5 ms·

I would advise you to look at the Lightning protocol which allows you to do transactions off chain via credit lines for as long as you like. You only pay a fee

by lrvick 5y ago

I would advise you to look at the Lightning protocol which allows you to do transactions off chain via credit lines for as long as you like. You only pay a fee to record to the blockchain ledger for eventual settlement.

qayxc 5y ago
Lightning is only safe if you constantly monitor the blockchain, otherwise your transactions aren't safe (as in double spending is still possible). Opening and closing Lightning channels is an operation that requires a transaction on the blockchain - no real win there. Due to the restriction just mentioned, most L2 transactions will take place via intermediaries who you need to trust and who can take arbitrary fees for their service as well (the whole routing business). Lightning might be ok for regular payments (subscriptions, etc.), but at the same time it offers not a single advantage over traditional banking and credit cards other than explicitly not being either. It might alleviate the transaction time and energy problems of the blockchain, but it does nothing to tackle any of the other problems mentioned by the author.
- gruez 5y ago
  >Lightning is only safe if you constantly monitor the blockchain "constantly" in this case means "once every 2 weeks". You can also have a third party do it for you without having to hand over your keys.
  - qayxc 5y ago
    > "constantly" in this case means "once every 2 weeks" No. Constantly means exactly that - revoked transactions for either party cannot be checked otherwise. I didn't even include the need to be online all the time, since otherwise payments don't work either as multiple interactions are required for each payment. > You can also have a third party do it for you without having to hand over your keys. And of course that 3rd party is totally trustworthy for some reason and offers their service for free? The 3rd parties still need to run scripts that have to work correctly. We all see how well that one works on a regular basis, what with the multi-million dollar thefts that happened recently due to flawed contracts and scripts.
    - gruez 5y ago
      >No. Constantly means exactly that - revoked transactions for either party cannot be checked otherwise. Source? My understanding is unless the channel is cooperatively closed, there's a waiting period (ie. the two weeks) before the transaction is finalized to the blockchain. During that time that transaction can be challenged/overridden. https://wiki.ion.radar.tech/tech/channels/channel-closing https://wiki.ion.radar.tech/tech/channels/channel-closing >I didn't even include the need to be online all the time, since otherwise payments don't work either as multiple interactions are required for each payment. That seems to be a completely separate issue. Short of receiving random donations, I can't think of any situation where you want to make a payment, but somehow aren't online. >And of course that 3rd party is totally trustworthy for some reason and offers their service for free? You're making it sound like it's an issue, but I'm not seeing it. Thousands of hobbyists run bitcoin nodes for free, which costs storage and bandwidth. >The 3rd parties still need to run scripts that have to work correctly. We all see how well that one works on a regular basis, what with the multi-million dollar thefts that happened recently due to flawed contracts and scripts. ETH =/= BTC It's far easier for the community to scrutinize one set of code than for everyone to scrutinize the implementation they rolled themselves.
      - qayxc 5y ago
        > Source? https://lightning.network/lightning-network-paper.pdf https://lightning.network/lightning-network-paper.pdf Chapter 3.1.4 Commitment Transactions: Ascribing Blame Penalties for contract violations can only be enforced "if one is able to ascribe blame for broadcasting an old transaction." Broadcasting transactions takes place on the BC, so identifying an old transaction is only possible by finding it on the BC. The same is true for revocable commitment transactions. Both parties must observe the BC at all times in order to know whether the other party did indeed violate the contract by broadcasting a transaction. Contract violations cannot be detected otherwise. > I can't think of any situation where you want to make a payment, but somehow aren't online. Out here in The Real World(tm) I find the opposite to be the case. I cannot think of a situation in which I want to make a payment that requires me to be online. Neither my debit card, nor my credit card, and especially not cash has such requirement. I can buy petrol, groceries, clothes, pay the barber, eat at a restaurant, have a drink at a bar, pay admission for a ball game, etc. etc. all without being online. Go ahead and call me a Boomer, but we seem to exist in very different realities. > Thousands of hobbyists run bitcoin nodes for free, which costs storage and bandwidth. That's orthogonal to the problem of Lightning network routing fees. It doesn't matter who operates a node and how. What matters is that unless you open a bi-directional payment channel, you'll route transactions through intermediaries that will take fees. > It's far easier for the community to scrutinize one set of code than for everyone to scrutinize the implementation they rolled themselves. I think you missed something here. Lightning isn't a single centralised implementation. Just look at chapter 8.4 - once routing tables are in place, there's a wide open door for routing payment channels through profitable routes and tracking, for example. Routing also requires keys to held online for intermediary nodes for latency reasons, which is another considerable risk since unlike with banking, there's neither oversight nor security regulations in place. If you actually read the whole story, you'll quickly notice that a lot of Lightning's mechanisms are built on trust in scripts, incentives, and edge software that "does the right thing" (e.g. periodically make backups and checking the other party's state for honesty).
- lrvick 5y ago
  I know people that use Lightning frequently at a local coffee shop via long term tabs there is no rush to close. Saves them a ton in Visa transaction fees long term even after they eventually pay a Bitcoin transaction fee to close the tab.
  - lbotos 5y ago
    So you are saying that the business doesn't convert BTC to USD near immediately? Seems like a lot of currency risk here.
    - lrvick 5y ago
      I am only a home owner because the value of my deflationary BTC savings dramatically outpaced inflationary USD savings account interest. If bitcoin is coming in constantly you get it at the average price via dollar cost averaging and the average value of Bitcoin has trended sharply up for a decade. Selling BTC for USD is most likely a loss to inflation if you intend on holding for a year or more.
      - ryan_lane 5y ago
        You gambled your money against other people. You won, and they lost. Their losses paid for your house. 12m y/y bitcoin is up 8% and the S&P is up 18%, so if you gambled your money into bitcoin a year ago, you made a bad choice. Note that last week bitcoin was down 5% y/y. Bitcoin, y/y is hardly beating USD inflation, right now, after a major increase in the price today. Also, stop comparing a speculative asset to a currency. USD isn't meant to be held as an investment. It's meant to be spent, or invested in an asset that appreciates more than inflation.
    - mikegreenberg 5y ago
      Lightning is worse than that. When you do try to convert from BTC to USD, you pay a transaction fee twice. Once to close the channel, and another to transfer to the party where you want to exchange your BTC. And further, you can't predict the fee you'll pay. And I hope you aren't in a hurry to settle in those cases.
mikegreenberg 5y ago
I'm sorry, but Lightning is a mess and it would be irresponsible to suggest that it's safe. 1. Unpredictable fees make usage for small amounts almost require a long-lived channel to be worthwhile. 2. UX around Lightning channels are painful. You can't receive BTC in a channel unless you put BTC in as collateral. You can't spend more than the channel allows. Routing is unpredictable and fickle causing transactions to fail just as often (if not worse) as complete successfully. (Perfect for one-off transactions /s) All Lightning wallets (with the exception of one or two) are custodial and if they aren't, they cost a lot of energy to run on your phone because they're constantly chatting with the network. 3. The whole point of cryptocurrency is diversify the control across the network. The design of Lightning motivates large hub and spoke connections between users which consolidate control to a few individuals. 4. The complexity for any business to integration Lightning into their purchase flow is expensive due to the many states your channel can exist in and need to considered as part of your integration. Not to mention the added costs of monitoring the BTC network to protect your channels. Or you find a merchant provider you have to trust with your processing...at which point, you're just using credit cards by another name. 5. And due to the complexity of Lightning's design, there are systemic bugs which expose users to more risk than if they just used a gift card or credit card in the first place. (One case in particular, a channel which is mostly settled on side B (versus side A) such that A's value on their side of the channel is less than the dust limit of the BTC network (which is often given the highly fluctuating fees) will allow B to force the close of the channel causing A to lose their value in the channel (because A will need to spend more than their side of the channel is worth and will be a worse outcome than if channel A just ate the loss from the channel being maliciously closed)).

by lrvick 5y ago

qayxc 5y ago

Lightning is only safe if you constantly monitor the blockchain, otherwise your transactions aren't safe (as in double spending is still possible). Opening and closing Lightning channels is an operation that requires a transaction on the blockchain - no real win there. Due to the restriction just mentioned, most L2 transactions will take place via intermediaries who you need to trust and who can take arbitrary fees for their service as well (the whole routing business). Lightning might be ok for regular payments (subscriptions, etc.), but at the same time it offers not a single advantage over traditional banking and credit cards other than explicitly not being either. It might alleviate the transaction time and energy problems of the blockchain, but it does nothing to tackle any of the other problems mentioned by the author.

gruez 5y ago
>Lightning is only safe if you constantly monitor the blockchain "constantly" in this case means "once every 2 weeks". You can also have a third party do it for you without having to hand over your keys.
- qayxc 5y ago
  > "constantly" in this case means "once every 2 weeks" No. Constantly means exactly that - revoked transactions for either party cannot be checked otherwise. I didn't even include the need to be online all the time, since otherwise payments don't work either as multiple interactions are required for each payment. > You can also have a third party do it for you without having to hand over your keys. And of course that 3rd party is totally trustworthy for some reason and offers their service for free? The 3rd parties still need to run scripts that have to work correctly. We all see how well that one works on a regular basis, what with the multi-million dollar thefts that happened recently due to flawed contracts and scripts.
  - gruez 5y ago
    >No. Constantly means exactly that - revoked transactions for either party cannot be checked otherwise. Source? My understanding is unless the channel is cooperatively closed, there's a waiting period (ie. the two weeks) before the transaction is finalized to the blockchain. During that time that transaction can be challenged/overridden. https://wiki.ion.radar.tech/tech/channels/channel-closing https://wiki.ion.radar.tech/tech/channels/channel-closing >I didn't even include the need to be online all the time, since otherwise payments don't work either as multiple interactions are required for each payment. That seems to be a completely separate issue. Short of receiving random donations, I can't think of any situation where you want to make a payment, but somehow aren't online. >And of course that 3rd party is totally trustworthy for some reason and offers their service for free? You're making it sound like it's an issue, but I'm not seeing it. Thousands of hobbyists run bitcoin nodes for free, which costs storage and bandwidth. >The 3rd parties still need to run scripts that have to work correctly. We all see how well that one works on a regular basis, what with the multi-million dollar thefts that happened recently due to flawed contracts and scripts. ETH =/= BTC It's far easier for the community to scrutinize one set of code than for everyone to scrutinize the implementation they rolled themselves.
    - qayxc 5y ago
      > Source? https://lightning.network/lightning-network-paper.pdf https://lightning.network/lightning-network-paper.pdf Chapter 3.1.4 Commitment Transactions: Ascribing Blame Penalties for contract violations can only be enforced "if one is able to ascribe blame for broadcasting an old transaction." Broadcasting transactions takes place on the BC, so identifying an old transaction is only possible by finding it on the BC. The same is true for revocable commitment transactions. Both parties must observe the BC at all times in order to know whether the other party did indeed violate the contract by broadcasting a transaction. Contract violations cannot be detected otherwise. > I can't think of any situation where you want to make a payment, but somehow aren't online. Out here in The Real World(tm) I find the opposite to be the case. I cannot think of a situation in which I want to make a payment that requires me to be online. Neither my debit card, nor my credit card, and especially not cash has such requirement. I can buy petrol, groceries, clothes, pay the barber, eat at a restaurant, have a drink at a bar, pay admission for a ball game, etc. etc. all without being online. Go ahead and call me a Boomer, but we seem to exist in very different realities. > Thousands of hobbyists run bitcoin nodes for free, which costs storage and bandwidth. That's orthogonal to the problem of Lightning network routing fees. It doesn't matter who operates a node and how. What matters is that unless you open a bi-directional payment channel, you'll route transactions through intermediaries that will take fees. > It's far easier for the community to scrutinize one set of code than for everyone to scrutinize the implementation they rolled themselves. I think you missed something here. Lightning isn't a single centralised implementation. Just look at chapter 8.4 - once routing tables are in place, there's a wide open door for routing payment channels through profitable routes and tracking, for example. Routing also requires keys to held online for intermediary nodes for latency reasons, which is another considerable risk since unlike with banking, there's neither oversight nor security regulations in place. If you actually read the whole story, you'll quickly notice that a lot of Lightning's mechanisms are built on trust in scripts, incentives, and edge software that "does the right thing" (e.g. periodically make backups and checking the other party's state for honesty).
lrvick 5y ago
I know people that use Lightning frequently at a local coffee shop via long term tabs there is no rush to close. Saves them a ton in Visa transaction fees long term even after they eventually pay a Bitcoin transaction fee to close the tab.
- lbotos 5y ago
  So you are saying that the business doesn't convert BTC to USD near immediately? Seems like a lot of currency risk here.
  - lrvick 5y ago
    I am only a home owner because the value of my deflationary BTC savings dramatically outpaced inflationary USD savings account interest. If bitcoin is coming in constantly you get it at the average price via dollar cost averaging and the average value of Bitcoin has trended sharply up for a decade. Selling BTC for USD is most likely a loss to inflation if you intend on holding for a year or more.
    - ryan_lane 5y ago
      You gambled your money against other people. You won, and they lost. Their losses paid for your house. 12m y/y bitcoin is up 8% and the S&P is up 18%, so if you gambled your money into bitcoin a year ago, you made a bad choice. Note that last week bitcoin was down 5% y/y. Bitcoin, y/y is hardly beating USD inflation, right now, after a major increase in the price today. Also, stop comparing a speculative asset to a currency. USD isn't meant to be held as an investment. It's meant to be spent, or invested in an asset that appreciates more than inflation.
  - mikegreenberg 5y ago
    Lightning is worse than that. When you do try to convert from BTC to USD, you pay a transaction fee twice. Once to close the channel, and another to transfer to the party where you want to exchange your BTC. And further, you can't predict the fee you'll pay. And I hope you aren't in a hurry to settle in those cases.

mikegreenberg 5y ago

I'm sorry, but Lightning is a mess and it would be irresponsible to suggest that it's safe. 1. Unpredictable fees make usage for small amounts almost require a long-lived channel to be worthwhile. 2. UX around Lightning channels are painful. You can't receive BTC in a channel unless you put BTC in as collateral. You can't spend more than the channel allows. Routing is unpredictable and fickle causing transactions to fail just as often (if not worse) as complete successfully. (Perfect for one-off transactions /s) All Lightning wallets (with the exception of one or two) are custodial and if they aren't, they cost a lot of energy to run on your phone because they're constantly chatting with the network. 3. The whole point of cryptocurrency is diversify the control across the network. The design of Lightning motivates large hub and spoke connections between users which consolidate control to a few individuals. 4. The complexity for any business to integration Lightning into their purchase flow is expensive due to the many states your channel can exist in and need to considered as part of your integration. Not to mention the added costs of monitoring the BTC network to protect your channels. Or you find a merchant provider you have to trust with your processing...at which point, you're just using credit cards by another name. 5. And due to the complexity of Lightning's design, there are systemic bugs which expose users to more risk than if they just used a gift card or credit card in the first place. (One case in particular, a channel which is mostly settled on side B (versus side A) such that A's value on their side of the channel is less than the dust limit of the BTC network (which is often given the highly fluctuating fees) will allow B to force the close of the channel causing A to lose their value in the channel (because A will need to spend more than their side of the channel is worth and will be a worse outcome than if channel A just ate the loss from the channel being maliciously closed)).