Lightning network - fast and low fees

[orangeferrari3]

I read an article explaining the entire process of the lightning network. Only two transactions will be verified. The first one to open a channel and the second one to close the channel. But what about the transactions within the channel? Nobody is verifying those transactions.  One member out of two could falsify a transaction within the channel. Am i missing something here?

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[DannyHamilton]

I read an article explaining the entire process of the lightning network. Only two transactions will be verified. The first one to open a channel and the second one to close the channel.

Only two transactions will be on the bitcoin blockchain.

All transactions will be verified.

But what about the transactions within the channel? Nobody is verifying those transactions.

The channel participants will be verifying those transactions.

One member out of two could falsify a transaction within the channel.

Only if the other member isn't paying attention (or doesn't run software that pays attention).

Am i missing something here?

Yes.  I suggest you skip the articles that don't know what they're talking about and seek out documentation written by the experts.

[aleksej996]

You are missing a lot, pretty much the whole point of LN.
You can read more about this in this 3 part article https://bitcoinmagazine.com/articles/understanding-the-lightning-network-part-building-a-bidirectional-payment-channel-1464710791/

[Anti-Cen]

Lightning network is well complicated and has lots of code to deal with transactions within
the network so if a banking hub (in theory) goes bad you can broadcast to the BTC network
to get you money back

See white paper https://lightning.network/lightning-network-paper.pdf

what people are not getting about lightning is that just because you deposit your
money at the bank in a ledger it is not the banks money (You can get it back) and the bank has to forward
it own money out from a separate ledger on to the next bank before Alice gets paid

See http://forum.cryptolivecap.com/posts/t31-Lightning-Network  
Dave is this case is the bank  or watch https://www.youtube.com/watch?v=UYHFrf5ci_g

[Kakmakr]

Lightning network is well complicated and has lots of code to deal with transactions within
the network so if a banking hub (in theory) goes bad you can broadcast to the BTC network
to get you money back

See white paper https://lightning.network/lightning-network-paper.pdf

what people are not getting about lightning is that just because you deposit your
money at the bank in a ledger it is not the banks money (You can get it back) and the bank has to forward
it own money out from a separate ledger on to the next bank before Alice gets paid

See http://forum.cryptolivecap.com/posts/t31-Lightning-Network  
Dave is this case is the bank  or watch https://www.youtube.com/watch?v=UYHFrf5ci_g

Why would you want to use the hubs, if you can open channels with these merchants directly? Or am I missing something here?

Disclaimer : I am still getting my head around the technology and how it will be implemented.

Also, would there not be multiple alternative routes via other channels to these merchants, if you are not satisfied with the hub you are using? These hubs will also be inter-connected, right? ShIt, I still have to learn a lot about this. ^hmmmmm^

[orangeferrari3]

Lightning network is well complicated and has lots of code to deal with transactions within
the network so if a banking hub (in theory) goes bad you can broadcast to the BTC network
to get you money back

See white paper https://lightning.network/lightning-network-paper.pdf

what people are not getting about lightning is that just because you deposit your
money at the bank in a ledger it is not the banks money (You can get it back) and the bank has to forward
it own money out from a separate ledger on to the next bank before Alice gets paid

See http://forum.cryptolivecap.com/posts/t31-Lightning-Network 
Dave is this case is the bank  or watch https://www.youtube.com/watch?v=UYHFrf5ci_g

Basically, it's in a pool. It can always be taken out of the pool at any time. It only stays in the pool to make things faster within the channel. Is that right?

[ahmad21]

Lightning network is well complicated and has lots of code to deal with transactions within
the network so if a banking hub (in theory) goes bad you can broadcast to the BTC network
to get you money back

See white paper https://lightning.network/lightning-network-paper.pdf

what people are not getting about lightning is that just because you deposit your
money at the bank in a ledger it is not the banks money (You can get it back) and the bank has to forward
it own money out from a separate ledger on to the next bank before Alice gets paid

See http://forum.cryptolivecap.com/posts/t31-Lightning-Network  
Dave is this case is the bank  or watch https://www.youtube.com/watch?v=UYHFrf5ci_g

Basically, it's in a pool. It can always be taken out of the pool at any time. It only stays in the pool to make things faster within the channel. Is that right?

Its not really a pool. Upto where I think its a protocol or a set of rules just like we saw in segwit. There are a lot of confusions regarding its working until now but surely the transactions in between will be verified. Its just in saying that the channel processing will be that fast that you won't really feel that the transactions are being getting verified as most of the verficiations will be by key owner or the parties in transactions. The whole core network will still remain intact with it.

[Colorblind]

I read an article explaining the entire process of the lightning network. Only two transactions will be verified. The first one to open a channel and the second one to close the channel. But what about the transactions within the channel? Nobody is verifying those transactions.  One member out of two could falsify a transaction within the channel. Am i missing something here?

You are the one who will verify those transactions. If you trust yourself it won't matter - in case of dispute occurs you can always post latest valid transaction on-chain. The downside is you have to monitor blockchain to be able to spot someone posting old channel state and counter it.

[Kprawn]

The process to guard against this can be automated. Some people can also be assigned as gatekeepers to monitor these

actions and to prevent this. {manual action} I do not know how practical it would be to monitor channels 24/7 but it is a much

better scaling method than simply increasing Block sizes. We are still in the very early stages of this technology, and solutions

for this can still be developed. 

[Destrodream]

Does this all means I have to maintain 100% uptime if I want to make sure nobody posted channel old state to the blockchain?

[Anti-Cen]

Why would you want to use the hubs, if you can open channels with these merchants directly? Or am I missing something here?

Also, would there not be multiple alternative routes via other channels to these merchants, if you are not satisfied with the hub you are using? These hubs will also be inter-connected, right? ShIt, I still have to learn a lot about this. ^hmmmmm^

Because each channel costs money on the main block-chain so unless you open ten channels a month then your
forced to use hubs or else you could get ten time $20 in transactions fees

See https://lnmainnet.gaben.win/

I am sure banking hub fees will start of low just like has happened with Bitcoin and they we
know what will happen once people buy in to using the banking system

[Anti-Cen]

You are the one who will verify those transactions. If you trust yourself it won't matter - in case of dispute occurs you can always post latest valid transaction on-chain. The downside is you have to monitor blockchain to be able to spot someone posting old channel state and counter it.

Bankers will be running more specialized versions of the wallets than we have that can morph in to
hubs unless of course our wallets come with lots of buttons and input boxes because the protocol allows
complicated transactions that you and me won't understand.

Open a channel and they make you agree to letting the bank take a up front fee to cover the
BTC mining fee even if they owe you money or else the channel will be closed or locked using
the dispute procedure that can take days to sort out.

it's like saving money in a bank without getting to read the terms and conditions and that's
without LN transaction fees being dumped on you. Don't agree at any stage and the BTC miners
will love the $20 you keep sending them to settle the account on the block-chain

[DooMAD]

Open a channel and they make you agree to letting the bank take a up front fee to cover the
BTC mining fee even if they owe you money or else the channel will be closed or locked using
the dispute procedure that can take days to sort out.

it's like saving money in a bank without getting to read the terms and conditions and that's
without LN transaction fees being dumped on you. Don't agree at any stage and the BTC miners
will love the $20 you keep sending them to settle the account on the block-chain

"Make you" how, exactly?  You still have full control over what funds you do and don't choose to send within a payment channel.  Do you have any evidence to support any of this conjecture?  And why do you keep saying "bank"?  No one is forcing you to transact with banks.  You can open a channel with anyone you like.  Or you can still send funds the conventional way.  From my understanding, it's entirely your preference if you want to "hop" through a number of people to reach someone or just deal directly with the person you want to deal with.  It's just that if you both already have "Lightning-ready" funds locked on the blockchain, it may well prove to be cheaper to go through the other people than is it to lock yet more funds on layer 0 to send directly.

Long story short, go with whichever option is most cost effective.  But the simple fact is, you have options.  No one is putting a gun to your head and forcing you to do anything you don't want to do.

• Option 1:  Standard single transaction to a person, with a single fee paid to the miners, recorded on the blockchain, no Lightning involved.  
• Option 2:  Open a Lightning payment channel directly with a person for any number of repeated payments back and forth, with one fee paid to the miners when you start and one when you finish.  Fees for this may be less than option 1 depending on the number of transactions you need to send.
• Option 3:  If you each have a Lightning channel open with some other person already, or two of the people you're each connected to are connected to each other, or even more people involved, you can send any number of repeated payments back and forth via those other people.  Fees for this may be less than options 1 and 2 depending on the number of transactions you need to send.

I suggest you read this if you haven't already.  It's not overly technical and explains things pretty well.

[Anti-Cen]

Do you have any evidence to support any of this conjecture

Sure pleanty so would you like the LN white paper https://lightning.network/lightning-network-paper.pdf
or the network map as it is running now https://lnmainnet.gaben.win/
or maybe you want to watch it on youtube https://www.youtube.com/watch?v=UYHFrf5ci_g
but if you want the noddy Bob and Alice version then here it is https://www.youtube.com/watch?v=rrr_zPmEiME

"And why do you keep saying "bank"?  No one is forcing you to transact with banks.  You can open a channel with anyone you like.  Or you can still send funds the conventional way.  From my understanding, it's entirely your preference if you want to "hop" through a number of people to reach someone or just deal directly with the person you want to deal with.  It's just that if you both already have "Lightning-ready" funds locked on the blockchain, it may well prove to be cheaper to go through the other people than is it to lock yet more funds on layer 0 to send directly.

if you want to live off grid then you don't need banking but for the rest of us we do and what we are seeing with LN is
ye old problem-reaction-solution and fees that have already gone sky high so you don't need a big IQ to work out where
we are going.

Long story short, go with whichever option is most cost effective.  But the simple fact is, you have options.  No one is putting a gun to your head and forcing you to do anything you don't want to do.

Sure felt like "gun to your head" last month when the miners here got $120 from me or did you not know that fees were like $0.10 a year ago and
peeked at $55 per transaction.