Bitcoin Forum

https://medium.com/@jonaldfyookball/mathematical-proof-that-the-lightning-network-cannot-be-a-decentralized-bitcoin-scaling-solution-1b8147650800

let the trolling begin...3....2....1....

Except you didn't, as has been extensively discussed in the other forums you or others are spamming with your latest effort.

You imagine that people will stand around doing nothing to change their behavior as LN nodes become centralized. But if decentralization is worth anything then that is precisely what will not happen. Ironically the UASF for SW that you so fear is evidence that people are not passive in response to threats to their economic well-being.

You may think I begin trolling now ;) ... but I mostly agree with your analysis. I have discussed, above all, the "channel exhaustion" (=channels that lose the "routing power") problem with other users and no solution (that doesn't involve a centralized entity) has been found.

For me, LN was never more than a semi-centralized micropayment solution that is better than a totally-centralized online wallet because the "bank" cannot run away with my money. I would be happy if I can manage all my 0-20USD payments via LN and having at least 10 different hubs to chose from.

" we will prove it is mathematically impossible. / We will divide this document into sections. Here I was thinking you have proven this wrong and that you were behind all this shilling.  ::) What is the difference between 5000 hubs and 5000 nodes again? Is the one less decentralized than the other?

Let the users decide what they want, because we are already being screwed by the miners and the developers. Good last ditch effort to confuse people. ^smile^

I essentially agree with your analysis.  I've said several times that instead of a small "economy of scale" with mining, which has already made mining an oligarchic business, the "economy of scale" in lightning is essentially proportional  to the amount of funds you can put into your links.  Which makes a HUGE advantage for whales, becoming central hubs: your bank.

In fact, the lightning network is PERFECT for your connection to your favourite exchange, which can act as one of the few central hubs in the world.  It has the advantage that the central exchange cannot run with your funds, like it does now, with an IOU.  Big exchanges can have bidirectional channels between them (the "banking back bone", swift-like), and as such, you can pay anyone through your channel to your exchange (you only need 1 channel with all your funds !), your exchange can transmit your funds to the exchange where your target is a customer, and that exchange will "push" the coins on your target's channel.  3-hop LN.

Of course, your exchange is now your bank, that can charge you with fees for using their banking service, can block payments to certain other people, knows all you do with your funds, etc.... but at least, compared to a normal bank, cannot run with your funds.... unless they can spam you out of the block chain for the time it takes to settle...

The LN is the missing technology that will turn centralized exchanges into world banks.

Amen.  Indeed, the HUGE difference between a LN P2P network and another P2P network, is that connecting, and disconnecting, is expensive.  The whole strength of decentralized P2P networks protocols is the easiness of setting up tunnels and breaking them ; but with the LN, your funds are engaged (with lock up time, and fees to unlock them).

Moreover, the LN is dangerous if the block chain is limited, because there cannot be "simultaneous settling".  In the case of an exchange that goes down for instance, all customers will want to settle their channels simultaneously, and that will be so many transactions, that a hard limited block chain like bitcoin will push a lot of transactions over the lock out time, meaning that the exchange can, after all, run with their funds.

I'm not going to pretend to have the slightest clue how it pans out until there are a few actually up and running.



Whisper it, but most people would choose convenience over decentralisation most days of the week. Look at Coinbase.

Indeed, the tragedy of decentralisation.  Everyone can set up his own web page, but we all run to centralized Facebook to share our social interaction.  Usenet was a decentralized discussion platform, but we all run to centralized fora.  We could have built an internet with 'cables and links from house to house', but we all use centralized internet service providers.

Yes, exactly. And then look at all the alternatives. I'm not saying there won't be an unequal distribution of channels. I expect the efficient and good LN operators to dominate. But just as there are many smaller exchanges catering to people who have reason to reject or look beyond Coinbase, there will be alternatives to using major LN channels. We (as a community) just need to make sure the protocol is not co-opted to raise barriers to entry in handling Bitcoin TX, such as when miners try to prevent off-chain TX.

Best example: massive increases to the blocksize.


With small blocks and conservative blocksize increases, Lightning is much more conducive to a decentralised network topology. And at the end of the day, as long as the blocks are small enough for any small business to have sufficient cash flow that they can run their own hub, then that's exactly what small businesses will do: be their own bank. Business people instinctively want control over their livelihoods.

Whereas the alternative is the various Bitcoin takeovers (that never seem to quit with new coup attempts, disguised as a "technology upgrade"), which all mysteriously give all the control to miners by design (did I mention that the miners always push the community to adopt their wonderful takeover plan?). Lightning could end up like that, but doesn't have to be, if the blocksize stays conservatively small.

There is no point to decentralisation if it doesn't improve our lives in some way. If its more difficult and more expensive then I don't want decentralisation.

It improves your life by denying others control over you.

Achieving that can be costly, irritating and a little clunky sometimes but it's one of those things you'll moan about until you truly need it. At that point it all makes perfect sense.

There are many wonderful centralised options ready for you right now. Give 'em a whirl.

Do you want Bitcoin, then?


Bitcoin is difficult and expensive, and decentralised (although to be fair, Lightning will make it easier and cheaper, at least in terms of transaction fees).

It seems that the increasing number of people joining the Bitcoin holders and the Bitcoin network disagree with you. But by all means, make your own choice.

Interesting read, but does a settlement layer really need to be fully distributed to remain permissionless? Isn't a strongly decentralized network enough (ie. any user with a sufficient amount of Bitcoin acting as a LN hub)? Or is there something I miss that could prevent the latter from effectively happening?

In the 2-layer model, the base letter is the settlement layer.  The problem is that if you force people not to use that base layer, it doesn't really matter what the layers on top will look like, because institutions become gatekeepers. 

It may be that things like sidechains are logistically much better than LN...but they will have all the same economic problems.

It just so happens that on top that (no pun intended), LN just can't work.

There are however designs like Drivechains where the "gatekeepers" are the same institution that secures the base layer - miners. In these designs I don't see, for example, possible censorship problems because game theory forces miners to work as expected.

In LN, that's a bit different, above all because the operation cost of a LN "hub node" is lower - and so pressure is lower on hub operators to work censorship-free.

I like the article and the argument presented, although I thought that everyone was under the impression that any sort of LN system would have to have centralized nodes in order for something like that to work. You can't have a bunch of LNs running and get them to all go through as transactions without some sort of node that connects everything together, let it be a completely centralized node or a set of centralized nodes spread out which interact with each other.

I didn't realize you wrote articles, good job m8. I'm gonna see if I can read more of them in the future.

Lol. ^ This. It's so true. People just love keeping their money on exchanges and they love their Web wallets. They're the credit cards of the bitcoin world. Easy to hack, easy to get another.

Define institutions. LN hub node operators? Also, wouldn't you still be able to use the raw Bitcoin protocol, albeit at a higher transaction cost?


Wouldn't the lower operation cost of a LN hub node also mean that it's easier to become one, meaning more hub nodes, meaning a lesser chance of censorship?

Why would main-chain settlement be more expensive, when billions of transactions are happening on the Lightning network? Moving billions of transactions onto a higher, more efficient network layer would free space on the main-chain, not congest it.

More expensive than LN transactions, under the assumption that on-chain transactions are at capacity with the fee market taking over (ie. the situation as it is right now, just on a larger scale).

I sadly have no proper model for, but think about the (mostly poor) masses will be adopted through cheap LN costs. How much % of the on chain tx will be caused by LN and limilar channels compared to now?

I d estimate more than 90% will. So you end up in huge traffic on such a hub node. Sounds not so cheap...

Bandwidth is as cheap as ever. Even if you can't run it at home you can get virtual private servers with 1TB of bandwidth for as little as USD 5,- / month at digitalocean.

Umf. So if bandwith is cheap why block the on chain scaling then?

It's surely significantly costly to operate a LN node, but the costs cannot be compared with mining farms. I have also no numbers to show, but if we compare a miner that generates 1% of the hashrate its operating cost should be be much higher than a LN node that routes 1% of the LN traffic.

Also, a misbehaving LN node that censors certain transactions would not be that significant for the network like a misbehaving miner, because LN nodes are more a kind of "external" service that doesn't deal that much with the "heart" of Bitcoin. In many cases I think a LN operator could censor transaction "under the radar" without being noticed because the few people affected would simply use other hubs - but if many LN hubs conspire, they could make it costlier for certain groups to transact efficiently via LN.

Latency. The bigger the blocks compared to the time between blocks, the bigger an issue latency becomes (ie. unless you're close to a large internet backbone your mining operation would run into the risk of orphaned blocks, leading to yet another centralization factor).

Lol every time you guys are reminded of the 1st Aug you ignite a fire and then the usual band of shills pour in with long posts to defend your ideology .
You think Bitcoin is irreplaceable right? damn wrong, you think you are immune from the outside world? damn wrong you are. people want fast transactions and with enough volume you'll see how other alts sweep in and take the crown. while you all are talking about game theories and how they are taking over the system.

Lightning Network is basically Ripple on top of Bitcoin. We don't need another IOU system. We need a peer-to-peer digital cash system.

Nope, wrong. You have no clue.


Not just anyone can open up a Ripple gateway, you need to go through all sorts of formalities and already be a financial mafia *ahem* industry institution (and so you already need to have been through all those cartel initiation ceremonies *ahem* legal/regulatory proceeding and due diligences)


Lightning node? Download the software. Finished.

You missed my point. I'm advocating the main chain for the primary transaction mechanism and using Ripple as a general analogy.

Apparently this guy read the blog and made a comment on Twitter.  I just wanna see a counter argument from jonald_fyookball and what his other thoughts are.  

https://i.imgur.com/uCIfKCb.jpg

https://medium.com/@bramcohen/in-this-analysis-nodes-arent-bothering-to-make-sure-that-they-have-any-connections-at-all-1fba7115e61d

Obviously he is missing the point, as you stated, of being decentralized means you have control over your own money, instead of the bank. That is huge. BUT, the dude has a point because most people will choose the more user friendly option, because people trust banks most of the time with their money. For bitcoin to truly take off on a global mass market scale it does need to be as user friendly, or very close to it, as current centralized options. Most people care about ease of use. If there isn't a significant negative difference in using bitcoin compared to standard options, then thats when mass use will happen because bitcoin has additional great features with the main one being you have control over your own money.

Do you have any idea how dense the bitcoin network already is? If you d really know, youd claim your post as FUD immediately by yourself...

The density of bitcoin nodes doesn't change the underlying physical infrastructure. I remember some of the alts that used extremely short block times (30-60 seconds) having massive orphan rates.

I'm not saying that Bitcoin blocks couldn't be bigger. I'm only pointing out that bandwidth and latency are two separate concerns.

3 channels per user
guaranteed routing
LOL

guess he hasnt done much of the "x degree's of separation" theory.
3degree's of separation requires 21 'hops' to cover 10billion people so that everyone can connect to everyone

now think about it 10billion people with 3 channels, thats 30billion funds onchain tx's needing to be broadcast ONCHAIN to open such channels
...
also each of those channels need to have sufficient funds to flip within the channel to fund the route
also each of those channels need to be online to sign funds. which not everyone will be online 24/7 to 'accept' the route

and ofcourse with each channel costs a 'payment fee' meaning if 1 wants to pay 10mill. he has to find the route and then make 21 payment fee's
relying on all 21 participants to remain online as they payment snowballs through the 21 channels

..

I can't see how it could ever match your friendly local bank for convenience and safety unless you use it through a centralised portal.

He indeed misses the main point and for now it's the only point that matters. If it isn't decentralised then there really isn't much point in using it at all.

It can reach a huge scale without your average person switching from Paypal because it has qualities that Paypal will never match. If people can't see that then they should not be getting involved. There are enough others who can.

It was deeply stupid for anyone to tout it as some type of fun filled alternative to your debit card that was just as free and quick. As we now see actual usage brings some strains. They need a lot of hammering out.

I wish we had data limits like that but you're dead wrong if you think that bandwidth costs that little in North America as a whole. In Canada we have, at best, half of those data caps for $100/month and they typically have mediocre dl/ul speeds at that point too. It's absolutely insane to try and maintain large blockchains in excess of 450G, at least when it is being synced for the first time. The only option for Canadians is to do something external, like hashocean at this point.

@HeRetiK

to respond to two of your points earlier:

1. The point is to stop cripping the main chain with a blocksize limit.  Any limit (unless its orders of magnitude beyond market demand)
makes fees artificially high, which creates an economic barrier to transacting on-chain.

2. I don't believe in the 'latency' argument all that much.  A miner should have a fast internet connection,
and at worst , they're going to be a few seconds behind someone else?  Not substantial when talking
about a 600 second block interval.


@tokeweed

this was my response to Bram:

https://medium.com/@jonaldfyookball/bram-are-you-sure-you-understand-the-article-51dc0365f27e

Problem with simply increasing the blocksize limit is that it's only a linear way of scaling. It won't suffice. Not saying that the current blocksize limit is ideal, but once you reach say 100MB latency may very well become a problem. And even then you're still not close to VISA level of transactions per seconds. "Just a few seconds behind someone else" can get pretty costly in what is poised to become a billion dollar industry.

Don't get me wrong, I'm all for keeping as much on-chain as possible. It's only that off-chain transaction options don't seem so harmful to me as long as they are 1) not the only way to use the protocol and 2) decentralized.


I'd still like to know what you mean by institutions.

The problem isn't off chain per se, its cripping on chain and not letting it compete fairly with off chain which is what Blockstream is doing.  Let the market decide.

What I mean by institutions:  If base blockchain becomes very expensive (and assuming that everyone just doesnt leave to use altcoins) then what bitcoin will become is
only big players (exchanges, banks, brokerages, etc) transacting with each other and users being forced to use the services that run on top of them, since no one will pay
$100+ just for a tx. 

The developers should figure out the scaling issues now. I am talking for long-term so that we don't need to go through this again when the price is, say, $50,000.

This whole thing has been about control through the veil of scaling. The desire for control will never go away and no scaling solution will ever satisfy everyone. It's never going away but let's at least try and make one upgrade to see if it's actually possible.

There's a constant tension between capacity and the worry of centralisation that'll never go away.

Agree. I mean I don't know what the best scaling solution would be. But segwit2x I'm guessing is only gonna scale bitcoin for maybe a couple of years at best I would think, if that. Then we are just gonna need another solution. If a hard fork happens it needs to be a one time thing, not every year a hard fork is needed to keep scaling bitcoin. I guess some people think Lightning Network is the ultimate scaling solution for bitcoin. I'm not sold, I just don't see it being used for more than a few percent of transactions, but I could be wrong. But its use case seems pretty niche to me. Hell, it could be that blockchain tech just isn't scalable to a mass market level (at least without needing vast super computers or vast groups of computers as the mining nodes, but then it really isn't any different than centralized solutions).

Point taken.


Thank you for elaborating! I argue that despite the monetary overhead needed also regular users would be able to act as LN hubs. You're assuming that everyone needs to have 100% of their funds to be liquid all the time. Let's not forget that there's a lot of early adopters that have more Bitcoins at their hands than they would need for their monthly expenses. Regarding the avoidance of institutional actors, wealth disparity may actually work in favour of LN.

And the big shit is that BScore wants to do this wrong order. I m happy to have such channels later when on chain scaling , the most secure thing ever, is maximized. Also miners want that first because with LN firsst they have to share fees and miners are one of the biggest users as well...

Check this video at 3:09

LN is a Mesh with 80 Hubs. always attackable. Anyone get this explained?

https://bitcointalk.org/index.php?topic=1997310.0


And yes, if you do not concentrate to on chain scaling, you allow starting that less secure crap around, weakening bitcoin network security...

Bitcoin network security can't get weakened by layers you put on top of it, unless you change the very core of the Bitcoin protocol itself.

The bit at 03:09 is assuming that Sybil attacks are viable. Possibility does not equal viability. Claiming that the Bitcoin is fully distributed doesn't mean anything if you equate non-mining full nodes with the handful of mining pools that are actually confirming transactions.

I cannot agree in full here. He also says wise words about scarcity at all. If you spend recources to one side, there is always another side suffering.

Translate

If you spend things on 2nd layer dev, on chain scaling does not get full support. Choose what you want bitcoin to be. I vote for on chain as much as possible. Its our best security.

As much as we all are for "as much decentralisation as possible", there is not going to be "true decentralisation". The evidence for and against all solutions seem to hinge around this idea: "it won't work because that's centralisation".

Fair points for sure, but yeah, even users like me will be happy to use LN for smaller payments. I'd be able to transact more often and with risks on those small amounts. I don't because there isn't a cheap and fast way.

That's not how software development works. The whole point of separate abstraction layers (or protocol layers in this case) is that you can have separate development efforts working on different parts of the problem without interference. Either way, if on-chain scaling would be as simple as changing the blocksize variable, there'd be no development effort needed for on-chain scaling in the first place.

Again, not fully right. If you take the protocol layer, tell me what might help to scale: thin protocol, few simple rules, many teams competing - or that what we have now ?

Software separate isn't the issue, but rather economics.  Proof of Work secures the base layer.   Any money for fees, etc that's not on the base layer is draining security funding from that base layer.

A thin protocol with a few simple rules is what he have now. Moving scaling details to a second layer would help keep it that way. Or are you arguing in favour of adding complexity to the base layer?



Miners still get their block rewards and transaction fees. Even in the far future when block rewards are gone they still would get at least the amount of transaction fees that they are getting now (or like 6-12 months ago before blocks started to get full).

Yes there is plenty of money for miners for now.  But I dont' see any reason we need to force second layers.

The projection is real mass business. Even a tiny share for 2nd layer central crap might cost you a bunch of bitcoin because of some lower security you cannot grasp yet. Corps and banks are way more picky on that and can afford huge risk analysis. They will all stay off bitcoin and you stay nichy. Good bye

Of course it is. That's why we need to consider other options than linear on-chain scaling.


[citation needed]


Bitcoins biggest challenges when it comes to business and banks are legal and economic. The technical aspects are miniscule.


Have a nice day :)

But why crippling the on-chain usage? No one has answered this question reasonably.

jonald_fyookball, we have seen that you have "proven" cannot provide decentralized scaling. Without any arguments made from the developers of LN around, let us assume that you are correct. Then what is your proposal on how to do it right?

Tx !

Entry point for big business is always risk / reward.  RIsks: There a lots of: Operational / Market. (Reputation, Systemic, Counterparty, Legal.../ Volatility) Hope you know this a bit.

If your riskmanagers throw the red flag on only one of these parts and you cannot fix / control / MINIMIZE*  them - bitcoin is OUT - byebye.

Either blockstream knows all that shit and want to do only a quick buck - or they kill bitcoin not knowing better.

Think bigger

*MINIMIZE risk = MAXIMIZE on-chain scaling - easy to get.

 

RECAP :

1) Jhonny (bless him..) posts his document telling us that LN won't work and that he has proven it mathematically.

2) Bram Cohen (Inventor of BitTorrent) replies :


3) Jhonny retorts :


4) Bram retorts :


5) Jhonny fires back :


....

 ::) .. as always.. please fasten your seat belt and make up your own mind.

ps.. in 5).. Jhonny is saying that the fact you have to make a single on chain txn to start using LN (and then potentially do infinite txns), negates LN. I'm not kidding.

Ouch - that (and more above) is killing LN.  I wait for first LN Fan Boy triade here wanting SW and LN work despite of this AND missing out any usual financial product disclaimer in case I might lose my bitcoin on that - nobody can tell there is 100% security on that - even bitcoin on-chain tx are not 100% secure but much closer to than  anything known yet.

the reality people need to realise is
FIAT spenders use debit cards 40 times a month on average, but because bitcoin is not acceptable in every retailer
the average spender only uses bitcoin once a week/once a year.(5 a month)  based on person-merchant

the only real niche LN has is the faucet raiders and exchange day traders that will want to arbitrage daily. (average 10 a day)

knowing people cannot predict spending habits beyond a couple weeks and wont risk locking entire hoards into year/eternity long channels. the reality is channels will only get funded with pocket money amounts and for only a couple weeks lock periods.

these things limit the available funding for route hopping to occur

---

LN is not.. and i emphasise this.. is not about the funds of [A-B] $120 actually moving out of the channel. LN is about having 'pockets' of funds that 2 parties share. and they have a couple pockets dedicated to share

think of it like a 3 legged race where the legs are tied together with a fanny/bumbag. where the money stays in the fanny/bumbag. but who owes what % of whats inside the fanny/bumbag is agreed by the 2 people tied to it.

so get 5 people and play a game
https://i.imgur.com/96dWuiZ.png

EG
[A-B]    [B-C]     [C-D]      [D-E]
imagine BCD only trust $60 for 2 weeks
A need to deposit $60 (1 channel with B of $60)
B need to deposit $120 (2 channels of $60 with A and C)
C need to deposit $120 (2 channels of $60 with B and D)
D need to deposit $120 (2 channels of $60 with C and E)
E need to deposit $60 (1 channel with D of $60)
[$60-$60][$60-$60][$60-$60][$60-$60]

now imagine if A wants to pay E $60
[$0-$120][$60-$60][$60-$60][$60-$60] then
[$0-$120][$0-$120][$60-$60][$60-$60] then
[$0-$120][$0-$120][$0-$120][$60-$60] then
[$0-$120][$0-$120][$0-$120][$0-$120] now finally after 4 hops E has $60 extra thanks to the 'routing'/hops

technically B, C, D still has $120 but its not spread over the channels
for instance B has $120
but has $120 in [A-B] but $0 in [B-C] channel

meaning if B wants to pay D.. B can no longer user the [B-C][C-D] route because B doesnt have funds to pay C to pay D.

instead B needs to go backwards through [A-B] because thats where B's funds are, so...
B needs to give A.. then A needs to find a completely new route or create a new channel that is funded and has a new route to E to get E to pay D. or B needs to set up a new channel to fun that has a new route to E.

.. it may seem complicated but its alot easier visually if you just get 5 friends and 3 fanny/bumbags and put $120 of monopoly money in each bag ($60) each person... and without physically taking the paper money out.. agreeing who owes what inside each bumbag and then finding the best chain of hops to fund the group..

and see how long the 'payments' last by making up scenarios of buying each other things.. you soon learn the limitations of LN
next time you are at a bitcoin meet-up.. try it with the other attendee's. as its a very helpful visual display

And UaSF try to force themselfe into their lightning - sounds bit esotheric and helps bitcoin homeopaticaly.

Some good hashpower from above might get them back to the mainchain soon, hush hush.

 :D

If Jonald was indeed a paid BU shill, he works hard for the money LOL  ;D

Yes good work but I do not agree with the statement, that a partially centralized external layer is dangerous.

From a practical viewpoint, if some of the LN hubs want to buttrape me (e.g. KYC documents for their services) I will stop using those.

If all of them do it, I can fall back to onchain (so coins will never become worthless) and the community will abandon LN and move on to something else. LN is not irreversible....max risk IMHO is losing the Bitcoins that are blocked in a specific channel...which is much much less than what people put in exchanges.

Correct me if I'm wrong.

Cheers
leopard2

Yo Jonald, you need to see this: :)

https://bitcointalk.org/index.php?topic=2002791.msg19941312#msg19941312

yes , I replied on her blog post.  she proves my point as her model requires 14 open channels per user and each person can only send 0.01 BTC  :P