thing that this could cause is that you need to wait for your payment-channel to expire to claim your locked deposit, but you would eventually get your money back, and then decide not use that payment hub anymore, and use one that doesn't employ censorship to you.
        EGreg 9y ago
        The part where it's not true lol. Take bitcoin. Is it actually decentralized? You need someone to record your transaction on the blockchain. There are, in practice, like 5 gatekeepers - the minkng pools. You are lucky that they currently accept your transaction, but you already see they jacked up the fees. The fees will only get larger as there is more transaction volume and as the # of bitcoins awarded to miners goes down. There you go. You are once again back to paying the miners to be your trusted financial intermediaries. It's just called "miners" instead of "banks" but the database is nearly centrally controlled by a group of five mining pools who have most of the hash rate. Arms races always lead to centralization! PS: sure you are protected in terms of current ownership, which is valuable, but at any time your account can be frozen.
        knocte 9y ago
        > The fees will only get larger as there is more transaction Which means, every opportunity to try to censor someone will make them not be able to get the fees from that act of censorship. Are you really bringing up a conspirancy in which 5 big entities such as the main mining pools would conspire against some certain bitcoin address? (Remember: in an HD wallet you control many addresses, not one, so it would be really difficult that they actually can identify all addresses of the certain person/entity they want to censor; let alone get together and conspire against that person at the same time.) > PS: sure you are protected in terms of current ownership, which is valuable, but at any time your account can be frozen. If you keep saying a lie a thousand times, it will not become truth.
- bitxbitxbitcoin 9y ago
  Please... Say it ain't so!
- PKop 9y ago
  With a finite currency that is immune to inflation fractional reserve credit cycles.
  - Terr_ 9y ago
    ... But instead has guaranteed deflation and correspondingly greater speculation.
    - PKop 9y ago
      Which is great for saving, and as we see with tech products, energy and other goods, falling prices are beneficial. Money is a measuring stick, sending price signals throughout the economy. It should be a stable channel through which information is sent. Rising and falling money supplies corrupts this. I contend, because of not inspite of BTC being finite, if other currencies are pegged or influenced by BTC this will be a befefit economically vs inflationary fiat.
    - rothbardrand 9y ago
      Bitcoin is inflationary. It is currently inflating at a low rate and that will decrease every four years. That's not "deflation". Further, money holding its value is a good thing. The only people who profit from inflation are governments with fiat and miners with bitcoin. The people always suffer. The only reason bitcoin is going up in value despite inflation is its use case and technological ability is going up faster, and of course it started at zero.
      - Terr_ 9y ago
        No, you are confusing "inflation" versus "minting more money". While related, they are not the same thing. Whatever school of economics you subscribe to, 99% of the time somebody says "inflation" or "deflation", they are not referring to the "money supply" of currency in existence. Instead, they are referring to a change in proportion between that money supply versus how much "economic stuff" people want it for. Bitcoin will continue to follow its past deflationary pattern as long as the supply of Bitcoins does not keep up with the underlying growth of everything else... And it's hard to see a future where "Number of coins mined this year" grows while "Size of human economy" shrinks.
- rothbardrand 9y ago
  Many uses of the word "federated", it's not clear which you mean. IF you mean to imply that the people you open channels with will be custodians of your funds, that's an error. That's the whole point of LN.
the_stc 9y ago
Most people live month-to-month at best. It seems not real they can open a single channel with all their purchases for the year.
- knocte 9y ago
  Well, I don't expect layer2 to become mainstream at the same time as cryptocurrency becomes mainstream. On top of that, payment channels would actually allow your employer to pay you even by the hour, no need to have your paycheck monthly anymore.
  - eropple 9y ago
    Why would any employer want to do that?
    - knocte 9y ago
      To stay competitive? If we employees start demanding to be paid fairly, we will get there at some point.
      - madeofpalk 9y ago
        What's stopping employers paying more frequently now?
        BenjiWiebe 9y ago
        We pay our employees weekly.
        madeofpalk 9y ago
        ...exactly. I'm not sure how bitcoin improves the situation. The reason employers don't pay more frequently comes down to admin overhead (or other non-banking-network reasons)

by knocte 9y ago

EGreg 9y ago

So basically, we are back to a federated system :)

deleted 9y ago
[deleted]
knocte 9y ago
I don't understand your point, please elaborate.
- EGreg 9y ago
  Banks have a federated system. The internet is a network of networks. Same here. People tend to do the most business inside local communities. And then cross-community payments use the internet. It is not totally distributed and peer-to-peer. There are trusted intermediaries.
  - knocte 9y ago
    The big difference between Layer2 and the banking system is that Layer2 is still a trust-less protocol in the same way Layer1 is. There's no counterparty-risk in Layer2. Yes, most supernodes in Layer2 will probably be big payment-insitutions, but nothing will prevent you (or anyone) to become a Layer2 node as well, either.
    - EGreg 9y ago
      But in practice, the supernodes can freeze your money. Similarly if the five big mining pools blacklist your bitcoin address then your "permissionless" currency becomes just like a frozen bank account in Cyprus, no? You may not think those gatekeepers care about you, but that's one reason the banking system doesn't rush to adopt bitcoin. They don't want to be at the mercy of the mining pools when it comes to moving billions of dollars between banks. That's why they are instead adopting Ripple and Hyperledger.
      - knocte 9y ago
        > But in practice, the supernodes can freeze your money. What? What part of "there's no counterparty-risk in layer2" didn't you understand? The only thing they could do is become uncooperative, and the worst thing that this could cause is that you need to wait for your payment-channel to expire to claim your locked deposit, but you would eventually get your money back, and then decide not use that payment hub anymore, and use one that doesn't employ censorship to you.
        EGreg 9y ago
        The part where it's not true lol. Take bitcoin. Is it actually decentralized? You need someone to record your transaction on the blockchain. There are, in practice, like 5 gatekeepers - the minkng pools. You are lucky that they currently accept your transaction, but you already see they jacked up the fees. The fees will only get larger as there is more transaction volume and as the # of bitcoins awarded to miners goes down. There you go. You are once again back to paying the miners to be your trusted financial intermediaries. It's just called "miners" instead of "banks" but the database is nearly centrally controlled by a group of five mining pools who have most of the hash rate. Arms races always lead to centralization! PS: sure you are protected in terms of current ownership, which is valuable, but at any time your account can be frozen.
        knocte 9y ago
        > The fees will only get larger as there is more transaction Which means, every opportunity to try to censor someone will make them not be able to get the fees from that act of censorship. Are you really bringing up a conspirancy in which 5 big entities such as the main mining pools would conspire against some certain bitcoin address? (Remember: in an HD wallet you control many addresses, not one, so it would be really difficult that they actually can identify all addresses of the certain person/entity they want to censor; let alone get together and conspire against that person at the same time.) > PS: sure you are protected in terms of current ownership, which is valuable, but at any time your account can be frozen. If you keep saying a lie a thousand times, it will not become truth.
bitxbitxbitcoin 9y ago
Please... Say it ain't so!
PKop 9y ago
With a finite currency that is immune to inflation fractional reserve credit cycles.
- Terr_ 9y ago
  ... But instead has guaranteed deflation and correspondingly greater speculation.
  - PKop 9y ago
    Which is great for saving, and as we see with tech products, energy and other goods, falling prices are beneficial. Money is a measuring stick, sending price signals throughout the economy. It should be a stable channel through which information is sent. Rising and falling money supplies corrupts this. I contend, because of not inspite of BTC being finite, if other currencies are pegged or influenced by BTC this will be a befefit economically vs inflationary fiat.
  - rothbardrand 9y ago
    Bitcoin is inflationary. It is currently inflating at a low rate and that will decrease every four years. That's not "deflation". Further, money holding its value is a good thing. The only people who profit from inflation are governments with fiat and miners with bitcoin. The people always suffer. The only reason bitcoin is going up in value despite inflation is its use case and technological ability is going up faster, and of course it started at zero.
    - Terr_ 9y ago
      No, you are confusing "inflation" versus "minting more money". While related, they are not the same thing. Whatever school of economics you subscribe to, 99% of the time somebody says "inflation" or "deflation", they are not referring to the "money supply" of currency in existence. Instead, they are referring to a change in proportion between that money supply versus how much "economic stuff" people want it for. Bitcoin will continue to follow its past deflationary pattern as long as the supply of Bitcoins does not keep up with the underlying growth of everything else... And it's hard to see a future where "Number of coins mined this year" grows while "Size of human economy" shrinks.
rothbardrand 9y ago
Many uses of the word "federated", it's not clear which you mean. IF you mean to imply that the people you open channels with will be custodians of your funds, that's an error. That's the whole point of LN.

the_stc 9y ago

Most people live month-to-month at best. It seems not real they can open a single channel with all their purchases for the year.

knocte 9y ago
Well, I don't expect layer2 to become mainstream at the same time as cryptocurrency becomes mainstream. On top of that, payment channels would actually allow your employer to pay you even by the hour, no need to have your paycheck monthly anymore.
- eropple 9y ago
  Why would any employer want to do that?
  - knocte 9y ago
    To stay competitive? If we employees start demanding to be paid fairly, we will get there at some point.
    - madeofpalk 9y ago
      What's stopping employers paying more frequently now?
      - BenjiWiebe 9y ago
        We pay our employees weekly.
        madeofpalk 9y ago
        ...exactly. I'm not sure how bitcoin improves the situation. The reason employers don't pay more frequently comes down to admin overhead (or other non-banking-network reasons)