8 ms·

They are using lightning network which allows almost instant and practically free Bitcoin payments.

blocked_again 5y ago
Asking as a noob, isn't the whole point of transaction fees to prevent malicious actors from flooding the network with spam. How does lighting networks prevent that from happening and why can't one use a smiliar approach for the actual bitcoin blockchain?
- rawtxapp 5y ago
  The blockchain settles the transaction and records the finality. Imagine a transaction as being a simple cryptographic signed message that sends 1 BTC to someone, you just broadcast it to the network and it gets recorded immediately. But if you expect to continue transacting with the same person, instead of broadcasting the transaction, you can hold on to it and keep iterating on top of it with new balances, each time signing the transaction so that your counterparty can always go to blockchain to claim their coins. There's obviously some mechanism to avoid broadcasting old state and making sure you actually have the funds, etc, but you can't flood the network, even if you tried, you'd only be flooding your immediate neighbor which still charges fees, but much smaller fees than the blockchain. There's also mechanism for connecting those channels, so you don't need to have a direct channel with someone you want to pay, you just need a path to them.
- nepthar 5y ago
  High level answer: Lightning transactions happen off network and only "sync up" once in a while. In a lightning transaction, only the two individuals transacting know that it has happened. But in an on-chain transaction, that info is public.
  - eeegnu 5y ago
    What prevents someone from making the transaction on the lightning network, as well as the btc blockchain before the lightning network syncs up?
    - random_kris 5y ago
      Other person node who would lose money if this happend can publish the original transaction that is construscted in a way that the attacker would lose all his funds. So attacker could potentially do this but if they get caught they get punished for losing everything and they get caught if the other side node is online when this happens. There are also watchtowers that can monitor the network for hacks like this
    - drdeca 5y ago
      The coins are essentially allocated to being on the lightning network, and cannot be used on the blockchain until the two are synced up.
    - madacol 5y ago
      To open a LN channel, both parties puts their funds in an address that can only be spent if both parties agree (both have to sign) But the way this swap happen trustlessly between onchain and LN channel funds it's complicated, I don't have it clear right now If you want to get an idea how later the balances updates happen trustlessly see my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184
- scotty79 5y ago
  It's mostly to provide miners incentive to mine beyond periodically halved builtin reward for mining a block.
- tiku 5y ago
  This is called sharding in Ethereum and Zilliqa I believe.
  - gruez 5y ago
    AFAIK it's different from sharding. The transactions aren't being recorded on a separate chain, they're kept between the two ends of the channel.
UncleMeat 5y ago
Why would somebody who doesn't have a bank account be more capable of using a provider on the lightning network?
- neither_color 5y ago
  This is a good question and I think the clues are in the way informal vendors in parts of Asia and Africa have already caught on to transacting through mobile. In remote parts of ES there aren’t any bank branches and villagers have to travel an hour or more by bus into town just to open an account, when they get back to their village that same lack of infrastructure means no POS or businesses accepting cards. Feature phones and smart phones, however, are ubiquitous and this gives an “official” way of doing this. This solution doesn’t have to be crypto at all, however. I’ve been to China where even food carts have QR codes printed on them for people to take wechat pay and ali pay.
  - el-salvador 5y ago
    Electronic transfers are common. But electronic payments like that are not so much. We have Bank QR codes and something simillar to M-Pesa, but its not that widespread because there is no one standard for QR payments or similar. That makes it less practical to use because both you and the vendor must use the same bank. (El Salvador is small and there are many finatial instituions.) Something like U.S. Zelle or Swedish Swish would help, but banks have not standardized yet. If WhatsApp started something like WeChat payments it would become a hit. Like they did in Brazil.
- rawtxapp 5y ago
  You just need a phone, that's it. Banking requires all the infrastructure, etc.
  - fuj 5y ago
    Do you think the Salvadorians do not have a bank account because of the lack of banking infrastructure or because of the fees to use it or lack of funds to justify it?
whoisninja 5y ago
correct, just search El Zonte or Bitcoin Beach, tons of videos on youtube on how they're using lightning network in fully circular economy since entire town has been unbanked it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community. I plan to visit later this year and have friends who work with Strike team etc. The future is looking optimistic!
ddtaylor 5y ago
LN requires opening and closing channels, each of which have to be done as a regular Bitcoin transaction. The value proposition of LN is that repeated transactions with the same entity (or some subset of) can be done without high fees, but considering almost nobody is currently using LN that doesn't change things right now.
- rawtxapp 5y ago
  Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.
  - paulgb 5y ago
    Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
    - rawtxapp 5y ago
      If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
      - throwaaskjdfh 5y ago
        > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
m3kw9 5y ago
The problem here lies when the merchant want to derisk btc/USD by often converting it back to USD after a transaction. That causes a miner fee, there is a penalty in breaking the lighting channel.
- rawtxapp 5y ago
  You can stay on lightning for exchanges, Bitfinex for example offers lightning deposits/withdrawals, El Salvador would too, considering they are using lightning right now.

Asking as a noob, isn't the whole point of transaction fees to prevent malicious actors from flooding the network with spam. How does lighting networks prevent that from happening and why can't one use a smiliar approach for the actual bitcoin blockchain?

rawtxapp 5y ago
The blockchain settles the transaction and records the finality. Imagine a transaction as being a simple cryptographic signed message that sends 1 BTC to someone, you just broadcast it to the network and it gets recorded immediately. But if you expect to continue transacting with the same person, instead of broadcasting the transaction, you can hold on to it and keep iterating on top of it with new balances, each time signing the transaction so that your counterparty can always go to blockchain to claim their coins. There's obviously some mechanism to avoid broadcasting old state and making sure you actually have the funds, etc, but you can't flood the network, even if you tried, you'd only be flooding your immediate neighbor which still charges fees, but much smaller fees than the blockchain. There's also mechanism for connecting those channels, so you don't need to have a direct channel with someone you want to pay, you just need a path to them.
nepthar 5y ago
High level answer: Lightning transactions happen off network and only "sync up" once in a while. In a lightning transaction, only the two individuals transacting know that it has happened. But in an on-chain transaction, that info is public.
- eeegnu 5y ago
  What prevents someone from making the transaction on the lightning network, as well as the btc blockchain before the lightning network syncs up?
  - random_kris 5y ago
    Other person node who would lose money if this happend can publish the original transaction that is construscted in a way that the attacker would lose all his funds. So attacker could potentially do this but if they get caught they get punished for losing everything and they get caught if the other side node is online when this happens. There are also watchtowers that can monitor the network for hacks like this
  - drdeca 5y ago
    The coins are essentially allocated to being on the lightning network, and cannot be used on the blockchain until the two are synced up.
  - madacol 5y ago
    To open a LN channel, both parties puts their funds in an address that can only be spent if both parties agree (both have to sign) But the way this swap happen trustlessly between onchain and LN channel funds it's complicated, I don't have it clear right now If you want to get an idea how later the balances updates happen trustlessly see my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184
scotty79 5y ago
It's mostly to provide miners incentive to mine beyond periodically halved builtin reward for mining a block.
tiku 5y ago
This is called sharding in Ethereum and Zilliqa I believe.
- gruez 5y ago
  AFAIK it's different from sharding. The transactions aren't being recorded on a separate chain, they're kept between the two ends of the channel.

UncleMeat 5y ago

Why would somebody who doesn't have a bank account be more capable of using a provider on the lightning network?

neither_color 5y ago
This is a good question and I think the clues are in the way informal vendors in parts of Asia and Africa have already caught on to transacting through mobile. In remote parts of ES there aren’t any bank branches and villagers have to travel an hour or more by bus into town just to open an account, when they get back to their village that same lack of infrastructure means no POS or businesses accepting cards. Feature phones and smart phones, however, are ubiquitous and this gives an “official” way of doing this. This solution doesn’t have to be crypto at all, however. I’ve been to China where even food carts have QR codes printed on them for people to take wechat pay and ali pay.
- el-salvador 5y ago
  Electronic transfers are common. But electronic payments like that are not so much. We have Bank QR codes and something simillar to M-Pesa, but its not that widespread because there is no one standard for QR payments or similar. That makes it less practical to use because both you and the vendor must use the same bank. (El Salvador is small and there are many finatial instituions.) Something like U.S. Zelle or Swedish Swish would help, but banks have not standardized yet. If WhatsApp started something like WeChat payments it would become a hit. Like they did in Brazil.
rawtxapp 5y ago
You just need a phone, that's it. Banking requires all the infrastructure, etc.
- fuj 5y ago
  Do you think the Salvadorians do not have a bank account because of the lack of banking infrastructure or because of the fees to use it or lack of funds to justify it?

whoisninja 5y ago

correct, just search El Zonte or Bitcoin Beach, tons of videos on youtube on how they're using lightning network in fully circular economy since entire town has been unbanked it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community. I plan to visit later this year and have friends who work with Strike team etc. The future is looking optimistic!

ddtaylor 5y ago

LN requires opening and closing channels, each of which have to be done as a regular Bitcoin transaction. The value proposition of LN is that repeated transactions with the same entity (or some subset of) can be done without high fees, but considering almost nobody is currently using LN that doesn't change things right now.

rawtxapp 5y ago
Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.
- paulgb 5y ago
  Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
  - rawtxapp 5y ago
    If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
    - throwaaskjdfh 5y ago
      > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.

m3kw9 5y ago

The problem here lies when the merchant want to derisk btc/USD by often converting it back to USD after a transaction. That causes a miner fee, there is a penalty in breaking the lighting channel.

rawtxapp 5y ago
You can stay on lightning for exchanges, Bitfinex for example offers lightning deposits/withdrawals, El Salvador would too, considering they are using lightning right now.