The Lightning Network FAQ

[PrimeNumber7]

So was looking at my node just now and saw this:

Just dozens of 2sat (3 with fee) transactions.
Any idea why someone would be doing it? Just seems real odd.
Never saw it before, so I don't know if its something odd or I just never noticed.

-Dave

Don't get me wrong I'll take the 1 sat per transaction all day long, but it makes you wonder what else is going on out there that nobody sees.

-Dave
 

I would guess it is someone trying to calculate the size of open channels. If you know the size of open channels at enough intervals, you can potentially track individual LN transactions that are supposed to be private. Or it could be someone trying to reduce privacy in some other way.

It could also be someone trying to send a larger amount of coin to someone via many transactions than would be possible via a single transaction.

[Timelord2067]

It wouldn't be something like the One Satoshi quasi spam that occurred during the Sochi Winter Olympics a few years ago? IIRC it was either a tracking attack (actual terminology name escapes me just now) or it really was just a cleaver marketing ploy...

Either way I seem to recall hearing that "feature" has now been disabled.

[LoyceV]

I love the wild theories about this, but couldn't it just be someone who set up (or is testing) some micro payment system?

[DaveF]

I love the wild theories about this, but couldn't it just be someone who set up (or is testing) some micro payment system?

That was my 1st thought, BUT I would think that.

1) It went on for longer then I have the screen shot for so that just seems excessive. That's a lot of testing.
2) They would be using their own nodes.
3) That is what testnet is for (yeah I know it's such a small amount who cares)

So I dismissed it. Looing back through some logs it did happen once before so I'll just put it in the "meh, whatever" pile and move on.

-Dave

[BlackHatCoiner]

I'm trying to understand it, but I don't get it. Even if transaction(s) are signed in a multi-signature address, they still have to be broadcasted on-chain, so a very high fee must be paid. By who?

Second question, what if I pay with lightning network and before they are added to the blockchain, I spend them? Won't this make the signed transaction useless?

Sorry for the noob questions, I didn't need lightning network since I don't transact bitcoins very often, but right now I'll need it for micro-payments.

[STT]

Don't forget most withdraws on exchanges also are a profit center.

Definitely is that way, they allow deposits no problem but when people demand it back and just want any hassle over with thats when the fees come in and people are far more likely to take it without it hindering future usage of the exchange like deposit fees might discourage some.     The biggest use I've found for ETC the old branch of ETH was being common but also very cheap between exchanges, many of the other alts fail to do that or have spread margins too big to be worth it or just not common elsewhere to transfer.
   Meanwhile using a wallet is not a problem, it clears with really not much needed so the fee problem is a useful construct for many sites to gain minimum revenue from every user.   Eventually zero hassle has to be a thing for mainstream takeup.

[Rath_]

I'm trying to understand it, but I don't get it. Even if transaction(s) are signed in a multi-signature address, they still have to be broadcasted on-chain, so a very high fee must be paid. By who?

By the funder of the channel.

Second question, what if I pay with lightning network and before they are added to the blockchain, I spend them? Won't this make the signed transaction useless?

If the channel opening transaction is not confirmed, you can't use such a channel. Every time a channel is updated (either one spends/receives some coins or routes a payment), both parties sign a new commitment transaction which reflects the updated balance of the channel.

[BlackHatCoiner]

If the channel opening transaction is not confirmed, you can't use such a channel. Every time a channel is updated (either one spends/receives some coins or routes a payment), both parties sign a new commitment transaction which reflects the updated balance of the channel.

Yes but all of these are signed transactions that are kept by the channel founder. What if Alice broadcasts one transaction of her address that has signed transactions to Bob? I'm trying to understand how the channel founder can prevent from making the entire procedure useless.

It would be better to show it with the steps (It's on 8):

1. Alice opens a payment channel to Bob, and Bob opens a payment channel to Charlie.
2. Alice wants to buy something from Charlie for 1000 satoshis.
3. Charlie generates a random number and generates its SHA256 hash. Charlie gives that hash to Alice.
4. Alice uses her payment channel to Bob to pay him 1,000 satoshis, but she adds the hash Charlie gave her to the payment along with an extra condition: in order for Bob to claim the payment, he has to provide the data which was used to produce that hash.
5. Bob uses his payment channel to Charlie to pay Charlie 1,000 satoshis, and Bob adds a copy of the same condition that Alice put on the payment she gave Bob.
6. Charlie has the original data that was used to produce the hash (called a pre-image), so Charlie can use it to finalize his payment and fully receive the payment from Bob. By doing so, Charlie necessarily makes the pre-image available to Bob.
7. Bob uses the pre-image to finalize his payment from Alice
8. Alice broadcasts a transaction of her 1000 satoshis to the blockchain which makes the entire procedure useless, because the signed transaction that Bob keeps will not be accepted from the network.

Lightning network is known for being fast. But I don't understand where does that "fast" refer to. Is it fast on confirming the transaction? AFAIK, if the transaction is not written in a block, it can be double-spent.

[Rath_]

Yes but all of these are signed transactions that are kept by the channel founder.

Commitment transactions are stored and can be broadcast by both parties.

8. Alice broadcasts a transaction of her 1000 satoshis to the blockchain which makes the entire procedure useless, because the signed transaction that Bob keeps will not be accepted from the network.

Each new commitment transaction invalidates the previously signed transaction. If Alice broadcasts an old commitment transaction, Bob can immediately publish a penalty transaction which will send ALL funds to his address. It also works the other way around.

Lightning network is known for being fast. But I don't understand where does that "fast" refer to. Is it fast on confirming the transaction?

The whole point of the LN is to decrease the load on the blockchain and make small transactions cost-effective so broadcasting an on-chain transaction after every off-chain transaction would be pointless. When you send a payment over the Lightning Network to a node to which you are not directly connected, multiple nodes pass your payment further along the routing path to the destination node. That's what happens fast.

[Wind_FURY]

Yes but all of these are signed transactions that are kept by the channel founder.

Commitment transactions are stored and can be broadcast by both parties.

8. Alice broadcasts a transaction of her 1000 satoshis to the blockchain which makes the entire procedure useless, because the signed transaction that Bob keeps will not be accepted from the network.

Each new commitment transaction invalidates the previously signed transaction. If Alice broadcasts an old commitment transaction, Bob can immediately publish a penalty transaction which will send ALL funds to his address. It also works the other way around.

Lightning network is known for being fast. But I don't understand where does that "fast" refer to. Is it fast on confirming the transaction?

The whole point of the LN is to decrease the load on the blockchain and make small transactions cost-effective so broadcasting an on-chain transaction after every off-chain transaction would be pointless. When you send a payment over the Lightning Network to a node to which you are not directly connected, multiple nodes pass your payment further along the routing path to the destination node. That's what happens fast.

Would it be possible to onboard non-Bitcoin users straight to Lightning, without having them to go through buying their own coins from an exchange, setting up their own wallets, and all the other steps? I believe a hosted service like that would be the most practical.

[vjudeu]

Would it be possible to onboard non-Bitcoin users straight to Lightning, without having them to go through buying their own coins from an exchange, setting up their own wallets, and all the other steps? I believe a hosted service like that would be the most practical.

Yes, it is possible to go "straight to Lightning". There is for example https://satsback.com/en working only with Lightning Network, where people can receive LN-BTC as a cashback from their daily purchases. But for me it stopped working after September 2020, so there are still some issues, but it is definitely technically possible to create such service.

[Rath_]

Would it be possible to onboard non-Bitcoin users straight to Lightning, without having them to go through buying their own coins from an exchange, setting up their own wallets, and all the other steps? I believe a hosted service like that would be the most practical.

Sure! Strike already does it fairly well. Users can easily send Bitcoin/Lightning Network payments without having to worry about the technical details - they just need to deposit some fiat and scan a QR code of a payment invoice. Users can purchase Bitcoin directly through the app if they provide an invoice from a third-party wallet.

[LoyceV]

I didn't need lightning network since I don't transact bitcoins very often, but right now I'll need it for micro-payments.

You could exchange some low-fee altcoin for Bitcoin on the Lightning Network through an instant exchange and have it send to your custodial LN wallet to avoid on-chain Bitcoin transactions. The minimum for Doge to BTCLN on for instance FixedFloat.com is less than a euro worth of coins.

Would it be possible to onboard non-Bitcoin users straight to Lightning, without having them to go through buying their own coins from an exchange, setting up their own wallets, and all the other steps? I believe a hosted service like that would be the most practical.

Any exchange could set up such a service, but as long as the customer doesn't create his own channel, it will only be custodial.

[Wind_FURY]

I didn't need lightning network since I don't transact bitcoins very often, but right now I'll need it for micro-payments.

You could exchange some low-fee altcoin for Bitcoin on the Lightning Network through an instant exchange and have it send to your custodial LN wallet to avoid on-chain Bitcoin transactions. The minimum for Doge to BTCLN on for instance FixedFloat.com is less than a euro worth of coins.

Would it be possible to onboard non-Bitcoin users straight to Lightning, without having them to go through buying their own coins from an exchange, setting up their own wallets, and all the other steps? I believe a hosted service like that would be the most practical.

Any exchange could set up such a service, but as long as the customer doesn't create his own channel, it will only be custodial.

I believe that’s a necessary trade-off. Bitcoin users from after 2018 are not all very technical people. I am not a very technical person myself, although I’ve made an effort to understand how the network works. But to handle, and maintain my own Lightning node just to use Lightning long-term? I could learn it, but I will stop running it eventually.

[LoyceV]

Any exchange could set up such a service, but as long as the customer doesn't create his own channel, it will only be custodial.

I believe that’s a necessary trade-off. Bitcoin users from after 2018 are not all very technical people. I am not a very technical person myself, although I’ve made an effort to understand how the network works. But to handle, and maintain my own Lightning node just to use Lightning long-term? I could learn it, but I will stop running it eventually.

Bitcoin (or anything else for that matter) can't reach a large market share if it requires technical knowledge. That's why I like custodial LN so much: it's so easy! Making a payment with Phoenix Wallet is a lot faster than paying by bank now. I can even choose not to set a password, which isn't possible (nor wise) when paying by bank.

[DaveF]

Does anyone have a channel open to OpenNode.com and if so, do you see a lot of of outbound routing to them?
Just took a look at my Forwarding history and eliminating the oddball dozens of 2sat transactions almost all the other ones I have are inbound from elsewhere to OpenNode.
Never saw that before and wonder if something changed. Probably not important (how many people really sit there and check their forwarding on a regular basis) but since it's different I figured I would ask.



-Dave

[Rath_]

Has anyone here experimented with the Lightning Lab's Loop? It worked fine for a node with only a couple of channels, but it failed for my channel with ACINQ which is significantly better connected to the rest of the network. I recall having some routing problems in the past when my channel to them was the only one I had. I am about to open a few more channels since the transaction fees have decreased significantly. I will report back once I try "loop out" on them tomorrow.

[DaveF]

Has anyone here experimented with the Lightning Lab's Loop? It worked fine for a node with only a couple of channels, but it failed for my channel with ACINQ which is significantly better connected to the rest of the network. I recall having some routing problems in the past when my channel to them was the only one I had. I am about to open a few more channels since the transaction fees have decreased significantly. I will report back once I try "loop out" on them tomorrow.

Tried and failed with ACINQ too.
Did not put that much time into it as the one it was on was a somewhat wonky setup and figured it was just me.
Also, I am constantly tinkering with my channels to find what I think would be good, so automating swaps / loops was not high on my list to do.

With all of that being said, it might not be you but the ACINQ channel itself. I have had several issues with them in the past, and actually stopped connecting to them. Fold, WalletofSatoshi, OpenNode, Coingate. No issues at all. ACINQ was....not fine.

-Dave

[Wind_FURY]

If found this website for explaining Channel Capacity in the Lightning Network, https://channelcapacity.io/

Post/share it around the forum, especially when there’s FUD that “Lightning transactions are IOUs”. Lightning is actually the REAL DeFi, once fully understood.

[Rath_]

With all of that being said, it might not be you but the ACINQ channel itself. I have had several issues with them in the past, and actually stopped connecting to them. Fold, WalletofSatoshi, OpenNode, Coingate. No issues at all. ACINQ was....not fine.

I ended up closing my channel with ACINQ and opening a new one to LightningPowerUsers.com. I can't perform a loop out for that channel as well as for the CoinGate one. I will try opening a channel to one of the Loop's peers. I am also thinking about opening a large channel to Loop so that other people could balance their channels through me.