Reasons why Lightning Network will fail

[ktabb]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel
* Users can defraud each other in a channel, so they have to continually check if somebody is defrauding them.
* Unless you have a direct channel to your target, there is NO guarantee AT ALL that you can pay the person you want to pay.
* Users need to be online 24/7 if they want to be part of a payment route. If a user is offline, this particular route is not possible which of course has huge impact on the possible routes.
* Insane amounts of data are being sent because the network needs to be aware of EVERYBODY's payment channel's state (otherwise it can't discover a route)
* You still have huge fees if you want to wire money into/outside the channel.
* It's not feasible at all for bigger payments. Let's say you have to pay $1500 rent/month, are you going to open a payment channel and deposit 3 years rent in it ? Most people have difficulties enough coughing up the next month. But if you have to wire every payment into the channel, then you could just as well pay on-chain because you're paying that exact same on-chain fee.
* It's also not feasible for very small payments/channels. If you open a $30 channel with your coffeeshop to buy a few cups of coffee per week, then the price of your coffee doubles because of the huge fees to open/close the channel. Your only option is to route and HOPE there IS a route.
* Who is going to lock up his money in several channels anyway ? Liquidity, needed for routing money, is going to be a problem
* Very difficult to use and explain to users. No way your mother let alone grandmother is going to understand all this.

Very interesting post. I did not know about a lot of the aspects of the LN that you have mentioned here, and I think that is probably the case for many of the others here on this forum. It seems like the LN solves some problems while creating others.

[DooMAD]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel
* Users can defraud each other in a channel, so they have to continually check if somebody is defrauding them.
* Unless you have a direct channel to your target, there is NO guarantee AT ALL that you can pay the person you want to pay.
* Users need to be online 24/7 if they want to be part of a payment route. If a user is offline, this particular route is not possible which of course has huge impact on the possible routes.
* Insane amounts of data are being sent because the network needs to be aware of EVERYBODY's payment channel's state (otherwise it can't discover a route)
* You still have huge fees if you want to wire money into/outside the channel.
* It's not feasible at all for bigger payments. Let's say you have to pay $1500 rent/month, are you going to open a payment channel and deposit 3 years rent in it ? Most people have difficulties enough coughing up the next month. But if you have to wire every payment into the channel, then you could just as well pay on-chain because you're paying that exact same on-chain fee.
* It's also not feasible for very small payments/channels. If you open a $30 channel with your coffeeshop to buy a few cups of coffee per week, then the price of your coffee doubles because of the huge fees to open/close the channel. Your only option is to route and HOPE there IS a route.
* Who is going to lock up his money in several channels anyway ? Liquidity, needed for routing money, is going to be a problem
* Very difficult to use and explain to users. No way your mother let alone grandmother is going to understand all this.

Very interesting post. I did not know about a lot of the aspects of the LN that you have mentioned here, and I think that is probably the case for many of the others here on this forum. It seems like the LN solves some problems while creating others.

The only "problem" it creates is that you now have a choice which you didn't have before.  There will be times where you might use Lightning because it's cheaper, more convenient, or both.  There will be other times where it won't be those things and you can transact as you always have done.  But even if you aren't using LN for that particular transaction, you might still see a small benefit since anyone who is routing an off-chain payment through LN at the time won't be competing with you for a space in the next block.

No one rational is saying Lightning is perfect, or that it's going to be used for all your transactions.  But at the same time, it's not going to fail either.  That's just the opposite extreme of irrationality.

For the thread as a whole, particularly to the OP, I honestly don't understand why everyone on the internet has to be so polarised about everything.  This thread is just further evidence that people can't even discuss topics without becoming some sort of extremist, which is unfortunate for the community as a whole.  It's hardly ever that black and white, so stop talking in terms of "moon" and "fail", when the reality is clearly going to occupy some happy middle ground.

[sjefdeklerk]

Why wouldn´t you use the main blockchain for mid-to-large payments?

Because it can only process 7 transactions per second, world wide !! Pretty much NOBODY was even using it and fees already rocketed to $65/transaction. Now imagine that bitcoin ever becomes a success and most transactions > $150 still need to be processed via the main net. What do you think will happen?

Everybody here seems to agree, LN is ONLY suitable for small payments. But a system will never work if it can ONLY be used for small payments.

[sjefdeklerk]

For the thread as a whole, particularly to the OP, I honestly don't understand why everyone on the internet has to be so polarised about everything.  This thread is just further evidence that people can't even discuss topics without becoming some sort of extremist, which is unfortunate for the community as a whole.  It's hardly ever that black and white, so stop talking in terms of "moon" and "fail", when the reality is clearly going to occupy some happy middle ground.

There is no middle ground man. Yeah sure for some tech nerds maybe who don't care about adoption. But bitcoin either becomes a success or it will fail, simple as that. And with all the current scalability problems I just don't see how adoption will increase

[DooMAD]

There is no middle ground man. Yeah sure for some tech nerds maybe who don't care about adoption.

Yes, everyone who's currently working on Lightning is doing so because they don't care about adoption.  

So you think they're just working on it for a bit of fun?  Something to pass the time, perhaps?  Also, saying that all of these "nerds" are working on a scaling solution because they don't care about adoption sounds quite counter-intuitive if you think it through.  Why would someone work on something that could help with greater adoption if they don't care about adoption?  If those people building it shared your concerns, maybe it would be a different story, but as things stand, it just sounds like you're pissing into the wind here.  Either way, whether you understand it or not, they're going to keep working on it.

And with all the current scalability problems I just don't see how adoption will increase

So we should all give in to your limited perception in regards to how we perceive Bitcoin going forward?  Please explain why we should care about what you can't see.  What makes you qualified to say this is a waste of everyone's time?  I think this is where we get to the crux of the matter, which is where you simply won't be able to perceive the benefits until you understand Lightning a little better.  I can see how it's not the easiest concept to grasp right away.  It does take a while to get a sense of how and why it works the way it does.  But until you're there, I can't give your mudslinging from the sidelines much credibility.

Everybody here seems to agree, LN is ONLY suitable for small payments. But a system will never work if it can ONLY be used for small payments.

"Small" is a matter of perspective.  While it's in beta, just as a precaution, LN is currently capped at a maximum of 0.16777216 BTC in each channel and 0.04194304 for each transaction.  At current prices, 0.04194304 BTC is ~$480.  There are plenty of places in the world where that's not considered a small amount of money.  It's roughly the yearly minimum wage in Tajikistan, for example.  You sound like one of those "first world problems" people who think that just because it isn't directly of benefit to you, it can't be of benefit to anyone at all.

[hisslyness]

There is no middle ground man. Yeah sure for some tech nerds maybe who don't care about adoption.

Yes, everyone who's currently working on Lightning is doing so because they don't care about adoption.  

So you think they're just working on it for a bit of fun?  Something to pass the time, perhaps?  Also, saying that all of these "nerds" are working on a scaling solution because they don't care about adoption sounds quite counter-intuitive if you think it through.  Why would someone work on something that could help with greater adoption if they don't care about adoption?  If those people building it shared your concerns, maybe it would be a different story, but as things stand, it just sounds like you're pissing into the wind here.  Either way, whether you understand it or not, they're going to keep working on it.

And with all the current scalability problems I just don't see how adoption will increase

So we should all give in to your limited perception in regards to how we perceive Bitcoin going forward?  Please explain why we should care about what you can't see.  What makes you qualified to say this is a waste of everyone's time?  I think this is where we get to the crux of the matter, which is where you simply won't be able to perceive the benefits until you understand Lightning a little better.  I can see how it's not the easiest concept to grasp right away.  It does take a while to get a sense of how and why it works the way it does.  But until you're there, I can't give your mudslinging from the sidelines much credibility.

Everybody here seems to agree, LN is ONLY suitable for small payments. But a system will never work if it can ONLY be used for small payments.

"Small" is a matter of perspective.  While it's in beta, just as a precaution, LN is currently capped at a maximum of 0.16777216 BTC in each channel and 0.04194304 for each transaction.  At current prices, 0.04194304 BTC is ~$480.  There are plenty of places in the world where that's not considered a small amount of money.  It's roughly the yearly minimum wage in Tajikistan, for example.  You sound like one of those "first world problems" people who think that just because it isn't directly of benefit to you, it can't be of benefit to anyone at all.

When i first heard about LN and done some reading. Concepts and Ideas popped into my head. They are effectively mimicking the internet and how packets are transmitted from computer to computer without having to be directly connected for Instant Payments! Absolute Genius!

If i was VISA/MC/AMEX or any payment processor, maybe WU, i would jump on quick smart. They could be a Major NODE! earn fees just for routing BTC having channels opened to other smaller nodes.

It reminds me of Blockbusters, imagine if they were creative enough to stream over the internet.

Regardless of what people think, we need TX Fees. When block rewards ceases. Miners are going to need as much TX fees as possible to keep doing what they are doing.

[vit05]

The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel

I did not know about that. It is clear that I need to study much more to understand NL. I hope that more solutions to continue decreasing the value of Fees are being developed since the risk of LN does not work as we wish is very high.

[MoonJeina]

Have you witnessed the massive difference of the tax you have to pay for the mining fees since the introduction of Segwit ?
I don't really see an major difference after the implementation of LN . The developres obviously looked out for the naive users and the freshmen and didn't make it too complicated to understand . What can possibly be the other way of escaping the previous problems related to bitcoin before the introduction of LN .
Talking about people shifting to other alts , they will sooner or later find the same problems they found with bitcoin without the LN technology .
Immense improvements and developments are being made everyday and i am sure that sooner or later they will come up with an even better substitute .

[deepcoreotc]

Damn, if this is true I really don't see it becoming mainstream as well. I should really research Lighting Network more in depth.

[pereira4]

Scammers such as Roger Ver and Craig Wright are trying to push their BCash scam by FUDding Bitcoin with videos like "How The Banks Bought Bitcoin | Lightning Network", if you haven't seen it, im not going to link it for you and give them more views.

Andreas Antonopoulos made a video in his channel explaining why that video is bullshit:

https://www.youtube.com/watch?v=c4TjfaLgzj4

Lightning Network will be a success. It will be easy as fuck to use, and everyone will be using it for shopping. Give it 2 years and really nice looking, user friendly interfaces will be all over the world. Steam will be accepting Bitcoin again for their games in 2 years thanks to LN, as well as a ton of other merchants, all of this while still being able to run your own Bitcoin node unlike BCash.

Let all the idiots sell now and stockpile on cheap BTC. In the next 2 years everyone that sold now will kill themselves in regret.

[DooMAD]

Damn, if this is true I really don't see it becoming mainstream as well. I should really research Lighting Network more in depth.

It's one of those things where you just need to give it a bit of time.  Lightning is still in beta and it hasn't even been on mainnet that long yet.  All the stuff that will make it easy and user-friendly will come later.  Also, not everyone has to be using Lightning for it to take some of the pressure off layer 0.  Any payment-channel-routed transaction is a transaction not taking up space in the blockchain.  If all the people using it only have to use up space in blocks when they open and close channels, they could still send thousands of transactions that will never touch the blockchain until the final balance is settled, so that's still going to be less traffic than we see generally.  It all helps reduce congestion on the network.

[Wind_FURY]

Apart from half of the points you state are just untrue, do you know of any feasible solution?
Bigger blocks don't solve the problem. DAG structures don't solve the problem.

IMHO a proper decentralized secure base protocol with second layer scaling beats any other proposals we have now, they all decrease decentralization and/or security at the base level.

Sorry, but I had to quote this.

So do you support Bitcoin or don't you? I'm a little confused. I swear that not too long ago you were fudding left and right that Bitcoin was surely going on a death spiral down and "die".

Does that mean our favorite fudster has now become a hodler?

[followmenot]

Scammers such as Roger Ver and Craig Wright are trying to push their BCash scam by FUDding Bitcoin with videos like "How The Banks Bought Bitcoin | Lightning Network", if you haven't seen it, im not going to link it for you and give them more views.

Andreas Antonopoulos made a video in his channel explaining why that video is bullshit:

https://www.youtube.com/watch?v=c4TjfaLgzj4

Lightning Network will be a success. It will be easy as fuck to use, and everyone will be using it for shopping. Give it 2 years and really nice looking, user friendly interfaces will be all over the world. Steam will be accepting Bitcoin again for their games in 2 years thanks to LN, as well as a ton of other merchants, all of this while still being able to run your own Bitcoin node unlike BCash.

Let all the idiots sell now and stockpile on cheap BTC. In the next 2 years everyone that sold now will kill themselves in regret.

Thanks for the post as it really cleared my mind on situation. I also think that bitcoin will be increadibly useful in 2 years when lightning network installed, many people selling their btc to btc cash is really weird, hard for me to understand.

[carlisle1]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel

It would not fall.. all those who are saying that it will be a total failure are probably being paid by Roger Ver in order to spam this forum with all that crap. Just relax, it will work fine if that is your real problem at all. And it will fix a lot of things in here.

you have a point there mate,theres no impossible with roger ver as he was against this setting,no matter how much he will spent as long as hes intentions will happens.better get rid of such issues and news as we are scaping from the problem of yesterday

[sjefdeklerk]

It's one of those things where you just need to give it a bit of time.  Lightning is still in beta and it hasn't even been on mainnet that long yet.  All the stuff that will make it easy and user-friendly will come later.  Also, not everyone has to be using Lightning for it to take some of the pressure off layer 0.  Any payment-channel-routed transaction is a transaction not taking up space in the blockchain.  If all the people using it only have to use up space in blocks when they open and close channels, they could still send thousands of transactions that will never touch the blockchain until the final balance is settled, so that's still going to be less traffic than we see generally.  It all helps reduce congestion on the network.

Did you read any of my points?

[jubalix]

Apart from half of the points you state are just untrue, do you know of any feasible solution?
Bigger blocks don't solve the problem. DAG structures don't solve the problem.

IMHO a proper decentralized secure base protocol with second layer scaling beats any other proposals we have now, they all decrease decentralization and/or security at the base level.

dash seems so solve eg master nodes can afford to brute force to with  hardware

[sjefdeklerk]

dash seems so solve eg master nodes can afford to brute force to with  hardware

?? What are you talking about?

[sjefdeklerk]

Thanks for the post as it really cleared my mind on situation. I also think that bitcoin will be increadibly useful in 2 years when lightning network installed, many people selling their btc to btc cash is really weird, hard for me to understand.

LOL

[DooMAD]

It's one of those things where you just need to give it a bit of time.  Lightning is still in beta and it hasn't even been on mainnet that long yet.  All the stuff that will make it easy and user-friendly will come later.  Also, not everyone has to be using Lightning for it to take some of the pressure off layer 0.  Any payment-channel-routed transaction is a transaction not taking up space in the blockchain.  If all the people using it only have to use up space in blocks when they open and close channels, they could still send thousands of transactions that will never touch the blockchain until the final balance is settled, so that's still going to be less traffic than we see generally.  It all helps reduce congestion on the network.

Did you read any of my points?

Did you read any of mine?  I'll make a few more just in case:

Who is going to lock up his money in several channels anyway ? Liquidity, needed for routing money, is going to be a problem

The more you use Lightning and the more channels you have open, the greater the potential savings on fees.  Each time you can avoid making on-chain transactions, that's one less mining fee to pay.  Financial incentive will be the driving force for having multiple channels open.  Incentive itself will provide the liquidity.  Users can also incentivise routing by adjusting the fees they charge, even charging negative fees (effectively paying anyone who routes through them), so there may be situations where you can rebalance a channel rather than having to open a new one.

So you'll end up taking a different route, most likely without you even noticing.  You aren't forced to route through people with insufficient funds.

My point is that there simply might not be a route with enough funding.

Lightning opens up two new choices for how to transact.  Opening a new channel, or routing through one of your existing open channels.  If this scenario of no sufficiently funded channels occurs, you might not be able to route through an existing channel, true enough.  So you open a new channel.  Or you send a regular on-chain transaction.  Not exactly rocket science.  Plus, that's still more options overall than you previously had, so if one of the two new choices isn't available, that doesn't constitute a failure.  I'd rather not repeat myself, but, "the only "problem" it creates is that you now have a choice which you didn't have before.  There will be times where you might use Lightning because it's cheaper, more convenient, or both.  There will be other times where it won't be those things and you can transact as you always have done".  How can something that gives you more freedom and choice than you previously had possibly be a bad thing?  I can see how it might look bad if you haven't taken the time to comprehend how it works, but that means the failure is on your part and not Lightning's.

But if someone does attempt to defraud you and you catch them, you can take their funds.  That's a rather strong disincentive to try ripping people off.

It is. But you're never 100% sure, which means that you actively NEED to monitor all of your channels for fraud. That's really a big downside.

You don't have to personally sit there and stare at it 24/7.  By "monitor", you mean your software simply has to be online.  I know plenty of people who are online 24/7.  It won't be a downside to any of them.  Work has also started on an idea for what they're calling "watchtowers", which will step in to monitor for you if you're offline for whatever reason.  If watchtowers are successful and become the norm, you won't have to worry about monitoring your channels.  As I said before, all the stuff that will make it easy and user-friendly will come later.  Give it time.

Which is why Lightning is completely optional and you can still send regular payments to be confirmed directly on the blockchain, just like you always have done.

This is no argument at all.

It's an argument you don't have an answer for, you mean.  Lightning is not designed to replace on-chain transactions altogether.  If you're suggesting that it is, no wonder your arguments seem so skewed.

[sjefdeklerk]

The more you use Lightning and the more channels you have open, the greater the potential savings on fees.  Each time you can avoid making on-chain transactions, that's one less mining fee to pay.  Financial incentive will be the driving force for having multiple channels open.  Incentive itself will provide the liquidity.  

But each time you open a channel you pay the on-chain fee, which would be very steep if bitcoin would ever become popular. So I just don't see people opening tons of channels and put a lot of money in each and every channel. That just makes no sense.

Lightning opens up two new choices for how to transact.  Opening a new channel, or routing through one of your existing open channels.  If this scenario of no sufficiently funded channels occurs, you might not be able to route through an existing channel, true enough.  So you open a new channel.  Or you send a regular on-chain transaction.  Not exactly rocket science.  Plus, that's still more options overall than you previously had, so if one of the two new choices isn't available, that doesn't constitute a failure.  I'd rather not repeat myself, but, "the only "problem" it creates is that you now have a choice which you didn't have before.  There will be times where you might use Lightning because it's cheaper, more convenient, or both.  There will be other times where it won't be those things and you can transact as you always have done".  How can something that gives you more freedom and choice than you previously had possibly be a bad thing?  I can see how it might look bad if you haven't taken the time to comprehend how it works, but that means the failure is on your part and not Lightning's.

The thing is, you compare it to the on-chain form of bitcoin. But that makes no sense, that's a failure already. You need to compare it to VISA for example.