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Author Topic: The Lightning Network FAQ  (Read 2316 times)
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September 19, 2019, 07:36:59 PM
 #101

https://www.youtube.com/playlist?list=PLbdPWjvnsOMyyce4oxRZWo2fmV9Dhg42p
Here's a channel worth subscribing to. @shinobi plans to push out quite a few more podcasts in the next ~week, covering lots of aspects of lightning now and way off in to the future.

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September 19, 2019, 07:40:12 PM
 #102

If possible from anyone of you please clerify me with iconic point of Lightning Network payments.

In most cases, they are instant and cost way less than on-chain transactions. However, there are many disadvantages such as not being able to receive payments right after opening a channel, payment routing failures and having to be online in order to prevent the other party from cheating. Don't expect to earn a lot of money on running a Lightning Network node right now.

And confirm me please is it accept BitPay?

BitPay does not accept Lightning Network payments. Introducing SegWit addresses and fixing their QR codes will be huge milestones for them.

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September 21, 2019, 06:19:35 AM
 #103

If possible from anyone of you please clerify me with iconic point of Lightning Network payments.

In most cases, they are instant and cost way less than on-chain transactions. However, there are many disadvantages such as not being able to receive payments right after opening a channel, payment routing failures and having to be online in order to prevent the other party from cheating. Don't expect to earn a lot of money on running a Lightning Network node right now.

And confirm me please is it accept BitPay?

BitPay does not accept Lightning Network payments. Introducing SegWit addresses and fixing their QR codes will be huge milestones for them.

Clarification,
they are instant (only on LN offchain network, redemption on the onchain Bitcoin network is controlled by preset time locks)
and cost way less than on-chain transactions.
(This is dependent on the number of transactions made,
make a single transaction on LN and you paid more than a single onchain bitcoin transaction.
You have to make multiple transactions to the exact same person to save the most on fees.)
ie: Gift Cards have proven superior over Lightning Network for actually removing transactions offchain
https://bitcointalk.org/index.php?topic=5124663.msg50330030#msg50330030

Quote from: Khaos77
The above brings an interesting development, LN users that don't consciously plan their transactions to maximize offchain transaction over onchain transactions could actually generate more onchain transactions than if they paid directly onchain and potentially nullify any transactions reduction that LN could have provided.  Tongue

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September 21, 2019, 06:52:17 AM
 #104

ie: Gift Cards have proven superior over Lightning Network for actually removing transactions offchain
It's easy for a centralized entity to allow zero-fee transactions between users. Most online casinos and some exchanges allow customers to "tip" each other. They all have their own system, and it only works within their own website. That's great, assuming you trust the site.
But it's not what LN is about.

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September 21, 2019, 10:18:44 AM
 #105

ie: Gift Cards have proven superior over Lightning Network for actually removing transactions offchain
It's easy for a centralized entity to allow zero-fee transactions between users. Most online casinos and some exchanges allow customers to "tip" each other. They all have their own system, and it only works within their own website. That's great, assuming you trust the site.
But it's not what LN is about.

I think the OP means actual gift cards, like the ones you can buy at convenience stores, for Amazon, iTunes, etc.

Businesses selling those online are actually getting a lot of value from using LN because they can just send the card right away instead of having to wait for X confirmations.

There's no centralized entity since the funds are coming from an outsider to the company.

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September 23, 2019, 08:41:40 AM
 #106

(This is dependent on the number of transactions made,
make a single transaction on LN and you paid more than a single onchain bitcoin transaction.
You have to make multiple transactions to the exact same person to save the most on fees.)
You are confused between direct payment channels and the actual Lightning Network. Having such a network is the whole point of solving the direct payment channels issue you pointed out. You can learn more about the Lightning Network here.

To answer the question : using the Lightning network is viable if you expect to do more than 2 payments using it. You will in practice have to pay some additional on-chain transactions to reload your channels.

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September 24, 2019, 03:08:04 AM
Last edit: September 24, 2019, 03:28:42 AM by Khaos77
 #107

(This is dependent on the number of transactions made,
make a single transaction on LN and you paid more than a single onchain bitcoin transaction.
You have to make multiple transactions to the exact same person to save the most on fees.)
You are confused between direct payment channels and the actual Lightning Network. Having such a network is the whole point of solving the direct payment channels issue you pointed out. You can learn more about the Lightning Network here.

To answer the question : using the Lightning network is viable if you expect to do more than 2 payments using it. You will in practice have to pay some additional on-chain transactions to reload your channels.

Actually you're confused.   Smiley

Make a single LN transaction and you pay one onchain transaction fee to bitcoin network and then the LN transaction fee (per hub used), and then 1 onchain transaction fee to redeem your coins onchain.
Which means a single onchain transaction without LN would have been cheaper (as only a single onchain transaction charged)
However make 20 to 200 LN transactions to the same person and you saved greatly in fees.

Using LN without planning can not only cost you more , but also increase the number of onchain transactions.
LN is not a magic solution, it only relieves fee costs and decreases onchain transactions if used wisely.
Which in LN case is multiple transactions between the same parties over and over again.

FYI: Maybe read the link next time so you get it.
I'll be working up a comparison at a later date,
based on most likely amounts locked in each of the 3 solutions and how many offchain transactions are really available,
after a glancing look, the thought that thousands of transactions will occur per deposit on LN appears to be extremely overstated except possibility for micro-payments of less than a penny, before new funding is required.

Some preliminary thoughts are a person deposit $200 in their account and spending the entire amount.
Exchange:  1 onchain transaction and possibility a 2nd (optional) onchain transaction withdraw by vendor
Gift Card :  only 1 onchain transaction required
LN          :  2 onchain transaction required per party

In a normal US person, a funding of $200
would allow $40 transaction for gas, $120 transaction for electricity , four $10 restaurant visits =$40

$200 on Exchange , spent on the above
1 onchain to fund account and 1 onchain withdrawl by gas station and 1 onchain withdrawal and 4 onchain withdrawals by 4 different restaurants.

So we have a possible 7 maximum onchain transactions,
however, since withdrawals can be grouped from multiple users at a weekly or monthly basis,
by only withdrawing large amounts, the total onchain transactions can be reduced greatly


$200 on Gift Cards , spent on the above
Only 1 onchain transaction required, the other transactions occur on the gift card network
(For the Purpose of this example the gift card is a Refillable Visa Debit Card accepted at multiple vendors)


$200 on LN , spent on the above
2 onchain transactions Person,  2 onchain transactions Gas Station, 2 onchain Electric Company, 8 onchain transactions from 4 separate restaurants  
6 offchain transactions total

When you look at the above it becomes apparent that gift cards are superior in reducing the # of onchain transactions
over Exchanges and LN.  In the above Scenario :
Gift Cards: 1 onchain transaction required
Exchange : 7 onchain transactions , if none of the companies group their withdrawals with others
LN           : 14 onchain transactions

Just using the onchain blockchain alone and paying the gas station, electric company, 4 separate restaurants directly onchain,
requires 6 onchain transactions.

So anyone really wanting to cut down on the # of onchain transactions would use gift cards over exchanges and LN.  Wink
Other Factors may be more important for the individual on which they choose , but gift cards win decreasing onchain transactions hands down for the normal individual.

You also notice that anyone using LN for normal life purchases such as gas, electricity , restaurants,
end up generating more onchain transactions by trying to use LN offchain network,
than if they just paid the vendors directly onchain.  Tongue  


FYI:
For 1000 transactions to take place on LN, from a $200 deposit
each transaction would have to be worth no more than 20 cents each offchain transaction.

Which brings up a question, what are people buying that is only worth 20 cents?   Huh  

* Even a single 20oz bottle of coke cola is ~$2.00 *

If a person only used LN to buy meals at the same restaurant, of no more than $10 per visit,
you can squeeze 20 offchain transactions out of it, using only 4 onchain transactions, saving 16 onchain transactions,
however if those visits were to 20 different restaurants,
those 20 offchain transactions would be using 40 onchain transactions, a loss of 20 onchain transactions verses paying onchain only.

The above brings an interesting development, LN users that don't consciously plan their transactions to maximize offchain transaction over onchain transactions could actually generate more onchain transactions than if they paid directly onchain and potentially nullify any transactions reduction that LN could have provided. Tongue

*Note onchain transactions reduction would still be far more if you used a gift card instead.*    

FYI: At some point you people will finally realize that LN is not for you,
LN is for the Banks to Transact with each other, as they make thousands of payments between themselves daily.
LN was designed for them not the average joe on the street.
LN is Banking 2.0 .

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September 24, 2019, 04:20:02 AM
 #108

If possible from anyone of you please clerify me with iconic point of Lightning Network payments.

In most cases, they are instant and cost way less than on-chain transactions. However, there are many disadvantages such as not being able to receive payments right after opening a channel, payment routing failures and having to be online in order to prevent the other party from cheating. Don't expect to earn a lot of money on running a Lightning Network node right now.

And confirm me please is it accept BitPay?

BitPay does not accept Lightning Network payments. Introducing SegWit addresses and fixing their QR codes will be huge milestones for them.


Hahaha. That would be their greatest development as a Bitcoin service. But have you used Bitpay? It now markets for Bitcoin Cash. But in a subtle/naughty way.

Plus criticizing Lightning is OK, but saying gift cards are more superior is the dumbest way to criticize it.


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September 24, 2019, 08:38:35 AM
 #109

Using LN without planning can not only cost you more , but also increase the number of onchain transactions.
LN is not a magic solution, it only relieves fee costs and decreases onchain transactions if used wisely.
Which in LN case is multiple transactions between the same parties over and over again.
Many people keep their Bitcoin on exchanges. Top 100 Richest Bitcoin Addresses shows a few billion dollars worth of Bitcoin in cold storage owned by exchanges.
Once LN becomes mainstream, I can imagine the people who store their funds on exchanges, won't have any problem using the same exchange to make their payments. Currently thats not a viable option because withdrawal fees are much higher compared to using your own wallet.
I imagine a future in which exchanges keep a couple million dollar worth of Bitcoin in their LN hot wallet, and many people use the exchange to make their small payments without ever needing to fund a LN channel on their own.
Say: paying from exchange to VPS provider, paying from exchange to buy a coffee, or paying from exchange to fund a balance on website x. The exchange, VPS provider, and website x will run their own LN-node. The coffee bar will most likely use a large payment processor that runs their own LN-node.

There are already custodial LN wallets, but they still need to earn their trust. If a large exchange would provide their own convenient (mobile) wallet, I'd love to use it!

Quote
LN is Banking 2.0 .
As long as it's optional, I'm totally fine with that! I want to be able to use Bitcoin for small transactions, and for small amounts I don't mind trusting someone.

Is it really Bitcoin in which you and only you are in full control of your private keys? No.
Do I care for small amounts as long as I can make small payments without paying several dollars in fees? Hell no!

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September 24, 2019, 11:53:19 AM
Last edit: September 24, 2019, 12:04:49 PM by Khaos77
 #110

Plus criticizing Lightning is OK, but saying gift cards are more superior is the dumbest way to criticize it.

Not a criticism but a fact. Learn the difference.

Superior in the aspects of actually decreasing the number of onchain transactions and decreasing the amount of fees charged.

If those things are dumb to you, well you have always been stupid.  Kiss




Quote
LN is Banking 2.0 .
As long as it's optional, I'm totally fine with that! I want to be able to use Bitcoin for small transactions, and for small amounts I don't mind trusting someone.

Is it really Bitcoin in which you and only you are in full control of your private keys? No.
Do I care for small amounts as long as I can make small payments without paying several dollars in fees? Hell no!

Actually, it won't be optional, Banks will dominate LN ,  and then dominate bitcoin onchain.
They can print fiat out of thin air to buy all of the bitcoins, which they then lock up just for their internal transactions.
Or they can use Public money to overload the bitcoin transactions limits, to make onchain transactions unaffordable.
Or they can just have their government minions pass laws allowing only banks to directly transacts in bitcoin.
They have a multitude of options , but at the end of the day, the final result will be , you will need them to transact with anyone.
Just watch as time progresses and it becomes apparent to all.
The Freedom of Crypto transactions between the populace will be short-lived to less than 10 years from now.


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September 24, 2019, 12:54:42 PM
Merited by BitCryptex (3)
 #111

(This is dependent on the number of transactions made,
make a single transaction on LN and you paid more than a single onchain bitcoin transaction.
You have to make multiple transactions to the exact same person to save the most on fees.)
You are confused between direct payment channels and the actual Lightning Network. Having such a network is the whole point of solving the direct payment channels issue you pointed out. You can learn more about the Lightning Network here.

To answer the question : using the Lightning network is viable if you expect to do more than 2 payments using it. You will in practice have to pay some additional on-chain transactions to reload your channels.

Actually you're confused.   Smiley

Make a single LN transaction and you pay one onchain transaction fee to bitcoin network and then the LN transaction fee (per hub used), and then 1 onchain transaction fee to redeem your coins onchain.
Which means a single onchain transaction without LN would have been cheaper (as only a single onchain transaction charged)
However make 20 to 200 LN transactions to the same person and you saved greatly in fees.
Ah I understand... I actually naively thought you were honest and not spreading FUD. Have you ever read the whitepaper ? Or are you typing faster than you're learning ?

You want to discredit a network of routed payment channels by talking of the tradeoffs of a single payment channel. But you talk about the routing (a characteristic of a network of multiple channels) as one of these tradeoffs. That's why I thought you were obviously confused : actually you're not you're spreading FUD, but do you really think someone could actually believe such logic-less speech ?

LN is not a magic solution, it only relieves fee costs and decreases onchain transactions if used wisely.
That's true.
Which in LN case is multiple transactions between the same parties over and over again.
That's wrong. Intentionally or not ? Wink

As the thread title is "The Lightning Network FAQ" and not "The Lightning Network FUDers challenging", I'll stop answering your messages. Please refer to the whitepaper (more conceptual) and the specifications (more technical and implementation-wise) for more accurate information about the Lightning Network.

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September 25, 2019, 06:04:02 AM
 #112

I believe some people, whether FUD or not, have not thought of some use-cases that were tried on-chain, did not work, but would work in Lightning. One good use-case would be high frequency payments, Satoshi Dice.


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September 25, 2019, 10:00:36 AM
Last edit: September 25, 2019, 10:10:40 AM by Carlton Banks
Merited by bones261 (4), BitCryptex (2)
 #113

I believe some people, whether FUD or not, have not thought of some use-cases that were tried on-chain, did not work, but would work in Lightning. One good use-case would be high frequency payments, Satoshi Dice.

it's good to bear in mind how increases in Bitcoin's exchange rate redefine what constitutes a micro-payment.

the "1 coffee use-case" is often considered the base level for in-person Bitcoin usage, but coffee can be anywhere up to $6 a cup, and the low levels are more like $1.50. What about typical purchases that are cost less than that?

  • Bus/subway tickets
  • mp3s
  • chewing gum
  • cups of Tea Grin

At the current BTC exchange rate, you can pay anything from $0.005 up to $1 to get a transaction confirmed. It's not unrealistic that BTC could reach x10 it's value even next year, at which point the case for Lightning will be proving itself further (although the Bitcoin devs could of course change the 1sat/vbyte minimum feerate, but that comes with spam trade-offs)

IMO, cups of coffee should not be the baseline. mp3's would make alot of sense, they're one of the cheapest single items out there, and the people selling them (well, the people who write the music at least) are some of the most independent business-people there are.

I've said this many times; Bitcoin is the final piece in the puzzle for musicians, they can have a totally closed loop business model, where they control and own everything:

  • production (studio equipment)
  • promotion (social networks)
  • distribution (own website)
  • payment & banking (cryptocurrency)

Vires in numeris
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October 02, 2019, 03:01:32 PM
Merited by LoyceV (1)
 #114

Just to make you aware that in latest Bitcoin Optech Newsletter #66, we have full disclosure of LN vulnerabilities we have all been warned about during the last weeks:

Quote
Full disclosure of fixed vulnerabilities affecting multiple LN implementations: several weeks ago, the developers of C-Lightning, Eclair, and LND announced the previous discovery of an undisclosed issue in each of their implementations, which they had each fixed in a recent release. At that time, they strongly encouraged their users to upgrade (a message which Optech relayed) and promised a full disclosure in the future, which they have now done with an email by vulnerability discoverer and C-Lightning developer Rusty Russell and a blog post by LND developers Olaoluwa Osuntokun and Conner Fromknecht.

Briefly, the issue appears to have been that the implementations did not confirm that channel open transactions paid the correct script, amount, or both. Because of this, the implementations would accept payments within the channel which they would later be unable to get confirmed onchain, allowing them to be defrauded. As of this writing, Optech is not aware of any reports that this issue was exploited prior to the warning last month. Now that the issue has been disclosed, a PR has been opened to update the specification to note that this check is needed.


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October 21, 2019, 04:19:18 AM
 #115

Another use-case that illustrates that the future of Bitcoin payments is off-chain, https://medium.com/lightnite/lightnite-a-bitcoin-integrated-battle-royale-game-2ec9f3746b0e?sk=2145c0ea5da25a65c6a2d7a54fa23be1

The game's online store will start a more liquid marketplace for online items, finding more price-efficiency for those items.


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d5000
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October 22, 2019, 07:40:51 PM
Last edit: October 22, 2019, 07:53:11 PM by d5000
Merited by LoyceV (2), BitCryptex (2)
 #116

I have a question regarding LN which may deserve an own thread, but first (to avoid cluttering the Development forum) I ask it here.

Is it possible to use LN for offline payments?

The goal is to find a way for "pre-arranged" offline transactions in regions where internet connection is unstable/unreliable (people have asked me in the Spanish subforum with Venezuela in mind).

I had the following scheme in mind:

The situation

Alice wants to sell Bob a good, or sell BTC for fiat, but the trade will be carried out in an area without or with unreliable internet access. With on-chain transactions, there is a possible technique using timelocks and a secret to release the amount in question, but it requires a confirmed transaction on the blockchain (see here and for a similar example in another context, this proposal for payments of digital goods). This is not ideal because transaction fees would be paid even if the trade isn't carried out.

LN-based solution?

In a payment channel, we could arrange a "conditional payment" in the following way:

- Bob and Alice are connected by a payment channel.
- Bob (the buyer) sends Alice a signed commitment transaction, with a penalty like in a standard LN transaction, but a difference: the amount of the trade made conditional, requiring a secret to be spent (like in atomic swaps or the technique I just outlined). The transaction includes the hash of the secret.
- Bob and Alice meet in the place without Internet access.
-- If the trade takes place, Alice receives the secret from Bob, and she can verify it using the hash, with a simple electronic device not requiring internet access. She can now in theory release the funds including the amount of the trade with an on-chain transaction closing the channel. But instead, she tells the LN software the secret, and her balance is updated.
-- If the trade does not take place, Alice doesn't know the secret and thus cannot release the funds reserved for the trade, and thus she must use the last commitment transaction to close the channel, with the state of the channel before the trade.

I think with a simple payment channel this setup could work, if I've not overseen something. But is it also possible to route it via additional LN nodes? I don't know if the requirement of an additional secret would be possible to be "included" in the HTLCs necessary to route the payment through other LN nodes.

The solution would have a crucial advantage to the on-chain solution: it would not require any spendings of transaction fees, and in the case it's not carried out, not even LN fees would have to be paid.

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October 22, 2019, 09:17:34 PM
Merited by LoyceV (2), BitCryptex (2), d5000 (1), ETFbitcoin (1), richardsNY (1)
 #117


- Bob and Alice are connected by a payment channel.

ok


- Bob (the buyer) sends Alice a signed commitment transaction, with a penalty like in a standard LN transaction, but a difference: the amount of the trade made conditional, requiring a secret to be spent (like in atomic swaps or the technique I just outlined). The transaction includes the hash of the secret.
- Bob and Alice meet in the place without Internet access.

hmmm, not seeing the necessity of this

if alice and bob have a payment channel open between one another, there's no need at all for additional commitment exchange, they can perform the zero hop routing operation in an ad-hoc network i.e. out of band at their meeting spot. If both Alice and Bob live in the same area, and both lost internet at the same time, then the exisiting protocol can work just as well offline as online (private channels are essentially doing exactly this. We typically assume they do it connected to the wider internet, but it's not strictly necessary)


People with intermittent/zero internet access could always try setting up a smaller private network of payment channels to circulate currency locally, but agreeing on what channels are valid is a difficult problem if they lose access to the internet. Freezing the blockchain state to before the time at which internet access was lost limits lightning usage to devices that were in those precise geographical regions when the outage hit, and potentially different (but contiguous) areas went out at different times. The shorter period of time for which access to the blockchain is curtailed, the more viable a local channel network is.

Still though, huge amounts of trade are often local only, so depending on how well connected channels are in a given locality (reflecting high proportion of entirely local trade), it could work pretty well. The correlation of areas affected by internet outages with micro-economies could well be pretty high in practice, i.e. if a whole town loses internet, the whole town may well also happen to do 60-80% of trade internally. Is it not the case that mesh networking is more likely to exist in places with poor access to the corporate owned internet?

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October 22, 2019, 09:52:40 PM
Merited by Carlton Banks (1), d5000 (1), ETFbitcoin (1)
 #118

I have a question regarding LN which may deserve an own thread, but first (to avoid cluttering the Development forum) I ask it here.

Is it possible to use LN for offline payments?


I don't know if it is related to your question, but this actually just hit the news:

A form of offline payments is being developed for Bitcoin’s Lightning Network

Quote
Lightning Rod, a new offline-style payments protocol for the Bitcoin Lightning Network, will enable users to make Lightning payments to a payee without their mobile nodes being online at the same time.

The functioning is quite simple in principle:

Quote
The new protocol works by routing a Lightning network payment through an intermediate node. This intermediate node is always online and can securely forward a payment without needing that the payer and the payee maintain an active connection to the network.

It's not clear (to me, at least) if this solution is fully trustless. If it weren't it would be little more than a gimmick. Otherwise, another step in the right direction of a more flexible and user-friendly UX for the Lightning Network.




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October 23, 2019, 12:42:28 AM
 #119

if alice and bob have a payment channel open between one another, there's no need at all for additional commitment exchange, they can perform the zero hop routing operation in an ad-hoc network i.e. out of band at their meeting spot.
Good idea, thanks! I will report this idea to the Spanish forum. It is surely appliable for many cases, above all in urban areas, but also in some rural use cases (e.g. a person buying essential goods at the same grocery with BTC like it seems to be the case in countries like Venezuela).

The question remains if the setup I outlined is compatible with the Lightning network, i.e. if there is a way to pay offline when there is no direct payment channel between both.

A form of offline payments is being developed for Bitcoin’s Lightning Network
[...]
Quote
The new protocol works by routing a Lightning network payment through an intermediate node. This intermediate node is always online and can securely forward a payment without needing that the payer and the payee maintain an active connection to the network.
Thanks, that sounds interesting, too, although I would need to know more details to know if it's applicable to the "offline payment" use case. The "forwarding", however, could indicate it's based on a similar principle like that I had in mind.

I have found the Lightning Rod protocol here at Github, but I must re-read it to fully understand it.

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October 23, 2019, 10:17:12 AM
Last edit: October 23, 2019, 11:08:16 AM by Carlton Banks
 #120

The question remains if the setup I outlined is compatible with the Lightning network, i.e. if there is a way to pay offline when there is no direct payment channel between both.

so here would be a way to make it work...

set up that private Lightning network, and keep it very exclusive to people within a given area. The crucial part would be: don't use it, except in outage situations. Use uptime of the general internet to store BTC in the private network, but use the regular Lightning network for everyday payments while internet remains up. Maybe a good idea would be to physically assemble people at a certain time every week to top up the liquidity in the private network, that way any disputes about which channel balances on the private local network are valid can be worked out there and then if internet dies coincidently while the actual meeting takes place.

Then, when internet goes down, this group of people have a pool of money that can reliably be exchanged in a zero hop fashion, as in my first example. And, if they can set up a meshnet, then they can achieve your suggestion: use multi-hop routing within the local private channel network to increase the liquidity Smiley

All of the above is possible today with some patching of Lightning software to switch between the mainnet and the private-net, and configuring devices and network routers to be capable of switching to mesh and/or adhoc modes Smiley Plus, the organizational task of setting and topping up the private channel network. Channel factories may serve as a fully packaged solution to that, but that's future stuff.

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