Can Lightning Network Hubs be owned by banks?

[Wind_FURY]

What’s funnier are the people who spread FUD that the government will monitor all Lightning transactions, just as they’re doing with onchain transactions. OK, then government will run Lightning nodes, buy Bitcoin, and then open payment channels? Thanks for the liquidity.

On reality, if government run LN nodes, it can used as honeypot to get few information such as IP address and other metadata (such as time and range of bitcoin is sent).

That’s the point of the post. To monitor all transactions in Lightning, the government will need to be a liquidity provider in Lightning, helping the network scale.

What’s funnier are the people who spread FUD that the government will monitor all Lightning transactions, just as they’re doing with onchain transactions. OK, then government will run Lightning nodes, buy Bitcoin, and then open payment channels? Thanks for the liquidity.

On reality, if government run LN nodes, it can used as honeypot to get few information such as IP address and other metadata (such as time and range of bitcoin is sent).

liquidity ... Pffft
government wont give liquidity..
they can just gossip the network. then try every route and not actually fulfill any payment. but test which payments are possible at different values and cancel payment without letting it finalise.

with enough attempts at enough times they can gather quite alot of info. at no cost

Is this true? I don’t want to ask Bitcoin Stack Exchange, and prove another franky1 post wrong again.

- gmax, achow,

[TangentC]

https://www.consumeraffairs.com/news/irs-offers-625000-reward-to-anyone-who-can-create-tracing-tool-for-monero-cryptocurrency-or-the-lightning-network-091120.html

https://www.reddit.com/r/Monero/comments/j2qm42/chainalysis_and_integra_fec_have_won_the_recent/

https://blockonomi.com/watchtowers-bitcoin-lightning-network/

For their services, they receive fees from users,

https://www.coindesk.com/blockstreams-watchtowers-will-bring-a-new-justice-system-to-the-lightning-network

As a semi-trusted peacekeeper, Watchtowers store local information from subscribing nodes and are purpose-built for nodes that go offline frequently,
Watchtowers are expensive to maintain as they store lots of local data,

Just a guess on my part, but I imagine that using Chainalysis secret tool in addition to running a WatchTower would allow for forensics to be observed on the Lightning Network Payment Channels. Their is no locking bitcoin requirement for WatchTowers operators to provide liquidity, it could be done at a minimal cost and may even earn some payment for the watchtower service.

[ABCbits]

On reality, if government run LN nodes, it can used as honeypot to get few information such as IP address and other metadata (such as time and range of bitcoin is sent).

liquidity ... Pffft
government wont give liquidity..
they can just gossip the network. then try every route and not actually fulfill any payment. but test which payments are possible at different values and cancel payment without letting it finalise.

with enough attempts at enough times they can gather quite alot of info. at no cost

LN node isn't equal liquidity. You still need to run LN node and make a channel to try possible routes, but you can refuse to route any transaction or actually make payment.

Just a guess on my part, but I imagine that using Chainalysis secret tool in addition to running a WatchTower would allow for forensics to be observed on the Lightning Network Payment Channels. Their is no locking bitcoin requirement for WatchTowers operators to provide liquidity, it could be done at a minimal cost and may even earn some payment for the watchtower service.

Chainalysis already suspected doing it on Bitcoin network when they caught run lots of full nodes, so it's possible they do same thing for LN watchtower and server for SPV wallet (such as Electrum).

[Wind_FURY]

Is this true? I don’t want to ask Bitcoin Stack Exchange, and prove another franky1 post wrong again.

- gmax, achow,

funny part is your 'franky post wrong'
were not technical debunks but instead 'ignore him he just angry against dev'
maybe try using LN understand LN
 if you have spent the last 2+ years promoting it you better learn about it

a "gov" node can have any balance it wants. but doesnt have to provide any of that for routing other people.

it can use its balance to set its own payment paths to its preferred destination and have its preferred destination just cancel/reject.
thus no funds(liquidity) actually moves 'for the network of users'
but use this process to poke the network and find out stuff

..path finding and payment brute forcing via incremental balances and then tweaking the path on each attempt can gain you alot of knowledge about which nodes will allow certain amounts or not

i really do suggest you google LN vulnerabilities. get a fair balance of knowledge about its limitations and problems.. then take your PR cap off and just imagine yourself with less positive spin and think about how features can be used against people

i do think its rather strange that someone thats been promoting LN soo much hasnt gathered the basic points and features and details.

its like your a car fan... but not old enough to drive yet... you like it for its curved edges but have no experience of sitting in the drivers seat and testing it out first hand

..
anyway.. enough about you..

the basic LN model wont live up to a reputation of individual decentralised network of hops
it will of course turn into a hub and spoke model

For a non-technical person like me, and after reading so many of your posts, that when researched were discovered to be mostly disinformation, gas-lighting, and FUD, would you expect that person to trust and listen to you? Actually, I hope they do. To make them learn the HARD WAY.

[acquafredda]

hubs of private business will have more route access/hop skipping and ability to move more funds per session.
it will be these hubs that become the bank2.0
but there will be nodes present used just to analyse the network for things like tax/justice such as government nodes
nothing stops fiat institutional banks from making their own hubs. but you will find private business like walmart and starbucks being the main hub(bank2.0)

That is the beauty of it, being a permission-less network anybody can jump in/off at will and do actually whatever with it. This applies to Bitcoin and the LN too. Therefore, I completely agree with the above and that is what I am witnessing in the real world outside of bitcointalk.
For the above reasons I still do not feel confident to use the LN on a daily basis.
 

[Wind_FURY]

maybe try to learn the facts. and use LN and stop just asking for a answer that sounds like 'ignore him he just troll'

even EFTbitcoin jsut told you that an node does not equal liquidity. because it can just refuse routes.
which is what i said.

Not entirely true. A Lightning node that has at least an open channel does provide liquidity, doesn’t matter if it can refuse some routes. IF it refuses ALL routes, then why open a channel, or why run a Lightning node at all? To participate in Lightning as a node, is to provide liquidity.

[PrimeNumber7]

maybe try to learn the facts. and use LN and stop just asking for a answer that sounds like 'ignore him he just troll'

even EFTbitcoin jsut told you that an node does not equal liquidity. because it can just refuse routes.
which is what i said.

Not entirely true. A Lightning node that has at least an open channel does provide liquidity, doesn’t matter if it can refuse some routes. IF it refuses ALL routes, then why open a channel, or why run a Lightning node at all? To participate in Lightning as a node, is to provide liquidity.

A LN node will actually need to have at least two open channels to provide liquidity. In order to provide liquidity, one of your open channels is sending a transaction to another of your open channels through your node.

I think what franky1 is saying is that an adversary could open many LN channels to monitor the balances of as many LN nodes as possible while not providing liquidity. If there is someone who is constantly refusing to sign new transactions, a LN node operator would probably close the channel. If an adversary were to provide liquidity while trying to figure out the balance of each side of each open channel while providing liquidity, they would need to make many transactions (if they attempted to make transactions they don't sign, they would run into the same problem of having their channels closed). The solution to this is simple, have a user-configurable minimum and maximum amount they will allow to be on their side of their channel, and a maximum individual transaction size they will be willing to sign.

[PrimeNumber7]

a LN node will only provide liquidity if it opens channels between more than one partner and contingent on allowing routes
not allowing routes=no extra liquidity
eg i can have 50 channels.. no routing=no liquidity

If you have 50 open channels and are not allowing transactions, it will not be long before you have 0 open channels because other nodes will close their channels with you in favor of opening channels with other peers who are willing to allow transactions to flow through the channel.

[Kakmakr]

I think in the first world countries, large Exchanges will dominate with their LN hubs.... but in third world countries a bunch of smaller operators will dominate at first and then as the technology become more popular, the bigger companies will get in on the action and they will start dominating too.

The people using the LN hubs will not even worry about who are behind these hubs as long as their tx's are fast and cheap. Banks will definitely fund hubs, when they start losing income. (This is still very early and no threat to them now)  

[Theb]

This was created during December 2017 the timer were Bitcoin first reach 19,000$ and his assumptions was based on the scaling solution (LN) as the alternative for sending and receiving Bitcoin as the fees on the normal Blockchain transactions were ridiculously high which he pointed out earlier in the video. Now Almost 4 years have passed and I think it is safe to assume that he may have overreacted with the situation Bitcoin had during December 2017, Banks have not monopolize Bitcoin in any kind of Lightning Hubs and on-chain transactions aren't 20-30$ ever since SegWit and LN has been applied for Bitcoin. Also why not to worry about Banks creating their own Lightning Network is most probably is they heavily enforced by AML and KYC regulations as obviously they will always be under the surveillance of the authorities, before you can use this Bank-run LN hubs all users will need to submit KYC which I don't think a lot of people will like especially if there are other non-KYC alternatives.

[Wind_FURY]

maybe try to learn the facts. and use LN and stop just asking for a answer that sounds like 'ignore him he just troll'

even EFTbitcoin jsut told you that an node does not equal liquidity. because it can just refuse routes.
which is what i said.

Not entirely true. A Lightning node that has at least an open channel does provide liquidity, doesn’t matter if it can refuse some routes. IF it refuses ALL routes, then why open a channel, or why run a Lightning node at all? To participate in Lightning as a node, is to provide liquidity.

if it only has a channel open then it is not a route
if it has a channel open it does not need to provide any of that balance for anyone else.

I know that, but the point being made is that for each node to START somehwhere in providing liquidity in the Lightning Network, is for nodes to connect, and open channels with its peers. How would you bootstrap the network without opening at least one channel? Or, why run a Lightning node at all?

[Wind_FURY]

node liquidity is not the same as network liquidity

if the network cant use it. its not network liquidity. its just node liquidity

Get the context. You’re not listening.

exchanges dont actually have money moving from banks to exchanges. so banks dont need LN for their fiat reasons

Who said they need LN for anything? You? Isn’t LN’s main purpose to increase utility for small payments IN Bitcoin?

banks also have to do things legit. so they wont use a funky network with vulnerabilities. instead they use officially regulated OTC platforms

the banks just use their own bank website API to display deposits in exchange accounts(held at bank) separately from the exchange server.

so the main hubs will be exchanges. retailers and things like blockstream factories.

eventually the network will look like this:(dumbed down diagram)
                                                                            /-users 0001-1000
       |-------- [walmart]<-|        |-----> [BS factory1]-users 1001-2000
       |                             |        |                 ^         \-users 2001-3000
       v                            v        v                  v         /-users 3001-4000
[exchange]<-------> [BS greyscale]<->[BS Factory2]-users 4001-5000
       ^                          ^        ^                 ^          \-users 5001-6000
       |                            |        |                  v          /-users 6001-7000
       |------[starbucks]<-|        |------->[BS factory3]- users8001-9000
                                                                            \-users 9001-10000

Why are you so bothered about banks and LN? The banks WILL NOT use LN, but the exchanges, merchants accepting Bitcoin might, and attracted towards an off-chain layer if it becomes more convenient for them and their users.