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Author Topic: Lightning Network & bigger amounts?  (Read 333 times)
Kprawn
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February 08, 2018, 03:29:35 PM
 #1

As I see this, the Lightning Network is limited to the amounts being transferred. Ok, let me explain and then tell me if I am

wrong, Example :

Lets say Bitcoin goes mainstream and 1000's of people wants to send say 100 bitcoins from point A to B... {Most channels are

funded with much smaller amounts, right?} Now these people are limited to the channels that are funded with 100 bitcoins or

more... right? In the end, only large payment hubs with large amounts of coins would be available for them to use? Is this

why the Lightning Network is more effective for micro transactions and less affective for large transactions? I know you can

still make on-chain payments, but this would defeat the purpose... right?

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poptok1
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February 08, 2018, 03:45:00 PM
Last edit: February 08, 2018, 04:35:14 PM by poptok1
 #2

{Most channels are funded with much smaller amounts, right?}
Yes, they are rather small but nothing stops an old-school holder from starting one with say 300BTC.(well as it turns out there are limitations)
But most of those 1000s will probably be willing to send small transactions anyway, they can pick any channel as long as it supports the amount they need to send. Quantity of people is kinda irrelevant, the amount of money they're sending in one TX is what matters.
If 7 people out of those 1000, use all the founds on one particular channel, rest will have to look for a new payment channel.
The original one, with 100BTC will be "automagically" closed/excluded from suggestions.  

Is this why the Lightning Network is more effective for micro transactions and less affective for large transactions?
That will be yes again, it was designed with smaller transactions in mind.

...make on-chain payments, but this would defeat the purpose... right?
Yep Smiley

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February 08, 2018, 04:03:29 PM
Merited by Kprawn (1), poptok1 (1), HeRetiK (1), squatter (1)
 #3

Lets say Bitcoin goes mainstream and 1000's of people wants to send say 100 bitcoins from point A to B... {Most channels are

funded with much smaller amounts, right?} Now these people are limited to the channels that are funded with 100 bitcoins or

more... right?

Currently, channels are limited to 0.16777216 BTC, and individual transactions can be no more than 0.04194304 BTC. These are safety limits, and may be changed (or possibly removed) in future


In the end, only large payment hubs with large amounts of coins would be available for them to use? Is this

why the Lightning Network is more effective for micro transactions and less affective for large transactions? I know you can

still make on-chain payments, but this would defeat the purpose... right?

Atomic Multi Path (AMP) would be another option (a set of options really).

Instead of only sending via 1 channel, a Lightning node can send via multiple channels to a single recipient. This additional protocol is only at the discussions stage right now, though.

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February 08, 2018, 04:20:20 PM
 #4

Lets say Bitcoin goes mainstream and 1000's of people wants to send say 100 bitcoins from point A to B... {Most channels are

funded with much smaller amounts, right?} Now these people are limited to the channels that are funded with 100 bitcoins or

more... right?

Currently, channels are limited to 0.16777216 BTC, and individual transactions can be no more than 0.04194304 BTC. These are safety limits, and may be changed (or possibly removed) in future


In the end, only large payment hubs with large amounts of coins would be available for them to use? Is this

why the Lightning Network is more effective for micro transactions and less affective for large transactions? I know you can

still make on-chain payments, but this would defeat the purpose... right?

Atomic Multi Path (AMP) would be another option (a set of options really).

Instead of only sending via 1 channel, a Lightning node can send via multiple channels to a single recipient. This additional protocol is only at the discussions stage right now, though.

You actually answered my next question, before I could ask it. {I guess you read my mind there} ....The question would have

been, if multiple small channels with less funds could be used, if they were linked to the destination. The problem I see with

that is when 1 guy sends 100 000 coins and it wipes the funds from these smaller channels in one transaction.  Huh Huh Huh

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February 08, 2018, 06:33:42 PM
 #5

that is when 1 guy sends 100 000 coins and it wipes the funds from these smaller channels in one transaction.  Huh Huh Huh

That depends on the network topology.

It is possible, given an appropriate topology, for each of the smaller payments to travel in opposite directions through the same channel.  In that way, the funds could be re-balanced.

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February 09, 2018, 09:07:12 AM
 #6

In theory you can transfer the max-flow in a single go,  but software needs to support making payments on separate channels in order to do that atomically and people are working on that.   But usually atomiticity isn't required-- usually you can just make a couple of separate payments if you run into limits.
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February 10, 2018, 05:59:48 AM
Last edit: February 10, 2018, 02:54:16 PM by Rahar02
 #7

In theory you can transfer the max-flow in a single go,  but software needs to support making payments on separate channels in order to do that atomically and people are working on that.   But usually atomiticity isn't required-- usually you can just make a couple of separate payments if you run into limits.

People are waiting for this, wondering how long it takes for lighting network to be done and can be implemented?
I always thought whether it will going through the drama such as when segwit has not been activated or it will just apply to the main network.
The problem still the same :
- high fees and
- a long time to be confirmed
But, it just happens whenever bitcoin price spike, increases significantly and then people will judge: oh, this is because "spam transactions", we need bigger blocksize. But, it proved the other way after bitcoin corrected, we can send $800 in bitcoin but only pay $0.5 fees.
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February 10, 2018, 07:07:37 AM
Last edit: February 10, 2018, 09:02:51 AM by nc50lc
 #8

Lightning Network wasn't really designed for large transactions.
But the overall transaction issues can still be solved by it due to the fact that there may be less micro transactions that will clog the blockchain if services begin to utilize LN.

Together with SegWit which compresses transactions, problems of the past were lessen by a significant amount.
In the future, if Bitcoin become mainstream, I think that the Hubs will be more busy than the Blockchain itself.
On chain transactions will be for "level 0" transactions.

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February 10, 2018, 10:16:24 AM
 #9

I have a much different vision for Bitcoin. Could this probably grow into multiple solutions for different use cases? Like off-chain SWIFT like solutions being used for large amounts and multiple PayPal type solutions for smaller amounts. <Not PayPal, but 1000s of little PayPal payment processors handling that kind of load> This will not be large corporations, but rather current payment processors taking on that role.

Individuals can still participate, if they can fund multiple smaller channels.  Huh

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February 10, 2018, 05:56:40 PM
 #10

People are waiting for this, wondering how long it takes for lighting network to be done and can be implemented?
I always thought whether it will going through the drama such as when segwit has not been activated or it will just apply to the main network.
[...]

What do you mean? In its basic form Lightning Network has already been implemented and deployed on main net without much drama. It's just that right now the network is still only used by enthusiasts and early adopters, being not quite ready for day-to-day usage yet.



I have a much different vision for Bitcoin. Could this probably grow into multiple solutions for different use cases? Like off-chain SWIFT like solutions being used for large amounts and multiple PayPal type solutions for smaller amounts. [...]

That's the beauty of LN simply being a protocol layer on top of the Bitcoin blockchain. You can 1) still use on-chain transactions as is, for example for larger transaction, 2) use LN for microtransactions or 3) implement an entirely different scaling approach on top of Bitcoin, either increasing LN's effectiveness or ignoring LN altogether.

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February 10, 2018, 08:23:09 PM
 #11

I think LN will be good only for big whales who spend transactions every time like exchanges\partners etc. Because for them opening channel
will be profitable but for users who want to pay for internet it's no reason to keep in cloud their BTC. Maybe I'm mistaken?

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February 11, 2018, 01:34:20 AM
 #12

I think LN will be good only for big whales who spend transactions every time like exchanges\partners etc. Because for them opening channel
will be profitable but for users who want to pay for internet it's no reason to keep in cloud their BTC. Maybe I'm mistaken?



Channels are basically just iou’s. Your not storing your BTC somewhere else.

The thing is Lightning, will help you and I by lowering transaction fees by not going through the Blockchain everytime a transaction is made.

As for whales, Lightning would be of limited use because they wouldn’t mind high transaction fees and there’s a limit to how much you can transfer via Lightning. Though I am not sure if this is a temporary measure or not. Can someone please clarify?
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February 11, 2018, 09:01:27 AM
 #13

I think LN will be good only for big whales who spend transactions every time like exchanges\partners etc. Because for them opening channel
will be profitable but for users who want to pay for internet it's no reason to keep in cloud their BTC. Maybe I'm mistaken?

LN is good for everyone who wants to transact BTC on a regular basis, not just whales. As a consumer you can just preload a payment channel with whatever amount you plan on spending the next, say, 6 months and you're set. Just one on-chain transaction to open the payment channel and off you go, spending coins on video games, online services or the infamous coffee to your heart's content without worrying about on-chain transaction fees.


Channels are basically just iou’s. Your not storing your BTC somewhere else.

The BTC of you and your counterparty are sent to a multi-sig address for the lifetime of the channel, so arguably they are indeed "stored" somewhere else, for lack of a better word.


As for whales, Lightning would be of limited use because they wouldn’t mind high transaction fees and there’s a limit to how much you can transfer via Lightning. Though I am not sure if this is a temporary measure or not. Can someone please clarify?

There will always be a topological limitation in what LN is able to handle based on the size of the individual payment channels, ie. you will likely fail to transact, say, 10 BTC, if the majority of channels hold less than 1 BTC, making it impossible to route your transaction.

I guess the channel / transaction limits as mentioned by Carlton Banks are subject to change once LN gets more stable, however I wouldn't be surprised if some sort of limit will be kept in place to ensure network stability.

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February 11, 2018, 10:46:12 AM
 #14

that is when 1 guy sends 100 000 coins and it wipes the funds from these smaller channels in one transaction.  Huh Huh Huh

That depends on the network topology.

It is possible, given an appropriate topology, for each of the smaller payments to travel in opposite directions through the same channel.  In that way, the funds could be re-balanced.

This.

People underestimate how hard it is to answer questions in specific, dealing with hypotheticals like this. What happens if I do X in lightning? 9 out of 10 times, it depends on the network topology. Unfortunately, there are no easy answers. That being said though, from the testing so far, it doesn't appear to be very fragile. Besides, I am sure things will continue to improve over time as the real-world tests come out.
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February 15, 2018, 05:15:30 AM
 #15

People are waiting for this, wondering how long it takes for lighting network to be done and can be implemented?
I always thought whether it will going through the drama such as when segwit has not been activated or it will just apply to the main network.
[...]

What do you mean? In its basic form Lightning Network has already been implemented and deployed on main net without much drama. It's just that right now the network is still only used by enthusiasts and early adopters, being not quite ready for day-to-day usage yet.

This what I mean:
"Currently, there is a Proof-of-Concept implementation running on the Bitcoin Testnet. So everybody can try out the Lightning Network and even set up their own Lightning Node. A date when the Lightning Network will be launched on the Bitcoin mainnet is not yet set, but chances are high it will be sometime this year."
Read here
It's not on main net, still on testnet.
And this is the first one: Read here

I mean; Lightning network still not being used massively as you said: still only used by enthusiasts and early adopters
Even for segwit which has been implemented over 6 months is not really used by exchanges or most people in bitcoin-world.
in short, I'm waiting for an official announcement about everyone can transact using Lightning network easily, in most case, people transact in exchanges.
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February 15, 2018, 08:22:50 AM
Merited by Rahar02 (5)
 #16

People are waiting for this, wondering how long it takes for lighting network to be done and can be implemented?
I always thought whether it will going through the drama such as when segwit has not been activated or it will just apply to the main network.
[...]

What do you mean? In its basic form Lightning Network has already been implemented and deployed on main net without much drama. It's just that right now the network is still only used by enthusiasts and early adopters, being not quite ready for day-to-day usage yet.

This what I mean:
"Currently, there is a Proof-of-Concept implementation running on the Bitcoin Testnet. So everybody can try out the Lightning Network and even set up their own Lightning Node. A date when the Lightning Network will be launched on the Bitcoin mainnet is not yet set, but chances are high it will be sometime this year."
Read here
It's not on main net, still on testnet.
And this is the first one: Read here

I mean; Lightning network still not being used massively as you said: still only used by enthusiasts and early adopters
Even for segwit which has been implemented over 6 months is not really used by exchanges or most people in bitcoin-world.
in short, I'm waiting for an official announcement about everyone can transact using Lightning network easily, in most case, people transact in exchanges.

Lightning Network being used by only a small group of people is not the same as Lightning Network being only deployed on testnet.

There's currently 700 nodes connected via 1700 channels on mainnet. A lot has happened since the Bitrefill transaction.

https://lnmainnet.gaben.win/


The anonymous VPN provider Torguard has been accepting mainnet Lightning Network transaction for a couple of weeks now:

https://dowbit.com/torguard-lightning-payments/


I'm not sure if there will ever be such a thing as an "official announcement". A real-life rollout is progressively taking place already though.


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February 15, 2018, 09:59:29 AM
 #17

As I see this, the Lightning Network is limited to the amounts being transferred. Ok, let me explain and then tell me if I am

wrong, Example :

Lets say Bitcoin goes mainstream and 1000's of people wants to send say 100 bitcoins from point A to B... {Most channels are

funded with much smaller amounts, right?} Now these people are limited to the channels that are funded with 100 bitcoins or

more... right? In the end, only large payment hubs with large amounts of coins would be available for them to use? Is this

why the Lightning Network is more effective for micro transactions and less affective for large transactions? I know you can

still make on-chain payments, but this would defeat the purpose... right?

Yes you are absolutely spot on that there will be large hubs. Most estimates say there will be about 2-3 such hubs that will form.
This is a general critic of the lightning network being centralized.

However, this is NOT why lightning supports microtransactions and not bigger payments.
You can continue to make bigger payments on the lightning network as long as the channels have that much funds.
The reason why lightning is suitable for micro transactions is that there is little (or no) transaction fees for smaller amounts.

Lightning is best suited for making multiple "repeat payments". It is unlikely that you have multiple HUGE payments.
Setting up a channel and closing it requires 2 on chain transactions. If you make only one payment in the channel, you'd be paying the transaction fees twice (once for the setting up and one for closing). You could rather make an onchain transfer, paying the transaction fees only once.
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February 15, 2018, 10:41:39 AM
 #18

Yes you are absolutely spot on that there will be large hubs. Most estimates say there will be about 2-3 such hubs that will form.
This is a general critic of the lightning network being centralized.

Define "most"? Source?


[...]

Lightning is best suited for making multiple "repeat payments". It is unlikely that you have multiple HUGE payments.
Setting up a channel and closing it requires 2 on chain transactions. If you make only one payment in the channel, you'd be paying the transaction fees twice (once for the setting up and one for closing). You could rather make an onchain transfer, paying the transaction fees only once.

What do you mean by "best suited for making multiple repeat payments"? The same channel can be used to send transactions to any number of market participants, not just the ones that you deal with on a regular basis. In other words, LN is suited for any form of day-to-day payments. If day-to-day payments aren't your thing, ie. you don't plan on transacting BTC on a regular basis, then you are not using BTC as a payment network anyway and are only marginally affected by transaction fees in the first place.

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February 15, 2018, 11:11:38 AM
 #19


Quote
What do you mean by "best suited for making multiple repeat payments"?
I meant you keep making Bitcoin transactions. If your purpose is to just send one large transaction, i point out that you wouldn't set up a lightning channel just for that payment.
It works if you already have a channel which has enough funds.
Apologies for the ambiguity.
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