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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

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if you watch the chain - this is how you determine if your counterparty is trying to close out the channel with an out of date state (at which point you can submit an onchain transaction that corrects the problem + collects a penalty from your counterparty).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 It's simply allowing a third party to submit penalty transaction iff your counterparty attempts to submit an out of date state.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.

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.