Bitcoin Forum

This is not meant as a heavy technical discussion. That's why I posted it here.

Since there is a lot of talk about 'The Lightning Network' at the moment, and a lot of confusion about how it actually might be implemented in the real world, I thought a layman's description would be useful.

I'll start, and then some one, please correct me..  :P

As I understand it, and from other lively discussions, LN allows  Bitcoin users to go into a private room, transact amongst themselves with 100% security off the main chain, and then when all is said and done, they leave the room, and post a TXN on the main-chain that is the culmination / sum of all the private TXNs.

So - we can all play poker in private, with bitcoins, off chain, and then at the end of the night send out 1 TXN, on chain, with everybody getting their final chip stack. Very nice.

What I don't understand is how this works when I want to transact with someone on the street, or in a coffee shop ?

If I'm only really going to be sending them some BTC once, how does LN help in that scenario ?

The concept is not designed to help with sending BTC to someone once (you'd do that using Bitcoin).

When you consider things like a "game table" people are likely to spend hours "playing" that would (if recorded on the main chain) just be blockchain bloat and luckily that is not necessary if you are prepared to instead use a payment channel.

Ah.. I see..

Can you join the 'room' after it has been created or do you need to be there at it's inception ? ( I have a feeling you need to be there at inception )

AFAIA you'd need to be there at the inception as it basically requires refund scripts to have been created before the off-chain txs occur.

I have only quickly browsed the documentation though so it would probably be better for one of the LN people to explain things.

I assume that LN require to host (or room) to be trusted?
Is there any other applications expect for gambling?

ok. Thanks Ciyam.

Now, I am having 'understanding'..

What I am not seeing, is when 'Average Joe' who doesn't play cards, is going to be using this ?

What scenarios, in day-to-day life, is this going to be used for ?

( Funnily enough I can see Banks jumping all over this.. )

I am 'pretty' sure this is trustless..

Actually I'm not sure if gambling was even what it was designed for just but micro-payments in general.

Posting crap on this forum would be a very easily understood practical example. :D

(i.e. ad-sig campaign payments)

What kind of question is that (You should not assume that it will be only used for a specific thing)? LN can be used for pretty much everything that the main chain is being used right now (it was not designed for gambling). It should be faster and cheaper (IIRC) than transacting on the main chain.

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OP wait for ELI5 from e.g. shorena, Dannyhamilton, etc. Once I find more time I'll explain it as well.

So, just to be extra-clear,

If I was running the campaign, and you were showing the banners, we would have to start a LN room with just the 2 of us, and every time you showed my banner I would pay you a micro-amount, in the room, and at the end of the week/month (depending on how much you made) you would post the final tally on the main net ?

I assume either party can post the 'tally-txn' at any time. 


I wait.

That is my basic understanding of how it will work.

Is it proprietary? Patented?

How does it make money?

If it isn't open source then no-one will use it - and I certainly hope they aren't trying to patent it.


That is a good question - perhaps someone from LN would care to comment about that.

no & no... and it doesn't. (I think)

My current 'understanding' :

1) Any group of individuals can start an LN room. Securely and trust free.

2) You cannot join a room once it has been created.

3) You cannot add funds to a room, except for those added at the inception, once the room has been created.

4) The group transacts amongst themselves at high speed with no limit on the TXN numbers, in the room, off the main chain.

5) Finally, at some point, the room is closed and 1 TXN is sent out on the main chain, that gives everybody their final BTC tally.

6) If you want to continue, you need to create a new room.

I seriously don't get the room metaphor. It's too much of a black box.

From what I understand, it works like this:

1. You give a fixed amount, of how much you would spend max, say for Coffee at Starbucks. There is some mutlisig(that means neither you, nor the sender can do anything alone) and n-LockTime(which means you just get all back, if nothing happens)-magic. That's called a channel.
2. Now, you buy Coffee. You give Starbucks the transaction, which they don't put on the blockchain, since they know you will come again.
3. Next day, you buy another Coffee. You give Starbucks a new transaction, with money for both coffees(note, that they can not execute both transactions).
4. You realize that Starbucks is shitty coffee and never come back to them again. After a while, they see, that you are not coming back and just execute the last transaction you gave.
5. After n-LockTime is reached, the remaining money in this channel is send back to you.

Yes - I think you have got it about right (a pity that no LN devs have joined in).

So, this is the same as the ad-sig campaign example, but instead of paying someone every time they show your banner, you pay them every time they give you a coffee. Got it.

Does anyone know if you need any 'new' op-codes to get LN to work ? Does the refund txn require OP_CHECKLOCKTIMEVERIFY to work, as with other refund uses ? 

..

I see now, that as long as you transact with someone MORE than once, especially for small amounts, LN can be very useful.

Although, it seems, you do need to lock up the funds you wish to use for the duration of the .. err.. 'room'. ( I think the room metaphor is quite simple to explain to the 'layman'..  :) ) 

Are you sure about point 3? After all, it is just a multisig, so why shouldn't you be able to send new funds there?

No - I am not sure..  :-\

That's pretty important though, as it changes how much you need to lock up.

Anyone ?

 

This is how I understand it :  At the core of the Lightning Network proposal is the usage of bitcoin micropayment channels. The micropayment protocol allows two parties to open a

channel for multiple payments, and the payments that are made through that channel do not hit the blockchain until the channel is closed. It functions like a Xapo wallet to wallet

transaction... but only goes on-chain once the funds are withdrawn from the Xapo service. I am still trying to figure out how this is going to happen : " Payments channels are made

possible through a combination of a multisignature bitcoin address with nLockTime. " .... I grasp the concept, but not the implementation.. still a lot of reading to be done.  ???

This article has good explanation about using a payment channel to pay 1 Satoshi for each second of video you watch.  Doesn't look proprietary.   They don't mention LN, I'm thinking LN would be something like BitPay but providing payment channel services.

https://bitcoinmagazine.com/articles/checklocktimeverify-or-how-a-time-lock-patch-will-boost-bitcoin-s-potential-1446658530

Okay, I'm really worn out. I have no idea how to approach the thread now (after a few replies). Could you ask direct questions? What is it that you do not understand or have trouble understanding; what are your concerns?

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I found the exact words from luke-jr on reddit:
In other words, if some XT shill comes up here, and says that blockstream will profit from this and whatnot put them on the ignore list so that we can have a decent discussion.

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Keep in mind that LN also needs a block size increase in order to scale upwards. However, even if we followed Gavin's plan and did 8 GB right now (I'm disregarding all problems with this statement, and we're going with the assumption that this is the perfect solution) it would be able to handle ~24 000 tps (3 tps at 1 MB x ~8000). This seems like a nice number doesn't it? It does not if you factor in the size of each block. We're talking about ~1 150 GB of data per day (~420 400 GB per year). Obviously this is really inefficient.

Now with the Lightning Network on the other hand:

We had such a nice discussion til you came along with your "XT is bad"-bullshit. Do you have to spoil every topic with that? Nobody said a bad word about anybody. There is a world outside your stupid battle against XT.
Your post is completely off-topic. If you want to contribute, answer the question:

This is what it sounds like (to me) when people start talking about side chains and lighting networks. https://www.youtube.com/watch?v=RXJKdh1KZ0w

Kind of ironic, as XT promoters are the literal origin of this exact problem.

Here's an off-topic post for you:

The XT supporters Handbook

1. Insert XT into every thread ad nauseum
2. Complain that everyone except XT supporters are inserting XT into every thread ad nausem!


As usual, you people are total hypocrites. You people started this nonsense, so if you don't like others playing your game the same way you do, you know where to go (hint: you're advertising it in your sig)

Annnddd... Back in the Room!.. (Snaps Fingers)..  ;)

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Went and scoured the 'info-web-net' last night to see if I could come up with anything.

Here it is. (Not much to be fair..  :-[)

1) Yes - you do need OP_CHECKLOCKTIMEVERIFY for it to work. In fact you need a 'relative' version. This is implemented in Core 0.12 but needs a mining Super Majority to be a 'go-er'. So, can't be used just yet, but should be Ok soon...ish.

2) The 2 way payment channel as described here :


is quite straight forward to understand.

What LN does, is it allows you to chain MORE than 2 people together. This was a 'semi-nice' example I found :


In other words, you don't need LN for a 2 party group. A normal payment channel will do. LN is for Multi-Party groups.

3) The messages will need to be sent back and forth over some other network. Obviously you can't do it over the Bitcoin network.. This may lead to payment hubs, where you can meet and 'dance'.

4) Obviously, yet not mentioned much, if the TXN's are taken off the network, this helps with anonymity, as you will be operating off-chain. (Though those you transact with will know.)

As always, anyone who knows, please do correct..

Hmm.. more reading.. missed something.

Payment channels are 1 way. LN is bi-directional. BIG difference.

Sooo.. You DO NEED LN for 2 parties if you are going to be paying back AND forth.

With a 2 party one-way channel, like paying at Starbucks, a normal payment channel will do. (no refunds though)

In fact, this makes me wonder whether you would ALWAYS use LN over a normal payment channel ?
 
Since LN does everything a payment channel does, and more.

Minor correction: 0.11.2 and 0.10.4 will also include the CHECKLOCKVERIFYTIME opcode soft-fork logic, it's not necessary to go straight to 0.12 to support the enabling of Lightning. BIP112 wlll improve matters for operating Lightning also (https://github.com/bitcoin/bips/blob/master/bip-0112.mediawiki#lightning-network), in support of "Deployable Lightning"....

Rusty Russell just published a new, simplified implementation of Lightning a week or two ago (Deployable Lightning (https://github.com/ElementsProject/lightning/blob/master/doc/deployable-lightning.pdf)), it reduces the need for (even more) opcodes and also makes it a little more efficient.

Now do you get it?

'The Lightning Network' is a protocol, not a company.

I think you have misunderstood. We can all use it.

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ps you misquoted me..

Ultimately LNs will be run by 3rd party companies who will be responsible for their security so they should be thought of as 3rd party services or alt coins.

Yes. Kind of like VISA and Mastercard, or OKPAY and those types of services.


No. Lightning still transacts Bitcoins, all it's really doing is packaging Bitcoin transactions up in the most space efficient way before they hit the blockchain.

Correct. In the case of alt coins we could be talking about a sidechain. This is not relevant to the Lightning Network.

No need for the use of ''. Still have no direct questions?

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Interestingly some people are refusing (or are unable to) acknowledge the fact that scaling via the block size directly is very inefficient (example (idiotic) counter argument: "just because it's inefficient that doesn't mean that we shouldn't do it").

Is this some sort of idea, or has it already been made by some site? Because it's a cool idea, and I'm wondering if something like yobit (koff koff, -Ve kingdom) would be able to switch, as they take out many withdrawals a day.

Well AFAIK Xapo uses an offchain system for internal transactions, but its completely different. Offchain transactions made by a company are pretty common. Every Most casinos uses offchain system to handle betting, deals on exchanges are not onchain as well.

This however is different because - as far as my limited understand of it goes - it removes the need for a trusted party (e.g. the company running the exchange).

Actually I don't think so ?

The LN tech will be integrated into your wallet client. Not the server end.

When you enter into an LN agreement with someone, it is done peer-2-peer. You don't need a 3rd party for anything. And if you do use one, they won't have access to your funds.

What I mean is, that you could do your LN business over email, sending each other signed messages in JSON format, or some such. Those messages will be as secure as any normal btc txn. They just need to be cashed in at some point.

All the clever crypto stuff is done completely by you. Including setting the whole thing up initially. No trust required. No 3rd party required.

Yes, you may need access to a block explorer, if you don't run a full node yourself, but I'm pretty sure the whole point about LN is that it is completely decentralised and trustless.

3rd party doesn't control your funds - true.  However, you get to pay this 3rd party tax for doing transactions on 'their' network.  who could be so stupid to want to let these guys take over the 'protocol'?  Hopefully, - nobody.

What are you talking about? You should educate yourself first, else you just end up looking like a shill and/or troll. Exactly how is it owned by Blockstream? There is no such information. You must be talking about sidechains, which are completely different. There is no protocol at the current stage, only the paper and some early development. (https://github.com/ElementsProject/lightning) Thus your argument is invalid with 'owned, managed, controlled'. If people like Hearn actually wanted Bitcoin to succeed and had skills, they'd code this protocol themselves.

I think having TLN is a bad idea.

If you can't add it within the protocol of bitcoin, don't bother.

It removes the reason why bitcoin was created and used in the first place.

With TLN you will require trust and other risks inherent with centralized services.

With the LN protocol there is no 3rd party involved. You and I can create a channel/room. With this channel we do as many transactions as we want. If we are finished we close the channel. No 3rd party involved and no tax to pay. We use bitcoin to establish the channel and to do the clearing when we close the channel.

BTW we can do off-chain transactions right now, using a payment channel.


LN basically means using the the bitcoin protocol elements to create safe off-chain transactions.


Wrong. It needs the bitcoin system. In fact it is a certain use model of the bitcoin system like multisig escrow.


There is no central service. Maybe you should read about how payment channels and lightning network is working first.

Good thread. Basically, only settlements are done on-chain.

You can have a LN channel open for a year and have millions of transactions happen there. Only the final tally will end up on-chain.