5 ms·

Tether is still a scam, and the music is still playing. Don't be the last guy. As for lightning, it adds a layer of trust into a system whose reason for existe

by nwah1 6y ago

Tether is still a scam, and the music is still playing. Don't be the last guy. As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness. If you don't care about trustlessness, you can already have fast and scalable transactions through normal banking.

ttul 6y ago
One day, when Tether finally breaks, books will be written, trying to explain how something so plainly fraudulent was able to persist for so long. The game theory behind its persistence is fascinating: only the last guy in stands to lose anything, so each transaction moved through Tether is basically pricing in a tiny chance of collapse.
- paulgb 6y ago
  I suspect that in retrospect it will seem obvious that a USD-equivalent that is effectively out of US jurisdiction (for the time being) will be seen as providing obvious value to money launderers and criminals, and that the counterparty risk they take is a small price to pay.
  - nwah1 6y ago
    I would personally love to see a writeup on that which shows some data on how big the market is for these illegal bitcoin transactions.
johnpaulkiser 6y ago
What do you mean by layer of trust? Bitcoin is definitely not "trustless" its trust minimized for sure. Lightning also minimizes trust in a very similar way. As a user you don't have to make any more assumptions when using lightning than you do already using the bitcoin base layer.
- nwah1 6y ago
  With bitcoin you can send funds peer to peer. No trusted intermediaries. Routing through a network of exchanges is more like routing through SWIFT or ACH.
  - varajelle 6y ago
    There are no trusted intermediary in lightning. If an intermediary is not behaving, the worst that can happen is that your found are blocked for a small amount of time.
    - nwah1 6y ago
      https://themoneymongers.com/lightning-network-watchtowers/ https://themoneymongers.com/lightning-network-watchtowers/
      - varajelle 6y ago
        1) You don't need trust the watch tower, they can't steel your money. 2) you can host a watch tower yourself on your server.
        nwah1 6y ago
        If a payment channel is still open, then the blockchain hasn't confirmed anything yet, the only speedup is to reduce roundtrips to the blockchain in the case of a series of transactions. So you are still limited by the speed of the blockchain, unless you decide to trust parties in the Lightning Network.
        nwah1 6y ago
        Onion routing also requires trust that there is no collusion between nodes
        varajelle 6y ago
varajelle 6y ago
> As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness. That's not true. That's the beauty of lightning, it manages to add a layer without needing to trust any of the intermediate party
- nwah1 6y ago
  For one, it uses onion routing, which means you are trusting that nodes are not colluding which each other to share information. In addition to the trusted watchtowers. If people start trusting the intermediate states of the payment channel then you could get into some really hairy territory in terms of trust.
slewis 6y ago
"you can already have fast and scalable transactions through normal banking." I see this repeated a lot. I think you're saying bitcoin is no better than normal banking for moving value. Do you really believe this? Yes, in the US I can immediately wire money somewhere as long as: 1) I do it within east coast business hours. Weekend? Sorry, wait til Monday 2) I have the correct information for the receiving institution, some of which require a small transfer up front to confirm the setup. 3) My bank actually supports wiring (Wealthfront, for example, only supports ACH transfers which take a few days) 4) I'm sending within the US, otherwise there are a bunch of other complications and requirements I also need to trust that the bank actually has my money. With cryptocurrency you can confirm that your stored value exists and is stilled owned by you, and transfer it to anywhere else within 30 minutes, in a provably secure and verifiable way.
- mshumi 6y ago
  It seems absurd that transfers between two accounts you own at large financial institutions take 3 days to process. There are obvious safety concerns, but there should be provably safe and faster ways of transferring value at minimal cost. People should be able to specify their security level; you could even gate-keep it with licensing, but we should make it an option for people.
  - fsh 6y ago
    In the EU, bank transfers (in €) have to clear within one working day. Transfers between your own accounts at one bank are typically instant. There is no fundamental reason for bank transfers to be slow. And unlike bitcoin, banks can handle more than a few transactions per second worldwide without grinding to a halt.
- spurgu 6y ago
  I've transferred 5-figures of fiat a couple of times and it always makes me sweat. Sure those transactions make me sweat with bitcoin as well, but the difference is that the process is 100% transparent. Plus the incredible annoyance of having to go through the KYC/AML procedures everywhere to do any kind of meaningful transactions. And still risk getting flagged for fraudulent transactions and possibly having your funds locked/confiscated.
three_seagrass 6y ago
Spot on. Lightning, while it scales with transactions, doesn't scale with users. This means transactions have to go unverified and that you have to trust the person you transact with by design.

by nwah1 6y ago

ttul 6y ago

One day, when Tether finally breaks, books will be written, trying to explain how something so plainly fraudulent was able to persist for so long. The game theory behind its persistence is fascinating: only the last guy in stands to lose anything, so each transaction moved through Tether is basically pricing in a tiny chance of collapse.

paulgb 6y ago
I suspect that in retrospect it will seem obvious that a USD-equivalent that is effectively out of US jurisdiction (for the time being) will be seen as providing obvious value to money launderers and criminals, and that the counterparty risk they take is a small price to pay.
- nwah1 6y ago
  I would personally love to see a writeup on that which shows some data on how big the market is for these illegal bitcoin transactions.

johnpaulkiser 6y ago

What do you mean by layer of trust? Bitcoin is definitely not "trustless" its trust minimized for sure. Lightning also minimizes trust in a very similar way. As a user you don't have to make any more assumptions when using lightning than you do already using the bitcoin base layer.

nwah1 6y ago
With bitcoin you can send funds peer to peer. No trusted intermediaries. Routing through a network of exchanges is more like routing through SWIFT or ACH.
- varajelle 6y ago
  There are no trusted intermediary in lightning. If an intermediary is not behaving, the worst that can happen is that your found are blocked for a small amount of time.
  - nwah1 6y ago
    https://themoneymongers.com/lightning-network-watchtowers/ https://themoneymongers.com/lightning-network-watchtowers/
    - varajelle 6y ago
      1) You don't need trust the watch tower, they can't steel your money. 2) you can host a watch tower yourself on your server.
      - nwah1 6y ago
        If a payment channel is still open, then the blockchain hasn't confirmed anything yet, the only speedup is to reduce roundtrips to the blockchain in the case of a series of transactions. So you are still limited by the speed of the blockchain, unless you decide to trust parties in the Lightning Network.
        nwah1 6y ago
        Onion routing also requires trust that there is no collusion between nodes
        varajelle 6y ago

varajelle 6y ago

> As for lightning, it adds a layer of trust into a system whose reason for existence is trustlessness. That's not true. That's the beauty of lightning, it manages to add a layer without needing to trust any of the intermediate party

nwah1 6y ago
For one, it uses onion routing, which means you are trusting that nodes are not colluding which each other to share information. In addition to the trusted watchtowers. If people start trusting the intermediate states of the payment channel then you could get into some really hairy territory in terms of trust.

slewis 6y ago

"you can already have fast and scalable transactions through normal banking." I see this repeated a lot. I think you're saying bitcoin is no better than normal banking for moving value. Do you really believe this? Yes, in the US I can immediately wire money somewhere as long as: 1) I do it within east coast business hours. Weekend? Sorry, wait til Monday 2) I have the correct information for the receiving institution, some of which require a small transfer up front to confirm the setup. 3) My bank actually supports wiring (Wealthfront, for example, only supports ACH transfers which take a few days) 4) I'm sending within the US, otherwise there are a bunch of other complications and requirements I also need to trust that the bank actually has my money. With cryptocurrency you can confirm that your stored value exists and is stilled owned by you, and transfer it to anywhere else within 30 minutes, in a provably secure and verifiable way.

mshumi 6y ago
It seems absurd that transfers between two accounts you own at large financial institutions take 3 days to process. There are obvious safety concerns, but there should be provably safe and faster ways of transferring value at minimal cost. People should be able to specify their security level; you could even gate-keep it with licensing, but we should make it an option for people.
- fsh 6y ago
  In the EU, bank transfers (in €) have to clear within one working day. Transfers between your own accounts at one bank are typically instant. There is no fundamental reason for bank transfers to be slow. And unlike bitcoin, banks can handle more than a few transactions per second worldwide without grinding to a halt.
spurgu 6y ago
I've transferred 5-figures of fiat a couple of times and it always makes me sweat. Sure those transactions make me sweat with bitcoin as well, but the difference is that the process is 100% transparent. Plus the incredible annoyance of having to go through the KYC/AML procedures everywhere to do any kind of meaningful transactions. And still risk getting flagged for fraudulent transactions and possibly having your funds locked/confiscated.

three_seagrass 6y ago

Spot on. Lightning, while it scales with transactions, doesn't scale with users. This means transactions have to go unverified and that you have to trust the person you transact with by design.