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A second layer transaction does not involve the Bitcoin network. When Katy wants to pay ₿3 to Billie, Katy just sends a key (via email or some API) to Billie w
by TekMol 5y ago
A second layer transaction does not involve the Bitcoin network.
When Katy wants to pay ₿3 to Billie, Katy just sends a key (via email or some API) to Billie which enables Billie to withdraw ₿3 from the account of Katy. But Billie does not do that. Billie just keeps that message like you keep your login to your bank account.
When Katy wants to pay another ₿5 to Billie, Katy sends a key to Billie which enables Billie to withdraw ₿8 from the account of Katy.
Now Katy paid Billie ₿8 in two transactions. All via email, letter, telephone or - most likely - API. Nothing at all happened on the Bitcoin network.
- piaste 5y agoHowever, if nothing happens on the Bitcoin network, then the funds aren't locked down, are they? In other words, Billie has no guarantee that the key she holds will be valid tomorrow; Katy could empty that account at any time, and Billie would then hold nothing except the evidence of Katy's wrongdoing.
- TekMol 5y agoKaty could empty that account at any time That would be a pretty lame virtual bank then :) Realistically, the spending conditions are either limited by time. So Billie knows she needs to withdraw until a certain date or Katy could betray her. Or the spending conditions contain a punishment for betrayal. So if Katy tries to withdraw money she assigned to Billie, Billie can intervene, get her money and punish Katy.
- gruez 5y ago> However, if nothing happens on the Bitcoin network, then the funds aren't locked down, are they? they are locked down. the funds in a lightning channel are locked in a 2 of 2 multisig address, and can only be moved upon mutual consent (ie. by updating the state of the channel), or by one party after sufficient time has passed (in case of an uncooperative peer).
- zaptrem 5y agoDon't LN channels require a (quite expensive) transaction to open and close?
- gruez 5y ago>quite expensive Are you talking about compared to regular transactions, or because network fees (per byte) are high?
- jimmydorry 5y agoQuite expensive, as in $1? That $1 enables as many transactions as you want between party A and B, of which party B may have dozens of open channels with other nodes to facilitate routing from party A to C etc.
- tgb 5y agoDoes this stop a double spend?
- gruez 5y agoYes, why wouldn't it? The funds are locked in a 2 of 2 multisig address.
- tgb 5y agoI'm confused then, doesn't this still need one transaction in the block chain for every transaction?
- HashBasher 5y agoNo, the transaction is fully signed and can be broadcast at any time by either party to settle. It doesn't have to be broadcasted and further transactions can be done on top and they just keep it private between themselves.
- 5y ago
- kordlessagain 5y agoBitcoin supports post dating transactions. The transaction can be updated between parties, off chain. Lightning Network. If a bad actor gets involved, the last transaction updated between both parties rules and is the remainder is refunded upon the timeout of the post dating. This function is provided by script: https://en.bitcoin.it/wiki/Script https://en.bitcoin.it/wiki/Script
- KptMarchewa 5y agoCan you send 8worthless$ using that method, then move money out of the account via normal transfer?
- gruez 5y agono, because the funds are locked down while in the lightning channel. see: https://news.ycombinator.com/item?id=29228483 https://news.ycombinator.com/item?id=29228483
- cgb223 5y ago> VIA email or API Isn’t this an example of a centralized bottleneck?