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Lightning Network isn't really a satisfying solution in my opinion. It means that Bitcoin will just be a low-capacity settlement layer, and regular purchases wi

Lightning Network isn't really a satisfying solution in my opinion. It means that Bitcoin will just be a low-capacity settlement layer, and regular purchases will need to use PayPal-like middlemen to avoid hefty fees. There are a few on-chain scaling solutions. One is Vitalik's approach to sharding. Payments would be split into debits and credits, and a credit transaction would include a Merkle proof showing that a bunch of validators on a different shard approved the corresponding debit. Double spending would be possible if you can corrupt a single shard, but users would be randomly bounced between shards to make that difficult. Another solution, which I think is very practical, is to make some protocol changes so that scalable full nodes can be run by a cluster of servers. Running a full node would become expensive, but most users would be fine with SPV clients + fraud proofs. See https://ethresear.ch/t/scaling-via-full-node-clusters/1358 https://ethresear.ch/t/scaling-via-full-node-clusters/1358

darawk 9y ago
> It means that Bitcoin will just be a low-capacity settlement layer, and regular purchases will need to use PayPal-like middlemen to avoid hefty fees. You're correct, of course. But what's wrong with that? You still retain ultimate sovereignty over your funds, which is the most important property, I think. What do you think is lost by Bitcoin being mostly a settlement layer with the option to transact on-chain for a higher fee?
- dlubarov 9y ago
  I think it's okay if users could settle reasonably often, but unless the main chain's capacity is greatly increased, that won't be the case. If 7 billion people used Bitcoin today, the current ~4 TPS capacity would only be enough for each person to perform one transaction every 55 years. If we adopted a 100mb block size, which is probably pushing the limit of what a normal server machine can handle, that would be just enough for each person to perform two on-chain transactions per year. Most people would want to settle at least once per month, to collect their paychecks and move the money into a payment channel with a well-connected middleman. That doesn't seem feasible without sharding or some other solution to drastically increase the main chain's capacity.
  - darawk 9y ago
    I think the idea is that due to the existence of LN, you would almost never need to settle on-chain. But because you theoretically could, you maintain all the benefits of genuine financial sovereignty without ever having to actually exercise it.
    - dlubarov 9y ago
      I haven't read most of the paper (59 pages!) so I might be missing something, but let's say I'm receiving Lightning payments from my employer and sending Lightning payments to my landlord. When my channel to my landlord runs out of funds, won't I need a couple on-chain transactions to withdraw funds from my employer channel and add them to my landlord channel? If I could somehow transfer my employer's IOUs to my landlord off-chain, I figure that break the security model because my landlord wouldn't know if I had double spent the IOUs. Let me know if I'm missing something though.
      - dpc_pw 9y ago
        Just watch some YT videos. It has been explained many times in many videos.
      - darawk 9y ago
        You are correct, if you think about it as a payment channel between you and your landlord, and a separate channel between you and your employer, I believe. However, the way it's more likely to end up shaking out is as an interlocking network of trusted intermediaries, much like Visa/Mastercard are now. Your employer will pay you, and then you will pay your landlord. But the only channel you'll have open is one to this 'visa' like entity that sits in the middle, and so will your employer and your landlord. So that trusted intermediary will ensure you don't double-spend to other parties in their channel, but who are the only parties you could double spend to. At least, that is my understanding of how the model works - I haven't read all 59 pages either, though.
polyomino 9y ago
Lightning is not a third party that takes custody of your funds, in what sense is it “paypal-like”?
- __blockcipher__ 9y ago
  You must be granted permission by liquidity hubs who route your payment, because it is a complicated (A wants to transact with C so B signs a transaction with C contingent on an equal transaction between A and B) design. The alternative, just fucking sending your bitcoin without a trusted third party, is the only viable option. And that requires not trying to mandate a transaction limit through a completely arbitrary and manufactured block size cap

darawk 9y ago

> It means that Bitcoin will just be a low-capacity settlement layer, and regular purchases will need to use PayPal-like middlemen to avoid hefty fees. You're correct, of course. But what's wrong with that? You still retain ultimate sovereignty over your funds, which is the most important property, I think. What do you think is lost by Bitcoin being mostly a settlement layer with the option to transact on-chain for a higher fee?

dlubarov 9y ago
I think it's okay if users could settle reasonably often, but unless the main chain's capacity is greatly increased, that won't be the case. If 7 billion people used Bitcoin today, the current ~4 TPS capacity would only be enough for each person to perform one transaction every 55 years. If we adopted a 100mb block size, which is probably pushing the limit of what a normal server machine can handle, that would be just enough for each person to perform two on-chain transactions per year. Most people would want to settle at least once per month, to collect their paychecks and move the money into a payment channel with a well-connected middleman. That doesn't seem feasible without sharding or some other solution to drastically increase the main chain's capacity.
- darawk 9y ago
  I think the idea is that due to the existence of LN, you would almost never need to settle on-chain. But because you theoretically could, you maintain all the benefits of genuine financial sovereignty without ever having to actually exercise it.
  - dlubarov 9y ago
    I haven't read most of the paper (59 pages!) so I might be missing something, but let's say I'm receiving Lightning payments from my employer and sending Lightning payments to my landlord. When my channel to my landlord runs out of funds, won't I need a couple on-chain transactions to withdraw funds from my employer channel and add them to my landlord channel? If I could somehow transfer my employer's IOUs to my landlord off-chain, I figure that break the security model because my landlord wouldn't know if I had double spent the IOUs. Let me know if I'm missing something though.
    - dpc_pw 9y ago
      Just watch some YT videos. It has been explained many times in many videos.
    - darawk 9y ago
      You are correct, if you think about it as a payment channel between you and your landlord, and a separate channel between you and your employer, I believe. However, the way it's more likely to end up shaking out is as an interlocking network of trusted intermediaries, much like Visa/Mastercard are now. Your employer will pay you, and then you will pay your landlord. But the only channel you'll have open is one to this 'visa' like entity that sits in the middle, and so will your employer and your landlord. So that trusted intermediary will ensure you don't double-spend to other parties in their channel, but who are the only parties you could double spend to. At least, that is my understanding of how the model works - I haven't read all 59 pages either, though.

polyomino 9y ago

Lightning is not a third party that takes custody of your funds, in what sense is it “paypal-like”?

__blockcipher__ 9y ago
You must be granted permission by liquidity hubs who route your payment, because it is a complicated (A wants to transact with C so B signs a transaction with C contingent on an equal transaction between A and B) design. The alternative, just fucking sending your bitcoin without a trusted third party, is the only viable option. And that requires not trying to mandate a transaction limit through a completely arbitrary and manufactured block size cap