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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 light

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if you watch the chain - this is how you determine if your counterparty is trying to close out the channel with an out of date state (at which point you can submit an onchain transaction that corrects the problem + collects a penalty from your counterparty).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.
      - xur17 6y ago
        > 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. No you cannot, again, that's not how it works. You commit funds to a channel on chain before you can spend funds in a channel. I don't think you understand how lightning works.
        minsc__and__boo 6y ago
        Yes, you commit funds before the initial transaction, but loop allows you to move them to another wallet before the channel closes.
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

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.
    - xur17 6y ago
      > 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. No you cannot, again, that's not how it works. You commit funds to a channel on chain before you can spend funds in a channel. I don't think you understand how lightning works.
      - minsc__and__boo 6y ago
        Yes, you commit funds before the initial transaction, but loop allows you to move them to another wallet before the channel closes.

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