The Lightning Network FAQ

[Wind_FURY]

There’s an anonymous person who calls himself “StopandDecrypt” who wrote this blog, refuting the “observation” that the Lightning Network is Centralized. It’s a long one and thorough, https://medium.com/hackernoon/them-lightning-network-nodes-sure-do-look-centralized-to-me-what-gives-ee39c9b12ac0

I asked who he was, some people suspect that he is gmaxwell.

Read everything he wrote.

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[d5000]

Lightning Network: a second path towards centralisation of the Bitcoin economy

Have you read this paper? What's your opinion?

I'm reading it. In my opinion it parts from the unrealistic ideal that LN could be totally interconnected, without any hubs, and what the authors call "centralization" seems to be the natural (and most effective) way for the Lightning Network to operate, i.e. as a hub-and-spoke model with small to medium hubs. What they found out is basically that the network is evolving towards this structure.

They seem to ignore that in LN there are naturally distinct classes of nodes: some who only are users, using LN for payments, or as individual merchants, while others are explicitly trying to support the network as hubs (and get fees for it). Comparing these kinds of nodes with a single Gini coefficient would be basically the equivalent of comparing retail users and businesses with a measure intended only for retail users.

It should also be noted that the analyzed period is 2018-19, which was in the initial stage of LN. This means that in this period it is expectable that the network became more centralized. At the beginning of 2018, LN was an experimental field, so it was mainly used by experienced users trying out the software. When time passed, "retail" ("pure user") nodes were increasingly added, which naturally try to connect with relatively well-connected, central nodes, increasing their centrality even more, but I can imagine this being a temporary phenomenon.

If we look at figure 3 (page 6 of the PDF) then we see also that the trend for the centrality measures they're using (Gini coefficient G_c) is increasing, but the curve is progressively flattening and in some cases lowering. This confirms my suspicion: that the "trend towards centralization" they've claimed to have found is mainly a consequence of the early stage the network was in in 2018-19, and that this trend would not continue in the future - it may even reverse.

In short: I would like to see an analysis of this kind with newer data, but maybe we should wait until LN usage grows a little bit more (LN is currently growing relatively fast) to really draw conclusions, so the proportion between "retail" and "hub" nodes becomes more natural. If the trends towards centralization they claim didn't flat out in this period, then it's time maybe to start worrying, but I don't see any reason for that.

[JayJuanGee]

It should also be noted that the analyzed period is 2018-19, which was in the initial stage of LN. This means that in this period it is expectable that the network became more centralized. At the beginning of 2018, LN was an experimental field, so it was mainly used by experienced users trying out the software. When time passed, "retail" ("pure user") nodes were increasingly added, which naturally try to connect with relatively well-connected, central nodes, increasing their centrality even more, but I can imagine this being a temporary phenomenon.

Actually, you might be being too nice in your assessment of anyone attempting to make definitive analysis regarding what a system like lightning network would be or would have been based on when it was first launched.. maybe giving it a year to come into place might not have been totally accurate in terms of where it might be going, but surely those first 6 months or longer were likely a hodgepodge of scrambling... I remember even the fact that lightning network was launched in January 2017 in quite a premature kind of way as a kind of reaction to the bullshit ongoing spamming attack on the bitcoin network that had been going on for around a couple of months at that time.. and creating stupid-ass narratives for the various shitcoiner pumpers(bcash, ethereum et al) and bitcoin is broken (grampacoin) naysayers. 

In short: I would like to see an analysis of this kind with newer data, but maybe we should wait until LN usage grows a little bit more (LN is currently growing relatively fast) to really draw conclusions, so the proportion between "retail" and "hub" nodes becomes more natural. If the trends towards centralization they claim didn't flat out in this period, then it's time maybe to start worrying, but I don't see any reason for that.

Personally, I am not against any kind of analysis that attempts to put matters into perspective and even to perhaps show historical developments as compared with current happenings, so surely we can likely appreciate that lightning network remains a ways from mature, yet I see no real reason not to be attempting to analyze what is going on without necessarily drawing inaccurate and misleading conclusions from nonrepresentative data.. such as the first year of lightning network.

Surely with the recent onboarding in lightning network - perhaps partly fueled by some of the El Salvador news (including realizing that apps like strike actually have utility) seems to bring more attention into creativity that could cause some functionalities and interfaces in the coming years that currently ONLY a few more insightful folks might imagine to be coming... which the occurrence of actual adoption and usage likely puts the whole damned thing to a kind of test that ends up inspiring creativity and even motivations to make money too.. and if some people might not be motivated by making money, they might end up being motivated by serving a kind of "mover and shaker" role in the whole scheme of lightning network related things.. that may well even inspire some other second layer interfaces/businesses that were beyond the imaginations of folks focusing on the matter from a different angle.

[franky1]

i would describe a independent user node network as someone (if the network has 21k nodes it would have an 6 degree of separate) with just 6 channels(average 5-7 range)
where the average would be:
6x6x6x6x6x6  to have everyone inter connected within 6 hops and within 6 channels per node to all 21k nodes

whereby the network if it was truly private and independent, individuals couldnt 'map' / 'visualise' the network even if they tried

whereby the max fee should be just 6x of the standard millisat token fee for a hop becasue all it would take is max of 6 hops
...

however this is not how the network is functioning
firstly the biggest lie.. the invisibility/privacy. as debunked by the many visualisations/maps of the network
if private there should be no way to map the network, not voluntarily or spying

secondly
it is instead a public hub and spoke model.. as people above are now admitting to but saying thats the natural effect.. even though less than 6 months ago they were arrogantly fighting that its an independent and private 'hop'/'route' network that will never centralise

even more recently certain people involved in LN are admitting that the centralisation is happening more often with some hubs refusing connections unless they meet minimum channel balance/htlc min. where they become the inner circle of even larger hubs and those with low balance are left to the outer layers

so although certain people are flip-floppy and then trying to deny their own post history of arrogance and ignorance and ow trying to spin the centralisation as a needed positive.. it is a slight relief they are starting to acknowledge that the hop model is not working for LN. and they are slowly acknowledging the centralisation.

the real centralising factor is not just nodes with 100+ channels. but those nodes only accepting channels with peers of certain balance htlc minimums to create a hierarchy of inner circle high channel balance and outer circle descending balance

for me a hub is a node that has far far more then the 'degree of separation' channels required. and its acceptable balance to create a channel or its minimum HTLC is far more than the average
so nodes requiring more then say 0.07btc per channel and having say 60+ channels. would be considered a hub

.. but just wait for the custodials to jump in and see the network really show off its inner outer circles with the el-three stuff like factories

[Wind_FURY]

Shower thought, is some degree of centralization in the Lightning Network, to find efficiency, truly bad for you, franky1? If you ask me it’s not. Or are you merely criticizing the people who believe that Lightning is on the far right side of the decentralization spectrum?

[alexrossi]

Shower thought, is some degree of centralization in the Lightning Network, to find efficiency, truly bad for you, franky1? If you ask me it’s not. Or are you merely criticizing the people who believe that Lightning is on the far right side of the decentralization spectrum?

Is strange that some people find LN bad while at the same time are ok with other totally centralized transfer systems, such as exchanges (binance BEP20?)

LN is far from being perfect, but 1) is a choice, not enforced 2) compared to a centralized payment processor still offer some degree of decentralization and possibility of external audit (channel capacity, nodes availability, etc...)

[d5000]

Actually, you might be being too nice in your assessment of anyone attempting to make definitive analysis regarding what a system like lightning network would be or would have been based on when it was first launched..

Maybe (if I understand you correctly). Generally I support this kind of analysis, and at least it could serve to find parameters to understand LN evolution and possible challenges (Edited, here I left an incomplete sentence). But to be clear: the title "Lightning Network: a second path towards centralisation of the Bitcoin economy", is at best a grotesque clickbait and/or overinterpretation of results. At worst, it may be simply trolling using a "scientific" language.

Personally, I am not against any kind of analysis that attempts to put matters into perspective and even to perhaps show historical developments as compared with current happenings, so surely we can likely appreciate that lightning network remains a ways from mature, yet I see no real reason not to be attempting to analyze what is going on without necessarily drawing inaccurate and misleading conclusions from nonrepresentative data.. such as the first year of lightning network.

Agree. What I would like to see, perhaps, is a real-time (or at least, let's say weekly) update on the centrality measures they established.

Bitcoin Visuals has some measures which may indicate relative centralization, too, or at least connectivity and thus resilience against attacks. For example, the "cut channels" indicator shows channels which cannot be closed safely without disconnecting nodes. The percentage of these channels was rising until May 2021, but since then it is slowly decreasing. This may indicate that people were indeed connecting to few nodes making some routes "irreplaceable", but now alternative routes are opening, and thus connectivity is improving again.

Surely with the recent onboarding in lightning network - perhaps partly fueled by some of the El Salvador news (including realizing that apps like strike actually have utility) seems to bring more attention into creativity that could cause some functionalities and interfaces in the coming years that currently ONLY a few more insightful folks might imagine to be coming...

For sure. The current growth trend in LN seems to have been started before El Salvador's adoption, though - it began to accelerate in March/April, maybe first due to the rising on-chain BTC fees, but then continuing after the May crash, possibly taking advantage of the low fees in this period. But El Salvador is surely a big test for the network, if they really manage to onboard people via Strike/Zap. So maybe at the end of the year we will have a first impression about how LN will look like in case of mass adoption.

it is instead a public hub and spoke model.. as people above are now admitting to but saying thats the natural effect.. even though less than 6 months ago they were arrogantly fighting that its an independent and private 'hop'/'route' network that will never centralise

If you mean me, I was never convinced that LN could be totally interconnected without at least smaller hubs (you can search my post history). The challenge is to reach a structure where the hubs don't get too big (with tens of thousands of channels each, a node may get realistic chances to launch attacks), but currently I see no danger here. But those wanting to bring forward LN have to care for that centralization not to happen, for example, periodically revising tutorials (which may have created some centralization according to the blog post linked above) and always pointing out several alternatives when talking to/writing content directed to beginners.

[BlackHatCoiner]

LN is far from being perfect, but 1) is a choice, not enforced 2) compared to a centralized payment processor still offer some degree of decentralization and possibility of external audit (channel capacity, nodes availability, etc...)

I don't get why it's referred as something “centralized”. Should we define that word? Because when someone calls a payment method centralized I'm thinking that there is an administrator among the rest who is responsible for my funds safety; he holds my money and gives me an IOU. Banks, for example, operate centralizedly.

But, when we talk about a network of computers each one running autonomously without being forced to do anything, I can't call it centralized. So, we can't compare LN to a centralized payment processor, because they're two distinct things. Visa is a company, while LN is a protocol; a set of rules computers around the world follow.

Even if there was only one LN node, the method would still not be centralized. I'd have full control over my funds and no IOUs.

*No different than when the Banks held gold, and their banknotes optionally redeemable in gold. *  

The bank can do whatever they want with my gold; the lightning node nothing.

[DooMAD]

but the LN transactions occurs on their LN hubs/ network only.

That's misleading.  It makes it sound as though they are in complete control of the transaction (which is no doubt why you deliberately elect to word it that way).  A more accurate description would be to say that both participants within the channel are in control of their own portion of the funds contained within it.  Maybe that's too technical for you to grasp, though.  If you're still unable to differentiate between a transaction on LN and an IOU, despite several different people having explained to each of your various troll accounts on multiple occasions, there's probably not much more we can do to help you understand.  

[BlackHatCoiner]

You don't have full control of funds locked in a multi-Sig address for LN.

Isn't this obvious? In a multi-signature address, X out of Y signatures are required to be able to spend. The fact that I lock them under these circumstances doesn't make it centralized. Again, the lightning node can do nothing to my funds; we're just both in agreement of transacting between other people.

If I somehow lose the private key from a 2-of-2 multi-sig address, the funds are gone for good. Will the bank behave similarly if I passed away? Clear it up and stop trolling. The fact that you didn't reply to DooMAD's post makes you a troll.

Stop the BS; you aren't close to the bone if that's your purpose.

Now since you have full control as you claim,
immediately send the bitcoins you locked to another onchain address without asking the hash time lock contracts to close the channel.

Let me ask you a question, if you signed a transaction, but didn't broadcast it, would you feel that you own the funds or that it's an IOU?

[franky1]

Shower thought, is some degree of centralization in the Lightning Network, to find efficiency, truly bad for you, franky1? If you ask me it’s not. Or are you merely criticizing the people who believe that Lightning is on the far right side of the decentralization spectrum?

the point of centralisation is that
while promoting fast payments for coffee. results in users using litewallets.
(they cant take their desktops with them to starbucks)

with the invention of factories so that users dont have to have their desktop at home online 24-7 just so they can buy coffee on there phone.
(yep someone told me that lame rebuttal that people will have their home desktop and remote access just to use their independant litewallet app (facepalm))

so knowing majority of people wont be full node users and instead rely on factories to deposit to and then have elthree 'accounts' managed by factories will be centralisation

take my network topology tree in a previous post.

                                                                                         /<0:0.0016>userf1a
                                                                                        //<0:0.0016>userf1b
                                                   <0.008:0.008>factory1-<0:0.0016>userf1c
                                                  /                                     \\<0:0.0016>userf1d
                                                 /                                       \<0:0.0016>userf1e
                                                /
                                               /                                        /<0:0.0016>userf2a
                                              /                                        //<0:0.0016>userf2b
                                             /     <0.008:0.008>factory2-<0:0.0016>userf2c
                                            /    /                                    \\<0:0.0016>userf2d
                                           /   /                                       \<0:0.0016>userf2e
                                          /  /
                                         / /                                        /<0:0.0016>userf3a
                                        //                                        //<0:0.0016>userf3b
exchange<0.04:0.04>hub<--<0.008:0.008>factory3-<0:0.0016>userf3c
                                       \\                                        \\<0:0.0016>userf3d
                                        \ \                                       \<0:0.0016>userf3e
                                         \ \          
                                          \ \                                        /<0:0.0016>userf4a
                                           \  \                                     //<0:0.0016>userf4b
                                            \   <0.008:0.008>factory4-<0:0.0016>userf4c
                                             \                                     \\<0:0.0016>userf4d
                                              \                                     \<0:0.0016>userf4e
                                               \
                                                \                                        /<0:0.0016>userf5a
                                                 \                                      //<0:0.0016>userf5b
                                                   <0.008:0.008>factory5-<0:0.0016>userf5c
                                                                                       \\<0:0.0016>userf5d
                                                                                        \<0:0.0016>userf5e

userf5e can only pay userf1a via one route that relies on the root(center) of the network

users wont want to have to split funds over different accounts.
99% of the world who get paid a salaray do not shift their wage into different accounts to just pay coffee in one account. groceries in another account, and so on.
they just use their same debit card

also they wont want fullnodes at home just to run a remote app on phone("for independence"). they wont want to have to pay large onchain fees to rebalance channels. they will seek the cheapest most convenient and lazy way to make payments. and thats a basic fact of common sense life

so once you realise that factories are becoming a thing because devs realise the need for factories
once you accept the direction the network is taking.
once you accept how cludgy it is to use LN at a hop eltoo model. and how convenient users end up using factories elthree hub model
then maybe you can start understanding the network centralisation effect

and please dont overpromise over promote the happy fluffy utopia of eltoo hop model.
alot of people want to know the harsh truths because they want to understand and make a valid and informed decision of reality. not hopes and dreams

analogy
banks have individual factories(bank branches) with routing/sort codes to pass funds up through the the hierarchy.
basically a bank branches are the channel co-signer
 which lead to the hubs and exchanges at the center(research UK bacs, swift and all the other banking networks in the payment hierarchy of fiat)

..
as for the others debating the concept of IOU
its very simple.
a HTLC is not a bitcoin broadcastable tx.
the denominations will not be understood by bitcoin.
when travelling through routes its not measured in satoshis.

also
if i wrote you a raw tx that was broadcastable. i signed it.. but.. i have yet to broadcast it and thus its not a confirmed transaction on the blockchain.. can you claim the funds are yours now free and clear settled. or that you are possibly waiting and hoping for funds you now think i owe you..
the answer is. your still stuck at the IOU stage until its actually confirmed on the blockchain.

the whole point of bitcoin is irreversible, no countersigning, no third party interference payment network.
LN is none of those things. yet pretends to be "bitcoin" ,... but without all the fascinating features of bitcoin

in my eyes. if its not on the blockchain.. it aint your funds. as thats what bitcoins purpose was
even devs tell people dont be stupid accepting zero confirms

so its wise to highlight that LN is not a settled/confirmed payment. and is still the limbo of someone owing funds until its actually confirmed. once people know the risks they can lose value on LN and that other issues can break the IOU promise(contract) .. then would be more cautious and aware of the risks. instead of falsely being promoted that LN is bitcoin and everything is fully pink clouds of utopian perfection

[LoyceV]

so knowing majority of people wont be full node users and instead rely on factories to deposit to

You've just described how the majority of people use on-chain Bitcoin transactions. They don't run their own full node, but instead rely on centralized nodes to make a transaction.

the whole point of bitcoin is irreversible, no countersigning, no third party interference payment network.
LN is none of those things.

Maybe I can make you an offer: you send 2 mBTC to my LN wallet, and in return I'll send you 1 mBTC on-chain. Since you believe your 2 mBTC payment can be reversed, you're free to do that, and keep my 1 mBTC too! That's an easy profit, right? Unless of course the LN transaction isn't so easily reversed, in which case I get to keep the 2 mBTC.
Put your money where your mouth is

[BlackHatCoiner]

the whole point of bitcoin is irreversible, no countersigning, no third party interference payment network.

The whole point of Bitcoin is, as being said by the whitepaper, to prevent payments from being sent through a financial institution. Its point is that two parties can transact without the need of a third party that will move the money. While that sounds like LN, it's not.

Satoshi was very clear with the problem he was struggling to solve.

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

The lightning node isn't like bank; you don't trust it your money. The maths speak for themselves. You surely lose a part of your privacy due to the knowledge of the node for every transaction you make, but isn't the same with SPV? Why hasn't this being said for electrum servers too? Not to mention that off-chain transactions aren't publicly announced and no weirdos can analyze your pocket.

I'd also like to read why LN transactions aren't irreversible.

[Wind_FURY]

..
as for the others debating the concept of IOU
its very simple.
a HTLC is not a bitcoin broadcastable tx.
the denominations will not be understood by bitcoin.
when travelling through routes its not measured in satoshis.

also
if i wrote you a raw tx that was broadcastable. i signed it.. but.. i have yet to broadcast it and thus its not a confirmed transaction on the blockchain.. can you claim the funds are yours now free and clear settled. or that you are possibly waiting and hoping for funds you now think i owe you..
the answer is. your still stuck at the IOU stage until its actually confirmed on the blockchain.

If Lightning transactions are made up of IOU’s, then what entity issued those IOUs? Or is it actually NOT the same as the IOUs in the real world that the issuer can NOT pay the holder of said IOU? Because, you are NOT sending anything worthless in Lightning. They are actually SIGNED TRANSACTIONS that have not been included in the blockchain yet.

[franky1]

..
as for the others debating the concept of IOU
its very simple.
a HTLC is not a bitcoin broadcastable tx.
the denominations will not be understood by bitcoin.
when travelling through routes its not measured in satoshis.

also
if i wrote you a raw tx that was broadcastable. i signed it.. but.. i have yet to broadcast it and thus its not a confirmed transaction on the blockchain.. can you claim the funds are yours now free and clear settled. or that you are possibly waiting and hoping for funds you now think i owe you..
the answer is. your still stuck at the IOU stage until its actually confirmed on the blockchain.

If Lightning transactions are made up of IOU’s, then what entity issued those IOUs? Or is it actually NOT the same as the IOUs in the real world that the issuer can NOT pay the holder of said IOU? Because, you are NOT sending anything worthless in Lightning. They are actually SIGNED TRANSACTIONS that have not been included in the blockchain yet.

when you are at a bar. and to do a favour for a friend.. you and the friend agree on an IOU.
however its an IOU and remains an IOU until its actually 'paid up' and settled..

heck other factors you need to consider(as its obvious you have avoided)
regarding the close session transactions
everything unconfirmed in a mempool is just waiting to be settled but no guarantee it will confirm
again. dont accept zero confirms. is a principal thats been around forever in bitcoin


its like writing a cheque. yes you signed it.... yes you might also have a debit card thats used as a 'cheque guarantee card' to prove you have worth.. but knowing the cheque is not going to be cleared that same hour. allows the other party to mess around and spend his funds elsewhere. making what you are owed.. not arrive in the end
..

now take a breath. because the bit below is about the internal payments within LN. which are not to be confused with the close channel transactions.
..
note:
a close session/commitment transaction or htlc. are not the same thing.
payments within LN use Msat
where they do not conform to the bitcoin network format

where msat units 4 significant figures different than bitcoin sats
and where a payment using msats wont be accepted by the bitcoin network
then you realise that doing payments in msats wont get confirmed. until you later convert the iou into something bitcoin will accept(msat divide by 1000)


if you cannot tell the difference between an Msat and an sat. then dont reply

// MilliSatoshi are the native unit of the Lightning Network. A milli-satoshi
// is simply 1/1000th of a satoshi. There are 1000 milli-satoshis in a single
// satoshi. Within the network, all HTLC payments are denominated in
// milli-satoshis. As milli-satoshis aren't deliverable on the native
// blockchain, before settling to broadcasting, the values are rounded down to
// the nearest satoshi.

msats. aka LN denominated tokens are not bitcoin satoshi's
LN payments on the LN network use Msats
before settling to broadcast.
a LN tokened payment needs to be converted to a bitcoin native sat amount.

in short and in very layman terms
a LN payment in Msat. is an IOU. that needs to be converted into a different 'note' that can then be settled

[DooMAD]

Same old story

I guess it couldn't last, you're back to spouting nonsense again.  There's a crucial distinction you appear to be neglecting.  Whether that's deliberate on your part or not, I suppose only you will know for sure.  

IOUs can be reneged upon.  Cheques can be reneged upon.  This is not the case when you receive a payment via LN.  Once the other channel participant has signed over a transaction and you have acknowledged it, the only way they can possibly back out on that payment is by attempting to spend from an outdated commitment state, which puts them at serious risk of losing their entire balance within the channel.  Provided you are online to monitor it and don't make any mistakes, you will be able to redeem any balance sent to you via LN.

If the other party became unresponsive before signing over their transaction, then that's equivalent to them becoming unresponsive before sending an on-chain transaction.  Either way, you don't get paid.  Yet you keep insinuating other people can use LN to withhold funds from you in a way they can't do on-chain, but this is untrue.  You can close the channel and broadcast it to the blockchain at any time, providing you are using the latest commitment state.

In fact, the bigger issue is if they become unresponsive when you are trying to pay them.  If that situation arises, you may have to wait for the timelock to expire before you use those same funds to make another payment to a different merchant/business/service/whatever.

I'm pretty sure you know all this by now, since I've been telling you the same thing for what feels like half a decade now, so why continue to be so disingenuous with your choice of words?  It's not an IOU.  It's not anything like an IOU.  You can certainly continue to call it one, but I'll continue to insult your intelligence/integrity (still honestly can't tell which one I'm supposed to be calling into question, perhaps you'll clarify that one day?).

No doubt you'll reply with "bUt FaCtOrIeS!!!111", but will once again neglect to mention that those will be completely optional for those who may wish to utilise them.  And "bUt MiLlIsAtS!!!111", but you seem to be the only person who has ever somehow perceived that as a problem in the history of ever, so yeah, who cares?  I'm going to be laughing if we ever do have a hardfork that increases the number of decimal places in the base protocol.  What would you rant about then?

Just stop.  Please.  You're an embarrassment to yourself and the entire community.  

[TangentC]

IOUs can be reneged upon.  Cheques can be reneged upon.  

And LN hubs can refuse transactions.

It was one of the attacks listed in my post, that Rath deleted just because LoyceV called me a troll and asked to have my post deleted. If you want to know now, google it.

Any Offchain transaction is an IOU, until confirmed ONCHAIN.
Denying that is intellectually dishonest.

[LoyceV]

when you are at a bar. and to do a favour for a friend.. you and the friend agree on an IOU.
however its an IOU and remains an IOU until its actually 'paid up' and settled..

I like this analogy, but you got it slightly wrong. In LN, you hold collateral over your friend. If he doesn't fulfill his IOU, it will cost him more, so he has a reason to be honest and it's very unlikely for you to lose your money.

its like writing a cheque. yes you signed it.... yes you might also have a debit card thats used as a 'cheque guarantee card' to prove you have worth.. but knowing the cheque is not going to be cleared that same hour. allows the other party to mess around and spend his funds elsewhere. making what you are owed.. not arrive in the end

Bad comparison: back when we still used checks, they had a guaranteed amount. Why else would anyone accept it?

where msat units 4 significant figures different than bitcoin sats

You mean 3: the "m" is a standard metric prefix for 1/1000^th.

if you cannot tell the difference between an Msat and an sat. then dont reply

M stands for 10⁶, m stands for 10^-3, and you use both in the wrong way. Talk about irony.

@franky1: how often have you actually used the LN to make payments? Maybe you should just try it a few more times, and see for yourself that all the things you worry about aren't happening.

[franky1]

when you are at a bar. and to do a favour for a friend.. you and the friend agree on an IOU.
however its an IOU and remains an IOU until its actually 'paid up' and settled..

I like this analogy, but you got it slightly wrong. In LN, you hold collateral over your friend. If he doesn't fulfill his IOU, it will cost him more, so he has a reason to be honest and it's very unlikely for you to lose your money.

so as you say IN LN you hold IOU

as for asking me about my LN usage
i am not a fangirl that uses LN for its intended use with its limited scope of trying to show off how it works
EG making penny value transactions for silly forum avatars just to show off LN
instead i have used it to see where the flaws are. i have looked at the code i have studied it and i have done many things.

unlike some

the bitcoin funds on the blockchain that are locked are the collateral
the millisats on LN or the L-BTC tokens on liquid are just pegged tokens and not the collateral.

EG 1950's bank notes were not the collateral of gold.. gold is the collateral of gold. and bank notes are just the IOU that can be redeemed for gold 70 years ago

there are no bitcoins in LN or liquid

atleast most liquid devs can be honest about calling the tokens, tokens. shame some people in this topic like doomad and windfury who are not even devs cant grasp the concept


the IN LN payments have no penalties..
what doomad and windfury keep talking about is the settling up/close session stuff

ill give them another example
you WIRE TRANSFER funds into paypal. and then you make paypal balance payments to ebay
when they can understand the paypal-ebay balance stuff is not the same as a bank wire deposit/withdrawal
then you might understand the differences between inside LN and outside LN

seems too many people are too hard pressed to either admit the difference or understand or even see the difference between a bitcoin transaction and a LN payment

so its no wonder they have no understanding

as for doomads usual superman to the rescue defence of windfury.. yet again doomad flew in too fast and tried to throw punches too fast without realising what he was doing.

so one more time
THIS IS NOT ABOUT THE BITCOIN ONCHAIN SETTLING TRANSACTIONS

this is about the IN LN PAYMENTS
they are measured in millisats and those contracts CAN BE RENEGGED ON in multiple ways
hense the IOU
an IOU is a contract that has not been settled

why.. well thats easy ..because the LN HTLC IN MILLISATS are not the same format or denomination as a bitcoin settlement transaction. and the funds are not settled/cleared/guaranteed to clear
there are many ways to reneg on the IOU
not just within LN
not just at the countersign of the settlement
not just at the broadcast
not just at the mempool

doomad can say all the BS he wants but i quoted something from the devs of a LN wallet from the LN wallet github that counters doomads fluff

so get the hint.. from the LN devs themselves: read it and weep

// MilliSatoshi are the native unit of the Lightning Network. A milli-satoshi
// is simply 1/1000th of a satoshi. There are 1000 milli-satoshis in a single
// satoshi. Within the network, all HTLC payments are denominated in
// milli-satoshis. As milli-satoshis aren't deliverable on the native
// blockchain, before settling to broadcasting, the values are rounded down to
// the nearest satoshi.

[/quote]

if you are still unsure.. try reading the code first. there are many examples but i showed the most layman version because it seems alot of people cannot read  anything more difficult that a glossy promotional advert graphic

and yes even i cant believe that doomad after 4 years is still saying the same fluff without checking
its as if he doesnt want to be truthfull. he just wants to be loyal to his wife windfury

[Wind_FURY]

..
as for the others debating the concept of IOU
its very simple.
a HTLC is not a bitcoin broadcastable tx.
the denominations will not be understood by bitcoin.
when travelling through routes its not measured in satoshis.

also
if i wrote you a raw tx that was broadcastable. i signed it.. but.. i have yet to broadcast it and thus its not a confirmed transaction on the blockchain.. can you claim the funds are yours now free and clear settled. or that you are possibly waiting and hoping for funds you now think i owe you..
the answer is. your still stuck at the IOU stage until its actually confirmed on the blockchain.

If Lightning transactions are made up of IOU’s, then what entity issued those IOUs? Or is it actually NOT the same as the IOUs in the real world that the issuer can NOT pay the holder of said IOU? Because, you are NOT sending anything worthless in Lightning. They are actually SIGNED TRANSACTIONS that have not been included in the blockchain yet.

when you are at a bar. and to do a favour for a friend.. you and the friend agree on an IOU.
however its an IOU and remains an IOU until its actually 'paid up' and settled..

But it’s NOT the same. No one signed, and issued a worthless piece of paper in Lightning, trusting the counterparty’s ability to pay. In Lightning, you literally need an onchain transaction to open/fund a channel, so you are not sending anything worthless to the counterparty.