24 ms·

The Lightning Network: Turning Bitcoin into Money

175 points by olalonde 4y ago

4kimov 4y ago
Anyone interested in Lightning should also check out Taro protocol, which was announced recently by Lightning Labs. Possibility of stablecoins on Bitcoin via the Lightning Network.
giuliomagnifico 4y ago
Interesting paper, surely the LN is miking the Bitcoin more useful as a payment/money system.
- sshine 4y ago
  It seems really useful for people who are already making Bitcoin transactions. I'm not sure I see it function as a tool for increasing adoption, though. Anyone can send someone Bitcoin by asking them to install a wallet (or giving them a paper wallet). The story seems less simple if those were sent with Lightning. Maybe that's just a question of wallet support not being pervasive. One nice property of money is that you don't need to have read extensively about money for someone to give you money.
  - jstanley 4y ago
    > One nice property of money is that you don't need to have read extensively about money for someone to give you money. This is true of cash, but not true of debit cards. It is actually quite rate for ordinary people to be able to accept a debit card payment, but that doesn't make debit cards not useful.
    - quickthrowman 4y ago
      > It is actually quite rate for ordinary people to be able to accept a debit card payment, but that doesn't make debit cards not useful. Venmo and Cashapp allow you to receive debit card payments, and there are no fees if you transfer the money to your bank account.
  - shudza 4y ago
    Try being a merchant and not using third party custodial services (Paypal) to accept payments on your website.
plankers 4y ago
from the introduction: >The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)). >While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance. very cool to see this coming from the Federal Reserve Bank of Cleveland
- tromp 4y ago
  > by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
  - DJBunnies 4y ago
    Bitcoin’s security has not changed.
  - FabHK 4y ago
    Fees have constituted just 1% to 2% of mining revenue over the last year (the other 99% being the mining reward ("coinbase") of 6.25 BTC per block). So, LN does not reduce the incentive for Bitcoin miners in any meaningful way, unless I'm mistaken.
teekert 4y ago
A cool use of the Lightning network is the podcast 2.0 initative. Currently, as I listen to podcasts, I stream back satoshis (sats), value for value (I use Castamatic on iOS, fountain.fm is also an option on Android). You can also send messages with sats attached, called “boosts”. Creators can transparantly split the sats they receive over various goals (i.e. FOSS projects [opensats], or guests on shows). There are no transaction fees afaik, that is just when your lightning node syncs with the main blockchain, and then you can bundle a lot of transactions. I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there). The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”. Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.
- TekMol 4y ago
  How do you handle the tax implications of streaming sats? As far as I know, every payment with Bitcoin triggers a taxable event? Do you record a gazillion log entrys "Paid $0.0000145 for listening podcasts, Paid $0.000142 for listening podcasts ...", crunch all the numbers and then at the end of the year put that gigantic list into your tax declaration?
  - londons_explore 4y ago
    Software can do it all for you. Not my problem that the IRS can't handle my 10 million page tax return...
    - dopidopHN 4y ago
      It’s anoying for me. I remember living in place where doing my taxes was taking 15min total. Here, without third party software it’s a challenge
nailer 4y ago
Is lightning just another layer 2 scaling solution? Or am I missing something?
- jstanley 4y ago
  Isn't lightning the layer 2 scaling solution? What other promising options are there?
  - syzygyhack 4y ago
    For Bitcoin, yes. For other networks, ZK and optimistic rollups are the main contenders.
  - once_inc 4y ago
    The Liquid network comes to mind. Basically, any sort of system that allows users to swap coins and settle back to bitcoin is a layer 2 solution. Banks could build an SQL database, generate a single Bitcoin address, and tell everyone to deposit there and prove they owned the originating address(es). You get credited in SQLcoins, which are centrally managed by a federation of banks. Once you want to go out, they send coins to an address of your choice. If one of these layers becomes large enough, it might win the netwerk effect war and become the defacto layer 2 because everyone is on it.
  - nailer 4y ago
    > What other promising options are there? Fast layer 1s. That way I don't have to worry about integration between n layer 2s that my users are on (considering my users are unlikely to be on the same layer 2).
    - kevinak 4y ago
      No Layer 1 Blockchain can effectively scale to billions of users when you also take into account that you want the system to be decentralized. In practice, for Bitcoin, there is only one real L2 and that is the Lightning Network.
  - tcfhgj 4y ago
arcticbull 4y ago
Lightning is a solution that does not do what it says on the tin. It requires an on-chain transaction to open a channel, which at current block size limits requires about 75 years for everyone on earth to have one, and somewhere in the trillion dollar range in fees and the entire outstanding block reward. Factor in quadratic routing complexity, and even if you did onboard everyone it wouldn't work anyways. This is assuming that channels never close and of course that the blockchain doesn't do anything else at all except open channels. Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's. It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset. The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was. Can we move on already?
- lumannnn 4y ago
  Not everyone needs to open a Channel. There are custodial solutions already. You just need some Satoshis and are good to go. Likewise, not everyone needs to create their own Visa or MasterCard. They may have their MySQL/PostgreSQL implementation where they scale and allow for many TX/s. But they don't settle all these transactions in real time. That's also done on a different, slower layer.
  - arcticbull 4y ago
    Custodial solutions offer zero benefits over putting your money in a bank - and have a ton of drawbacks associated with Bitcoin people only overlook because of those benefits - and the L1 is so slow that any subset that wants to open a channel brings it to its knees. It's not a real solution. It's something coiners distract people with whenever someone points out the obvious and glaring flaws of the L1. [edit] To me it's pretty telling that critics offer specific quantifications (X people requires Y time) and proponents say "only some people need it!" - how many, exactly? How full do you anticipate blocks being with other things? How long is too long to open a channel? Currently it sounds like a Soviet phone line - better put in a request now otherwise you might be in your 80s before it gets installed.
shp0ngle 4y ago
Lightning Network is just around the corner for about 5 years now
- once_inc 4y ago
  It is being actively used daily by a vast community of users. I don't understand what you are trying to imply with your statement.
  - joosters 4y ago
    The 'reference' implementation of the protocol, https://github.com/lightningnetwork/lnd https://github.com/lightningnetwork/lnd is still in beta, with warnings about how users could lose all their money. AFAIK, there's no stable/reliable software out there. And don't forget, ordinary users need to monitor the blockchain 24/7 in order not to lose their money by a counterparty closing their channel fraudulently. It's far from ready for use.
    - shp0ngle 4y ago
      > As of this writing, lnd is still in beta and it is considered #reckless to put any life altering amounts of BTC into the network. Well I will take them by their word.
    - exabyte 4y ago
      We use it at a cafe and receive several orders a day with people paying by lightning
      - acdha 4y ago
        Do you have a feel for whether those orders are cryptocurrency workers or normal people who happen to prefer it to a credit card?
        exabyte 4y ago
        well I'm living in Guatemala at Lake Atitlan. We have quite a movement of crypto enthusiasm so the people that are using it are "normal" people who are part of that crypto group. We also have a Lamassu "cryptomat" for people to exchange the local currency to Bitcoin and the crypto group has been advocating people to use Muun wallet, which is easy for the average person to kind of have on-chain and lightning capability.
blueflow 4y ago
Does this imply an admission that Bitcoin itself is not usable as money?
- once_inc 4y ago
  What do you think is being exchanged on the Lightning Network? LN transactions are simply 2-of-2 multisig transactions made on-chain, where both parties can change the balance amongst themselves, and where settlement is possible at any moment. Bitcoin isn't being used as money on-chain. Why is this controversial? Bitcoin is the equivalent of gold, which was the hardest form of money that is accepted worldwide, before bitcoin was invented. Using it as a settlement layer for higher layers is the obvious scaling solution if you wish to remain decentralised.
  - Hamuko 4y ago
    >Bitcoin is the equivalent of gold That definitely wasn't the original goal of Bitcoin though.
    - _Algernon_ 4y ago
      Sometimes creators don't know what their creation is initially. surprised pikachu
    - RileyJames 4y ago
      And surveillance capitalism wasn’t the original goal of the internet, yet here we are. What’s your point? A technology should achieve its founding goal or GTFO?
      - cowtools 4y ago
        Goalposts moved.
      - acdha 4y ago
        More that people who spend a decade dissembling about easily validated technical claims have a trust issue which is hard to reconcile with providing financial services. There were so many people selling this dream world where your life would be full of Bitcoin microtransactions who were unwilling to acknowledge that the system could not possibly scale to that level. Lightning is good for being potentially usable but I would not trust my assets to anyone who wasn’t saying something like it was necessary all along.
DennisP 4y ago
One drawback of Lightning is that if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online. It's an interactive protocol, you can't just publish an address and check it later. Since most people don't run their own servers, LN is pretty much going to be a custodial system.
- TekMol 4y ago
  If you have a lightning channel to the custodial service you use, you can transfer the funds to yourself any time though. So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour. And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
  - kevinak 4y ago
    Here’s a wallet that runs a node on your phone: https://blixtwallet.github.io https://blixtwallet.github.io
- knocte 4y ago
  > if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online Receiver of funds are normally merchants, and merchants normally already have payment systems that require some kind of connection anyway.
- Geee 4y ago
  There is actually a solution for that, called Lightning Rod.[0] It should allow asynchronous payment flows when running LN nodes on a mobile device, which are offline most of the time. I'm not sure if it has been implemented yet (probably not). [0] https://github.com/breez/LightningRod https://github.com/breez/LightningRod
- TrapLord_Rhodo 4y ago
  >LN is pretty much going to be a custodial system. like Chivo? take out the middleman(Banks) and put governments back in control of the funds. bingo :) Think about it... Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.
TradingPlaces 4y ago
“We can make the blockchain actually work for payments if we take payments off the blockchain.” Sounds about right.
- koheripbal 4y ago
  It's essentially a form of sharing, with lesser secure channels for less important transactions.
  - TradingPlaces 4y ago
    You say “less important;” I say “vast majority.” How is this better than Visa or MC?
    - toolz 4y ago
      for one, the base currency in question is uncensorable. e.g. I for one find it detestable that fruits and nuts sellers in Iran suffer immensely because of US sanctions. The idea that innocent citizens are being made to suffer for their governments policy (especially in more authoritarian countries) is gross. I see it akin to punishing a child for their parents behavior.
      - _mhr_ 4y ago
        What do you mean by uncensorable? What does censorship have to do with sanctions hurting innocent economic participants?
        toolz 4y ago
        if you sanction Iran, limiting their fruit sellers, you have to have means to track the trades in order to enforce those sanctions - lightening network is effectively untraceable at the moment (and tools built on top of bitcoin can make tracing payments provably impossible) which means the sanctions can't be easily enforced - no country is going to spend resources proving their businesses aren't doing fruit trades with sanctioned countries, so if you can't trace the money, you're going to have an incredibly hard time enforcing sanctions - which I would suggest means Iranian fruit sellers aren't going to be nearly as limited in their trade. Iran certainly isn't going to limit them and the sanctioning country (US in this example) isn't going to have the resources to audit every single import to every other country.
ETH_start 4y ago
LN adoption/capacity cannot possibly explain the reduction in Bitcoin congestion. At its peak, there was only $200 million worth of BTC as collateral in LN channels: https://www.defipulse.com/address-tag/lightning-network https://www.defipulse.com/address-tag/lightning-network This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC. The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.
- kevinak 4y ago
  It’s worth pointing out that you can only see public channels on these trackers. Large players probably have large private channels open with each other to guarantee better payment flows and less fees. Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.
  - ETH_start 4y ago
    The public LN channels define the routable space of the network, since a routing table is public by definition. The collateral in these channels is therefore a fair proxy for the overall size and usage of the LN.
- TrapLord_Rhodo 4y ago
  Market Cap and volume don't need to correlate. Your line of reasoning is a red herring. BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are. With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.
  - ETH_start 4y ago
    >>and those LN could be responsible for an inordinant amount of volume Theoretically yes, in practice no. Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases. Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral. For these reasons, low collateral reliably maps to low usage.
exabyte 4y ago
I run a lightning node at a cafe and we receive a few orders a day. Record had been 8 orders in one day.
- ponyous 4y ago
  Interesting. Where is that cafe located?
  - exabyte 4y ago
    In Guatemala at Lake Atitlan! I have a lightning node running BTCPay Server on a raspberry pi, and then also a web app that interfaces with it. I can show you the web site, although I'm hesitant to post it here cause i don't know how much traffic it can handle with the internet speeds here haha
  - exabyte 4y ago
    now that some time has passed, here's the web app if you wanna check it out! https://emporium.atitlan.io https://emporium.atitlan.io
  - exabyte 4y ago
    if that supernova purchase was you yesterday thank you!! :D
- bubersson 4y ago
  If you post ln address, I can send you some sats so you can have a coffee on me :)
  - exabyte 4y ago
    i think this post is old enough that i can post the page without worrying about the hug of death. if you wanna buy me a coffee you can go to https://emporium.atitlan.io https://emporium.atitlan.io :D in the comments just write "solo una prueba, no hagas este pedido"
    - 4y ago
revskill 4y ago
No, i'll use btc if i could buy pizza with it.
- bannedbybros 4y ago
cosmiccatnap 4y ago
Perhaps it should be called the alchemist network since it proposes to turn lead to gold.
JofArnold 4y ago
The problem I have with Lightning is it further validates the existence of Bitcoin - a decrepit and highly polluting technology which has at best has failed to achieve any of objectives in any meaningful way, and at worst recreated a financial system more exploitative and toxic than anything that came before it. Let it die already.
- kordlessagain 4y ago
  So you blame Lightning not for what it is, but what it enables? That doesn't make a lot of sense, especially given the creators built it to address the issues you raise here. With Lightning, micropayments for the Web can be a thing. Just because nobody has implemented it yet, doesn't mean it doesn't have a killer use case worth the cost of mining (which will decrease over a long period of time). Moving payments for API calls to Lightning becomes very efficient, given the (nearly instantaneous) transactions can occur off chain. I'm a big fan of mining with solar. Wish more miners were investing in this.
  - pessimizer 4y ago
    It doesn't make sense to blame Lightning for enabling Bitcoin, it only makes sense to praise Lightning for enabling Bitcoin?
    - kordlessagain 4y ago
      Does it make any sense to judge something used a biased argument or ask leading questions? No, it doesn't.
  - JofArnold 4y ago
    Correct. If you're going to build something like this, why on top of Bitcoin which - as I say - is rotten to its core. With Ethereum and its L2s instant, practically-free micropayments are already a thing. With Solana even... and others I'm not particularly in to but I hear work to various degrees. To be clear, the tech itself is interesting and broadly I remain fascinated in blockchain technologies and engaged with them to various degrees as you can see from my GitHub. But Bitcoin though? It's the oil of our time; dirty and corrupting. Edit: to address your point about solar (which along with using mining for heating is clearly a good way of reducing direct CO2 emissions) it's only part of the problem... e-waste is another and a pretty big one at that.
petefromnorth 4y ago
Why use LN when other simple L1 solutions already work great as money. Litecoin (LTC) has cheap fees and lots of room. Bitcoin Cash (BCH) is constantly improving and has a ton of transaction room to grow, with increases if/when demand grows. Dogecoin (DOGE) not my favorite, but does work fine for the money use-case, but development, from what I can see is a bit stale. With these existing simple solutions, I don't see why Bitcoin (BTC) has to be anything more than the unit of account other crypto projects value themselves against.
- Centmo 4y ago
  The holy grail is a cryptocurrency that can scale to billions of users while maintaining sufficient decentralization and security to be immune to state-level attack and corruption. BTC in combination with the higher level protocols such as Lightning (and others not yet conceived) is the only system that I believe can achieve this.
  - deleted 4y ago
    [deleted]
- flowctrl 4y ago
  Because bitcoin is money, and shitcoins are not.
  - Aaronstotle 4y ago
    Bitcoin is not fungible and because of its hard cap does not incentive actual use as a means of exchange. I'll never understand why BTC Maximalists refuse to acknowledge faults in BTC and see how other currencies can solve them.
    - TrapLord_Rhodo 4y ago
      > its hard cap does not incentive actual use as a means of exchange. Why? Is that because it's has 'Scarcity'? People will pay more for it in the future? If that case is so soundly put why would you not buy as much btc as possible? Playing a bit of devils advocate here but wouldn't you say that it's volitility leads to more trading? Means of exchange need to be further defined in this crazy overfinancialized world we live in. total trading volume of BTC is absolutely insane.
bendtheblock 4y ago
Due to blockchain's architectural shortcomings, you need to do the transactions off chain. Fine... But crypto-"currencies" are actually highly speculative assets (as South Africa declared today [1]). No bro will spend them - the ideology is to HODL for 100k remember [2]? Earnest patron saints like Laszlo Hanyecz bought two papa john’s pizzas in 2010 for what would be worth today roughly $200,000,000 [3]. They wanted a new currency, but today the purpose is speculation. The whole point is not to be the greater fool. Bitcoin was never meant to be gold, it was meant to be spent. But that hasn't happened. [1] https://cointelegraph.com/news/bitcoin-not-a-currency-south-africa-to-regulate-crypto-as-financial-asset https://cointelegraph.com/news/bitcoin-not-a-currency-south-... [2] https://www.wealthsimple.com/en-ca/magazine/laser-eyes-crypto https://www.wealthsimple.com/en-ca/magazine/laser-eyes-crypt... [3] https://www.the-sun.com/news/2935660/bitcoin-pizza-laszlo-hanyecz-crypto-currency/ https://www.the-sun.com/news/2935660/bitcoin-pizza-laszlo-ha...
- bendtheblock 4y ago
  what's wrong with this comment?! that it's anti-crypto? currency needs to be a medium of exchange, unit of account, and store of value. Given its volatility, Bitcoin could only ever realistically be useful for the latter, and only then as a risky speculation.
  - spiralx 4y ago
    A "store of value" when talking about the properties of a useful currency implies that the value is largely stable so that it can be "stored" over the medium- and long-term. So that's actually the property BTC is worst at due of its volatility. Actually, no, 4 transactions per second globally means "medium of exchange" is the property of money BTC is worse at. Your point that BTC was supposed to be a currency and has turned into a speculative asset is true though, and BTC proponents often dislike it when someone points that out. LN is just an attempt to make BTC better as a "medium of exchange" which is fine, but it still doesn't address the fact that BTC is a terrible store of value, it just reduces the volatility of the transaction fee (in theory).
cryptica 4y ago
Lightning network is a hack. It doesn't actually work. - There are many ways for a malicious entity to rollback a payment and prevent it from being detected (just DoS the watchtowers). - You still need to make an on-chain transaction to open a new channel which incurs on-chain fees and limits the scalability of LN. It's incredible how money can corrupt large groups of people into convincing themselves that a solution works when it simply doesn't.
- TrapLord_Rhodo 4y ago
  You're right, it's a hack. Doesn't mean it's wrong and doesn't work though. BTC stopped being practical for small payments when it got expensive. This is a way to make small, everyday payments cheap again. I'm not going to use LN to transfer large payments. "just DoS the watchtowers" is impracticle for a cup of coffee. Your second point is just plain false and there are many ways around those.
- snapcaster 4y ago
  How can you say it doesn't work? isn't it working right this moment? edit: not rhetorical question, actually curious since it appears to be working already
adrr 4y ago
Way i understand lightning is that you need a hot wallet that is connected most of the time to the internet. So you have to move money from your hardware wallet to your software based wallet and you're still constrained by the blockchain limitations between these transfers.
janandonly 4y ago
> Our analysis covers the period January 1, 2017, to September 5, 2019. Doesn't even include the explosive growth we've seen starting in 2020.
kag0 4y ago
I've stopped following bitcoin at a deep level for some time. Could someone summarize for me what changes/problems led current bitcoin to need lightning?
- __s 4y ago
  Lightning Network has been going on for years, I at least recall reading about it in 2017 when I started looking into bitcoin The idea of the Lightning Network is to allow transactions to exist on a separate layer where in theory transaction fees don't have to exist. & transactions don't have to wait for the next block. This allows for microtransactions etc. There are some blockchain transaction fees involved in creating channels & resolving disputes
- null0pointer 4y ago
  Some years ago bitcoin started running into scaling issues. The period between blocks is fixed at 10 minutes and the maximum size of each block is also fixed at 1Mb so the network transaction throughput was quite limited. Because of the limited transaction throughput the fees per transaction increased significantly because miners prioritize the high-fee transactions for inclusion in blocks. Low fee transactions would sit in the mempool until they were stale or dropped. This limited throughput led to a massive debate amongst the community about how best to scale bitcoin. One side wanted to change the blocksize (either a step-up in size or to use dynamic scaling), and the other main side wanted to keep the block size at 1Mb and implement off-chain scaling (Lightning Network). I won't recount their arguments for/against, or even tell the story of the debate because it would be very long and there was so much shenanigans involved that I would probably struggle to remain neutral. The long and short of it though is that the side that wanted to keep the block size fixed at 1Mb won out and got to keep the Bitcoin (BTC) name while the other side spun out into a fork called Bitcoin Cash (BCH).
  - kag0 4y ago
    Thanks for the recap. That sounds pretty familiar. I found https://en.bitcoin.it/wiki/Block_size_limit_controversy https://en.bitcoin.it/wiki/Block_size_limit_controversy to refresh myself as well, but there's clearly a lot of detail missing.
kkielhofner 4y ago
When will the blockchain ecosystem provide something with that "WOW I need this in my life right now" factor to the average user? Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today. We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations. I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange. Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale. I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed). I don't get it.
- eldenwrong 4y ago
  Yeah sending value through the internet without an intermediary that can't be stopped, confiscated or censored is whatever Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?
  - threeseed 4y ago
    I would argue the negatives outweigh the positives here: Tax evasion, money laundering, trafficking, drugs, sanctions evasion etc. Since the introduction of KYC it's very hard to do any of these in the traditional finance system. And each of them has very serious implications for people's lives.
silverlake 4y ago
Lightning is a remix of the correspondent banking network. If it grows it will devolve into a small set of large centralized nodes that act as gateway for most transactions. Think JPMorgan and Citi as nodes. The reason is funding channels is expensive: you can’t leave $10M sitting there doing nothing. It’s got to earn it’s cost of capital. This is why Western Union charges so much for transfers.
- gregwebs 4y ago
  Lightning is an environment where all the nodes have to compete on cost (or speed) and everything is digital. The costs of transactions are currently near zero now, is there a reason you think it will increase? There are a lot of people that want to just hold onto Bitcoin right now. Maybe the cost of a Lightning transaction will go up dramatically if that changes? But if such a protocol evolves to support swapping coins in and out of the channel lockup from different owners than potentially anyone holding Bitcoin for any duration can contribute.
boxmonster 4y ago
Many are taken with the idea that blockchain can be trusted in a world without trust. Governments can't mutate it. No one owns it. My sense is that this inspires an almost religious faith in some people. Google's ability to find just what I was looking for inspired a similar sense of wonder in me. Unfortunately, SEO scam artists began to game Google and now they are corrupting the blockchain idea, but I don't think we should underestimate the power of people who keep the faith over the long haul to eventually make something legitimate out of it

175 points by olalonde 4y ago

Anyone interested in Lightning should also check out Taro protocol, which was announced recently by Lightning Labs. Possibility of stablecoins on Bitcoin via the Lightning Network.

giuliomagnifico 4y ago

Interesting paper, surely the LN is miking the Bitcoin more useful as a payment/money system.

sshine 4y ago
It seems really useful for people who are already making Bitcoin transactions. I'm not sure I see it function as a tool for increasing adoption, though. Anyone can send someone Bitcoin by asking them to install a wallet (or giving them a paper wallet). The story seems less simple if those were sent with Lightning. Maybe that's just a question of wallet support not being pervasive. One nice property of money is that you don't need to have read extensively about money for someone to give you money.
- jstanley 4y ago
  > One nice property of money is that you don't need to have read extensively about money for someone to give you money. This is true of cash, but not true of debit cards. It is actually quite rate for ordinary people to be able to accept a debit card payment, but that doesn't make debit cards not useful.
  - quickthrowman 4y ago
    > It is actually quite rate for ordinary people to be able to accept a debit card payment, but that doesn't make debit cards not useful. Venmo and Cashapp allow you to receive debit card payments, and there are no fees if you transfer the money to your bank account.
- shudza 4y ago
  Try being a merchant and not using third party custodial services (Paypal) to accept payments on your website.

plankers 4y ago

from the introduction: >The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)). >While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance. very cool to see this coming from the Federal Reserve Bank of Cleveland

tromp 4y ago
> by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
- DJBunnies 4y ago
  Bitcoin’s security has not changed.
- FabHK 4y ago
  Fees have constituted just 1% to 2% of mining revenue over the last year (the other 99% being the mining reward ("coinbase") of 6.25 BTC per block). So, LN does not reduce the incentive for Bitcoin miners in any meaningful way, unless I'm mistaken.

teekert 4y ago

A cool use of the Lightning network is the podcast 2.0 initative. Currently, as I listen to podcasts, I stream back satoshis (sats), value for value (I use Castamatic on iOS, fountain.fm is also an option on Android). You can also send messages with sats attached, called “boosts”. Creators can transparantly split the sats they receive over various goals (i.e. FOSS projects [opensats], or guests on shows). There are no transaction fees afaik, that is just when your lightning node syncs with the main blockchain, and then you can bundle a lot of transactions. I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there). The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”. Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.

TekMol 4y ago
How do you handle the tax implications of streaming sats? As far as I know, every payment with Bitcoin triggers a taxable event? Do you record a gazillion log entrys "Paid $0.0000145 for listening podcasts, Paid $0.000142 for listening podcasts ...", crunch all the numbers and then at the end of the year put that gigantic list into your tax declaration?
- londons_explore 4y ago
  Software can do it all for you. Not my problem that the IRS can't handle my 10 million page tax return...
  - dopidopHN 4y ago
    It’s anoying for me. I remember living in place where doing my taxes was taking 15min total. Here, without third party software it’s a challenge

nailer 4y ago

Is lightning just another layer 2 scaling solution? Or am I missing something?

jstanley 4y ago
Isn't lightning the layer 2 scaling solution? What other promising options are there?
- syzygyhack 4y ago
  For Bitcoin, yes. For other networks, ZK and optimistic rollups are the main contenders.
- once_inc 4y ago
  The Liquid network comes to mind. Basically, any sort of system that allows users to swap coins and settle back to bitcoin is a layer 2 solution. Banks could build an SQL database, generate a single Bitcoin address, and tell everyone to deposit there and prove they owned the originating address(es). You get credited in SQLcoins, which are centrally managed by a federation of banks. Once you want to go out, they send coins to an address of your choice. If one of these layers becomes large enough, it might win the netwerk effect war and become the defacto layer 2 because everyone is on it.
- nailer 4y ago
  > What other promising options are there? Fast layer 1s. That way I don't have to worry about integration between n layer 2s that my users are on (considering my users are unlikely to be on the same layer 2).
  - kevinak 4y ago
    No Layer 1 Blockchain can effectively scale to billions of users when you also take into account that you want the system to be decentralized. In practice, for Bitcoin, there is only one real L2 and that is the Lightning Network.
- tcfhgj 4y ago

arcticbull 4y ago

Lightning is a solution that does not do what it says on the tin. It requires an on-chain transaction to open a channel, which at current block size limits requires about 75 years for everyone on earth to have one, and somewhere in the trillion dollar range in fees and the entire outstanding block reward. Factor in quadratic routing complexity, and even if you did onboard everyone it wouldn't work anyways. This is assuming that channels never close and of course that the blockchain doesn't do anything else at all except open channels. Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's. It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset. The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was. Can we move on already?

lumannnn 4y ago
Not everyone needs to open a Channel. There are custodial solutions already. You just need some Satoshis and are good to go. Likewise, not everyone needs to create their own Visa or MasterCard. They may have their MySQL/PostgreSQL implementation where they scale and allow for many TX/s. But they don't settle all these transactions in real time. That's also done on a different, slower layer.
- arcticbull 4y ago
  Custodial solutions offer zero benefits over putting your money in a bank - and have a ton of drawbacks associated with Bitcoin people only overlook because of those benefits - and the L1 is so slow that any subset that wants to open a channel brings it to its knees. It's not a real solution. It's something coiners distract people with whenever someone points out the obvious and glaring flaws of the L1. [edit] To me it's pretty telling that critics offer specific quantifications (X people requires Y time) and proponents say "only some people need it!" - how many, exactly? How full do you anticipate blocks being with other things? How long is too long to open a channel? Currently it sounds like a Soviet phone line - better put in a request now otherwise you might be in your 80s before it gets installed.

shp0ngle 4y ago

Lightning Network is just around the corner for about 5 years now

once_inc 4y ago
It is being actively used daily by a vast community of users. I don't understand what you are trying to imply with your statement.
- joosters 4y ago
  The 'reference' implementation of the protocol, https://github.com/lightningnetwork/lnd https://github.com/lightningnetwork/lnd is still in beta, with warnings about how users could lose all their money. AFAIK, there's no stable/reliable software out there. And don't forget, ordinary users need to monitor the blockchain 24/7 in order not to lose their money by a counterparty closing their channel fraudulently. It's far from ready for use.
  - shp0ngle 4y ago
    > As of this writing, lnd is still in beta and it is considered #reckless to put any life altering amounts of BTC into the network. Well I will take them by their word.
  - exabyte 4y ago
    We use it at a cafe and receive several orders a day with people paying by lightning
    - acdha 4y ago
      Do you have a feel for whether those orders are cryptocurrency workers or normal people who happen to prefer it to a credit card?
      - exabyte 4y ago
        well I'm living in Guatemala at Lake Atitlan. We have quite a movement of crypto enthusiasm so the people that are using it are "normal" people who are part of that crypto group. We also have a Lamassu "cryptomat" for people to exchange the local currency to Bitcoin and the crypto group has been advocating people to use Muun wallet, which is easy for the average person to kind of have on-chain and lightning capability.

blueflow 4y ago

Does this imply an admission that Bitcoin itself is not usable as money?

once_inc 4y ago
What do you think is being exchanged on the Lightning Network? LN transactions are simply 2-of-2 multisig transactions made on-chain, where both parties can change the balance amongst themselves, and where settlement is possible at any moment. Bitcoin isn't being used as money on-chain. Why is this controversial? Bitcoin is the equivalent of gold, which was the hardest form of money that is accepted worldwide, before bitcoin was invented. Using it as a settlement layer for higher layers is the obvious scaling solution if you wish to remain decentralised.
- Hamuko 4y ago
  >Bitcoin is the equivalent of gold That definitely wasn't the original goal of Bitcoin though.
  - _Algernon_ 4y ago
    Sometimes creators don't know what their creation is initially. surprised pikachu
  - RileyJames 4y ago
    And surveillance capitalism wasn’t the original goal of the internet, yet here we are. What’s your point? A technology should achieve its founding goal or GTFO?
    - cowtools 4y ago
      Goalposts moved.
    - acdha 4y ago
      More that people who spend a decade dissembling about easily validated technical claims have a trust issue which is hard to reconcile with providing financial services. There were so many people selling this dream world where your life would be full of Bitcoin microtransactions who were unwilling to acknowledge that the system could not possibly scale to that level. Lightning is good for being potentially usable but I would not trust my assets to anyone who wasn’t saying something like it was necessary all along.

DennisP 4y ago

One drawback of Lightning is that if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online. It's an interactive protocol, you can't just publish an address and check it later. Since most people don't run their own servers, LN is pretty much going to be a custodial system.

TekMol 4y ago
If you have a lightning channel to the custodial service you use, you can transfer the funds to yourself any time though. So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour. And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
- kevinak 4y ago
  Here’s a wallet that runs a node on your phone: https://blixtwallet.github.io https://blixtwallet.github.io
knocte 4y ago
> if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online Receiver of funds are normally merchants, and merchants normally already have payment systems that require some kind of connection anyway.
Geee 4y ago
There is actually a solution for that, called Lightning Rod.[0] It should allow asynchronous payment flows when running LN nodes on a mobile device, which are offline most of the time. I'm not sure if it has been implemented yet (probably not). [0] https://github.com/breez/LightningRod https://github.com/breez/LightningRod
TrapLord_Rhodo 4y ago
>LN is pretty much going to be a custodial system. like Chivo? take out the middleman(Banks) and put governments back in control of the funds. bingo :) Think about it... Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.

TradingPlaces 4y ago

“We can make the blockchain actually work for payments if we take payments off the blockchain.” Sounds about right.

koheripbal 4y ago
It's essentially a form of sharing, with lesser secure channels for less important transactions.
- TradingPlaces 4y ago
  You say “less important;” I say “vast majority.” How is this better than Visa or MC?
  - toolz 4y ago
    for one, the base currency in question is uncensorable. e.g. I for one find it detestable that fruits and nuts sellers in Iran suffer immensely because of US sanctions. The idea that innocent citizens are being made to suffer for their governments policy (especially in more authoritarian countries) is gross. I see it akin to punishing a child for their parents behavior.
    - _mhr_ 4y ago
      What do you mean by uncensorable? What does censorship have to do with sanctions hurting innocent economic participants?
      - toolz 4y ago
        if you sanction Iran, limiting their fruit sellers, you have to have means to track the trades in order to enforce those sanctions - lightening network is effectively untraceable at the moment (and tools built on top of bitcoin can make tracing payments provably impossible) which means the sanctions can't be easily enforced - no country is going to spend resources proving their businesses aren't doing fruit trades with sanctioned countries, so if you can't trace the money, you're going to have an incredibly hard time enforcing sanctions - which I would suggest means Iranian fruit sellers aren't going to be nearly as limited in their trade. Iran certainly isn't going to limit them and the sanctioning country (US in this example) isn't going to have the resources to audit every single import to every other country.

ETH_start 4y ago

LN adoption/capacity cannot possibly explain the reduction in Bitcoin congestion. At its peak, there was only $200 million worth of BTC as collateral in LN channels: https://www.defipulse.com/address-tag/lightning-network https://www.defipulse.com/address-tag/lightning-network This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC. The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.

kevinak 4y ago
It’s worth pointing out that you can only see public channels on these trackers. Large players probably have large private channels open with each other to guarantee better payment flows and less fees. Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.
- ETH_start 4y ago
  The public LN channels define the routable space of the network, since a routing table is public by definition. The collateral in these channels is therefore a fair proxy for the overall size and usage of the LN.
TrapLord_Rhodo 4y ago
Market Cap and volume don't need to correlate. Your line of reasoning is a red herring. BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are. With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.
- ETH_start 4y ago
  >>and those LN could be responsible for an inordinant amount of volume Theoretically yes, in practice no. Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases. Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral. For these reasons, low collateral reliably maps to low usage.

exabyte 4y ago

I run a lightning node at a cafe and we receive a few orders a day. Record had been 8 orders in one day.

ponyous 4y ago
Interesting. Where is that cafe located?
- exabyte 4y ago
  In Guatemala at Lake Atitlan! I have a lightning node running BTCPay Server on a raspberry pi, and then also a web app that interfaces with it. I can show you the web site, although I'm hesitant to post it here cause i don't know how much traffic it can handle with the internet speeds here haha
- exabyte 4y ago
  now that some time has passed, here's the web app if you wanna check it out! https://emporium.atitlan.io https://emporium.atitlan.io
- exabyte 4y ago
  if that supernova purchase was you yesterday thank you!! :D
bubersson 4y ago
If you post ln address, I can send you some sats so you can have a coffee on me :)
- exabyte 4y ago
  i think this post is old enough that i can post the page without worrying about the hug of death. if you wanna buy me a coffee you can go to https://emporium.atitlan.io https://emporium.atitlan.io :D in the comments just write "solo una prueba, no hagas este pedido"
  - 4y ago

revskill 4y ago

No, i'll use btc if i could buy pizza with it.

bannedbybros 4y ago

cosmiccatnap 4y ago

Perhaps it should be called the alchemist network since it proposes to turn lead to gold.

JofArnold 4y ago

The problem I have with Lightning is it further validates the existence of Bitcoin - a decrepit and highly polluting technology which has at best has failed to achieve any of objectives in any meaningful way, and at worst recreated a financial system more exploitative and toxic than anything that came before it. Let it die already.

kordlessagain 4y ago
So you blame Lightning not for what it is, but what it enables? That doesn't make a lot of sense, especially given the creators built it to address the issues you raise here. With Lightning, micropayments for the Web can be a thing. Just because nobody has implemented it yet, doesn't mean it doesn't have a killer use case worth the cost of mining (which will decrease over a long period of time). Moving payments for API calls to Lightning becomes very efficient, given the (nearly instantaneous) transactions can occur off chain. I'm a big fan of mining with solar. Wish more miners were investing in this.
- pessimizer 4y ago
  It doesn't make sense to blame Lightning for enabling Bitcoin, it only makes sense to praise Lightning for enabling Bitcoin?
  - kordlessagain 4y ago
    Does it make any sense to judge something used a biased argument or ask leading questions? No, it doesn't.
- JofArnold 4y ago
  Correct. If you're going to build something like this, why on top of Bitcoin which - as I say - is rotten to its core. With Ethereum and its L2s instant, practically-free micropayments are already a thing. With Solana even... and others I'm not particularly in to but I hear work to various degrees. To be clear, the tech itself is interesting and broadly I remain fascinated in blockchain technologies and engaged with them to various degrees as you can see from my GitHub. But Bitcoin though? It's the oil of our time; dirty and corrupting. Edit: to address your point about solar (which along with using mining for heating is clearly a good way of reducing direct CO2 emissions) it's only part of the problem... e-waste is another and a pretty big one at that.

petefromnorth 4y ago

Why use LN when other simple L1 solutions already work great as money. Litecoin (LTC) has cheap fees and lots of room. Bitcoin Cash (BCH) is constantly improving and has a ton of transaction room to grow, with increases if/when demand grows. Dogecoin (DOGE) not my favorite, but does work fine for the money use-case, but development, from what I can see is a bit stale. With these existing simple solutions, I don't see why Bitcoin (BTC) has to be anything more than the unit of account other crypto projects value themselves against.

Centmo 4y ago
The holy grail is a cryptocurrency that can scale to billions of users while maintaining sufficient decentralization and security to be immune to state-level attack and corruption. BTC in combination with the higher level protocols such as Lightning (and others not yet conceived) is the only system that I believe can achieve this.
- deleted 4y ago
  [deleted]
flowctrl 4y ago
Because bitcoin is money, and shitcoins are not.
- Aaronstotle 4y ago
  Bitcoin is not fungible and because of its hard cap does not incentive actual use as a means of exchange. I'll never understand why BTC Maximalists refuse to acknowledge faults in BTC and see how other currencies can solve them.
  - TrapLord_Rhodo 4y ago
    > its hard cap does not incentive actual use as a means of exchange. Why? Is that because it's has 'Scarcity'? People will pay more for it in the future? If that case is so soundly put why would you not buy as much btc as possible? Playing a bit of devils advocate here but wouldn't you say that it's volitility leads to more trading? Means of exchange need to be further defined in this crazy overfinancialized world we live in. total trading volume of BTC is absolutely insane.

bendtheblock 4y ago

Due to blockchain's architectural shortcomings, you need to do the transactions off chain. Fine... But crypto-"currencies" are actually highly speculative assets (as South Africa declared today [1]). No bro will spend them - the ideology is to HODL for 100k remember [2]? Earnest patron saints like Laszlo Hanyecz bought two papa john’s pizzas in 2010 for what would be worth today roughly $200,000,000 [3]. They wanted a new currency, but today the purpose is speculation. The whole point is not to be the greater fool. Bitcoin was never meant to be gold, it was meant to be spent. But that hasn't happened. [1] https://cointelegraph.com/news/bitcoin-not-a-currency-south-africa-to-regulate-crypto-as-financial-asset https://cointelegraph.com/news/bitcoin-not-a-currency-south-... [2] https://www.wealthsimple.com/en-ca/magazine/laser-eyes-crypto https://www.wealthsimple.com/en-ca/magazine/laser-eyes-crypt... [3] https://www.the-sun.com/news/2935660/bitcoin-pizza-laszlo-hanyecz-crypto-currency/ https://www.the-sun.com/news/2935660/bitcoin-pizza-laszlo-ha...

bendtheblock 4y ago
what's wrong with this comment?! that it's anti-crypto? currency needs to be a medium of exchange, unit of account, and store of value. Given its volatility, Bitcoin could only ever realistically be useful for the latter, and only then as a risky speculation.
- spiralx 4y ago
  A "store of value" when talking about the properties of a useful currency implies that the value is largely stable so that it can be "stored" over the medium- and long-term. So that's actually the property BTC is worst at due of its volatility. Actually, no, 4 transactions per second globally means "medium of exchange" is the property of money BTC is worse at. Your point that BTC was supposed to be a currency and has turned into a speculative asset is true though, and BTC proponents often dislike it when someone points that out. LN is just an attempt to make BTC better as a "medium of exchange" which is fine, but it still doesn't address the fact that BTC is a terrible store of value, it just reduces the volatility of the transaction fee (in theory).

cryptica 4y ago

Lightning network is a hack. It doesn't actually work. - There are many ways for a malicious entity to rollback a payment and prevent it from being detected (just DoS the watchtowers). - You still need to make an on-chain transaction to open a new channel which incurs on-chain fees and limits the scalability of LN. It's incredible how money can corrupt large groups of people into convincing themselves that a solution works when it simply doesn't.

TrapLord_Rhodo 4y ago
You're right, it's a hack. Doesn't mean it's wrong and doesn't work though. BTC stopped being practical for small payments when it got expensive. This is a way to make small, everyday payments cheap again. I'm not going to use LN to transfer large payments. "just DoS the watchtowers" is impracticle for a cup of coffee. Your second point is just plain false and there are many ways around those.
snapcaster 4y ago
How can you say it doesn't work? isn't it working right this moment? edit: not rhetorical question, actually curious since it appears to be working already

adrr 4y ago

Way i understand lightning is that you need a hot wallet that is connected most of the time to the internet. So you have to move money from your hardware wallet to your software based wallet and you're still constrained by the blockchain limitations between these transfers.

janandonly 4y ago

> Our analysis covers the period January 1, 2017, to September 5, 2019. Doesn't even include the explosive growth we've seen starting in 2020.

kag0 4y ago

I've stopped following bitcoin at a deep level for some time. Could someone summarize for me what changes/problems led current bitcoin to need lightning?

__s 4y ago
Lightning Network has been going on for years, I at least recall reading about it in 2017 when I started looking into bitcoin The idea of the Lightning Network is to allow transactions to exist on a separate layer where in theory transaction fees don't have to exist. & transactions don't have to wait for the next block. This allows for microtransactions etc. There are some blockchain transaction fees involved in creating channels & resolving disputes
null0pointer 4y ago
Some years ago bitcoin started running into scaling issues. The period between blocks is fixed at 10 minutes and the maximum size of each block is also fixed at 1Mb so the network transaction throughput was quite limited. Because of the limited transaction throughput the fees per transaction increased significantly because miners prioritize the high-fee transactions for inclusion in blocks. Low fee transactions would sit in the mempool until they were stale or dropped. This limited throughput led to a massive debate amongst the community about how best to scale bitcoin. One side wanted to change the blocksize (either a step-up in size or to use dynamic scaling), and the other main side wanted to keep the block size at 1Mb and implement off-chain scaling (Lightning Network). I won't recount their arguments for/against, or even tell the story of the debate because it would be very long and there was so much shenanigans involved that I would probably struggle to remain neutral. The long and short of it though is that the side that wanted to keep the block size fixed at 1Mb won out and got to keep the Bitcoin (BTC) name while the other side spun out into a fork called Bitcoin Cash (BCH).
- kag0 4y ago
  Thanks for the recap. That sounds pretty familiar. I found https://en.bitcoin.it/wiki/Block_size_limit_controversy https://en.bitcoin.it/wiki/Block_size_limit_controversy to refresh myself as well, but there's clearly a lot of detail missing.

kkielhofner 4y ago

When will the blockchain ecosystem provide something with that "WOW I need this in my life right now" factor to the average user? Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today. We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations. I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange. Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale. I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed). I don't get it.

eldenwrong 4y ago
Yeah sending value through the internet without an intermediary that can't be stopped, confiscated or censored is whatever Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?
- threeseed 4y ago
  I would argue the negatives outweigh the positives here: Tax evasion, money laundering, trafficking, drugs, sanctions evasion etc. Since the introduction of KYC it's very hard to do any of these in the traditional finance system. And each of them has very serious implications for people's lives.

silverlake 4y ago

Lightning is a remix of the correspondent banking network. If it grows it will devolve into a small set of large centralized nodes that act as gateway for most transactions. Think JPMorgan and Citi as nodes. The reason is funding channels is expensive: you can’t leave $10M sitting there doing nothing. It’s got to earn it’s cost of capital. This is why Western Union charges so much for transfers.

gregwebs 4y ago
Lightning is an environment where all the nodes have to compete on cost (or speed) and everything is digital. The costs of transactions are currently near zero now, is there a reason you think it will increase? There are a lot of people that want to just hold onto Bitcoin right now. Maybe the cost of a Lightning transaction will go up dramatically if that changes? But if such a protocol evolves to support swapping coins in and out of the channel lockup from different owners than potentially anyone holding Bitcoin for any duration can contribute.

boxmonster 4y ago

Many are taken with the idea that blockchain can be trusted in a world without trust. Governments can't mutate it. No one owns it. My sense is that this inspires an almost religious faith in some people. Google's ability to find just what I was looking for inspired a similar sense of wonder in me. Unfortunately, SEO scam artists began to game Google and now they are corrupting the blockchain idea, but I don't think we should underestimate the power of people who keep the faith over the long haul to eventually make something legitimate out of it