Criticisms of the Lightning Network

[btc_enigma]

The biggest issue for me is  that you cannot have a  safe backup of your lightning funds using seed words

no, the wallets used to manage Lightning channels do have a seed in every implementation


there's no seed for the channel addresses, but that's not relevant, as the funds will always end up back in the addresses of the underlying bitcoin wallet should a channel be closed.

This is relevant, user will lose funds if  his mobile phone having LN channel states crashes

think of it like this; Lightning channels are like a checking account, for regular comings and goings of cash. saying the channels don't have seeds is like complaining your debit card didn't come with a bank vault and an armed guard

In essence, what you are saying is LN is insecure for anything greater than 100USD. And you should put only small amounts that you can afford to lose. This forces me to keep transferring funds between bitcoin/LN which doesn't work with high tx fee

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[Carlton Banks]

This is relevant, user will lose funds if  his mobile phone having LN channel states crashes

redundant disk solves that, a seed cannot. For a phone, just keep literal pocket change amounts on a phone. How often does an entire phone fail anyhow?

think of it like this; Lightning channels are like a checking account, for regular comings and goings of cash. saying the channels don't have seeds is like complaining your debit card didn't come with a bank vault and an armed guard

In essence, what you are saying is LN is insecure for anything greater than 100USD. And you should put only small amounts that you can afford to lose. This forces me to keep transferring funds between bitcoin/LN which doesn't work with high tx fee

nope, I'm not saying either of those things, and that's not how I use Lightning at all. Money comes in, money goes out; there's not much need to go back on-chain, you just need to put some thought into how you manage it.

[Rath_]

This is relevant, user will lose funds if  his mobile phone having LN channel states crashes

Both Eclair Mobile and Bitcoin Lightning Wallet allow user to backup their Lightning Network channels. The former allows creating local backups as well as encrypting and uploading them directly to user's Google Drive account automatically. As far as I remember, the latter asks user to pay for its backup service. It might have changed, though.

[Rath_]

It's great, but user might get their funds stolen if they don't use watchtower & realize it after earlier state of money flow/balance could be broadcasted.

Eclair Mobile sets the timelock for the remote uncooperative close to 2 weeks which is plenty of time, especially if you take into account that most people keep their phones constantly connected to 3G or 4G networks (unless you live in the US where data plans are expensive ). It's also possible to have an LND node on a VPS and a Zap app on a phone which makes sending and receiving payments much easier without a risk of theft. Spark is an alternative if someone uses c-lightning.

[Rath_]

Few client i've used in past (mainly on testnet) have default 144 blocks (1 day)

I made a small assumption here. It's still 144 blocks by default, but it is extended to 2016 blocks when the user enables receiving payments over the LN. You are more likely to lose money when the other party had coins on their side in the beginning.

[LoyceV]

Both Eclair Mobile and Bitcoin Lightning Wallet allow user to backup their Lightning Network channels. The former allows creating local backups as well as encrypting and uploading them directly to user's Google Drive account automatically. As far as I remember, the latter asks user to pay for its backup service. It might have changed, though.

My Eclair client makes backups on Google Drive, and I've never paid them directly (only with my privacy). I think Google Drive is part of the ~15 GB Gmail storage space.
I've never tested the backups though.

But most user don't run full nodes, rent a VPS or both

I think it was BitCryptex who mentioned a VPS before: does it require storing the full blockchain to run a full LN node? If so, any cheap VPS won't qualify (the cheap VPS I bought recently has 25 GB only).

[Rath_]

My Eclair client makes backups on Google Drive, and I've never paid them directly (only with my privacy).

It looks like you have misread my post. Bitcoin Lightning Wallet is the one that charges users for backups. More information can be found here.

does it require storing the full blockchain to run a full LN node? If so, any cheap VPS won't qualify (the cheap VPS I bought recently has 25 GB only).

No, it doesn't. If you choose LND then you can use built-in neutrino which is a light client. The Lightning Network node itself doesn't use many resources. We could set it up even on your VPS.

[darosior]

Hi,

The biggest issue for me is  that you cannot have a  safe backup of your lightning funds using seed words

A safe offline backup solution is very important, if you want users to store any serious amount of funds on LN

FWIW it's not true anymore on C-lightning. Using the [db_write plugin hook](https://lightning.readthedocs.io/PLUGINS.html#db-write) a plugin can replicate the entire database. Along with the seed (contained in `~/.lightning/hsm_secret`) it is possible to have a full backup of your LN node. To get much closer from practice here is a proposed plugin implementing that actual feature : https://github.com/lightningd/plugins/pull/40.

[Wind_FURY]

I'm still waiting for the people who keep insisting that "Bitcoins in Lightning are IOUs". They're not posting so far, I believe maybe they have given up on that propaganda.

[Carlton Banks]

I'm still waiting for the people who keep insisting that "Bitcoins in Lightning are IOUs". They're not posting so far, I believe maybe they have given up on that propaganda.

it's conceptually similar, so you can see how someone could make such a mistake (or deliberately state the falsehood as fact in order to bash Lightning)


the similarities end in the redemption; if you redeem an IOU, the issuer might just refuse (or make an excuse). But the issuer of funds in a Lighting channel is the Bitcoin blockchain, and so when you "redeem", it accepts no matter what.

i.e. payment channels have the advantages of an IOU without the drawbacks

[Wind_FURY]

Babble

No IOUs in Lightning. They are signed transactions made by the participants of the channel that have not been broadcasted on-chain yet. No one is holding your coins, and issued something worthless in Lightning.

[LoyceV]

One guy says LN has bitcoins on it.
To that idiot, I say ok send me the bitcoins directly without using bitcoin onchain network.
He says , he can't do that , he can only send me a LN's representation of bitcoins on LN network,

I'm not sure what you're getting at. It's obvious you can't send Bitcoins without making an on-chain transaction. That statement is true with or without Lightning Network.

[Carlton Banks]

another way to look at it :-

• IOU's are informal contracts, that have a reputation for being easy to break
• Lightning channels are contracts too, but they're enforced by the Bitcoin blockchain. You can't break these contracts

future improvements (i.e. Eltoo / sighash_noinput) will tidy up the corner case where old copies of channel updates are put on-chain.

[HeRetiK]

• IOU's are informal contracts, that have a reputation for being easy to break
• Lightning channels are contracts too, but they're enforced by the Bitcoin blockchain. You can't break these contracts

Well put. I think a lot of misconceptions regarding LN stem from mistaking the latter for the former. They seem to believe that LN smart contracts are governed by laws similar to legal laws (ie. a social construct based on trust and thus easily broken) while the laws smart contracts are governed by are more akin to the laws of physics.

[Welsh]

Well put. I think a lot of misconceptions regarding LN stem from mistaking the latter for the former. They seem to believe that LN smart contracts are governed by laws similar to legal laws (ie. a social construct based on trust and thus easily broken) while the laws smart contracts are governed by are more akin to the laws of physics.

As a side note this is what people should be pushing for when it comes to contracts with anything. Unbreakable contracts by either party which are enforced by a system such as the Blockchain. The Lightning Network is no doubt a good move even if its not perfect in itself, its a movement that will hopefully lead onto better things. Whether that's The Lightning Network or something different.

[Wind_FURY]

another way to look at it :-

• IOU's are informal contracts, that have a reputation for being easy to break
• Lightning channels are contracts too, but they're enforced by the Bitcoin blockchain. You can't break these contracts

future improvements (i.e. Eltoo / sighash_noinput) will tidy up the corner case where old copies of channel updates are put on-chain.

But Lightning is nothing "like" an IOU system. "Coins" sent in Lightning are actually signed transactions that haven't been broadcasted, and included in the blockchain yet.

[Carlton Banks]

But Lightning is nothing "like" an IOU system. "Coins" sent in Lightning are actually signed transactions that haven't been broadcasted, and included in the blockchain yet.

goods in an IOU are signed by the issuer, and haven't been delivered to the recipient yet

Lightning channels are just contracts to deliver valid on-chain funds, but not to actually confirm the transaction. If it can be confirmed, then it's nigh-on identical to actually owning it on-chain, you have the signed transaction that delivers the BTC to an address own by you

(that's why Eltoo/sighash_noinput is so important, the big obstacle is unexpectedly high on-chain fees preventing you from settling a channel balance, no_input lets you change the transaction fee when you initiate a channel close, whereas with today's Lightning you must choose the transaction fee when you update the channel, which may be a while before you close)


The "IOU" thing is a psychological trick; IOU's have a bad reputation for being worthless and easy to abuse, whereas as you say, Lightning is not like that. That doesn't mean it's any less like a non-legal contract, it is a non-legal contract. Lightning channels are better guaranteed than even a legal contract, maybe we should call them cryptographic or algorithmic contracts to reflect this difference. I find "smart" contract to be an irritating expression

[Wind_FURY]

But Lightning is nothing "like" an IOU system. "Coins" sent in Lightning are actually signed transactions that haven't been broadcasted, and included in the blockchain yet.

goods in an IOU are signed by the issuer, and haven't been delivered to the recipient yet

Lightning channels are just contracts to deliver valid on-chain funds, but not to actually confirm the transaction. If it can be confirmed, then it's nigh-on identical to actually owning it on-chain, you have the signed transaction that delivers the BTC to an address own by you

(that's why Eltoo/sighash_noinput is so important, the big obstacle is unexpcetdly on-chain fees preventing you from settling a channel balance, no_input lets you change the transaction fee when you initiate a channel close, whereas with todays Lightning you must choose the transaction fee when you update the channel, which may be a while before you close)


The "IOU" thing is a psychological trick; IOU's have a bad reputation for being worthless and easy to abuse, whereas as you say, Lightning is not like that. That doesn't mean it's any less like a non-legal contract, it is a non-legal contract. Lightning channels are better guaranteed than even a legal contract, maybe we should call them cryptographic or algorithmic contracts to reflect this difference. I find "smart" contract to be an irritating expression

The "IOU comparison" is something difficult for me to agree with, because an IOU is something that acknowledges debt. There are no debts in Lightning.

Am I wrong in this? Was franky1 actually right that the transactions in Lightning are made up of IOUs? Hahaha.

[LoyceV]

The "IOU comparison" is something difficult for me to agree with, because an IOU is something that acknowledges debt. There are no debts in Lightning.

Can't you say it's an IOU from the channel to both parties involved? Neither of the parties has a debt, but the Lightning channel owes them money.

[Carlton Banks]

The "IOU comparison" is something difficult for me to agree with, because an IOU is something that acknowledges debt. There are no debts in Lightning.

Can't you say it's an IOU from the channel to both parties involved? Neither of the parties has a debt, but the Lightning channel owes them money.

you could, but unlike an IOU, the debtor cannot stiff the creditor. As I say, that is where the comparisons end

and I reiterate, saying "Lightning is an IOU" is a psychological tactic, designed to make people think they're trusting money put into Lighting channels can be returned to the on-chain. That's not what's happening. You can control whether your money is returned, providing that you understand how to do so.

Am I wrong in this?

no

channels are like IOUs, but they are not IOUs. Manipulating subtle differences in the meaning of words, or exaggerating something are typical tactics of someone trying to twist reality.