The Lightning Network's penalty system in action

[Anti-Cen]

If "B" tries to close the channel, he must do so using an old state, and attempting to use this would result in "A" being able to claim all funds in the channel.

Surly "A" could only claim on the balance that he holds the key for on the transaction state of the ledger and not just take the lot.

General users just won't understand the system but their voices will be herd if more than a few start to cry fowl so again Bitcoin
has solved one problem by introducing two more not that i am saying your understand is wrong or anything.

Miners running these banking hubs can and will be taken down by white-hats if they try any of that bushiness 

 

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[Quickseller]

If "B" tries to close the channel, he must do so using an old state, and attempting to use this would result in "A" being able to claim all funds in the channel.

Surly "A" could only claim on the balance that he holds the key for on the transaction state of the ledger and not just take the lot.

No, "A" would be able to obtain the entire balance held in the channel as part of the penalty for trying to "cheat".

In theory, the LN protocol could be changed so that "A" could only claim what he is due, plus a penalty percentage, but this would still not be ideal because "B" would be loosing money because of something outside of his control, and due to something he cannot prevent.

[Rydereee12]

I think this is one of the reasons why the spamming of the legacy/SegWit Blockchain was put on hold, too. 

[Anti-Cen]

In theory, the LN protocol could be changed so that "A" could only claim what he is due, plus a penalty percentage, but this would still not be ideal because "B" would be loosing money because of something outside of his control, and due to something he cannot prevent.

it's a hard one I guess and what if man-in-the-middle hackers fool a wallet into sending an out of date
transaction given that no one can pick up the phone to plea their case when coins do go missing.

[Xynerise]

Unless I am missing something, I don't think that is right. Consider this scenario:

"A" and "B" open a channel and engage in several transactions. If immidiately after the most recent transaction, "transaction n", "B" losses all data associated with his LN wallet, and was unable to backup his data after "transaction n", then he will have insufficient information available to close the channel without risking all of his funds (with near certainty of loss). Remember that "B" does not have the current state of the channel.

If "B" tries to close the channel, he must do so using an old state, and attempting to use this would result in "A" being able to claim all funds in the channel.

It seems I misunderstood your previous post.
The Lightning Network nodes are local and not on the blockchain so you can't restore backups deterministically. So without a backup you're SOL.
However in the future you could outsource the watching of commitment transactions to a Watchtower so if your peer tries to cheat you even if you're offline or lose your backup, then the Watchtower could post the penalty transaction on your behalf and take a cut of it as fees.
It's still very nascent at this stage though.

I don't think this is right. My understanding is that Bitcoin Core/QT would pre-generate 100 addresses in advance, so you could backup your wallet and the backup would contain the next 100 addresses you would receive bitcoin to.

Actually in the past, before version 0.3.13.3, there was no keeypool feature and users had to backup after EVERY transaction.
The Keypool feature was introduced in version 0.3.13.3 by Satoshi after a user lost a large amount of bitcoins because he didn't backup after his last transaction so he didn't have access to the private key of his change address.

In hindsight, using Keypool, HD,  and mnemonics seem obvious to us. It wasn't obvious then.
On the future when LN has drastically improved, the improvements would seem obvious I'm hindsight too.