3 ms·

Then use the lightning network, it's really what should be used for smaller payments like this anyways. You don't pay for coffee with a wire transfer, for the s

by xur17 6y ago

Then use the lightning network, it's really what should be used for smaller payments like this anyways. You don't pay for coffee with a wire transfer, for the same reason you shouldn't be using layer 1 for small everyday purchases like this.

minsc__and__boo 6y ago
Lightning requires the bitcoin network to verify the transaction though. It's like using a personal check - until the bank clears it you're at risk.
- xur17 6y ago
  That's not true at all. You can perform lots of transactions over lightning, and settle with a single on chain transaction. The money clears instantly, and is not at risk, even if you keep the funds on layer 2.
  - jkepler 6y ago
    No, the previous comment was correct, in that an open lightning channel balance is inherently at risk, if you're wallet software isn't monitoring that the lightning nodes you're dealing with follow the protocol. If a node broadcasts an older HTLC transaction to bitcoin's main chain and your software isn't watching, you may loose some/all of your channel balance.
    - xur17 6y ago
      That is correct, but the GP said: > It's like using a personal check - until the bank clears it you're at risk. Which is 100% not true, it's not like a personal check. You are only at risk if: * your counterparty decides to try and cheat you (despite knowing they will lose even more money if they attempt to screw you and you notice, so some game theory is involved) * you are not watching onchain for a period longer than the monitor period (typically several days) * you have not elected to have someone else monitor on your behalf (in exchange for a small cut of the "profits" if your counterparty tries to cheat you) My point being - it's nowhere near the same as a personal check.
      - minsc__and__boo 6y ago
        That's just like a personal check. The same methods you cheat someone with a scam check applies to the IOUs on Lightning. * Bad actors exist and will do this with checks or lightning, game theory applies to both * It doesn't matter if you're watching the chain, you've already transacted with the buyer * 3P Escrow is not unique to Lightning and is sometimes used with checks too
        xur17 6y ago
        > Bad actors exist and will do this with checks or lightning, game theory applies to both It does, but with lightning, as long as you are watching the chain periodically, you are guaranteed to not lose money. The same cannot be said for checks. > It doesn't matter if you're watching the chain, you've already transacted with the buyer It does matter if you watch the chain - this is how you determine if your counterparty is trying to close out the channel with an out of date state (at which point you can submit an onchain transaction that corrects the problem + collects a penalty from your counterparty). > 3P Escrow is not unique to Lightning and is sometimes used with checks too Watchtowers are not anything like escrow. It's simply allowing a third party to submit penalty transaction iff your counterparty attempts to submit an out of date state. They do not take custody of your funds.
        minsc__and__boo 6y ago
        People watch for bad checks as well. Plenty of cash registers used to have example bad checks laminated on them, back when the modern financial system was still using IOUs like that. You can make a lightning transaction, drain your bitcoin wallet before it verifies, and no amount of watching the chain will get the seller back whatever they traded you for that transaction. Just because you identify the fraudulent transaction before it finally verifies doesn't mean that the fraud wasn't committed. Same with bad checks. I thought you were talking about 3P escrow, because watchtowers are even worse than escrow in fighting fraud, for reasons outlined above.
        6y ago
    - TylerE 6y ago
      Wait, for real? Lightning is even dumber than I thought - and I already thought it was DOA.
      - minsc__and__boo 6y ago
        It pretty much is - Lightning plateaued out and has been known to have empty channels. https://bitcoinvisuals.com/ln-channels https://bitcoinvisuals.com/ln-channels
UncleMeat 6y ago
But you need dollars on the other side. For this to work without PayPal hosting the BTC you need the following: 1. You send BTC to PayPal 2. PayPal sends equivalent dollars to the merchant. But what is "equivalent"? What is the price of BTC at any given moment? It fluctuates a lot and you can't "lock-in" a price without waiting minutes (as opposed to milliseconds in other financial systems). So between the time that you sent dollars to the merchant and when you sold the coins you are exposed to risk of holding BTC. Lightning does not help with this.
- xur17 6y ago
  That's a fair point. In order to use lightning, PayPal would either need to hold some BTC in reserves on layer 2, or work with an exchange that accepts lightning transactions.

by xur17 6y ago

minsc__and__boo 6y ago

Lightning requires the bitcoin network to verify the transaction though. It's like using a personal check - until the bank clears it you're at risk.

xur17 6y ago
That's not true at all. You can perform lots of transactions over lightning, and settle with a single on chain transaction. The money clears instantly, and is not at risk, even if you keep the funds on layer 2.
- jkepler 6y ago
  No, the previous comment was correct, in that an open lightning channel balance is inherently at risk, if you're wallet software isn't monitoring that the lightning nodes you're dealing with follow the protocol. If a node broadcasts an older HTLC transaction to bitcoin's main chain and your software isn't watching, you may loose some/all of your channel balance.
  - xur17 6y ago
    That is correct, but the GP said: > It's like using a personal check - until the bank clears it you're at risk. Which is 100% not true, it's not like a personal check. You are only at risk if: * your counterparty decides to try and cheat you (despite knowing they will lose even more money if they attempt to screw you and you notice, so some game theory is involved) * you are not watching onchain for a period longer than the monitor period (typically several days) * you have not elected to have someone else monitor on your behalf (in exchange for a small cut of the "profits" if your counterparty tries to cheat you) My point being - it's nowhere near the same as a personal check.
    - minsc__and__boo 6y ago
      That's just like a personal check. The same methods you cheat someone with a scam check applies to the IOUs on Lightning. * Bad actors exist and will do this with checks or lightning, game theory applies to both * It doesn't matter if you're watching the chain, you've already transacted with the buyer * 3P Escrow is not unique to Lightning and is sometimes used with checks too
      - xur17 6y ago
        > Bad actors exist and will do this with checks or lightning, game theory applies to both It does, but with lightning, as long as you are watching the chain periodically, you are guaranteed to not lose money. The same cannot be said for checks. > It doesn't matter if you're watching the chain, you've already transacted with the buyer It does matter if you watch the chain - this is how you determine if your counterparty is trying to close out the channel with an out of date state (at which point you can submit an onchain transaction that corrects the problem + collects a penalty from your counterparty). > 3P Escrow is not unique to Lightning and is sometimes used with checks too Watchtowers are not anything like escrow. It's simply allowing a third party to submit penalty transaction iff your counterparty attempts to submit an out of date state. They do not take custody of your funds.
        minsc__and__boo 6y ago
        People watch for bad checks as well. Plenty of cash registers used to have example bad checks laminated on them, back when the modern financial system was still using IOUs like that. You can make a lightning transaction, drain your bitcoin wallet before it verifies, and no amount of watching the chain will get the seller back whatever they traded you for that transaction. Just because you identify the fraudulent transaction before it finally verifies doesn't mean that the fraud wasn't committed. Same with bad checks. I thought you were talking about 3P escrow, because watchtowers are even worse than escrow in fighting fraud, for reasons outlined above.
        6y ago
  - TylerE 6y ago
    Wait, for real? Lightning is even dumber than I thought - and I already thought it was DOA.
    - minsc__and__boo 6y ago
      It pretty much is - Lightning plateaued out and has been known to have empty channels. https://bitcoinvisuals.com/ln-channels https://bitcoinvisuals.com/ln-channels

UncleMeat 6y ago

But you need dollars on the other side. For this to work without PayPal hosting the BTC you need the following: 1. You send BTC to PayPal 2. PayPal sends equivalent dollars to the merchant. But what is "equivalent"? What is the price of BTC at any given moment? It fluctuates a lot and you can't "lock-in" a price without waiting minutes (as opposed to milliseconds in other financial systems). So between the time that you sent dollars to the merchant and when you sold the coins you are exposed to risk of holding BTC. Lightning does not help with this.

xur17 6y ago
That's a fair point. In order to use lightning, PayPal would either need to hold some BTC in reserves on layer 2, or work with an exchange that accepts lightning transactions.