Lightning Network Discussion Thread

[Wind_FURY]

I'll go so far as to say LN is virtually useless as an end-user protocol. It provides the technological base for the payment processors of the future. Some have compared it to the TCP/IP protocol. The analogy is:
Internet -> Bitcoin
TCP/IP -> Lightning Network
World Wide Web -> Layer 3

Anyway, the next generation of payment processors will be built atop LN, will absorb all risk associated with LN, and will provide users a foolproof layer 3 solution. And possibly fractional reserve banking and derivatives.

But the "fractional reserve banking" system, and/or derivatives will be isolated only in the "next generation" payment processors' layer correct? But not on the Lightning Network?

I'm pretty sure that's right.

Thanks, I can sleep better now.

I made a mistake in the merit I sent. I sent to much, it was supossed to be 1. Haha.

[1713560902]

1713560902

[1713560902]

1713560902

[Traxo]

I'll go so far as to say LN is virtually useless as an end-user protocol. It provides the technological base for the payment processors of the future. Some have compared it to the TCP/IP protocol. The analogy is:
Internet -> Bitcoin
TCP/IP -> Lightning Network
World Wide Web -> Layer 3

Anyway, the next generation of payment processors will be built atop LN, will absorb all risk associated with LN, and will provide users a foolproof layer 3 solution. And possibly fractional reserve banking and derivatives.

Agreed. That (thus necessarily fractional reserves for the users) is the only way it can scale without requiring block size increases. And ongoing block size increases are a form centralized failure mode as I already explained up-thread. Also because liquidity (aka liquid routing) issues can’t be resolved adequately without “Mt. Box” hubs and hubs can choose who they want to do provide liquidity to, so they could give preference to their users who have fractional reserves.

So Hashed Time Locked Contracts (HTLC) are a secure means of off-chain and cross-chain¹ (not side-chains which are insecure!) transactions, but they do not scale to the masses. In payment channels, they are for use by “Mt. Box” hubs as I had alluded to. Btw, the “Mt. Box” term originates from Rusty Russell one of the early proponents of LN.

Actually HTLCs can be done on the real Bitcoin (without the Core cruft added). Core’s OP_CHECKLOCKTIMEVERIFY (aka OP_CLTV) makes it possible to do them more elegantly yet this elegance will not be even beneficial in any way when only a small number of large hubs will be using HTLCs on the real Bitcoin. Craig Wright is (and the Trilema dudes are) actually correct in this case that all the Core cruft is unnecessary.

For example, although I wrote for my improvement for cross-chain transactions¹ that it requires OP_CLTV—“This protocol can’t be achieved with nLockTime”—I realize I could actually make the protocol work without Core’s OP_CLTV. Simply have the bidders issue commitments on either chain. Even though this doesn’t lockup the UTXO for their bid, the asker’s ledger can still penalize them to the back-of-the-line when they fail to sign the payment for their accepted bid, by tracing the lineage of the UTXO on the bidder’s chain. It’s less elegant (with some increased risk in some nearly implausible pathological case) but still works. Another alternative in lieu of OP_CLTV would employ OP_MULTISIG as Spillman-style contracts do in order to lockup the bidder’s UTXO and require the asker to be the other signer wherein the asker pre-signs T2 the nLockTime refund and the alternative payment T3 transaction (used if the bid is accepted) before the bidder issues the T1 transaction.

Many Core shills claim that Spillman-style payment channels which employ nLockTime instead of OP_CLTV are vulnerable to malleability attacks wherein the counterparty could hold the channel’s funds hostage. But these malleability attacks are simply a bug which can be fixed that doesn’t require any change to Satohshi’s real Bitcoin protocol. By enforcing the correct format for signatures, then the counterparty needs to only sign two variants of each transaction to remove all remaining malleability.

So we will get a lot of hype about LN on Core but this is just a ploy by the powers-that-be to take real Bitcoin from bunny rabbits. And yes we will end up with LN on “Mt. Box” hubs and it will run fine on the real Bitcoin which ends up the winner at the end. Core will provide it’s intermediary role and to fool the n00bs in the process.

¹ _{I improved and fixed TierNolan's flawed atomic decentralized exchange protocol utilizing HTLCs in the Viable Trustless Cross-chain DEX Protocol subsection of the Secure, DEX (Decentralized Exchange) section of Part 1 of my most recent blog.}

But the "fractional reserve banking" system, and/or derivatives will be isolated only in the "next generation" payment processors' layer correct? But not on the Lightning Network?

Correct, but that means the actual users will eventually all be using fractional reserves.

So now do you understand why Goldman Sachs et al were investors in Blockstream. Not only do they get to propel us forward towards a 666 fractional reserve future, but they also take our Bitcoins from us by fooling us into hodling a Core protocol altcoin (all altcoins are fractional reserves of the reserve currency real Bitcoin).

What is your actual position anunymint? Are you a bcash troll? Just anti crypto currency? Pro fiat fractional reserve banking? Pro gold and silver bullion? I have a taste of some of the things you stand against but no idea what you sand for.
 

I now hate gold and silver.

Didn’t you read me criticizing Bcash (BCH) so many times recently? Hell no I am not a shill for Bcash. Bcash is (like Core also) another way of getting n00bs to buy shitcoins with their real Bitcoin.

Fractional reserve banking (and democracy with redistribution of wealth and socialism) was necessary in the fixed capital investment Agricultural and Industrial ages, but I believe we are leaving that now going into a new epoch Knowledge Age. See the following links for digging into my hypothesis on that:

https://bitcointalk.org/index.php?topic=4614012.msg41962468#msg41962468
https://bitcointalk.org/index.php?topic=4614012.msg41788167#msg41788167

So I believe the real Satoshi protocol Bitcoin is going to be the new world reserve currency and it will be king of the old world, fixed capital investment, fungible labor, Industrial age economy. The real Bitcoin will dominate all the shitcoins, including Core and Bcash which are just fractional reserves on the real Bitcoin.

But I also believe that old world economy is fading away. That is why the powers-that-be must further consolidate it with (surreptitious control over) Bitcoin and ameliorate the nation-state central banks (which they also significantly surreptitiously influence from behind the curtain).

So I believe the future is a Knowledge Age and that is why I am working on trying to remove the “Past Majority” nothing-at-stake attacks on proof-of-stake and remove the ability for even 50+% attacks to profit on proof-of-stake. Because I think we need decentralized consensus for more than just money. We need to for example replace all the centralized databases on the Internet with decentralized ones so that the Knowledge Age is not controlled by a few fat cats who destroy it.

So I am working on not the absolute maximum security (hey natural calamities are a risk we all face yet we still go about doing our work anyway), but the maximum on-chain scalability so we avoid the deleterious effects of “Mt. Box” hubs especially for databases for everything we do on the Internet not just payments (aren’t we tired of being controlled by a few Internet behemoths!). Off-chain does not scale (along with not having fractional reserves) to the masses except in localized groupings (which is what non-fractional reserve layer 3 solutions require). And scaling with fractional reserves has the drawbacks/limitations that we see now with the dominance of the Internet behemoths. So I am trying to solve the BIG ENCHILADA which is long-term even more important than Bitcoin. But not a Bitcoin Killer. The Knowledge Age is the ultimate Bitcoin Killer but that is some decades from now. In the interim Bitcoin will be dominant.

Yet if we succeed on this goal, then what we are creating will also grow hopefully to billions of users with a decade or two. Anyway, that is the shitcoin I am contributing to. I am also working on a new programming language Zer0 which I think can be the next mainstream programming language:

Which is why C++ is the most clusterfucked programming language (c.f. also, also and also) on earth.

[Traxo]

While you work on that though the rest of us can be doing lightning payments that are super cheap super fast and don't really negatively impact the bitcoin that we already had in any way.

Also, to anyone who is feeling down in the dumps about the current price action, I recommend downloading the Bitcoin Lightning Network app on your android phone and playing with it. Doing this has made me very excited about the future of bitcoin and reaffirmed my long term bull expectation. Paying a penny for something and having it be super easy and super fast and unbelievably cheap transaction fee is just fun to do.

I presume you know realize STEEM has had “free” instant transactions on-chain since 2016, not limited to just payment transactions but all sorts of non-monetary database updates. I have been posting blog and comment edits instantly since 2016 on STEEM. It really works. Of course it is centralized behind the curtain but one can argue so is Bitcoin. I am really not super excited about being able to send an instant payment off-chain (and no other kinds of non-monetary database update transactions!) on a system that I expect to become centralized, not permissionless, and with users holding bags of fractional reserves. I want a design that I know can scale and protect humanity from the Internet behemoths which have too much totalitarian power. I think LN is more of the same totalitarianism.

Note however that letting Wallstreet and the Silicon Valley vulture capitalists bring their zombies minions into off-chain hubs is probably good for the growth of crypto. Does not meet my ideals, but it can coexist for example with other alternatives that I and others are working on.

Can you give us at least a flavor of how you propose to achieve on chain scalability?

One of the important factors in scalability is that not everyone can validate every transaction. The reasons why that is an important factor should be obvious no?

Thus we can never get maximum scalability on-chain combined with maximum security. The best we can hope for on-chain scalability is acceptable mathematically quantified security along with maximum on-chain scalability of both transaction volume and participation.

Off-chain can scale volume of transactions while maintaining maximum security on-chain for settlement, but AFAICT it can’t scale maximum participation in those non-fractional reserve transactions (for the reasons already discussed up-thread such as the liquidity weighted routing issue and AFAIK that layer 3 can only be non-fractional for groupings of participants, not every public address on the block chain). Thus, off-chain only scales participation via fractional reserves and Internet behemoths. (Note off-chain HTLCs can be employed securely for participants of any wealth in local groupings for example to accelerate battles in decentralized MMORPG games)

As an analogy, off-chain HTLCs actually create regions clustered around liquidity and sufficient wealth of market makers. Off-chain liquid routing ends up as centralized exchanges decorated with some secure settlement protocols which most end-user participants probably won’t be able to avail of on-chain. Thus off-chain moves the masses entirely off-chain to fractional reserves and keeps only the exchanges on-chain. Well isn’t that what we already have with centralized exchanges, except that off-chain HTLCs also enables those exchanges to transact securely off-chain. But my expectation is that most end-users will not be participating with on-chain settlement security (i.e. with non-fractional reserves).

So what I want to do is raise the average level of security for the end-user participants because they will all be transacting on-chain at maximum scalability of volume and participation, but the security will not be as high as Bitcoin. Yet most end-users will not be able to transact on Bitcoin (even with LN) for the reasons already stated. So that is why the average security can be raised even while the maximum security is lower. Yet by lower, I do not mean the current shit security of proof-of-stake which is guaranteed to be controlled by a parasitic oligarchy. Yet please note that Bitcoin is also ostensibly being surreptitiously controlled by a parasitic oligarchy behind the curtain, but that parasitism is masked (to some degree at least for those not stupid enough to be fooled into buying shitcoins or trading the dips) near-term by the gains in market cap due to onboarding onto the world’s future reserve currency that has maximum security.

_{If I give you much more flavor than that about the actual technological features I am exploring, then I will probably give away my idea prematurely. It will of course employ a open participation sharded design analogous to OmniLedger, but there are some significant differences. And no traditional proof-of-work but every user's client does some work but not what you would normally think of as a proof-of-work (i.e. not computationally significant and not a “fungible might is right” paradigm, i.e. the work is not measured by computational difficulty). OmniLedger and most other sharded designs I’ve seen divide up security level by the number of shards. My design idea in theory maintains a constant security level regardless of the number of shards. Note please take this all as unsubstantiated story-telling conjecture until you actually see a whitepaper with some formal proofs of security.}

[Anon136]

Well anyway, it's partly my fault for steering this off course but let's not make this the anonymity discussion thread.

Last night I found a service that sold me a little VPS for 2 dollars a month and accepted lightning so I bought it. Not sure what I'm going to do with it yet but maybe try to set up a web page for accepting lightning tips.

[andrew1carlssin]

A thread for discussion of all things Lightning Network.

I am working on a LN simulator using
the intend is to let the .iso

https://www.nrl.navy.mil/itd/ncs/products/core

HOPE it will be available soon so we can perform some measurement ;-)

[Rath_]

Last night I found a service that sold me a little VPS for 2 dollars a month and accepted lightning so I bought it. Not sure what I'm going to do with it yet but maybe try to set up a web page for accepting lightning tips.

Could you post what the name of that service is? Two dollars is not really much so I don't expect that VPS to be powerful, of course.

What about updating the first post of this thread with some useful links? For example, stores which accept Lightning Network payments, a list of LN wallets, (Discussion) Is Lightning Network centralized?, Lightning Network Explorer.

[infofront]

There's a discussion about Anonymint's ban in the Meta subforum: https://bitcointalk.org/index.php?topic=1887077.160
It's probably best to keep that discussion there.

In LN news: 49% of the Bitcoin BTC Lightning Network is occupied by one node

[European Central Bank]

In LN news: 49% of the Bitcoin BTC Lightning Network is occupied by one node

what are the implications of this?

https://twitter.com/F0nta1n3/status/1017582396923875328

according to this guy he is a bcash butt boy.

i guess if he does break it it's free testing.

[Rath_]

what are the implications of this?

Quoting from the article

“Yes, I am very curious about what he has planned. My guess is that he is just going to shut them all down at once and see what happens.”

This might be actually something we should worry about. Personally, I am not running a Lightning Network node but to ensure that payments made from my LN wallet won't fail, I opened a channel to one of the biggest nodes. Shutting down such node might cause to break the connection between many users which would result in failing payments.

I have just checked that node using https://lnmainnet.gaben.win/ and the total capacity of that node is 36.08798090 BTC (49.054 % of total) $225,146.42. Source: https://1ml.com/node/036b32ac6acf6d178f47c2139b7327ab85bd3d5f5c40681a9a48109ea21f53e1e5

[JayJuanGee]

In LN news: 49% of the Bitcoin BTC Lightning Network is occupied by one node

what are the implications of this?

https://twitter.com/F0nta1n3/status/1017582396923875328

according to this guy he is a bcash butt boy.

i guess if he does break it it's free testing.

Yes, is the evidence of the article actually true, and is it a kind of spam attack that is potentially going on the lightning network?

Also, is this part of the explanation why lightning network capacity has pretty much gone onto an exponential run, in terms of the number of bitcoins on there - seeming to double in less than a week?

[Rath_]

Yes, is the evidence of the article actually true, and is it a kind of spam attack that is potentially going on the lightning network?

Also, is this part of the explanation why lightning network capacity has pretty much gone onto an exponential run, in terms of the number of bitcoins on there - seeming to double in less than a week?

I don't really think if we can call it a spam attack. I would rather say that it might be an attempt to prepare for disrupting the network in the future in order to show its critical disadvantages. I have already answered it here, in case you missed it.

Yes, the capacity surged in the past 30 days by 220%. Source: https://1ml.com/statistics

[Anon136]

There's a discussion about Anonymint's ban in the Meta subforum: https://bitcointalk.org/index.php?topic=1887077.160
It's probably best to keep that discussion there.

In LN news: 49% of the Bitcoin BTC Lightning Network is occupied by one node

It seems like a good time to talk about how bad of a thing centralization on LN actually is. Because, the way I see it, it isn't that big of a deal, but I may be missing part of the puzzle.

There is this idea in the economics of free market capitalism that, even if an actor is a defacto monopoly, that even though he isn't constrained by existing competition, he is still constrained by the competition that will come into being if he abuses his position. This doesn't always work in the real world because monopolists employ the state to protect them against competition. However in the abstract world of permissionless adhock networks there is no state to protect a node from competition.

Even if there were only one node that everyone connected through, he would be constrained by the knowledge that if he abused his position than competition would quickly appear. He would have to keep fees so low that no one wanted to bother starting a node to compete with him. He would have to route all transactions because the moment he started censoring nodes would pop up to route those transactions. He would have to route transactions reliably and consistently because the moment he didn't new nodes would pop up to compete with him that could. He would have to find a way to be DDOS resistant because if he did not new nodes would appear to serve those who were unable to route through him due to network disruption.

Anyway, I am sure that you see where I am going with this. So I would like to know what if anything I am missing here. What is the fear of a centralized lightning network?

[infofront]

There's a discussion about Anonymint's ban in the Meta subforum: https://bitcointalk.org/index.php?topic=1887077.160
It's probably best to keep that discussion there.

In LN news: 49% of the Bitcoin BTC Lightning Network is occupied by one node

It seems like a good time to talk about how bad of a thing centralization on LN actually is. Because, the way I see it, it isn't that big of a deal, but I may be missing part of the puzzle.

There is this idea in the economics of free market capitalism that, even if an actor is a defacto monopoly, that even though he isn't constrained by existing competition, he is still constrained by the competition that will come into being if he abuses his position. This doesn't always work in the real world because monopolists employ the state to protect them against competition. However in the abstract world of permissionless adhock networks there is no state to protect a node from competition.

Even if there were only one node that everyone connected through, he would be constrained by the knowledge that if he abused his position than competition would quickly appear. He would have to keep fees so low that no one wanted to bother starting a node to compete with him. He would have to route all transactions because the moment he started censoring nodes would pop up to route those transactions. He would have to route transactions reliably and consistently because the moment he didn't new nodes would pop up to compete with him that could. He would have to find a way to be DDOS resistant because if he did not new nodes would appear to serve those who were unable to route through him due to network disruption.

Anyway, I am sure that you see where I am going with this. So I would like to know what if anything I am missing here. What is the fear of a centralized lightning network?

If someone like a banking cartel manages to control 50+% of the LN transactions, it will be difficult to replace. The replacement node(s) may be required to maintain millions of BTC in payment channels to maintain similar liquidity, which would not be easily replaceable.

Assuming governments regulate BTC and LN, as they regulate everything, they may require people to use "authorized" LN nodes, to censor nation states, drug traffickers, etc. That depends on how anonymous LN proves to be.

[Wind_FURY]

If that was an "attack" on the Lightning Network, should it then be that someone else or more people must open channels that are worth as much liquidity in Bitcoin to balance it out?

[Rath_]

If that was an "attack" on the Lightning Network, should it then be that someone else or more people must open channels that are worth as much liquidity in Bitcoin to balance it out?

This wouldn't solve the problem completely. Other people would have to open channels to those who are trying to balance it out in order to preserve connectivity between the users of the Lightning Network. As I mentioned earlier, if the person who controls that node decides to shut it down then it might result in many payments not going through.

[European Central Bank]

more about the one dominant guy on the network

https://twitter.com/ziggamon/status/1018627137320968192

according to that he wants to turn his channel into a honeypot and screw users by trapping them in it with high fees. all character building stuff i guess.

[Anon136]

Last night I found a service that sold me a little VPS for 2 dollars a month and accepted lightning so I bought it. Not sure what I'm going to do with it yet but maybe try to set up a web page for accepting lightning tips.

Could you post what the name of that service is? Two dollars is not really much so I don't expect that VPS to be powerful, of course.

What about updating the first post of this thread with some useful links? For example, stores which accept Lightning Network payments, a list of LN wallets, (Discussion) Is Lightning Network centralized?, Lightning Network Explorer.

Sure. Here ya go https://www.lavavps.lt/en-anonymous-bitcoin-vps/.

If someone like a banking cartel manages to control 50+% of the LN transactions, it will be difficult to replace. The replacement node(s) may be required to maintain millions of BTC in payment channels to maintain similar liquidity, which would not be easily replaceable.

As I understand it, the lightning network isn't supposed to be for large transactions. It might more severely disrupt some marginal transactions that are above the normal denominations of every day users but below what people tend to consider worth doing on chain. And sure if a huge node like that suddenly went offline it would create disruption and force people to open new channels which would bloat the mempool and temporarily increase on chain fees. The point is that the network would heal almost organically and rather more quickly than many would surmise, I suspect.  Even that worst case scinario of one entity routing everything suddenly pulls out, would just heal naturally in time. And destroying your privileged position as largest node on the network just to cause temporary disruption that would heal probably pretty quickly? As an attack vector, it seems like a stretch.

Assuming governments regulate BTC and LN, as they regulate everything, they may require people to use "authorized" LN nodes, to censor nation states, drug traffickers, etc. That depends on how anonymous LN proves to be.

I don't think this is right. A user would only have to find one payment channel that would be willing to route his payment. So if the big centralized node was refusing to route certain payments this would create a market for routing the payments that he was unwilling to route. Smaller parallel payment channels would emerge to serve this market. Even if it wasn't very anonymous, they would stay nimble and mobile and in safe jurisdictions. I'm sure the state could succeed in increasing the fees some what for routing payments like this but probably not to oppressive levels. Where there is a shekel there is a way, as we see with drug prohibition.

more about the one dominant guy on the network

https://twitter.com/ziggamon/status/1018627137320968192

according to that he wants to turn his channel into a honeypot and screw users by trapping them in it with high fees. all character building stuff i guess.

Good good! Bring on that stress testing.

[infofront]

If someone like a banking cartel manages to control 50+% of the LN transactions, it will be difficult to replace. The replacement node(s) may be required to maintain millions of BTC in payment channels to maintain similar liquidity, which would not be easily replaceable.

As I understand it, the lightning network isn't supposed to be for large transactions. It might more severely disrupt some marginal transactions that are above the normal denominations of every day users but below what people tend to consider worth doing on chain. And sure if a huge node like that suddenly went offline it would create disruption and force people to open new channels which would bloat the mempool and temporarily increase on chain fees. The point is that the network would heal almost organically and rather more quickly than many would surmise, I suspect.  Even that worst case scinario of one entity routing everything suddenly pulls out, would just heal naturally in time. And destroying your privileged position as largest node on the network just to cause temporary disruption that would heal probably pretty quickly? As an attack vector, it seems like a stretch.

Assuming governments regulate BTC and LN, as they regulate everything, they may require people to use "authorized" LN nodes, to censor nation states, drug traffickers, etc. That depends on how anonymous LN proves to be.

I don't think this is right. A user would only have to find one payment channel that would be willing to route his payment. So if the big centralized node was refusing to route certain payments this would create a market for routing the payments that he was unwilling to route. Smaller parallel payment channels would emerge to serve this market. Even if it wasn't very anonymous, they would stay nimble and mobile and in safe jurisdictions. I'm sure the state could succeed in increasing the fees some what for routing payments like this but probably not to oppressive levels. Where there is a shekel there is a way, as we see with drug prohibition.

I got pretty drunk last night for the Pacquiao fight and then came on the forum.

I think I had in mind lots of large transactions being moved around on the lightning network. Transacting on the base layer could become so prohibitively expensive that only $1 Billion+ transactions would be worth making on the base layer, in the event that bitcoin becomes the global reserve currency.

[Wind_FURY]

If that was an "attack" on the Lightning Network, should it then be that someone else or more people must open channels that are worth as much liquidity in Bitcoin to balance it out?

This wouldn't solve the problem completely. Other people would have to open channels to those who are trying to balance it out in order to preserve connectivity between the users of the Lightning Network. As I mentioned earlier, if the person who controls that node decides to shut it down then it might result in many payments not going through.

I hope he does decide to close it down without warning. Hahaha. That would make a good experiment on Lightning's robustness. But I believe if there are enough connections among nodes in the network, routing payments will still go through but maybe with slight delays?

[Kakmakr]

If we say that the Lightning Network is a 2cnd layer application, targeted at micro transactions, would we clearly define what constitutes a micro transaction first? I recently saw individual channels that are funded by +/- 37 bitcoins. 

This was my first impression of what the Lightning Network was developed for and that bigger transactions would still be done on-chain. In your view, would you say 1 bitcoin is a micro transaction?