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Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lo

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

isoprophlex 9y ago
Fort Knox storing paper BTC wallets instead of gold?
JanSt 9y ago
To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning network seems all wrong to me. If the Lightning network is so great, why do we need a blockchain at all? If not, why not just increase the blocksize? It achieves nothing that couldn't be done on-chain. There have been successful tests of blocksizes of up to 1 GB or 1000x the current size. Even getting it up to a small multiple of the current size would dramatically cut transaction costs and waiting times.
- raverbashing 9y ago
  My opinion exactly It's not a "terrible idea" it is what should have existed in the first place in the oficial blockchain They're just adding a 2nd layer on top, calling it official and then saying "bitcoin is working"
  - homakov 9y ago
    It should _have_ existed, but the idea came around only about 2015? It's evolving slowly. But if it were "built-in" would be a lot better of course.
- Kiro 9y ago
  > It achieves nothing that an increased blocksize would not have done on-chain Regardless of blocksize the block times are still 10 minutes which means you need one hour for the transaction to settle, per the 6 block standard. You can't compare that with LN.
  - uncoder0 9y ago
    With the current difficulty level isn't the '6 block standard' a bit dated unless we're talking about a transaction that is extremely valuable.
  - homakov 9y ago
    Also good point - no matter how much you scale "onchain" you still end up with settlement periods, a few min at least. Impractical for offline payments.
  - mercer 9y ago
    Could you elaborate on that? I recall doing transactions that had 6+ confirmations in far less than 1 hour. Do I recall incorrectly?
    - spiorf 9y ago
      That's just luck. The 10 minute is an average. There are times where you need three hours for 6 confirmations.
- nlperguiy 9y ago
  These successful tests are research-level developments, just like lightning network. Bitcoin is extremely early stage technology. It'll take years for a bunch of scaling developments and blocksize is just a temporary measure.
- homakov 9y ago
  > There have been successful tests of blocksizes of up to 1 GB or 1000x the current size no need to be genius to just increase blocksize 1000x and "assume" gigabit connection which no one has. Lightning network is a great idea, in theory, in practice however it will just not work for the problem you mentioned - no one is interested in providing this kind of liquidity. As of why need blockchain at all - is because 1st layer is the court and guarantees you to own money from the channel. You just don't have to ask court for every coffee payment (i.e. broadcast to every single laptop in the world).
- zodiac 9y ago
  > It achieves nothing that an increased blocksize would not have done on-chain It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain.
  - awemany 9y ago
    > It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain. No that is not true. Each Lightning Channel needs UTXOs to be created before it can be used at all. Its goal is rather to do trustless multi-hop off-chain payments on pre-opened channels. Notice that Satoshi himself implemented simple payment channels in Bitcoin. (Without the multi-hop part) It is all but clear that the much more complex LN contraption will help in the real world. Furthermore, a case can be made that this going closer to decoupling Bitcoin from the economy on top. The "gold standard" argument hinted at above might be a too close historical parallel, really. Because, eventually, the gold standard got abolished.
    - zodiac 9y ago
      I mean without creating a new UTXO for each micropayment. Of course you need new UTXOs to open the channel
- spiorf 9y ago
  If you do that, in a year a new full node will take a year to fully sync. That means no new nodes. That means that over time bitcoin is dead.
- londons_explore 9y ago
  The lightning network allows the payer and the payee to be anonymous from each other, which could be useful for some things, like for example anonymous charity donations.
flatline 9y ago
I agree, and I'm skeptical of Bitcoin on many levels. The vision it offers is very attractive, but each so-called feature comes with so many caveats that it's never clear there is a real advantage. Still, I think people hold onto the vision. As digital cash, I can buy something online more or less anonymously, without a middle man. Well, except for the miners. And my anonymity is blown if the person from whom I purchase ever reveals my real-world identity. And the fact that the transaction may reveal my entire spending history. Other cryptos offer better privacy guarantees of course. Oh and the tax burden of buying a pair of socks with BTC makes it terribly unattractive for practical uses. A nearly instant, low-fee settlement layer is great. Except the fee schedule is market driven which sucks for fee calculations, and the instant part is no longer true with full blocks, RBF, and other realities of a popular distributed ledger. The deflationary model is interesting and is great for investment but not so great for money. And the volatility is too high to consider Bitcoin an investment. The currency exists independent of national borders. But, rogue states can horde it and work around international sanctions, and it's quite popular for money laundering. Be your own bank - with all the risks that may not be so obvious at first glance, and none of the benefits that real banks get. The list goes on. These "features" will keep selling bitcoin, I don't know the dream will ever really die.
- tehlike 9y ago
  IF you want privacy, there are alternative coins that are fairly active with development: Monero, zcash, etc. I am not endorsing anything, but i believe the privacy & fungibility are important in a digital currency. On the sad side, people who put money in bitcoin are thinking it's a great investment. This is not to devalue your comment, but for the past 10 years, almost every years, the low lows have been increasing. Be your own bank is not a meaningful goal, though, at least with the way things are. Coinbase, for example, holds about 10% of circulating bitcoin is what i hear.
  - deleted 9y ago
    [deleted]
  - stef25 9y ago
    Maybe this isn't the right place to ask this question, but how is Monero any different than the Bitcoin example you respond to, when the vendor you sent your crypto currency to to exposes your identity?
gruez 9y ago
>the Lightning network looks a lot like the old Gold Standard There's no fractional reserve with LN.
- sliverstorm 9y ago
  Not yet, but Bitcoin is fixed in supply & deflationary, just like gold was, and there have been non-fractional reserve gold standards.

isoprophlex 9y ago

Fort Knox storing paper BTC wallets instead of gold?

JanSt 9y ago

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning network seems all wrong to me. If the Lightning network is so great, why do we need a blockchain at all? If not, why not just increase the blocksize? It achieves nothing that couldn't be done on-chain. There have been successful tests of blocksizes of up to 1 GB or 1000x the current size. Even getting it up to a small multiple of the current size would dramatically cut transaction costs and waiting times.

raverbashing 9y ago
My opinion exactly It's not a "terrible idea" it is what should have existed in the first place in the oficial blockchain They're just adding a 2nd layer on top, calling it official and then saying "bitcoin is working"
- homakov 9y ago
  It should _have_ existed, but the idea came around only about 2015? It's evolving slowly. But if it were "built-in" would be a lot better of course.
Kiro 9y ago
> It achieves nothing that an increased blocksize would not have done on-chain Regardless of blocksize the block times are still 10 minutes which means you need one hour for the transaction to settle, per the 6 block standard. You can't compare that with LN.
- uncoder0 9y ago
  With the current difficulty level isn't the '6 block standard' a bit dated unless we're talking about a transaction that is extremely valuable.
- homakov 9y ago
  Also good point - no matter how much you scale "onchain" you still end up with settlement periods, a few min at least. Impractical for offline payments.
- mercer 9y ago
  Could you elaborate on that? I recall doing transactions that had 6+ confirmations in far less than 1 hour. Do I recall incorrectly?
  - spiorf 9y ago
    That's just luck. The 10 minute is an average. There are times where you need three hours for 6 confirmations.
nlperguiy 9y ago
These successful tests are research-level developments, just like lightning network. Bitcoin is extremely early stage technology. It'll take years for a bunch of scaling developments and blocksize is just a temporary measure.
homakov 9y ago
> There have been successful tests of blocksizes of up to 1 GB or 1000x the current size no need to be genius to just increase blocksize 1000x and "assume" gigabit connection which no one has. Lightning network is a great idea, in theory, in practice however it will just not work for the problem you mentioned - no one is interested in providing this kind of liquidity. As of why need blockchain at all - is because 1st layer is the court and guarantees you to own money from the channel. You just don't have to ask court for every coffee payment (i.e. broadcast to every single laptop in the world).
zodiac 9y ago
> It achieves nothing that an increased blocksize would not have done on-chain It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain.
- awemany 9y ago
  > It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain. No that is not true. Each Lightning Channel needs UTXOs to be created before it can be used at all. Its goal is rather to do trustless multi-hop off-chain payments on pre-opened channels. Notice that Satoshi himself implemented simple payment channels in Bitcoin. (Without the multi-hop part) It is all but clear that the much more complex LN contraption will help in the real world. Furthermore, a case can be made that this going closer to decoupling Bitcoin from the economy on top. The "gold standard" argument hinted at above might be a too close historical parallel, really. Because, eventually, the gold standard got abolished.
  - zodiac 9y ago
    I mean without creating a new UTXO for each micropayment. Of course you need new UTXOs to open the channel
spiorf 9y ago
If you do that, in a year a new full node will take a year to fully sync. That means no new nodes. That means that over time bitcoin is dead.
londons_explore 9y ago
The lightning network allows the payer and the payee to be anonymous from each other, which could be useful for some things, like for example anonymous charity donations.

flatline 9y ago

I agree, and I'm skeptical of Bitcoin on many levels. The vision it offers is very attractive, but each so-called feature comes with so many caveats that it's never clear there is a real advantage. Still, I think people hold onto the vision. As digital cash, I can buy something online more or less anonymously, without a middle man. Well, except for the miners. And my anonymity is blown if the person from whom I purchase ever reveals my real-world identity. And the fact that the transaction may reveal my entire spending history. Other cryptos offer better privacy guarantees of course. Oh and the tax burden of buying a pair of socks with BTC makes it terribly unattractive for practical uses. A nearly instant, low-fee settlement layer is great. Except the fee schedule is market driven which sucks for fee calculations, and the instant part is no longer true with full blocks, RBF, and other realities of a popular distributed ledger. The deflationary model is interesting and is great for investment but not so great for money. And the volatility is too high to consider Bitcoin an investment. The currency exists independent of national borders. But, rogue states can horde it and work around international sanctions, and it's quite popular for money laundering. Be your own bank - with all the risks that may not be so obvious at first glance, and none of the benefits that real banks get. The list goes on. These "features" will keep selling bitcoin, I don't know the dream will ever really die.

tehlike 9y ago
IF you want privacy, there are alternative coins that are fairly active with development: Monero, zcash, etc. I am not endorsing anything, but i believe the privacy & fungibility are important in a digital currency. On the sad side, people who put money in bitcoin are thinking it's a great investment. This is not to devalue your comment, but for the past 10 years, almost every years, the low lows have been increasing. Be your own bank is not a meaningful goal, though, at least with the way things are. Coinbase, for example, holds about 10% of circulating bitcoin is what i hear.
- deleted 9y ago
  [deleted]
- stef25 9y ago
  Maybe this isn't the right place to ask this question, but how is Monero any different than the Bitcoin example you respond to, when the vendor you sent your crypto currency to to exposes your identity?

gruez 9y ago

>the Lightning network looks a lot like the old Gold Standard There's no fractional reserve with LN.

sliverstorm 9y ago
Not yet, but Bitcoin is fixed in supply & deflationary, just like gold was, and there have been non-fractional reserve gold standards.