The Lightning Network for Beginners..

[spartacusrex]

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.. 

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 ?

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[CIYAM]

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.

[spartacusrex]

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 )

[CIYAM]

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.

[TookDk]

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?

[spartacusrex]

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.. )

[spartacusrex]

I assume that LN require to host (or room) to be trusted?

I am 'pretty' sure this is trustless..

[CIYAM]

Is there any other applications expect for gambling?

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

[CIYAM]

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 ?

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

(i.e. ad-sig campaign payments)

[Lauda]

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

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

[spartacusrex]

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 ?

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

(i.e. ad-sig campaign payments)

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. 

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

I wait.

[CIYAM]

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 ?

That is my basic understanding of how it will work.

[pedrog]

Is it proprietary? Patented?

How does it make money?

[CIYAM]

Is it proprietary? Patented?

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

How does it make money?

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

[spartacusrex]

Is it proprietary? Patented?

How does it make money?

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.

[turvarya]

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.

[CIYAM]

From what I understand, it works like this:

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

[spartacusrex]

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.

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'..  ) 

[turvarya]

Is it proprietary? Patented?

How does it make money?

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.

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?

[spartacusrex]

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

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 ?