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You have onchain BTC, and you can decide to put them in a LN channel with another party (this causes an onchain transaction) You and that party can now transac

You have onchain BTC, and you can decide to put them in a LN channel with another party (this causes an onchain transaction) You and that party can now transact freely between each other with no fees, but if that other party is a gateway, it can route payments through it and through other gateways too, and each of them charge fees for routing. Once any of the parties decide to close the channel, is when a new onchain transaction is created with the last balances state. While the LN channel is open, only the parties involved know the current state of the balance.

SavantIdiot 5y ago
Interesting. So it's like lots of little ledgers, each channel stays open until N number of transactions between two people complete, then the finally tally is pushed onchain when the channel closes. Am I wrong to thing this sounds a little risky? Like, that channel could be "lost" after the goods/services were exchanged, leaving the seller holding the bag. I don't understand what kind of recourse the seller has to LN if LN screws up? It's kinda like escrow, but escrow agents are heavily regulated whereas is LN "trustworthy"? EDIT: ah, I think "nicpottier" explains a little more, below. about having an account on LN requires a certain amount of a deposit (like a debit account).
- madacol 5y ago
  Each update to the channel is a new transaction that references the opening transaction, on each update, this transaction is replaced with a new one, so in practice only the last transaction is kept (old transactions become dangerous to publish) To know how they update trustlessly you should read my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184 LN eliminates the need of escrow completely by using bitcoin's script (smart contracts) in clever ways and a bit of cryptography
  - SavantIdiot 5y ago
    > bitcoin's script (smart contracts I'm out of the loop, I didn't realize bitcoin had contracts yet. Cool.
    - madacol 5y ago
      It has always had, it is just much limited than ethereum's. But you can express things like "if X and Y cooperate they can spend this transaction or Y can spend after 1000 blocks or X can spend if it reveals the preimage of this hash ____" These logics are what LN uses in its update-transactions
    - anonporridge 5y ago
      The big difference is that bitcoin's scripting language is not turing complete. This is a security and scalability trade off that the bitcoin community isn't willing to compromise on, which drove people like Vitalik (started as a bitcoin dev) away to start Ethereum. Taproot is also a rad upgrade that is going to improve bitcoin's layer one scripting in some interesting ways, https://bitcoinmagazine.com/technical/taproot-coming-what-it-and-how-it-will-benefit-bitcoin https://bitcoinmagazine.com/technical/taproot-coming-what-it... I haven't looked into this much, but there are projects like Rootstock, https://www.rsk.co/ https://www.rsk.co/, that essentially recreate all of Ethereum's functionality as a bitcoin sidechain.

SavantIdiot 5y ago

Interesting. So it's like lots of little ledgers, each channel stays open until N number of transactions between two people complete, then the finally tally is pushed onchain when the channel closes. Am I wrong to thing this sounds a little risky? Like, that channel could be "lost" after the goods/services were exchanged, leaving the seller holding the bag. I don't understand what kind of recourse the seller has to LN if LN screws up? It's kinda like escrow, but escrow agents are heavily regulated whereas is LN "trustworthy"? EDIT: ah, I think "nicpottier" explains a little more, below. about having an account on LN requires a certain amount of a deposit (like a debit account).

madacol 5y ago
Each update to the channel is a new transaction that references the opening transaction, on each update, this transaction is replaced with a new one, so in practice only the last transaction is kept (old transactions become dangerous to publish) To know how they update trustlessly you should read my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184 LN eliminates the need of escrow completely by using bitcoin's script (smart contracts) in clever ways and a bit of cryptography
- SavantIdiot 5y ago
  > bitcoin's script (smart contracts I'm out of the loop, I didn't realize bitcoin had contracts yet. Cool.
  - madacol 5y ago
    It has always had, it is just much limited than ethereum's. But you can express things like "if X and Y cooperate they can spend this transaction or Y can spend after 1000 blocks or X can spend if it reveals the preimage of this hash ____" These logics are what LN uses in its update-transactions
  - anonporridge 5y ago
    The big difference is that bitcoin's scripting language is not turing complete. This is a security and scalability trade off that the bitcoin community isn't willing to compromise on, which drove people like Vitalik (started as a bitcoin dev) away to start Ethereum. Taproot is also a rad upgrade that is going to improve bitcoin's layer one scripting in some interesting ways, https://bitcoinmagazine.com/technical/taproot-coming-what-it-and-how-it-will-benefit-bitcoin https://bitcoinmagazine.com/technical/taproot-coming-what-it... I haven't looked into this much, but there are projects like Rootstock, https://www.rsk.co/ https://www.rsk.co/, that essentially recreate all of Ethereum's functionality as a bitcoin sidechain.