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Please explain to me how scaling is solved in bitcoin. The lighting network requires an on-chain transaction to create and close a channel both times. Even if t

by foepys 6y ago

Please explain to me how scaling is solved in bitcoin. The lighting network requires an on-chain transaction to create and close a channel both times. Even if the world population were static it would take months to open a channel for everybody. Companies also need multiple channels each. LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed. This eventually leads to entities specialized in monitoring the chain for the average Joe. You could call those payment providers.

kajumix 6y ago
"LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed." Not true. Cite a source.
- foepys 6y ago
  Very true and often conveniently omitted by LN fans. Lightning Network Whitepaper, section 3.3.4 states very clearly: "For this reason, one should periodically monitor the blockchain to see if one’s counterparty has broadcast an invalidated Commitment Transaction, or delegate a third party to do so. A third party can be delegated by only giving the Breach Remedy transaction to this third party. They can be incentivized to watch the blockchain broadcast such a transaction in the event of counterparty maliciousness by giving these third parties some fee in the output. Since the third party is only able to take action when the counterparty is acting maliciously, this third party does not have any power to force close of the channel."
rawtxapp 6y ago
> Please explain to me how scaling is solved in bitcoin. The lighting network requires an on-chain transaction to create and close a channel both times. Channel factories solve this issue by being able to create and close many channels at once. > LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed. These are called watchtowers, they never have control of your funds, they are simply watching the blockchain for counterparty actions, which if they tried to steal your money, they would end up losing all theirs, so just knowing that you might be using a watchtower is a very strong deterrent to not cheat you.
- foepys 6y ago
  Channel factories do not work globally as far as I understand them. They only work within a group of addresses that know they won't close the channels every other hour or everybody would have to create yet another channel. It sounds very similar to a credit union. Watchtowers are what I meant with payment processors. You need to pay them to watch the chain in case the other party tries to literally steal from you. You can call them whatever you want, it's a third-party, just like Visa. I love how all these cryptocurrency concepts have "traditional" counterparts, btw. Or it's rather the other way around.
  - rawtxapp 6y ago
    Exchanges could act as channel factories, for example, today they batch a bunch of withdrawals into a single transaction, there's really no reason why they couldn't simply open a channel for each person in that. It can be a third-party or you could also run one yourself, there's nothing stopping you. I wouldn't be surprised to see counterparts, just like email is "mail on the internet", but there are also fairly novel concepts like flash loans which are just not possible in current financial system.
    - foepys 6y ago
      You are just recentralising everything Bitcoin allegedly decentralized. It's ridiculous. Just pay cash, you are decentralized, are your own bank and can buy everything. Problem solved without Bitcoin. You won't get rich from just holding it, though, and we all know that this is really the only goal of cryptocurrency proponents.
      - MrMan 6y ago
        Two goals Get rich Destroy trust
      - rawtxapp 6y ago
        Everything is still de-centralized and you're the only person who has control over your funds. With cash, not only you won't get rich holding, the FED is determined to make sure it's value goes to 0. It seems like you've already made up your mind anyways.

by foepys 6y ago

kajumix 6y ago

"LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed." Not true. Cite a source.

foepys 6y ago
Very true and often conveniently omitted by LN fans. Lightning Network Whitepaper, section 3.3.4 states very clearly: "For this reason, one should periodically monitor the blockchain to see if one’s counterparty has broadcast an invalidated Commitment Transaction, or delegate a third party to do so. A third party can be delegated by only giving the Breach Remedy transaction to this third party. They can be incentivized to watch the blockchain broadcast such a transaction in the event of counterparty maliciousness by giving these third parties some fee in the output. Since the third party is only able to take action when the counterparty is acting maliciously, this third party does not have any power to force close of the channel."

rawtxapp 6y ago

> Please explain to me how scaling is solved in bitcoin. The lighting network requires an on-chain transaction to create and close a channel both times. Channel factories solve this issue by being able to create and close many channels at once. > LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed. These are called watchtowers, they never have control of your funds, they are simply watching the blockchain for counterparty actions, which if they tried to steal your money, they would end up losing all theirs, so just knowing that you might be using a watchtower is a very strong deterrent to not cheat you.

foepys 6y ago
Channel factories do not work globally as far as I understand them. They only work within a group of addresses that know they won't close the channels every other hour or everybody would have to create yet another channel. It sounds very similar to a credit union. Watchtowers are what I meant with payment processors. You need to pay them to watch the chain in case the other party tries to literally steal from you. You can call them whatever you want, it's a third-party, just like Visa. I love how all these cryptocurrency concepts have "traditional" counterparts, btw. Or it's rather the other way around.
- rawtxapp 6y ago
  Exchanges could act as channel factories, for example, today they batch a bunch of withdrawals into a single transaction, there's really no reason why they couldn't simply open a channel for each person in that. It can be a third-party or you could also run one yourself, there's nothing stopping you. I wouldn't be surprised to see counterparts, just like email is "mail on the internet", but there are also fairly novel concepts like flash loans which are just not possible in current financial system.
  - foepys 6y ago
    You are just recentralising everything Bitcoin allegedly decentralized. It's ridiculous. Just pay cash, you are decentralized, are your own bank and can buy everything. Problem solved without Bitcoin. You won't get rich from just holding it, though, and we all know that this is really the only goal of cryptocurrency proponents.
    - MrMan 6y ago
      Two goals Get rich Destroy trust
    - rawtxapp 6y ago
      Everything is still de-centralized and you're the only person who has control over your funds. With cash, not only you won't get rich holding, the FED is determined to make sure it's value goes to 0. It seems like you've already made up your mind anyways.