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Author Topic: Common questions regarding the Lightning Network  (Read 221 times)
BitCryptex
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July 31, 2018, 11:02:09 PM
Merited by suchmoon (15), Anon136 (10), gentlemand (3), TryNinja (3), LoyceV (2), d5000 (1), ETFbitcoin (1), mocacinno (1), buwaytress (1), wilwxk (1)
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Table of contents

      1. General Information
      2. Running a node
      3. Concerns

General Information

How are bitcoins on the Lightning Network different from on-chain bitcoins?

They are exactly the same coins. There are no Lightning Network tokens. The only difference is that bitcoins are stored in multi-signature addresses and transactions are settled between two parties without broadcasting anything to the blockchain (except when opening and closing the channel).


When will merchants start accepting Lightning Network payments?

It is a tough question. Many merchants were discouraged from accepting Bitcoin because of high transaction fees. Some of them use third party services which are slowly working on the Lightning Network support. Here you can find a list of stores which accept Lightning Network payments.


How many times can we expect to be able to use a payment channel?

Every channel has a minimum amount of coins which has to stay unspent. Channels can be used as long as both parties continue to cooperate with each other.


How fast and reliable are Lightning Network payments?

Depending on the route, Lightning Network payments can be instant. Every wallet tries to find the cheapest and the shortest route once you send your transaction. You can open a channel directly to a person who you are going to often trade with or depend on other channels which might route your payment for a small fee. Lightning Network is still in its early state so payments fail from time to time.


What are the upcoming features?

Dual funded channels - both parties will be able to fund a channel. Watchtowers - they will be responsible for taking care of people attempting to cheat while the other party is offline. Muilti-path payments - currently, the payment can't be divided into smaller ones which sometimes results in failed payments due to not enough funds in the channels.

You can find more here.


Where can I find the latest news regarding the Lightning Network?

Telegram channel - a whole group of knowledgeable people ready to talk about the Lightning Network. Great source of information.

Bitcoin Lightning - a website strictly focused only on the Lightning Network.

Cointelegraph - nothing to add here.


Which wallet is the best one?

There are multiple implementations of the Lightning Network and most wallets have similar features. However, some mobile wallets can't receive payments. Eclair is the most popular wallet for Android but it is also available on Windows. The most popular implementations are: c-lightning, LND and eclair mentioned earlier.


Running a node

How much money can you make on running a Lightning Network node?

Don’t expect to make a lot of money. Everything depends on the number of connections and your fee policy. The less you charge, the higher your chances to route a payment. Don’t set the fee too low. You have to save up money for future channel re-balancing. User Xian01 opened almost 200 channels and earned barely 15 satoshis after 2 weeks (Reference).


Is running a Lightning Network node demanding?

You can run a Lightning Network node on both Linux and Windows. You have to run a Bitcoin full node which uses the biggest part of available resources. In order to start making money on running a node, you have to open a few channels. Keep in mind that built-in autopilot might not guarantee you the best connections. Even Raspberry Pi 3 B+ is capable of running a Lightning Network node. Check out RaspiBlitz for fast setup.


Is there any risk in running a Lightning Network node?

Yes, due to many factors. Lightning Network implementations are still in beta and might contain critical bugs which could be used to steal funds locked up in channels. Keep in mind that if you won't keep your node online 24/7, someone can attempt to cheat you by broadcasting an old state of your channel. An online node would normally broadcast a penalty transaction.


Does opening new channels help to increase the earnings?

No, it doesn't. There are many other things that you should take into account. Your fee policy, channels' capacity, connection to different sized nodes. Here you can find an interesting comparison between Andreas Brekken's and Alex Bosworth's nodes. The node which had lower principal, made higher profit.


Do I have to run a full Bitcoin node?

No. LND supports neutrino which allows user to run a light node instead of a full one. It is a good solution for devices with low processing power and storage (Raspberry Pi).


How do I set up a Lightning Network node?

The setup process varies for each implementation. Fortunately, detailed documentation makes it easy for inexperienced users to start their own Lightning Network node even on Linux. If you don't feel confident with any other operating system than Windows then take a look at this tutorial which will help to set up your own node.


Concerns

Is Lightning Network centralized? Is it more centralized than Bitcoin? Does it make Bitcoin more centralized?

This topic has been brought up many times. The Lightning Network is a second layer scaling solution which has no impact on the Bitcoin network. It works independently and no one is forced to use it. The problem of large nodes should solve itself once network continues to grow.


Will casual users be able to accept payments and donations without having to run their own full node 24/7?

Currently, it is not possible. It might be possible in the future to ask a third party to watch for the incoming payment.


What are the new limitations of scalability once lightning is fully functional?

Opening and closing a channel requires broadcasting a Bitcoin on-chain transaction. Increasing the blocksize might be necessary in the future; however, solutions like SegWit, Schnorr signatures can help to decrease the size of transactions. Lightning Network is a second layer protocol, it is possible to build more user-friendly layers on top of it.


What would happen if a large node disappeared from the network?

Recently, we were able to observe Andreas Brekken’s experiment (shitcoin.com node). He was in charge of a node whose capacity was around 43 BTC (more than 50% of the whole network’s capacity!). After its closure, some people started to experience routing problems.


Is Lightning Network more anonymous than on-chain transactions?

Lightning Network increases the level of privacy. The next node doesn’t know if the previous one initiated the transaction. Every node which routes the payment doesn’t know the details of the transaction (final destination, sender).


What happens if some nodes go temporarily offline?

The problem of "zombie nodes" hasn't been solved yet. Offline channels are still considered as capable of routing payments which in some cases cause the payment to fail because channels are unavailable. It is a matter of making a few changes to how channels signalize their state. More information can be found here.
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August 01, 2018, 12:06:03 AM
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Good writeup!

There are two questions where I would want to know a little bit more:

Will casual users be able to accept payments and donations without having to run their own full node 24/7?

Currently, it is not possible. It might be possible in the future to ask a third party to watch for the incoming payment.
Here I would like a clarification what is exactly not possible. Can't the payer initiate a Lightning transaction, waiting a time (e.g. 24 hours) until the other node pops up to sign its part? It's clear that both have to be online at the same time somewhen, at least for a moment. And: Does the "watching" node need to be connected with the destination node?

Is there any risk in running a Lightning Network node?

Yes, due to many factors. Lightning Network implementations are still in beta and might contain critical bugs which could be used to steal funds locked up in channels. Keep in mind that if you won't keep your node online 24/7, someone can attempt to cheat you by broadcasting an old state of your channel. An online node would normally broadcast a penalty transaction.

Here an interesting addition is if there is a "standard" timeout/lock time for the Lightning "penalty transaction" - to know how often you should be online to avoid being cheated. I've currently no Lightning node running (I tested Eclair some weeks ago but it's now outdated, so I can't answer that question myself.) Normally, you should be able to set the timeout you want, but what are the chances you will find a route or a partner to open a channel with?




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August 01, 2018, 05:41:07 AM
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Very interesting and helpful topic, I would merit if I still had it.
From a user point of view sounds like LN it's a potential breaktrough innovation but still with some big issue to fix
(opening a channel 24/7 is clearly impossible, and it's not clear to me how you can manage negative balance once a user wants to close his channel).

Anyway there's a sentence that sounds really disappointing to me

...We can’t avoid increasing the block weight in the future...

It's one year since BCH fork, and after all that debate here's the conclusion  Shocked.
I quite disagree with it. Block weight should stay 1 MB forever. Makes no sense to me increasing it.

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BitCryptex
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August 01, 2018, 07:21:30 AM
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Here I would like a clarification what is exactly not possible. Can't the payer initiate a Lightning transaction, waiting a time (e.g. 24 hours) until the other node pops up to sign its part? It's clear that both have to be online at the same time somewhen, at least for a moment. And: Does the "watching" node need to be connected with the destination node?

One of the problems is that even if the other party would come back online for a few seconds after 24 hours, the route might have changed so the transaction would not take place. The word "watching" was probably the worst one that I could have used. I was thinking of a service which would accept payments on behalf of someone (connection to both nodes would have to exist) and then send it to the destination node on demand.

Here an interesting addition is if there is a "standard" timeout/lock time for the Lightning "penalty transaction" - to know how often you should be online to avoid being cheated. I've currently no Lightning node running (I tested Eclair some weeks ago but it's now outdated, so I can't answer that question myself.) Normally, you should be able to set the timeout you want, but what are the chances you will find a route or a partner to open a channel with?

I'm quite sure that locktime is being negotiated while you are trying to open a channel therefore it will vary for your each connection with the other node. Finding someone with the same channel policy might be a bit difficult.

It's one year since BCH fork, and after all that debate here's the conclusion  Shocked.
I quite disagree with it. Block weight should stay 1 MB forever. Makes no sense to me increasing it.

I didn't write that we have to increase the block weight 30 times. There are plenty of things that can be done in the future before increasing the block weight, for example, implementing channel factories which allow users to create new Lightning Network channels from existing ones - no need to broadcast closing and opening transaction. I have changed the sentence you quoted in order to make it more neutral  Wink
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August 01, 2018, 10:14:37 PM
 #5

Lightning Network Risk Prevention Measures

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The Lightning Payment Layer 1 private key (cold storage) is generated offline, and the second layer private key is generated by using the wallet address as the brain wallet seed, and is cyclically calculated to the 100th layer. Use the last layer 100 public key as the public key for lightning payment. If the lightning private key is stolen, the layer 99 public key is broadcast in time to invalidate the 100th layer public key. It can prevent stolen 100 times.

Lightning channel establishment:
1. Sign the authorized private key with cold storage to authorize the lightning payment of the layer 100 public key, and all lightning payments do not use the original private key. Both the original private key and the lightning layer 1 private key are cold storage (offline) and are very secure.
2, in order to control the risk, you must set the daily payment limit of each party (such as: daily maximum limit: 60 yuan for one party, 70 yuan for B party). If the lightning private key of Party B is stolen, Party B will use cold storage for original private use. The key closes the channel on the chain, and at most, it will only lose the maximum payment of 70 yuan for the day.

In order to save the blockchain space, when the lightning channel is established, the blockchain only stores the hash value of the lightning-paid third-layer public key and the daily payment limit. The party applying to close the channel must provide the original information for the miner to verify the Lightning Payment Level 100 public key for both parties and the maximum daily payment limit.

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August 01, 2018, 11:35:08 PM
 #6

Suggested edit:
Quote
Lightning Network increases the level of anonymity privacy.

Rep Thread: https://bitcointalk.org/index.php?topic=381041
If one can not confer upon another a right which he does not himself first possess, by what means does the state derive the right to engage in behaviors from which the public is prohibited?
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August 02, 2018, 02:06:03 AM
 #7

One of the problems is that even if the other party would come back online for a few seconds after 24 hours, the route might have changed so the transaction would not take place.
That makes sense, thanks for the clarification.

However, a workaround shouldn't be difficult: the client of the "customer" could simply save the "intention" of the transaction, and it would get carried out if the second node pops up before a timeout is reached. In this case, the route is decided only at the moment both nodes are online.

Quote
The word "watching" was probably the worst one that I could have used. I was thinking of a service which would accept payments on behalf of someone (connection to both nodes would have to exist) and then send it to the destination node on demand.
Yep, that sounds more logical. Unfortunately, that would provide incentives for hubs.

Quote
I'm quite sure that locktime is being negotiated while you are trying to open a channel therefore it will vary for your each connection with the other node. Finding someone with the same channel policy might be a bit difficult.
OK, I'll probably soon test an updated Eclair again and look how it's implemented there.

And regarding your response to Vigme86: I agree with a conservative block size policy, and I have some hopes that the sidechain concept isn't fully forgotten because it could serve as an excellent intermediate layer. We could then have the following structure:

Mainchain -> Sidechains/Pegged chains -> Channel factories/Superchannels -> "reloadable channels"

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August 05, 2018, 05:19:21 PM
 #8

I have just added a few new questions and I am still looking for more. Don't be afraid to ask! The new ones are: Which wallet is the best one?, Do I have to run a full Bitcoin node?, How do I set up a Lightning Network node?, What happens if some nodes go temporarily offline?

Suggested edit:
Quote
Lightning Network increases the level of anonymity privacy.

Thanks for catching that! Fixed.
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