First Bitcoin Lightning Network Transaction Tested Successfully

[AgentofCoin]

Franky, no amount of smoke-screen garbage about doing binary arithmetic is going to alter the basics that you're not grasping: divisional point. There is one. There are no new units, only finer division of the existing units.

Yes, the code deals with 64-bit unsigned integers, and yes, that may have to be changed to a variable type that can handle an amount of monetary deflation. You still can't turn division into multiplication with your magic maths, lol. This really is scraping the bottom of the barrel, a child could detect your comic propaganda, Saddam-era Iraq is missing a PR man, lol

...

now back on topic. lets hope blockstream NEVER propose to increase bitcoins unit cap.. and instead the only thing we ever have to debate is who gains most from rounding the LN coins when forming the settlement transaction to be transmitted (in satoshis) onchain

All rounding would presumably be rounded down until they reach 0.0000,0001.
If a hub's fees do not exceed  0.0000,0000,9999, it would always round down to zero.

The total accumulated micro fees will only be important at the settlement unto the bitcoin blockchain.
For example, total hub fees for the day:
(1) 0.0012,7187,4912 recorded in LN = 0.0012,7187 settled to bitcoin chain
(2) 0.0012,7187,9999 recorded in LN = 0.0012,7187 settled to bitcoin chain
(3) 0.0012,7188,0000 recorded in LN = 0.0012,7188 settled to bitcoin chain

You are implying fractional reserve banking that can be applied to the bitcoin blockchain?
That would violate the agreed 21 million coin cap limit, so all rounding must go down.

[franky1]

All rounding would presumably be rounded down until they reach 0.0000,0001.
If a hub's fees do not exceed  0.0000,0000,9999, it would always round down to zero.

The total accumulated micro fees will only be important at the settlement unto the bitcoin blockchain.
For example, total hub fees for the day:
(1) 0.0012,7187,4912 recorded in LN = 0.0012,7187 settled to bitcoin chain
(2) 0.0012,7187,9999 recorded in LN = 0.0012,7187 settled to bitcoin chain
(3) 0.0012,7188,0000 recorded in LN = 0.0012,7188 settled to bitcoin chain

You are implying fractional reserve banking that can be applied to the bitcoin blockchain?
That would violate the agreed 21 million coin cap limit, so all rounding must go down.

exactly. your getting it..
however i can see hubs not agreeing to lose out on earning by rounding down. which is (before carlton butted in) the point i was making.
that LN has many flaws and needs to address many things to fix many bugs, remove many opportunities of abuse, etc etc

i think using millisats is opening a big can of worms of possible issues, compared to just handling satoshis, to emulate bitcoin and allow signing and settling to happen more fluid

[AgentofCoin]

All rounding would presumably be rounded down until they reach 0.0000,0001.
If a hub's fees do not exceed  0.0000,0000,9999, it would always round down to zero.

The total accumulated micro fees will only be important at the settlement unto the bitcoin blockchain.
For example, total hub fees for the day:
(1) 0.0012,7187,4912 recorded in LN = 0.0012,7187 settled to bitcoin chain
(2) 0.0012,7187,9999 recorded in LN = 0.0012,7187 settled to bitcoin chain
(3) 0.0012,7188,0000 recorded in LN = 0.0012,7188 settled to bitcoin chain

You are implying fractional reserve banking that can be applied to the bitcoin blockchain?
That would violate the agreed 21 million coin cap limit, so all rounding must go down.

exactly. your getting it..
however i can see hubs not agreeing to lose out on earning by rounding down. which is (before carlton butted in) the point i was making.
that LN has many flaws and needs to address many things to fix many bugs, remove many opportunities of abuse, etc etc

i think using millisats is opening a big can of worms of possible issues, compared to just handling satoshis, to emulate bitcoin and allow signing and settling to happen more fluid

I think the LN system can be designed so that the hub operator would not be able to
determine their own rounding aspect. If the hub operator is concerned with losing out
on a whole satoshi, then at one of the last LN tx they receive prior to the "settlement"
they can jack their fee up a few millisats so that it evens out to a full satoshi. The
"LN fee rise" will still be in accordance with the previously approved hub fee boundaries,
that I outlined in a prior posting.

LN is still an experiment and in development, but I believe that we can get it to work as
envisioned if we work together and create "checks and balances" within "checks and balances".
LN allows us to protect Bitcoin from failure, by outsourcing that potential failure to a secondary layer.

[Wind_FURY]

So, do you "understand" the LN system, or are you just speculating? It can't be both, can it? Let us all know which it is before you carry on.

I said I understand it like the way franky1 does. So I speculate that what will happen could be the same, only to some extent, of how the banking system was started in Italy by the Medici clan. I was only trying to say that history is repeating itself.

And which participant in the Bitcoin network holds the majority of the free capital in Bitcoin? Don't tell me you think it's the banks?

Again you misunderstand the point I am trying to convey. I was using the bank example just to make a point. This is Bitcoin, it is a different scenario. But that does not mean that certain individuals or group of individuals will not pool their resources together to create a large payment hub or a group of large payment hubs interconnecting with each other.

It's obvious that having just one Lightning Hub would maximise processing efficiency. Guess what that would do to the fees the Hub charges?

When you bear in mind that:

• Users will always choose the cheapest routing option
• The barrier to entry for competing Hubs couldn't be any lower

I do not deny that. I have to mention again that I was merely speculating on what could happen. I mean no harm. If you must know, I am for core, for smaller blocks and support off chain transactions.

...then a monopoly Hub simply couldn't take control, because Hubs are in free market competition. Banks are not in free-market competition. Your point is invalid.

You do not know that. Individuals can group together to serve their own agenda and self interests. Just like in Bitcoin's cartelization of mining, a cartelization of payment hubs is possible.

[Carlton Banks]

again code level, units need to be multiplied(due to how binary work)
again GUI/human level, they can play around with it in any way they choose to rename the clumps of units to anything they want. thus faking division while diluting peoples holdings to expend miners rewards for a longer period.. but at coding level its still multiplication

Franky, if you really knew anything about computer science (and not waffling this "I SEE IN CODE" nonsense), you'd know that neither multiplication or division (or even subtraction) can be performed directly in binary logic.

So let's not have any more of this "due to how binary work" nonsense, eh? Because other people know how it works too.

[Carlton Banks]

...then a monopoly Hub simply couldn't take control, because Hubs are in free market competition. Banks are not in free-market competition. Your point is invalid.

You do not know that. Individuals can group together to serve their own agenda and self interests. Just like in Bitcoin's cartelization of mining, a cartelization of payment hubs is possible.

Reality knows it. If the barrier to enter the market is identically low for everyone, a monopoly is literally impossible. Mining isn't like that post-ASIC, but the only hardware needed to run a Lightning hub is going to be general purpose.

[Wind_FURY]

...then a monopoly Hub simply couldn't take control, because Hubs are in free market competition. Banks are not in free-market competition. Your point is invalid.

You do not know that. Individuals can group together to serve their own agenda and self interests. Just like in Bitcoin's cartelization of mining, a cartelization of payment hubs is possible.

Reality knows it. If the barrier to enter the market is identically low for everyone, a monopoly is literally impossible. Mining isn't like that post-ASIC, but the only hardware needed to run a Lightning hub is going to be general purpose.

Ok maybe the comparison with Bitcoin mining is a mistake. But I know you get what I am trying to say. It will not stop certain individuals or a group of individuals to form a large payment hub in the Lightning Network. It will be more efficient and channels more reliable because they could have the advantage to take in more people to open more payment channels with them.

If you think deeply about it then maybe the network would perform better if there are only a few but large payment hubs. It will make the routing of payments easier and more efficient.

[Carlton Banks]

Ok maybe the comparison with Bitcoin mining is a mistake. But I know you get what I am trying to say. It will not stop certain individuals or a group of individuals to form a large payment hub in the Lightning Network. It will be more efficient and channels more reliable because they could have the advantage to take in more people to open more payment channels with them.

If you think deeply about it then maybe the network would perform better if there are only a few but large payment hubs. It will make the routing of payments easier and more efficient.

Right. Some balance between "big & liquid" and "small & independent" will arise, and I shouldn't wonder that the LN protocol designers have had this balance in mind when working on it.



Think about it in comparison to electronic fiat processors; we have less than a dozen major payment systems, and a typical consumer will not necessarily get to choose from them all. Despite that, and despite healthy profit at the payment processors, the fees aren't extortionate.

Now, remember what it is that allowed these companies onto the marketplace in the first: heavy licensing regimes. Innovative tech? Clever new business structure? Tough luck, unless you can get a licence, you're any other bum on the street (working for the companies who you could have competed against is your only option).



With Lightning, there is no licence. That means that the natural limit to the size of the Hub market will be what dictates how many Hubs there are, not an artificial limit. In practice, that means any business owner with their own premises is going to give this a go, and the natural dynamics of the clearance system will determine how successful Hubs are distributed, not political decisions.

This could manifest itself in a much more complicated way than simply VISA, PayPal or UnionPay. Depending on the state of the Bitcoin ledger at any point in time, no Hub could consistently always be the cheapest option. The Hub would have to be routing every single other payment in the ledger in order to be able to offer the most efficient routing and in turn the cheapest price.... unless they were the only Hub.... where they would lose incentive to be cheapest anyway... it's a free-market paradox, essentially.

[rubiprojects]

Developers at Blockstream has successfully conducted tests on the Lightning Network using Bitcoin testnet coins.

In the test, the developers used an ASCII cat picture as a demo product. The developer below can be seen manipulating a combination of bitcoind and lightningd, the Bitcoin daemon and Lightning daemon respectively, to instantly purchase a cat picture that developer Rusty Russell has up for sale. Some of the information in the video may be hard to understand, so we’ll do our best here to make it simpler.

http://bitcoinagile.com/8A1D4B/first-bitcoin-lightning-network-transaction-tested-successfully_stream

It is very exciting, you know the biggest downside of bitcoin is slow transactions, now they will improve it to instant payment network, bright future is there.

[Wind_FURY]

....

This could manifest itself in a much more complicated way than simply VISA, PayPal or UnionPay. Depending on the state of the Bitcoin ledger at any point in time, no Hub could consistently always be the cheapest option. The Hub would have to be routing every single other payment in the ledger in order to be able to offer the most efficient routing and in turn the cheapest price.... unless they were the only Hub.... where they would lose incentive to be cheapest anyway... it's a free-market paradox, essentially.

I have another concern about the Lightning Network. In the beginning there might only be a small portion of of Bitcoin users that will start using it. Will this not cause a problem in the fungibility of BTC? There might be a scenario where the price of Bitcoins outside LN will be higher than the coins "trapped" or "hindered" in LN. So it might create another market for LN Bitcoins versus "real" Bitcoins. What do you think?

[franky1]

I have another concern about the Lightning Network. In the beginning there might only be a small portion of of Bitcoin users that will start using it. Will this not cause a problem in the fungibility of BTC? There might be a scenario where the price of Bitcoins outside LN will be higher than the coins "trapped" or "hindered" in LN. So it might create another market for LN Bitcoins versus "real" Bitcoins. What do you think?

quite possible
people can use LN as a peer-to-peer method of doing exchanges. afterall instead of buying coffee with it. it can be anything EG a different currency.

which then starts a different price market.

much like localbitcoin's valuations are more open to variance compared to centralised exchanges
much like bitcoin-OTC's valuations are more open to variance compared to centralised exchanges

ofcourse speculation cannot guarantee if exchanges done on LN will end up with higher or lower valuations compared to centralised exchanges, but we can expect there to be a variance