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Author Topic: The year is 2020 - Lightning Network is a huge success! What now?  (Read 534 times)
BitCryptex
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February 21, 2018, 07:12:48 PM
 #21

That's because it's still experimental and there is a chance to lose all funds you put in there.
I'm curious to see how this will develop in the future: if many exchanges support LN, I see no reason to keep any funds on a non-Lightning hot wallet anymore. It will be directly from on-chain cold storage to LN and if needed back to on-chain cold storage.

That's why I wrote "Current version", my point was that Lightning Network cannot be used for cheap transfers of bigger amount of BTC. It shouldn't be a huge problem as long as fees will stay as they are today. We all know that they are all rushing to make Lightning Network usable. Even though people know the risk, they are still trying to use Lightning Network because they understand how huge impact it will have on Bitcoin future.  I also can't wait to see the results.

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February 21, 2018, 08:11:07 PM
 #22

I can imagine someone throwing 1 Bitcoin in a hub, getting a million transactions per year, and earning a million Satoshis (1% of his 1 Bitcoin).

I can imagine all (or most) of the 11,400 Bitcoin node operators thinking the exact same thing.

That would be 11 billion transactions that they'd need to process in aggregate to earn their 0.01 BTC. If we assume that a generous 600,000 per day vanilla on-chain transactions (i.e. 1 signer, 1 input, 2 outputs) are possible, then the 11 billion transactions needed to earn back that 0.01 BTC for each node would take around 50 years to occur at today's rates of use. Lightning could be far more utilised than that, that's just a little perspective based on historical demand and on-chain technical limits.


I can also imagine how much more popular it would be to run a Bitcoin node that routes Lightning transactions, if this really was such a big money spinner. Any significant profits will be, like with mining, limited to the first movers. Even now, there is at least one very well connected Lightning node that charges 0.001 satoshis per transaction.

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February 22, 2018, 06:58:16 AM
 #23

Looking at most of the responses here, I reckon that my initial concerns might be valid. We are hoping for explosive growth and adoption to sustain both the Lightning Network and mining. The next question should be, "Would the benefits of the Lightning Network" be enough to attract that much attention and adoption?

I know the end goal is "Cheap/near instant Global micro transactions" but looking at the math, this might pose serious challenges, once this is achieved. Miners are running expensive ASIC intensive operations and this needs to be profitable for them to continue doing this. Shifting from ASIC based hardware to hardware focused on running Lightning Nodes, is not profitable.

This is why this technology is still highly experimental and should be classed as a high risk investment. ^hmmmmm^

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February 24, 2018, 02:52:17 AM
 #24

Does anyone know when Lightning Network will be available?  This will be a good addition to Bitcoin. Smiley
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February 24, 2018, 12:21:41 PM
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 #25

Does anyone know when Lightning Network will be available?  This will be a good addition to Bitcoin. Smiley

Lightning Network is available on both mainnet and testnet. However, I can't recall any user friendly Lightning Network clients for mainnet. Most of them are still being developed so that is why they are configured to send and receive transactions on the testnet. I doubt that anyone would like to lose their bitcoins due to bug in the code. You can check the number of nodes and channels right here. Zap is easy to use and it seems like it might be one of the first ready-to-use Lightning Network clients. I'm quite curious when will Trezor and Ledger start working on LN support. As far as I know, TorGuard accepts Lightning Network payments for their service. You might try to contact them to learn more if you are interested in their offer.

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February 24, 2018, 01:26:22 PM
 #26

Does anyone know when Lightning Network will be available?  This will be a good addition to Bitcoin. Smiley

Lightning Network is available on both mainnet and testnet. However, I can't recall any user friendly Lightning Network clients for mainnet. Most of them are still being developed so that is why they are configured to send and receive transactions on the testnet. I doubt that anyone would like to lose their bitcoins due to bug in the code. You can check the number of nodes and channels right here. Zap is easy to use and it seems like it might be one of the first ready-to-use Lightning Network clients. I'm quite curious when will Trezor and Ledger start working on LN support. As far as I know, TorGuard accepts Lightning Network payments for their service. You might try to contact them to learn more if you are interested in their offer.

TorGaurd is taking huge risks by doing this, but they have given customers their word that they would refund people, if they lose any money, due to exploits in the Lightning Network. I think most people are just doing small "test" transactions now, to see how it will react in a live environment.

As a matter of fact, I believe their are even a limit on the amount that you can send & receive now, to protect people from themselves. ^smile^

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February 24, 2018, 05:40:43 PM
 #27

TorGaurd is taking huge risks by doing this, but they have given customers their word that they would refund people, if they lose any money, due to exploits in the Lightning Network. I think most people are just doing small "test" transactions now, to see how it will react in a live environment.

As a matter of fact, I believe their are even a limit on the amount that you can send & receive now, to protect people from themselves. ^smile^

Great marketing, I wouldn't be surprised if they gained a lot of new customers only because of Lightning Network mainnet payments. I have tested Lightning Network quite a lot on the testnet and at first I had mixed feelings. I opened a few channels with the biggest available nodes and some of my channels were closed without any particular reason after a few days. I have checked LN explorer and it turned out that it wasn't node's fault. However, it got better after some time, now all of my channels on the testnet are running without any problems. I didn't have enough courage to test it on the mainnet, though.

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February 24, 2018, 06:28:48 PM
 #28

I think that is a great success.. however it is still unsure for some people... It isn’t it Huh
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February 25, 2018, 12:09:51 AM
 #29

It would be amazing to see the lightning network fully implemented throughout the blockchain by 2020. That is not far away if you think about it. If all goes to plan there will be no need for 99% of the current payment systems given its effect it will have on fees and transaction times
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February 25, 2018, 02:52:43 AM
 #30

It will depend on the market. If BTC remains the king and the price goes to the moon, then all players will probably in happy mood.
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February 25, 2018, 07:04:47 AM
 #31

Why would LN be a huge success?

https://medium.com/@jonaldfyookball/mathematical-proof-that-the-lightning-network-cannot-be-a-decentralized-bitcoin-scaling-solution-1b8147650800

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February 25, 2018, 07:25:56 PM
 #32


Huge success = all big merchants using it, big transaction volume, etc. If Steam, Microsoft, Amazon, Ebay... etc, are all using it, and people are using it and the volume is huge, then it will be a success, irrespective of what Jonald Fyookball has to say.

Also on the technicals, im not sure how Fyookball can be right and Nick Szabo (a realistic satoshi candidate and an huge past in the crypto world) can be wrong:

http://bitcoinist.com/nick-szabo-bitcoin-censorship-resistance/

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February 25, 2018, 08:26:12 PM
 #33

I don't think LN will fundamentally change mining incentives. As you point out, there is the matter of opening, closing and funding channels. These require on-chain transactions. Even if a majority of network traffic goes to LN, a significant portion of network growth will still be on-chain.

For another thing, the security model of LN is different than Bitcoin. As I understand it, parties must be online and private keys are required to update settlement transactions. So your LN node is a essentially a "hot wallet" and shouldn't be used for value storage. I think most high-value transactions will probably remain on-chain. Also, the security of LN hash preimages is based on the idea that you can settle to the blockchain if your channel partner is dishonest. But if you can't get a settlement transaction confirmed on the blockchain before the timelock expires, you can't necessarily empty your channel before a thief can. In the context of high on-chain fees, that could prove significant.

So, even if we sidestep the matter of opening and closing channels, I think the differences in security model mean that LN payments are not interchangeable with BTC payments. There will always be a market for distributed and permanently stored payments/contracts/data on the blockchain.

Of course there will always be a place for onchain transactions to be happened within the bitcoin network, but don't forget that the main that LN comes to handle is with the micro transactions, people who want to transact a small amount wouldn't really need the same amount of security that doing onchain transaction offers, and they will be okay with doing the transaction off-chain.

A big concern about LN network is that you would need to open a channel for each bitcoin address you have, which means that you won't be able to use multiple addresses- so you are losing anonymity and you are more open for security flaws as multi-signature addresses are not being supported within the LN network and you can only open channels with segwit addresses.
Not a big deal solution at all.
 

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February 26, 2018, 04:00:28 AM
 #34

I think that a compromise will be found for the miners. However, small farms are likely to cease to exist. Home mining will not be profitable

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February 26, 2018, 07:47:53 AM
 #35

I don't think LN will fundamentally change mining incentives. As you point out, there is the matter of opening, closing and funding channels. These require on-chain transactions. Even if a majority of network traffic goes to LN, a significant portion of network growth will still be on-chain.

For another thing, the security model of LN is different than Bitcoin. As I understand it, parties must be online and private keys are required to update settlement transactions. So your LN node is a essentially a "hot wallet" and shouldn't be used for value storage. I think most high-value transactions will probably remain on-chain. Also, the security of LN hash preimages is based on the idea that you can settle to the blockchain if your channel partner is dishonest. But if you can't get a settlement transaction confirmed on the blockchain before the timelock expires, you can't necessarily empty your channel before a thief can. In the context of high on-chain fees, that could prove significant.

So, even if we sidestep the matter of opening and closing channels, I think the differences in security model mean that LN payments are not interchangeable with BTC payments. There will always be a market for distributed and permanently stored payments/contracts/data on the blockchain.

Of course there will always be a place for onchain transactions to be happened within the bitcoin network, but don't forget that the main that LN comes to handle is with the micro transactions, people who want to transact a small amount wouldn't really need the same amount of security that doing onchain transaction offers, and they will be okay with doing the transaction off-chain.

A big concern about LN network is that you would need to open a channel for each bitcoin address you have, which means that you won't be able to use multiple addresses- so you are losing anonymity and you are more open for security flaws as multi-signature addresses are not being supported within the LN network and you can only open channels with segwit addresses.
Not a big deal solution at all.
 

The thing is, it is still very early days for this technology and people's expectations are possibly a bit too high. As the technology mature and more applications are developed, most of these problems will be solved. The Lightning Network was built on top of SegWit, so it is expected that SegWit addresses would be a requirement.

If it could be applied without SegWit, the guys at BCrash would have used it already. ^smile^

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February 26, 2018, 03:35:21 PM
 #36

I don't think LN will fundamentally change mining incentives. As you point out, there is the matter of opening, closing and funding channels. These require on-chain transactions. Even if a majority of network traffic goes to LN, a significant portion of network growth will still be on-chain.

For another thing, the security model of LN is different than Bitcoin. As I understand it, parties must be online and private keys are required to update settlement transactions. So your LN node is a essentially a "hot wallet" and shouldn't be used for value storage. I think most high-value transactions will probably remain on-chain. Also, the security of LN hash preimages is based on the idea that you can settle to the blockchain if your channel partner is dishonest. But if you can't get a settlement transaction confirmed on the blockchain before the timelock expires, you can't necessarily empty your channel before a thief can. In the context of high on-chain fees, that could prove significant.

So, even if we sidestep the matter of opening and closing channels, I think the differences in security model mean that LN payments are not interchangeable with BTC payments. There will always be a market for distributed and permanently stored payments/contracts/data on the blockchain.

Of course there will always be a place for onchain transactions to be happened within the bitcoin network, but don't forget that the main that LN comes to handle is with the micro transactions, people who want to transact a small amount wouldn't really need the same amount of security that doing onchain transaction offers, and they will be okay with doing the transaction off-chain.

A big concern about LN network is that you would need to open a channel for each bitcoin address you have, which means that you won't be able to use multiple addresses- so you are losing anonymity and you are more open for security flaws as multi-signature addresses are not being supported within the LN network and you can only open channels with segwit addresses.
Not a big deal solution at all.
 

The thing is, it is still very early days for this technology and people's expectations are possibly a bit too high. As the technology mature and more applications are developed, most of these problems will be solved. The Lightning Network was built on top of SegWit, so it is expected that SegWit addresses would be a requirement.

If it could be applied without SegWit, the guys at BCrash would have used it already. ^smile^

LN can be used without segwit actually. In fact it was almost assumed at some point that segwit would never get activated, and devs were working around this fact, possibly using Litecoin as a gateway to improve LN with a non-segwit Bitcoin, but as we know, it eventually got activated. This is what caused that big Litecoin dip, since as soon as Bitcoin got segwit, Litecoin went back into irrelevancy. I have nothing against Litecoin but that's just a fact.

I think LTC will still have a role in the future with further improvements that are delayed by miners and whatnot. It will be a test station for controversial updates before they go live.

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February 27, 2018, 06:27:25 AM
 #37

I don't think LN will fundamentally change mining incentives. As you point out, there is the matter of opening, closing and funding channels. These require on-chain transactions. Even if a majority of network traffic goes to LN, a significant portion of network growth will still be on-chain.

For another thing, the security model of LN is different than Bitcoin. As I understand it, parties must be online and private keys are required to update settlement transactions. So your LN node is a essentially a "hot wallet" and shouldn't be used for value storage. I think most high-value transactions will probably remain on-chain. Also, the security of LN hash preimages is based on the idea that you can settle to the blockchain if your channel partner is dishonest. But if you can't get a settlement transaction confirmed on the blockchain before the timelock expires, you can't necessarily empty your channel before a thief can. In the context of high on-chain fees, that could prove significant.

So, even if we sidestep the matter of opening and closing channels, I think the differences in security model mean that LN payments are not interchangeable with BTC payments. There will always be a market for distributed and permanently stored payments/contracts/data on the blockchain.

Of course there will always be a place for onchain transactions to be happened within the bitcoin network, but don't forget that the main that LN comes to handle is with the micro transactions, people who want to transact a small amount wouldn't really need the same amount of security that doing onchain transaction offers, and they will be okay with doing the transaction off-chain.

A big concern about LN network is that you would need to open a channel for each bitcoin address you have, which means that you won't be able to use multiple addresses- so you are losing anonymity and you are more open for security flaws as multi-signature addresses are not being supported within the LN network and you can only open channels with segwit addresses.
Not a big deal solution at all.
 

The thing is, it is still very early days for this technology and people's expectations are possibly a bit too high. As the technology mature and more applications are developed, most of these problems will be solved. The Lightning Network was built on top of SegWit, so it is expected that SegWit addresses would be a requirement.

If it could be applied without SegWit, the guys at BCrash would have used it already. ^smile^

LN can be used without segwit actually. In fact it was almost assumed at some point that segwit would never get activated, and devs were working around this fact, possibly using Litecoin as a gateway to improve LN with a non-segwit Bitcoin, but as we know, it eventually got activated. This is what caused that big Litecoin dip, since as soon as Bitcoin got segwit, Litecoin went back into irrelevancy. I have nothing against Litecoin but that's just a fact.

I think LTC will still have a role in the future with further improvements that are delayed by miners and whatnot. It will be a test station for controversial updates before they go live.

Oh, that is news to me. I was under the impression that LiteCoin actually implemented SegWit before Bitcoin did. It also seems as though SegWit has been more successful on LiteCoin than on Bitcoin. LiteCoin Segregated Witness (SegWit) Adoption was at  99.8% out of 617 blocks, back in 2017-05-08 < Source :  http://litecoin-segwit.info/  >

I also read somewhere that SegWit had to be implemented for Lightning Network to work, but things might have changed since then. < I will brush up on that knowledge >

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February 27, 2018, 07:43:55 AM
 #38

I also read somewhere that SegWit had to be implemented for Lightning Network to work, but things might have changed since then. < I will brush up on that knowledge >

SegWit is not necessary for implementing Lightning Network, only fixing transaction malleability is (the very same issue that enabled the MtGox hack back in the day).

As for now, however, SegWit is the only available fix for transaction malleability on affected blockchains (I'm not sure if Ethereum is facing the same issue with Raiden, for example) so as a consequence SegWit is currently prerequesite for Lightning Network to work.

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March 06, 2018, 09:16:40 AM
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 #39

Mining will always be profitable, the system  is designed that way. Should the reward drop to near zero then some hashpower might leave the system, but it will only leave the system until it becomes profitable again.  I see higher difficulty as a good support for a higher BTC price.

As for LN; profit margins might get squeezed but there will always be people mining it. LN fees for off chain will probably be a reflection of the price of opening and closing a channel. Thus we will probably just spread the fees out. It doesn't make sense for me to let my channel run dry and close off and make less in fees than I did to open it. The same goes for if I want to make profit on it then my channel just  wont get used. The system will regulate itself to about the same price for an open/close.

Lightning I think also wont form as many hubs as people think. Remember channels will be closing as they are "used up" all the time, and committing 1000 BTC to a hot wallet just to have 10 000 channels is a really bad idea as well. Because, again if we want to make too much profit from it then user wallets will just not route through us. We have no way of enforcing the merchant to only have a channel with us. The merchant will probably have a ton of ones opening and closing all the time with various people.

The security risks associated with having a "lightning hub/ bank" will also prevent it from happening.  The above stated prevents you from outweighing the risk/reward ratio. As you scale up your reward wont go up much, but your risk certainly will

It would be much more viable for individual users to just commit their "spending BTC" to a channel in a peer to peer fashion on a decentralized small scale and use that.
I would also argue that even if  a hub does form that, my understanding is that the off chain consensus prevents the other side of your channel from playing dirty. i.e. lets say they want to censor you or steal your funds, you get their money as their punishment.  There might be a few more popular than the rest  channels but they would still not introduce any systematic risk to LN or the ecosystem as a whole.


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