Jihan blocks segwit on LTC: price crashes

[jonald_fyookball]

5. LTC has been exchanged for BTC and has arrived at destination, no confirmation required, no trust involved, no escrow.

How is that possible. One can not send 1 LTC and expect it to become 1 BTC. They have different values.

This is also what I wondered !  Of course, the transaction can contain an exchange rate which is previously agreed-upon with the counterparty.  But the danger with this trick is of course, that the counter party can take your exchange in hostage the duration of the settling period, and decide to accept it, or to "settle on the chain" depending on the evolution of the exchange rate later.

If you read anonymoustroll420 post, "4. Hope the exchange doesn't steal your money" - is the same as counterparty. anonymoustroll420 doesn't explain how the exchange of LTC value to BTC value works in LN, i can't see how it works either. anonymoustroll420 said LTC to BTC as in "one for one exchange." A code can not possibly calculate an exchange rate without 3rd party input via API, for example. It would require advance Artificial Intelligence that i don't know about.

The exchange rate would be agreed on by the two parties directly.    Even on a centralized exchange, you get to choose what price you want.

[anonymoustroll420]

How is that possible. One can not send 1 LTC and expect it to become 1 BTC. They have different values.

A person (anyone) offers to sell LTC for BTC (or BTC for LTC), and they are matched with a buyer via LN.

Article here:
https://bitcoinmagazine.com/articles/atomic-swaps-how-the-lightning-network-extends-to-altcoins-1484157052/

[The One]

How is that possible. One can not send 1 LTC and expect it to become 1 BTC. They have different values.

A person (anyone) offers to sell LTC for BTC (or BTC for LTC), and they are matched with a buyer via LN.

Article here:
https://bitcoinmagazine.com/articles/atomic-swaps-how-the-lightning-network-extends-to-altcoins-1484157052/

I see. The above semantics is different from - "5. LTC has been exchanged for BTC and has arrived at destination, no confirmation required, no trust involved, no escrow."

Wouldn't this reduce the market share of the current Exchanges business model? If people use LN to exchange BTC with altcoins then are the Exchanges supporting LN or not?

[jonald_fyookball]

Wouldn't this reduce the market share of the current Exchanges business model?

yes it would but probably will be years before it happens

[anonymoustroll420]

How is that possible. One can not send 1 LTC and expect it to become 1 BTC. They have different values.

A person (anyone) offers to sell LTC for BTC (or BTC for LTC), and they are matched with a buyer via LN.

Article here:
https://bitcoinmagazine.com/articles/atomic-swaps-how-the-lightning-network-extends-to-altcoins-1484157052/

I see. The above semantics is different from - "5. LTC has been exchanged for BTC and has arrived at destination, no confirmation required, no trust involved, no escrow."

Wouldn't this reduce the market share of the current Exchanges business model? If people use LN to exchange BTC with altcoins then are the Exchanges supporting LN or not?

Centralized cryptocurrency-to-cryptocurrency exchanges would be made obsolete. There would be little advantage to using a centralized exchange. Thats just better technology for you, improvements in technology make certain business models obsolete. There were lots of jobs for horses until the car came along.

They could change their business model and become LN hubs that support both BTC and LTC and thus be nodes that take orders for exchanging coins and charge tx fees, but their profit margins would probably be a lot lower. They could also become fiat <> cryptocurrency exchanges too.

It's not really any different than I described. The coins are trustlessly "swapped", so there is no trust or escrow, and the exchange happens almost instantly. All the user has to do is type in a BTC address into their LTC wallet and the LN will work out the details of which coins to swap with who to get the best deal etc and then pay those coins to the receipient. A clever UI will make this a very seemless process.

[The One]

How is that possible. One can not send 1 LTC and expect it to become 1 BTC. They have different values.

A person (anyone) offers to sell LTC for BTC (or BTC for LTC), and they are matched with a buyer via LN.

Article here:
https://bitcoinmagazine.com/articles/atomic-swaps-how-the-lightning-network-extends-to-altcoins-1484157052/

I see. The above semantics is different from - "5. LTC has been exchanged for BTC and has arrived at destination, no confirmation required, no trust involved, no escrow."

Wouldn't this reduce the market share of the current Exchanges business model? If people use LN to exchange BTC with altcoins then are the Exchanges supporting LN or not?

Centralized cryptocurrency-to-cryptocurrency exchanges would be made obsolete. There would be little advantage to using a centralized exchange. Thats just better technology for you, improvements in technology make certain business models obsolete. There were lots of jobs for horses until the car came along.

They could change their business model and become LN hubs that support both BTC and LTC and thus be nodes that take orders for exchanging coins and charge tx fees, but their profit margins would probably be a lot lower. They could also become fiat <> cryptocurrency exchanges too.

It's not really any different than I described. The coins are trustlessly "swapped", so there is no trust or escrow, and the exchange happens almost instantly. All the user has to do is type in a BTC address into their LTC wallet and the LN will work out the details of which coins to swap with who to get the best deal etc and then pay those coins to the receipient. A clever UI will make this a very seemless process.

There are still lots of jobs horse related.

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?

The whole idea to take txs fees away from the main chain would pose a risk when the rewards goes low in 20 years time. Txs fees are suppose to cover the miners' costs in the future. If there is lack of fees then who will secure Bitcoin blockchain that the value depends on.

[jonald_fyookball]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

[The One]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

[jonald_fyookball]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

Exactly.  You can't do off chain by doing it on chain. 

[The One]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

Exactly.  You can't do off chain by doing it on chain. 

Not sure what you mean or you misunderstood what i meant.

[jonald_fyookball]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

Exactly.  You can't do off chain by doing it on chain. 

Not sure what you mean or you misunderstood what i meant.

Maybe I didn't... please elaborate.

[The One]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

Exactly.  You can't do off chain by doing it on chain. 

Not sure what you mean or you misunderstood what i meant.

Maybe I didn't... please elaborate.

Bi-directional payments can be done using Full Node and no need for LN hubs. The principles of LN can be applied to Bitcoin and therefore tx fees would go to miners and Full Noders. Thus securing the network in the future when POW reward/subsidy goes down.

[jonald_fyookball]

Bi-directional payments can be done using Full Node and no need for LN hubs. The principles of LN can be applied to Bitcoin and therefore tx fees would go to miners and Full Noders. Thus securing the network in the future when POW reward/subsidy goes down.

You seem to not really understand how LN works.   You can't simply say "use a regular bitcoin node instead of an LN hub" because they perform different functions. 


A non-mining node relays transactions, can verify if miners are doing their job (iow validate blocks), and can give information to SPV clients.  It doesn't provide any network security in the sense that miners do (compete with hashpower to extend and secure the ledger).

A LN hub is an entity that opens many offchain bi-directional payment channels with a large number of different users.  The LN hub does not require any additional security (perhaps that is where your misunderstanding comes from).  Its usefulness comes from the fact that many people are connected to it.  The hub may ask for a fee (or not) for its service but the transactions still need to be eventually settled to the blockchain, which is where the real security takes place.

[The One]

Bi-directional payments can be done using Full Node and no need for LN hubs. The principles of LN can be applied to Bitcoin and therefore tx fees would go to miners and Full Noders. Thus securing the network in the future when POW reward/subsidy goes down.

You seem to not really understand how LN works.   You can't simply say "use a regular bitcoin node instead of an LN hub" because they perform different functions. 


A non-mining node relays transactions, can verify if miners are doing their job (iow validate blocks), and can give information to SPV clients.  It doesn't provide any network security in the sense that miners do (compete with hashpower to extend and secure the ledger).

A LN hub is an entity that opens many offchain bi-directional payment channels with a large number of different users.  The LN hub does not require any additional security (perhaps that is where your misunderstanding comes from).  Its usefulness comes from the fact that many people are connected to it.  The hub may ask for a fee (or not) for its service but the transactions still need to be eventually settled to the blockchain, which is where the real security takes place.

I know that.

A LN hub works using a software. My computer is capable of running more than one software at a time you know. Thus replace hub with full noder. I.e i run both Bitcoin wallet and LN software.

[Quickseller]

So i will ask this question again as i've never had a satisfactory answer. Why LN with hubs and not LN using Bitcoin Full Nodes (non miners)?
 

There's no reason a person running a non-mining bitcoin node couldn't also run a LN hub... but the two things are different because they operate on
different levels.  

LN hub, outside Bitcoin as in off-chain.
Full Node, inside and part of Bitcoin already.

A LN hub/node will need to have access to a trustworthy Bitcoin full node because it will need to monitor for closing transactions that are not the most recent transaction.

Wouldn't this reduce the market share of the current Exchanges business model? If people use LN to exchange BTC with altcoins then are the Exchanges supporting LN or not?

Probably not. A centralized exchange will do a better job of price discovery because their order books would logically be more liquid. With a pair of BTC/LTC LN hubs, there would be a more limited amount of BTC/LTC the hub could exchange. I also suspect that those that employ BTC/LTC LN hubs in order to exchange BTC for LTC (and vice versa) will start out with a fixed amount of each of LTC and BTC, and will exchange BTC for LTC on an exchange whenever someone wants to use their hub to buy LTC with BTC, and would charge a spread over the price on the exchange. 

[jonald_fyookball]

Bi-directional payments can be done using Full Node and no need for LN hubs. The principles of LN can be applied to Bitcoin and therefore tx fees would go to miners and Full Noders. Thus securing the network in the future when POW reward/subsidy goes down.

You seem to not really understand how LN works.   You can't simply say "use a regular bitcoin node instead of an LN hub" because they perform different functions. 


A non-mining node relays transactions, can verify if miners are doing their job (iow validate blocks), and can give information to SPV clients.  It doesn't provide any network security in the sense that miners do (compete with hashpower to extend and secure the ledger).

A LN hub is an entity that opens many offchain bi-directional payment channels with a large number of different users.  The LN hub does not require any additional security (perhaps that is where your misunderstanding comes from).  Its usefulness comes from the fact that many people are connected to it.  The hub may ask for a fee (or not) for its service but the transactions still need to be eventually settled to the blockchain, which is where the real security takes place.

I know that.

A LN hub works using a software. My computer is capable of running more than one software at a time you know. Thus replace hub with full noder. I.e i run both Bitcoin wallet and LN software.

Ok I get what you are saying now.

Yes, that would be the ultimate goal is to have ordinary users just be hubs.

The problem is routing... i've thought a little bit about this but haven't really seen anyone write about how to do in a really decentralized mesh-network type way.  In order to route your payment to someone without centralized hubs, every node would have to be connected to at least 2 other 'unrelated' nodes and have a channel with them, then there would have to be a routing mechanism, and you still run into the issue that the channels need to be open all the time and be of sufficient 'width'.  Probably it would be possible to do but unwieldy.  I could imagine a future where such networks are possible but a hassle to use and most people just defer to the big companies that run the massive hubs.

[The One]

Bi-directional payments can be done using Full Node and no need for LN hubs. The principles of LN can be applied to Bitcoin and therefore tx fees would go to miners and Full Noders. Thus securing the network in the future when POW reward/subsidy goes down.

You seem to not really understand how LN works.   You can't simply say "use a regular bitcoin node instead of an LN hub" because they perform different functions.  


A non-mining node relays transactions, can verify if miners are doing their job (iow validate blocks), and can give information to SPV clients.  It doesn't provide any network security in the sense that miners do (compete with hashpower to extend and secure the ledger).

A LN hub is an entity that opens many offchain bi-directional payment channels with a large number of different users.  The LN hub does not require any additional security (perhaps that is where your misunderstanding comes from).  Its usefulness comes from the fact that many people are connected to it.  The hub may ask for a fee (or not) for its service but the transactions still need to be eventually settled to the blockchain, which is where the real security takes place.

I know that.

A LN hub works using a software. My computer is capable of running more than one software at a time you know. Thus replace hub with full noder. I.e i run both Bitcoin wallet and LN software.

Ok I get what you are saying now.

Yes, that would be the ultimate goal is to have ordinary users just be hubs.

The problem is routing... i've thought a little bit about this but haven't really seen anyone write about how to do in a really decentralized mesh-network type way.  In order to route your payment to someone without centralized hubs, every node would have to be connected to at least 2 other 'unrelated' nodes and have a channel with them, then there would have to be a routing mechanism, and you still run into the issue that the channels need to be open all the time and be of sufficient 'width'.  Probably it would be possible to do but unwieldy.  I could imagine a future where such networks are possible but a hassle to use and most people just defer to the big companies that run the massive hubs.

The aim of scaling should be decentralised, if there is a way. My thinking is that there should be a minimum fee per tx of say 1000 sats or lower that goes to the full noder and the usual tx fee that goes to the miner. (more on that later)

In LN, as i understand it, so correct me if i am wrong. A wants to send a 1BTC to B - both send fund (2BTC) to Funding tx (1 tx on blockchain). A send 1BTC to B, B now has 2BTC. Both broadcast to blockchain, total 2 txs. If A send 1BTC to B using bitcoin wallet - only 1 tx on the blockchain. Therefore LN only works when it comes to 3 or more txs.

[jonald_fyookball]

In LN, as i understand it, so correct me if i am wrong. A wants to send a 1BTC to B - both send fund (2BTC) to Funding tx (1 tx on blockchain). A send 1BTC to B, B now has 2BTC. Both broadcast to blockchain, total 2 txs. If A send 1BTC to B using bitcoin wallet - only 1 tx on the blockchain. Therefore LN only works when it comes to 3 or more txs.

If I understand you correctly then yes you are right, you need transactions to open and close the channel, which is dumb if you only want to do 1 tx.  That's why a p2p implementation of LN doesnt make a whole lot of sense because almost everyone has to have 2 channels open with everyone else all the time...and you still have to open and close those channels as well if you want to settle...so it makes a lot more sense with centralized hubs...

why not just go for on chain scaling? 

[The One]

In LN, as i understand it, so correct me if i am wrong. A wants to send a 1BTC to B - both send fund (2BTC) to Funding tx (1 tx on blockchain). A send 1BTC to B, B now has 2BTC. Both broadcast to blockchain, total 2 txs. If A send 1BTC to B using bitcoin wallet - only 1 tx on the blockchain. Therefore LN only works when it comes to 3 or more txs.

If I understand you correctly then yes you are right, you need transactions to open and close the channel, which is dumb if you only want to do 1 tx.  That's why a p2p implementation of LN doesnt make a whole lot of sense because almost everyone has to have 2 channels open with everyone else all the time...and you still have to open and close those channels as well if you want to settle...so it makes a lot more sense with centralized hubs...

why not just go for on chain scaling? 

That what i am trying to figure out. When A send btc to B, it is broadcasted to all nodes. The full node/miner node validate the unconfirmed tx. What else exactly does the full node do? Check for double spent?

[jonald_fyookball]

pretty much.