Will LN Hubs require a Banking License / Banking Cartels will take over Crypto

[kiklo]

Charlie Lee has tricked the LTC miners into agreeing to activate segwit for LTC,

Charlie Lee is promising Larger Blocksizes when LTC blocks are half full, the Miners are hoping he keeps his word.
IE: In the below pic , Charlie Lee plays Lucy, and the LTC miners play the bald kid.  



Now the BTC Core Shills will try and use this to force the BTC community into accepting segwit.
We will see how that plays out.

LN Hubs will take deposits, (Lock your Funds up Onchain) ,
and then make payments using their offchain representations of your real funds.

Sounds an awful lot like a bank. In fact they will charge fees and penalties, sounds even more like a bank now.  

Here is the issue Boys & Girls,
You can't just open a bank up because you feel like it in most countries.
https://en.wikipedia.org/wiki/Banking_license

Most state legislatures in the United States ban general corporations from accepting banker's deposits, which ban tends to cover any service whereby a general corporation acts as a funds drawee which transfers current funds (i.e. credit payable upon demand) to make payments as a substitute for coins on behalf of an account holder.

Licenses are typically issued by a national banking regulator to applicant corporations that meet its banking requirements. The requirements may include minimum capital requirements, minimum number of directors, residence of shareholders, spread of shareholdings, disclosure of beneficial shareholders, besides other matters. These requirements may differ between jurisdictions, and may differ depending on the type of license being sought. Some jurisdictions, sometimes called tax havens, have a reputation for lax or corrupt standards in bank licensing, granting a license, for example, to shell companies, or to companies with nominee directors, or with dummy shareholders, etc.[citation needed]

The granting of the license may involve a long, complex and expensive procedure, which may depend on the type of bank license being sought. There are a number of sectors in which banks may be involved. The general bank license allows a bank to engage in all banking activities, such as retail banking, merchant acquiring, cash management, asset management and trading. An applicant can apply for a limited banking license, such as an offshore banking license.

Once the LN Hubs are in place, the Banking Cartels will have their Politicians pass a Law stating LN Hubs are acting as a Bank by taking deposits and making payments.
This will require all LN Hubs to get a Bank License, if they wish to continue, which most will not have the resources to and it is a lengthily process either way for those that do have the resources.

During this Time the Banking Cartels will buy up the existing LN hubs or start their own, and why not they already have a bank license.
In a Nutshell,
this is how they will completely take over crypto from all segwit activated coins and make sure financial slavery continues for your children's children and beyond.  
Satoshi's dream will be officially dead.  

 

[Zogrambo]

Hello,

I'm a new poster here but I've been lurking on this forum for a long time before making an account.  I try to understand this lightning network thing somewhat better, you seem to be knowledgeable about it.  I also had the impression that it looked like banking, but then I don't really know.

Tell me if I understand it correctly.  The LN is supposed to handle much more transactions than can be put on the blockchain.  So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?  Is there a transaction on-chain to set up the link ?  Is there one to settle ?  Who is going to pay the fee ?  Who gets the LN fees and how do I determine them ?  Can I put my conditions for using the channel ?

I think I more or less understood what a LN channel is (details lacking) but I am missing details.  How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

How is LN practically supposed to work ?

[Kakmakr]

BTC Core shills will force people to use SegWit? Tell me, how do those people force other people to do anything? The
only people I see that are forcing others to do something is the BU miners with their hash power. This is a bunch of crap, and you know it.

If anything like this happens, people will just resort back to a Alt coin where SegWit or the LN is not applied. The network will quickly adapt to the new coin and the old Bitcoin will be dead.

Miners will stop mining it and move over to the new Alt coin.

[d5000]

So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?

Most probably the GUI client will hide all that hassle. The way it would work (as far as I know) is that you would do the first transaction just as if it was on-chain, but the client would search a "route" across nodes that support LN if the receiver also uses LN - so the "opening" of the channel would be totally automated.

That is the "decentralized" LN model, that some think may work but others think a "centralized" model with a few hubs is more realistic. We'll see.

Is there a transaction on-chain to set up the link ?  Is there one to settle ?

Yes and Yes - but the second one is not mandatory, in theory you can use a LN channel as long as you want, you only have to close it if your counterparty is trying to scam you.

  Who is going to pay the fee ?

I guess it's the sender, like with on-chain transactions. But I can imagine that some online wallet providers could "sponsor" the fee if they also act as LN hubs and are for-profit businesses.

Who gets the LN fees and how do I determine them ?

All the nodes you use to "route" to the receiver of your transactions can require a fee.

Can I put my conditions for using the channel ?

I think yes, but your conditions (e.g. a maximum fee) must match the conditions of the node to whom you're opening a channel and all nodes you want to route through.

How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

I think that is one of the reasons why most people probably will tend to open channels to known "hubs" because they think they won't disappear that fast. But let's wait and see.

[kiklo]

Hello,

I'm a new poster here but I've been lurking on this forum for a long time before making an account.  I try to understand this lightning network thing somewhat better, you seem to be knowledgeable about it.  I also had the impression that it looked like banking, but then I don't really know.

Tell me if I understand it correctly.  The LN is supposed to handle much more transactions than can be put on the blockchain.  So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?  Is there a transaction on-chain to set up the link ?  Is there one to settle ?  Who is going to pay the fee ?  Who gets the LN fees and how do I determine them ?  Can I put my conditions for using the channel ?

I think I more or less understood what a LN channel is (details lacking) but I am missing details.  How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

How is LN practically supposed to work ?

https://lightning.network/lightning-network-summary.pdf

Instant Payments.
Bitcoin aggregates transactions into blocks spaced ten minutes apart. Payments are widely
regarded as secure on bitcoin after confirmation of six blocks, or about one hour.
On the Lightning Network, payments don't need block confirmations, and are instant and atomic. Lightning can be used at retail point-of-sale terminals, with
user device-to-device transactions, or anywhere instant payments are needed

BTC transaction capacity is limited by the blockchain itself.
Size of the Block currently 1MB,
Speed at which new Blocks are found ~10 minutes apart
This limits the total # of transactions per second onchain to in theory 7 Transactions per second, but current speeds average is ~4 transactions per second.

LN is not using blocks to verify transactions, they have a separate offchain systems, that does nothing more than update an internal General Ledger.
Unlike BTC Onchain Transactions there is no true verification. Only General Ledger updates, by doing this they bypass verification in favor of speed.
LN claims BTC Onchain Security is what secures your funds, that is incorrect , what is securing your funds are the Time Locks they have placed on the BTC onchain , and that is why they need segwit, without segwit , they can't time lock the BTC onchain in an trustless manner, which is required for LN to Function the way they want.
Now when you are finished using LN, and you want to cash out to BTC Onchain, that is the same as going to the bank and drawing your money out in Gold or Silver.
That is when you verified that the BTC funds , that LN said was Locked and now belong to you, well that is when you know for certain it was really there.

Video on Using LN.
https://youtu.be/8zVzw912wPo

LN is not being actively used yet, so some of your questions won't be answered, until LN & segwit is fully activated,
because they may change stuff before the final release. Time will tell.




FYI:
The Final Goal of LN is only the rich will be able to afford Onchain Transactions, leaving the poor and middle class with a LN that acts as a fractional reserve system.  

[kiklo]

BTC Core shills will force people to use SegWit? Tell me, how do those people force other people to do anything? The
only people I see that are forcing others to do something is the BU miners with their hash power. This is a bunch of crap, and you know it.

If anything like this happens, people will just resort back to a Alt coin where SegWit or the LN is not applied. The network will quickly adapt to the new coin and the old Bitcoin will be dead.

Miners will stop mining it and move over to the new Alt coin.

You are a Naive Soul are'nt you?  

LTC does not need segwit, it is all a propaganda technique to trick BTC community into activating it.

http://web.stanford.edu/class/e297c/war_peace/media/hpropaganda.html

Attitudes, Belief's and Behaviors

The previous picture and poem is a clear example of propaganda which is a form of persuasion used to influence people's attitudes, beliefs, and behaviors. A working definition of propaganda is the spreading of ideas, information, or rumor for the purpose of helping or injuring an institution, a cause, or a person. While propaganda has been around for almost a thousand years, only recently (last 100 years) with the advent of technologies that allow us to spread information to a mass group has it evolved to a scientific process capable of influencing a whole nation of people. While propaganda is most evident in times of war as in the poster, it is constantly being used as a political and social means in even less obvious ways to influence peoples attitudes. This is currently evident with all the election commercials on TV, where the candidates are using propaganda techniques to elevate themselves above their competitor. Another place propaganda is being exploited is by the use of the media in its portrayal of countries that have nuclear technology.

Modern propaganda uses all the media available to spread its message, including: press, radio, television, film, computers, fax machines, posters, meetings, door-to-door canvassing, handbills, buttons, billboards, speeches, flags, street names, monuments, coins, stamps, books, plays, comic strips, poetry, music, sporting events, cultural events, company reports, libraries, and awards and prizes. It is most likely that some of these media uses are surprising, but that only serves to show how easy it is to not even recognize propaganda as such. For the purpose of our paper we will focus on mainly the usage of the press in their tactics of shaping people's opinions. The press (newspapers and magazines) is important because the most current news and issues are spread every day through them. The Dune affect is a term we coined--after the movie Dune--which explains that those who control and have access to media have access to and potential control of public opinion.

Indeed, propaganda is so powerful because everyone is susceptible to it. This is true as explained by Robert Cialdini, an expert in influence, because people exist in a rapidly moving and complex world. In order to deal with it, we need shortcuts. We cannot be expected to recognize and analyze all the aspects in each person, event, and situation we encounter in even one day. We do not have the time, energy, or capacity to process the information; and instead we must very often use our stereotypes, our rules of thumb, to classify things according to a few key features and then to respond without thinking when one or another of these trigger feature are present (Cialdini 6). While this makes people highly susceptible to a propagandist who understands persuasion, in general it is the most efficient for of behaving, and in other cases it is simply necessary. Additionally, propaganda includes the reinforcement of societal myths and stereotypes that are so deeply embedded within a culture that it is often difficult to recognize the message as propaganda.

For example I just used a persuasive technique that propagandist use all the time by introducing Cialdini as an expert. The heuristic this follows is the obedience to authority and is a rule that when someone credible and in this case by title of an expert, a person will automatically believe the information to be correct. "Titles are simultaneously the most difficult and the easiest symbols of authority to acquire. To earn a title normally takes years of work and achievement. Yet, it is possible for somebody who has put in none of this effort to adopt the mere label and receive an automatic difference" Cialdini 181). After all, what really makes Cialdini an expert?

Why is Propaganda such a powerful instrument , because the 99% care what others think about them, it is all part of the herd mentality,
they seek agreement and acceptance from the herd, threaten their standing in the herd and they will do almost anything to still be accepted even against their better judgement, in fact they shut down their cognitive abilities and rely on the herd's leader who interests may not match theirs whatsoever, but will grant the leader authority over them in their own mind. Kind of pathetic actually , but it is how the majority of humans have acted for centuries.
You always have the 1% that can think for themselves and not be swayed by propaganda techniques , but their low numbers prevent them from overpowering the 99% , unless that 1% is extremely charismatic , which is not usually a trait they have.

Watch the BTC Core Shrills in the coming months, they are going to be sprouting how BTC community is now missing out , and how LTC will overtake BTC, if segwit is not implemented immediately , how that is the bigest failure in BTC history letting LTC activate 1st. The Forums are going to explode with Core Shrills making up everything under the sun , and all they have to do for the final step, is wait for a sell off of a $100 or so , and then blame it all on not activating segwit.
Most will fall in line behind them now screaming for segwit and LN, like the little children they are.
LOL, Don't take my word for it, just sit back and enjoy the show, it's coming.


 

FYI:  It is already starting:
Observe the new topics, it is only the start.
SegWit on Litecoin, make it be used in more mainstream platforms than Bitcoin? 
The impossible has been reached: LTC has 100% SW support! Can BTC ever do it?

[Zogrambo]

So that means that LN connections must be handling a lot of transactions before settling.  But how does that go really ?  Suppose I want to participate in the LN network, what do I have to do ?  I find dudes on the internet (contacted here on the forum or what ?) and I agree to put BTC in a link with them ?

Most probably the GUI client will hide all that hassle. The way it would work (as far as I know) is that you would do the first transaction just as if it was on-chain, but the client would search a "route" across nodes that support LN if the receiver also uses LN - so the "opening" of the channel would be totally automated.

That is the "decentralized" LN model, that some think may work but others think a "centralized" model with a few hubs is more realistic. We'll see.

This is exactly what I'm wondering, but that will depend on how exactly things are done, so I'm trying to understand how it is supposed to work.  So suppose I own 2 BTC, and I want to pay someone 0.5 BTC.  Like now, I put in his address, and I take the option "try to do it with LN" or I don't know how it will present itself.  So what happens ?  

In a kademlia-like way my client goes looking whether my payee has an open channel on the LN, and looks at a possible routing through the network from the list of peers available ?  So I then propose to open a channel to whatever node happens to be chosen by that algorithm, with the hope of keeping it open long enough to have many transactions through it, locking in automatically my 2 BTC and hoping that this unknown partner on the network will keep open this link and his node active ?  

I'm somewhat sceptical about this being able to work, because it seems to me that this will lead to a lot of savage settlements.  I'm often running openbazaar, and other nodes are often down, people send me messages, and when I want to look at their site, it is not often reachable.  My node sometimes crashes.  With openbazaar, this is just a nuisance, but with such random channel opening, when the other node is "gone", I have no other option but to settle and this will cost a lot of on-chain fees, no ?  

I would think that a channel partner has to be chosen carefully with trust and reputation to avoid settling and the big fee that goes with it, and it is not something that can be done automatically with a routing algorithm.  That said, my understanding of this thing is incomplete and maybe this problem has been studied and solved, but I'd like to understand more of it.

Is there a transaction on-chain to set up the link ?  Is there one to settle ?

Yes and Yes - but the second one is not mandatory, in theory you can use a LN channel as long as you want, you only have to close it if your counterparty is trying to scam you.

Well, as I understood, until your counterparty decides to settle himself, or "disappears" (node down).  But for an LN channel to be beneficial and not at loss, it has to treat as many transactions as the ratio between LN fee won, and the cost of settling, so this is what I'm worried about: savage settling, or being obliged to settle to get the funds back if the other side is gone.

 Who is going to pay the fee ?

I guess it's the sender, like with on-chain transactions. But I can imagine that some online wallet providers could "sponsor" the fee if they also act as LN hubs and are for-profit businesses.

[/quote]

But that sounds a lot like a bank account.

Can I put my conditions for using the channel ?

I think yes, but your conditions (e.g. a maximum fee) must match the conditions of the node to whom you're opening a channel and all nodes you want to route through.

Mm, could I require, for instance, to get an e-mail with personal information (KYC/AML), or with the purpose of the transaction, and decide upon that information whether I accept to transmit it or not ?
(I'm trying to find out how much power the nodes can have over the transactions)

How can I know that my link is going to be used sufficiently to cover the expensive on chain fee for setting up/settling ?  How can I know that the other dude isn't going to cut the link and oblige me to settle with a loss ?

I think that is one of the reasons why most people probably will tend to open channels to known "hubs" because they think they won't disappear that fast. But let's wait and see.

Well, that's what I'm trying to understand: whether this is just a smarter way of transmitting transactions, or whether this sounds awfully lot like banking.   It is not clear to me, and I know too little about it.

[unamis76]

LN isn't a bank per se, thus won't be eligible for a license... Wouldn't laws regarding banks have to change in order to be able to give licenses to dedicated LN hubs? From the government point of view, a LN hub wouldn't operate with money, so it wouldn't be possible to give a license, or am I wrong?

[jonald_fyookball]

The fact that we're even having this discussion should tell people something VERY critical:

LN is centralizing by nature if you try to implement it as a primary scaling solution.  It is not the p2p scaling solution it is sometimes advertised as.  LN will not solve all the scaling problems.  We still need massive on chain scaling. 
 

[Paashaas]

The fact that we're even having this discussion should tell people something VERY critical:

LN is centralizing by nature if you try to implement it as a primary scaling solution.  It is not the p2p scaling solution it is sometimes advertised as.  LN will not solve all the scaling problems.  We still need massive on chain scaling. 

LN is not the only project out there, Mimblewimble, Rootstock, TubmleBit all with there own specialization. More to come guaranteed. Mainstream adoption is not possible with only bigger blocks without losing security for a very long time. You can always use Bitcoin like we all do today if you dont like all of those cool payment options. The more options people have the better.

[d5000]

So suppose I own 2 BTC, and I want to pay someone 0.5 BTC.  Like now, I put in his address, and I take the option "try to do it with LN" or I don't know how it will present itself.  So what happens ?  

In a kademlia-like way my client goes looking whether my payee has an open channel on the LN, and looks at a possible routing through the network from the list of peers available ?  So I then propose to open a channel to whatever node happens to be chosen by that algorithm, with the hope of keeping it open long enough to have many transactions through it, locking in automatically my 2 BTC and hoping that this unknown partner on the network will keep open this link and his node active ?

I'm somewhat sceptical about this being able to work, because it seems to me that this will lead to a lot of savage settlements.

Yes, that is, in my understanding, like it's supposed to work.

(There was more text here, but after a re-read of the LN proposal I realized I wrote bullshit. Your concerns are valid.)

 Who is going to pay the fee ?

I guess it's the sender, like with on-chain transactions. But I can imagine that some online wallet providers could "sponsor" the fee if they also act as LN hubs and are for-profit businesses.

But that sounds a lot like a bank account.

Yes, but IOU-based online wallets like Coinbase de facto are banks even today. They will continue to work the same way with LN. But also in the case of hybrid online wallets like Blockchain.info, they can choose to sponsor the commit transaction fee to get you to use their node as hub. That would be already a bit different from banking, I would call it "semi-centralized", because they in no situation can run away with your money if you have a copy of all your private keys.

Mm, could I require, for instance, to get an e-mail with personal information (KYC/AML), or with the purpose of the transaction, and decide upon that information whether I accept to transmit it or not ?
(I'm trying to find out how much power the nodes can have over the transactions)

As far as I understand, as a node you could do that, but it's very possible that you'll have a hard time against the competition. What is possible is that if e.g. government actors use LN, they could be forced to use such a "trusted" LN node, but for the general public it should be impossible to force that.

Well, that's what I'm trying to understand: whether this is just a smarter way of transmitting transactions, or whether this sounds awfully lot like banking.   It is not clear to me, and I know too little about it.

The big difference is that centralized actors like banks, in theory, can close down and lock or run away with your funds*. With LN, this is not possible, as you - in theory - would be able to retire the complete funds of the channel after the HTLC timeout if your counterparty is trying to scam you.

My problem with LN - and the reason why I personally would only use it for small amounts - is the danger that there could be attacks by nodes that act as hubs and after opening a channel and have a few transactions broadcast an old settlement transaction and then try to disconnect their counterparties from the network (e.g. by DDOS attacks) to avoid that you retire all the coins before the CSV timeout occurs. I don't know if there is already a solution for this problem or if I am understanding something wrong.


*well, with "official" registered banks you mostly have insurance against bank insolvency up to a relative large amount (e.g. 100000 EUR in the euro zone) but the problem remains for larger funds and because a generalized bank failure would lead to severe problems for the financial system.

[kiklo]

So suppose I own 2 BTC, and I want to pay someone 0.5 BTC.  Like now, I put in his address, and I take the option "try to do it with LN" or I don't know how it will present itself.  So what happens ?  

In a kademlia-like way my client goes looking whether my payee has an open channel on the LN, and looks at a possible routing through the network from the list of peers available ?  So I then propose to open a channel to whatever node happens to be chosen by that algorithm, with the hope of keeping it open long enough to have many transactions through it, locking in automatically my 2 BTC and hoping that this unknown partner on the network will keep open this link and his node active ?

I'm somewhat sceptical about this being able to work, because it seems to me that this will lead to a lot of savage settlements.

Yes, that is, in my understanding, like it's supposed to work.

(There was more text here, but after a re-read of the LN proposal I realized I wrote bullshit. Your concerns are valid.)

 Who is going to pay the fee ?

I guess it's the sender, like with on-chain transactions. But I can imagine that some online wallet providers could "sponsor" the fee if they also act as LN hubs and are for-profit businesses.

But that sounds a lot like a bank account.

Yes, but IOU-based online wallets like Coinbase de facto are banks even today. They will continue to work the same way with LN. But also in the case of hybrid online wallets like Blockchain.info, they can choose to sponsor the commit transaction fee to get you to use their node as hub. That would be already a bit different from banking, I would call it "semi-centralized", because they in no situation can run away with your money if you have a copy of all your private keys.

Mm, could I require, for instance, to get an e-mail with personal information (KYC/AML), or with the purpose of the transaction, and decide upon that information whether I accept to transmit it or not ?
(I'm trying to find out how much power the nodes can have over the transactions)

As far as I understand, as a node you could do that, but it's very possible that you'll have a hard time against the competition. What is possible is that if e.g. government actors use LN, they could be forced to use such a "trusted" LN node, but for the general public it should be impossible to force that.

Well, that's what I'm trying to understand: whether this is just a smarter way of transmitting transactions, or whether this sounds awfully lot like banking.   It is not clear to me, and I know too little about it.

The big difference is that centralized actors like banks, in theory, can close down and lock or run away with your funds*. With LN, this is not possible, as you - in theory - would be able to retire the complete funds of the channel after the HTLC timeout if your counterparty is trying to scam you.

My problem with LN - and the reason why I personally would only use it for small amounts - is the danger that there could be attacks by nodes that act as hubs and after opening a channel and have a few transactions broadcast an old settlement transaction and then try to disconnect their counterparties from the network (e.g. by DDOS attacks) to avoid that you retire all the coins before the CSV timeout occurs. I don't know if there is already a solution for this problem or if I am understanding something wrong.


*well, with "official" registered banks you mostly have insurance against bank insolvency up to a relative large amount (e.g. 100000 EUR in the euro zone) but the problem remains for larger funds and because a generalized bank failure would lead to severe problems for the financial system.

CoinBase current IOU system is regulated as a Money Transmitter, and they have Licenses as a Money Transmitter in every state they operate, as required by law.
https://www.coinbase.com/legal/licenses?locale=en-US


LN HUBs, will not be directing transmitting the BTC, they will be sending an OFFCHAIN Representation of the Value of a BTC (A LN Note or Token)
As such they are operating as a Bank , allowing deposits and letting people transact with LN / Bank Notes.
So a Money Transmitter License is not suitable for an LN Hub, the only license that will work legally is a Bank License.
LN Hubs will be forced to submit to getting  a Bank License to operate, sorry but that is Banking Cartels plan from the beginning to dominate crypto.
Once that has become law of the land, the next step in the plan  is to cause a price spike in transaction fees where only they and the rich find it affordable to
conduct ONCHAIN transactions, meaning that the poor and middle class now have to pay all of the offchain transaction fees directly to the Banking Cartels.


 

[kiklo]

LN isn't a bank per se, thus won't be eligible for a license... Wouldn't laws regarding banks have to change in order to be able to give licenses to dedicated LN hubs? From the government point of view, a LN hub wouldn't operate with money, so it wouldn't be possible to give a license, or am I wrong?

There will be a clarification of the current Banking laws, that will interpret LN Hubs acting as a Bank and then require by Law they have a Bank License.
The Banks own many State Governments, look at North Carolina, Wells Fargo pretty much controls all of the NC State Government assembly.
They could have them pass a Law confirming LN Hubs are Banks in a few weeks.

LN     => Holds access to your Locked BTC funds (BTC Deposits) ,  Charge Fees, Processes LN Notes payments, & Charges penalties.
Banks=> Hold Deposits,  Process their Bank Notes (Checks/ debit),Charge Fees , & Charge penalties

LN=Banks

Thinking a Bank License will not be required , is just setting yourself up for a lot of legal problems , including jail time.

Coinbase gets away with only needing a Money transmitter license, because they actually transmit the actual item onchain.
By LN hubs using a Offchain Representation to transact , they become Banks by processing their own Notes and are not eligible for just a money transmitter license.


 

[franky1]

to clear up this topic

unless FIAT is handled then its not part of FIAT regulations.

so LN wont need licences. but... here is the rub

if some organisation or dev made an altcoin that was 1:1 pegged for fiat, then that alt is under fiat regulations as the e-money/virtual currency fiat regulations. if used in swaps within LN.. which would then lead to any LN hub handling/accepting such obvious FIAT coin needing regulations
because most countries regulations are about e-money/virtual currency fiat concerns the easy translatable/auditable (pegged/replaces/represents) real bank fiat money

[kiklo]

to clear up this topic

unless FIAT is handled then its not part of FIAT regulations.

so LN wont need licences. but... here is the rub

if some organisation or dev made an altcoin that was 1:1 pegged for fiat, then that alt is under fiat regulations as the e-money/virtual currency fiat regulations. if used in swaps within LN.. which would then lead to any LN hub handling/accepting such obvious FIAT coin needing regulations
because most countries regulations are about e-money/virtual currency fiat concerns the easy translatable/auditable (pegged/replaces/represents) real bank fiat money

You can't guarantee that,
expect the Politicians to get involved soon after LN Hubs get a decent number.

Recent Example, China Barred Exchanges from transferring BTC out of their exchange, BTC not just Fiat,
so the Governments are exerting pressure on virtual currencies and those exchanges obeyed.

IE.
You run a Bar, you setup an LN Hub,
you accept cash /credit or Crypto for drinks, even thru you may not directly allow purchase of crypto, the Govs can still make the argument you are dealing in all three and hit you with regulations.

Now assume you allowed people to buy LN notes directly , by funding some notes yourself, and then sold them at a higher transaction fee in your bar.
You just crossed the line and mixed fiat with crypto, your ass is officially grass and the Gov is the lawnmower.

LN=Banks  it is coming, whether anyone likes it or not.
Once enough people start it , they will start issuing Fines for running an unlicensed bank.  


 

[Paashaas]

The fact that we're even having this discussion should tell people something VERY critical:

LN is centralizing by nature if you try to implement it as a primary scaling solution.  It is not the p2p scaling solution it is sometimes advertised as.  LN will not solve all the scaling problems.  We still need massive on chain scaling. 

LN is not the only project out there, Mimblewimble, Rootstock, TubmleBit all with there own specialization. More to come guaranteed. Mainstream adoption is not possible with only bigger blocks without losing security for a very long time. You can always use Bitcoin like we all do today if you dont like all of those cool payment options. The more options people have the better.

Based on current condition, i think more options isn't better since it might cause community split, FUD or the community/miners never agree on same solution/upgrade.

Yhea, but it's not needed at this time of speaking but we will need it eventually. We need to make the network ready for all those hundreds of millions of potential users otherwise it will cripple when we have an influx of new people. To prevent is better than to cure. Side-chains are all beeing build around Segwit, when this scaling debat is over we will not have a community split anymore. I hope everyone will be happy when it's solved.

[The One]

Charlie Lee has tricked the LTC miners into agreeing to activate segwit for LTC,

Charlie Lee is promising Larger Blocksizes when LTC blocks are half full, the Miners are hoping he keeps his word.
IE: In the below pic , Charlie Lee plays Lucy, and the LTC miners play the bald kid.  



Now the BTC Core Shills will try and use this to force the BTC community into accepting segwit.
We will see how that plays out.

LN Hubs will take deposits, (Lock your Funds up Onchain) ,
and then make payments using their offchain representations of your real funds.

Sounds an awful lot like a bank. In fact they will charge fees and penalties, sounds even more like a bank now.  

Here is the issue Boys & Girls,
You can't just open a bank up because you feel like it in most countries.
https://en.wikipedia.org/wiki/Banking_license

Most state legislatures in the United States ban general corporations from accepting banker's deposits, which ban tends to cover any service whereby a general corporation acts as a funds drawee which transfers current funds (i.e. credit payable upon demand) to make payments as a substitute for coins on behalf of an account holder.

Licenses are typically issued by a national banking regulator to applicant corporations that meet its banking requirements. The requirements may include minimum capital requirements, minimum number of directors, residence of shareholders, spread of shareholdings, disclosure of beneficial shareholders, besides other matters. These requirements may differ between jurisdictions, and may differ depending on the type of license being sought. Some jurisdictions, sometimes called tax havens, have a reputation for lax or corrupt standards in bank licensing, granting a license, for example, to shell companies, or to companies with nominee directors, or with dummy shareholders, etc.[citation needed]

The granting of the license may involve a long, complex and expensive procedure, which may depend on the type of bank license being sought. There are a number of sectors in which banks may be involved. The general bank license allows a bank to engage in all banking activities, such as retail banking, merchant acquiring, cash management, asset management and trading. An applicant can apply for a limited banking license, such as an offshore banking license.

Once the LN Hubs are in place, the Banking Cartels will have their Politicians pass a Law stating LN Hubs are acting as a Bank by taking deposits and making payments.
This will require all LN Hubs to get a Bank License, if they wish to continue, which most will not have the resources to and it is a lengthily process either way for those that do have the resources.

During this Time the Banking Cartels will buy up the existing LN hubs or start their own, and why not they already have a bank license.
In a Nutshell,
this is how they will completely take over crypto from all segwit activated coins and make sure financial slavery continues for your children's children and beyond.  
Satoshi's dream will be officially dead.  

 

Not just Satoshi's dream, for many of us intelligent ones too. The muppets are too stupid.

[jonald_fyookball]

We need to make the network ready for all those hundreds of millions of potential users otherwise it will cripple when we have an influx of new people. To prevent is better than to cure.

On the other hand we need to focus on the path in front of us rather than worry about what's 30 miles ahead.

Raising the 1mb limit TODAY is more important than being ready for hundreds of millions of users

[Zogrambo]

Yes, but IOU-based online wallets like Coinbase de facto are banks even today. They will continue to work the same way with LN.

I agree with that view, and I would think that if many people have an on-line account on something like Coinbase, then Coinbase simply can act as a bank, if you transmit coin IOU from your coinbase IOU account to an account of another customer of coinbase.   That's pure banking, like today.  Coinbase wouldn't even need any LN or block chain to do that, it would be an internal matter of their website, just like with normal banking.  So, online IOU wallets are, I would think, not even concerned with scaling, LN, or whatever, as one is not dealing with the crypto token itself, but with a centralized IOU "backed" by it.

But also in the case of hybrid online wallets like Blockchain.info, they can choose to sponsor the commit transaction fee to get you to use their node as hub. That would be already a bit different from banking, I would call it "semi-centralized", because they in no situation can run away with your money if you have a copy of all your private keys.

This is an important point, yes.

Mm, could I require, for instance, to get an e-mail with personal information (KYC/AML), or with the purpose of the transaction, and decide upon that information whether I accept to transmit it or not ?
(I'm trying to find out how much power the nodes can have over the transactions)

As far as I understand, as a node you could do that, but it's very possible that you'll have a hard time against the competition. What is possible is that if e.g. government actors use LN, they could be forced to use such a "trusted" LN node, but for the general public it should be impossible to force that.

I see. 

Well, that's what I'm trying to understand: whether this is just a smarter way of transmitting transactions, or whether this sounds awfully lot like banking.   It is not clear to me, and I know too little about it.

The big difference is that centralized actors like banks, in theory, can close down and lock or run away with your funds*. With LN, this is not possible, as you - in theory - would be able to retire the complete funds of the channel after the HTLC timeout if your counterparty is trying to scam you.

Indeed, that is still an advantage of LN over banking in the classical way, even if it were totally centralized. 

My problem with LN - and the reason why I personally would only use it for small amounts - is the danger that there could be attacks by nodes that act as hubs and after opening a channel and have a few transactions broadcast an old settlement transaction and then try to disconnect their counterparties from the network (e.g. by DDOS attacks) to avoid that you retire all the coins before the CSV timeout occurs. I don't know if there is already a solution for this problem or if I am understanding something wrong.

Well, as I already said, I'm trying to find out for myself whether to be positive or not towards LN, and with all the political disinformation and hype it is very hard to make up one's mind on objective information.  I think there are a lot of positive elements with LN, but "deep in my bones" I feel some issues, and two of these are:

- it looks to me that economies of scale will make LN hubs evolve towards a wheel and spokes kind of structure, because the more BTC you can lock up in many channels with many customers, the more chances you have to be able to transmit a lot of transactions through them, which will essentially give you the ratio between the profitable LN fee and the on-chain fee.  So I wonder if this sentiment is correct, and has been studied, or if it is not something to worry about ; and whether it is a problem or not.

- however, what worries me most, is that fact that there is not enough room on the block chain to settle large parts of the LN network, if it needs to settle.  As such, your "right to settle" is a right on paper, but could very well be thwarted by the practical limit of the room on the chain.  In other words, in as much as the LN allows to scale to a large multitude of the number of transactions on chain, it seems to me that this large factor is also at the same time a serious security risk, because it can never settle most of the links on time.  However, this is maybe also a gut feeling that is not justified in practice. 

So I'm not clear as to whether I should be in favor of the LN or not (not that it would make any difference ), because I can't wrap my mind enough around what it really is going to be.

[Xester]

Charlie Lee has tricked the LTC miners into agreeing to activate segwit for LTC,

Charlie Lee is promising Larger Blocksizes when LTC blocks are half full, the Miners are hoping he keeps his word.
IE: In the below pic , Charlie Lee plays Lucy, and the LTC miners play the bald kid.  



Now the BTC Core Shills will try and use this to force the BTC community into accepting segwit.
We will see how that plays out.

LN Hubs will take deposits, (Lock your Funds up Onchain) ,
and then make payments using their offchain representations of your real funds.

Sounds an awful lot like a bank. In fact they will charge fees and penalties, sounds even more like a bank now.  

Here is the issue Boys & Girls,
You can't just open a bank up because you feel like it in most countries.
https://en.wikipedia.org/wiki/Banking_license

Most state legislatures in the United States ban general corporations from accepting banker's deposits, which ban tends to cover any service whereby a general corporation acts as a funds drawee which transfers current funds (i.e. credit payable upon demand) to make payments as a substitute for coins on behalf of an account holder.

Licenses are typically issued by a national banking regulator to applicant corporations that meet its banking requirements. The requirements may include minimum capital requirements, minimum number of directors, residence of shareholders, spread of shareholdings, disclosure of beneficial shareholders, besides other matters. These requirements may differ between jurisdictions, and may differ depending on the type of license being sought. Some jurisdictions, sometimes called tax havens, have a reputation for lax or corrupt standards in bank licensing, granting a license, for example, to shell companies, or to companies with nominee directors, or with dummy shareholders, etc.[citation needed]

The granting of the license may involve a long, complex and expensive procedure, which may depend on the type of bank license being sought. There are a number of sectors in which banks may be involved. The general bank license allows a bank to engage in all banking activities, such as retail banking, merchant acquiring, cash management, asset management and trading. An applicant can apply for a limited banking license, such as an offshore banking license.

Once the LN Hubs are in place, the Banking Cartels will have their Politicians pass a Law stating LN Hubs are acting as a Bank by taking deposits and making payments.
This will require all LN Hubs to get a Bank License, if they wish to continue, which most will not have the resources to and it is a lengthily process either way for those that do have the resources.

During this Time the Banking Cartels will buy up the existing LN hubs or start their own, and why not they already have a bank license.
In a Nutshell,
this is how they will completely take over crypto from all segwit activated coins and make sure financial slavery continues for your children's children and beyond.  
Satoshi's dream will be officially dead.  

 

That is the bad side of the segwits lightning network. But we can no longer escape this kind of reality in the bitcoin network. It may be BU or Segwit both of them have a dream of monopolizing bitcoin. With this we can only accept the outcome of this matter and continue to use bitcoin. If bitcoin will become centralized then at least we will continue to earn and gain profit.