Volatility IS a bug, not a feature :)

[JaanusRaim]

https://coinmarketcap.com/historical/20131126/

one snapshot from the distant past.... THIS is volatility
       
                  %1h        %24h       %7d
Bitcoin     1.88%       15.73%      59.68%
Litecoin   8.68%        67.69%    156.67%
XRP        0.63%        59.54%    313.49%
Namecoin -1.73%     92.86%    620.76%

[Wind_FURY]

The mathematically controlled Bitcoin supply prevents that Bitcoin will have an extremely low volatility. So fiat-like values are probably impossible.

But it should not be much higher than gold's volatility in "normal times" (not taking into account the 1980s or the 2025/26 bubble).

But who are you to say what "should" or "should not" be? No plebs like us could simply order the market to have lower volatility than Gold in "normal times", no? Proposing that in itself is laughable.

That can be achieved by behavioral changes in the community: using DCA instead of hoard-and-sell, adopting it as a currency, not believing anymore in "get rich quick" but in "a stable asset which is likely to grow slowly to moderately".

 

OK, if you believe those behavioral changes in the community are possible. But the psychological nature of the market, ANY market including Bitcoin, has shown that what you propose is impossible. Those DCA buyers are also susceptible to Panic-Selling and FOMO.

[d5000]

Given that there are now $trillions going through stablecoins everyday, saying they "solve no problem" doesn't exactly agree with the marketplace.

These "trillions" are mainly used to move coins from exchange to exchange, for DeFi stuff and other "financial" types of usage. See this study.

A note: The study differentiates "payments" (0.7%) and "transfers" (29.3%). "Transfers" at the first glance looks good but:

transfers consist mainly of high-value movements into and out of DeFi protocols and for internal treasury applications (Ved 2026; Ingham 2026).

So a large part of the transfers can be added to the financial categories ("Exchanges", "Finance" and "Infrastructure") which together make up around 50%.  Thus we'd have about 65-70% of financial usage. The most relevant non-financial usage is "cross-border transfers among corporate branches across countries" (also part of "Transfers") which could make up around 10-15%, unfortunately the study isn't giving a clear number here. And then there is the "idle" category, which also groups together coins held in saving wallets, but also includes "lost" stablecoins.
 

some stablecoins have ZERO fees.

That can only apply to completely centralized stablecoins (on private blockchains or non-blockchain networks), as in all other cases you pay gas fees or other transaction fees. They're often small, but they add friction which you don't have at PayPal (from the consumer's perspective) nor with cash or credit cards etc..

You don't get to tout the benefits of Bitcoin and then add the L2, which negates the benefits you tout, and then talk about them together as if the combination magically solves a problem when it doesn't.

The L2's I'm talking about here are those that provide a so-called "unilateral exit". See the definition at https://www.bitcoinlayers.org/glossary#unilateral-exit.

This means that you actually do have the final word in custody, and so you can't be censored. Both Lightning and Ark provide this feature.

I'm not talking about Liquid, RSK and similar stuff. I do see some potential for a special type of sidechain where unilateral exit is not possible but instead the exit mechanism works based on incentives (Threshold tBTC, Nomic, the future plans for Stacks ...) but here indeed you have more counterparty risk.

And if you want to say, "but the L2 doesn't add any risk", then why have Bitcoin in the first place?

Because if you consider the problems Satoshi wanted to solve relevant, then you need a strong base asset on decentralized foundations. These decentralized foundation cannot be provided by 1) non-blockchain payment ledgers nor by 2) semi-centralized fast blockchains. And thus we need the "slow" L1.

And Bitcoiners love volatility because... that's the whole point.

Some do, some not.

people buying their coffee in the morning with Bitcoin...

Is a completely irrelevant category of payments.

[legiteum]

Given that there are now $trillions going through stablecoins everyday, saying they "solve no problem" doesn't exactly agree with the marketplace.

These "trillions" are mainly used to move coins from exchange to exchange, for DeFi stuff and other "financial" types of usage.

Just because you personally don't find the usage interesting, doesn't mean it isn't useful.

Stablecoins are doing $trillions in transactions. They are not "useless" as you implied. From a utility standpoint, they are doing thousands of times the volume as Bitcoin does. They are not a fad, they are not going away, etc.

some stablecoins have ZERO fees.

That can only apply to completely centralized stablecoins (on private blockchains or non-blockchain networks), as in all other cases you pay gas fees or other transaction fees. They're often small, but they add friction which you don't have at PayPal (from the consumer's perspective) nor with cash or credit cards etc..

I wasn't going to get into the technical details (not that any of their users care either), but suffice it to say that there are stablecoins with zero fees and millisecond-level clearing time. This is a useful product and hundreds of times faster than any credit card or app like PayPal that uses the traditional banking system to perform its transactions.

The only products that offer true "decentralization" is Bitcoin and a few other PoW (not PoS like Ether etc.) and you have to use that product natively, not with an L2, and you need to use it purely with self-custody, not through an app, an ETF, or a broker, or anything like that.

In other words, there are very, very few users out there these days using a decentralized system. And guess what: nobody cares. The products solve the problems they want to solve.

The L2's I'm talking about here are those that provide a so-called "unilateral exit". See the definition at https://www.bitcoinlayers.org/glossary#unilateral-exit.

This means that you actually do have the final word in custody, and so you can't be censored. Both Lightning and Ark provide this feature.

Ark and Lightning are... their own system. They are not Bitcoin. If you list all of the things you think makes Bitcoin amazing and unique, you will find these systems don't have that. In fact, they are systems you would probably deride as "centralized".

The reason L2s are fast and efficient is because they are more centralized, don't use PoW, etc. But without that, then it isn't Bitcoin. You might as well use Robinhood, which uses an Oracle database to keep track of your BTC holding amount. It's no different. Robinhood buys or sells your Bitcoin a few minutes after you click the button, and L2s might do it a few seconds after (presumably), but the principle is the same. You are no longer using a decentralized system.

All you have to do is think of the problem in fundamentals: the system is either truly "decentralized" the way Bitcoin is, and with that it is very slow, very expensive and impossible to scale, or it's fast/cheap/scalable and it's not as decentralized. There is no magic software that can bend the laws of physics.

[YellowSwap]

These are the main reasons for crypto adoption:

Merchants cite several advantages to accepting crypto, led by:
    Faster transaction speed (45%)
    Access to and attraction of new customers (45%)
    Enhanced security features (41%)
    Greater privacy for customers (40%)

I did wonder about transaction speed too, I know 0 confirmation would have explained that, but the finality does make sense, never thought about it that way -- but also not sure if merchants really would mention that as a reason for transaction speed, given that there could be refunds in lieu of chargebacks anyway.

Last year I saw pie shops in Liverpool explicitly sayng why they dont' accept credit cards and still prefer cash to debit cards: it's because they pay what they feel is high fees.

Surprised this is not more reason for merchants accepting crypto. My guess is most merchants using crypto use a settlement service that charges them fees anyway (hello BTCPay!).

Keep in mind that this study asked respondents theoretical questions, e.g. "IF you were to take crypto as payment, why would you want to do that?". In other words, this was not a study of merchants who were already accepting crypto for payments.

I suspect almost all of those respondents were not aware of how long Bitcoin transactions actually take to execute (viz. 10-100x longer than credit cards), and how much they cost. Most probably assume that since crypto is newer, it must be a lot faster and cheaper.

Also note the study asked about crypto generally, not Bitcoin specifically. Insofar as respondents knew the difference, all of the assumptions around practicality would be totally different for the generic concept of "cryptocurrency" versus Bitcoin specifically.

Everyone has their reasons as to why they would prefer to use Bitcoin as payment solution, for example if Bitcoin transaction is costly than using my credit card I won't care simply because I am all into Bitcoin, funny part is I don't even use credit and debits card.

I don't have one, I don't also go Infront of ATM machines to withdraw money, online banking is all I can do and still I prefer using Bitcoin to buy things that are so far away from my location, like cross border payments.

As for the speed I don't even care about it either, because I am not in a hurry to get the goods that I am paying for, it will take weeks to ship it down to my country and the longest wait I've waited while paying with Bitcoin is not even up to 20minutes.

So I believe that Bitcoin working for cross border payment is enough reason for some people to use Bitcoin as payment over speed and fee, like I said, we all have our reasons and this is mine.

[Ambatman]

Stablecoins give users all the benefits of Bitcoin etc. in terms of anonymity and instant settlement but with higher speed, lower transaction fees, and is based on a more stable financial instrument e.g. USD.

You stated something about trade off when speaking about L2 speed and decentralization
And you believe it doesn't apply to stablecoins?
They can't have all the benefits of Bitcoin since they enjoy some strength in its weaknesses, scalability.
But censorship and centralization still prevalent
And these are the reasons Bitcoin succeeded.

Bitcoin is only viable an investment instrument, not a payment mechanism.

Because it's slow? Speed isn't everything
What matters is it works and gets to its destination not everybody are fixated on speed.

The reason L2s are fast and efficient is because they are more centralized, don't use PoW, etc. But without that, then it isn't Bitcoin. You might as well use Robinhood, which uses an Oracle database to keep track of your BTC holding amount. It's no different. Robinhood buys or sells your Bitcoin a few minutes after you click the button, and L2s might do it a few seconds after (presumably), but the principle is the same.

Lightning is part of Bitcoin itself and your coins are stored in multisig channels
directly on the Bitcoin blockchain and  secured by the same PoW and consensus rules.
And comparing with Robinhood is like comparing Bitcoin with ETFs
RobinHood use a form of IOU while in lightning( running your lightning node) you can force close the channel unilaterally
and settle back to the Bitcoin base layer.

[legiteum]

Keep in mind that this study asked respondents theoretical questions, e.g. "IF you were to take crypto as payment, why would you want to do that?". In other words, this was not a study of merchants who were already accepting crypto for payments.

I suspect almost all of those respondents were not aware of how long Bitcoin transactions actually take to execute (viz. 10-100x longer than credit cards), and how much they cost. Most probably assume that since crypto is newer, it must be a lot faster and cheaper.

Also note the study asked about crypto generally, not Bitcoin specifically. Insofar as respondents knew the difference, all of the assumptions around practicality would be totally different for the generic concept of "cryptocurrency" versus Bitcoin specifically.

Everyone has their reasons as to why they would prefer to use Bitcoin as payment solution, for example if Bitcoin transaction is costly than using my credit card I won't care simply because I am all into Bitcoin, funny part is I don't even use credit and debits card.

Totally fair, but our discussion here is about the market generally. Your situation is obviously going to be very rare. If Bitcoin was only useful for people like yourself, it would not be relevant to most of the world.

Stablecoins give users all the benefits of Bitcoin etc. in terms of anonymity and instant settlement but with higher speed, lower transaction fees, and is based on a more stable financial instrument e.g. USD.

You stated something about trade off when speaking about L2 speed and decentralization
And you believe it doesn't apply to stablecoins?
They can't have all the benefits of Bitcoin since they enjoy some strength in its weaknesses, scalability.
But censorship and centralization still prevalent
And these are the reasons Bitcoin succeeded.

I said exactly what you are saying. Some stablecoins have traded the factor of "decentralization" (vaguely defined here) for speed, cost and scalability. It's a straightforward architectural trade-off.

Bitcoin is only viable an investment instrument, not a payment mechanism.

Because it's slow? Speed isn't everything
What matters is it works and gets to its destination not everybody are fixated on speed.

There are some uses that don't care about speed, but mainstream everyday payments simply cannot wait any longer than today's credit cards make them wait or users would not accept it.

And we're talking about billions of payments per day. There's no chance Bitcoin could get even within 100x of that: today it does perhaps 500k per day--using $30 billion in hardware to do it.

Lightning is part of Bitcoin itself and your coins are stored in multisig channels
directly on the Bitcoin blockchain and  secured by the same PoW and consensus rules.

Your coins are eventually stored, you mean. The reason it's fast is because it doesn't use the Bitcoin blockchain directly in real time. During the time your transaction is not on the Bitcoin blockchain, then it's on a system that is... not Bitcoin. Because of that you can't just pretend that the transaction is "Bitcoin" and pretend you get all of the advantages of decentralization and security that the Bitcoin network gives you.

I mean, this is straightforward logic: if you could gain all of the benefits of Bitcoin with a fast, low-latency architecture, then you would just change Bitcoin to that architecture natively.

By the way, just to do a quick reality check here, I'd ask anybody if they could even remotely imagine one billion new Bitcoin transactions going on the Bitcoin blockchain every single day for now on. It's inconceivable. And Bitcoin was never designed for anything remotely like it.

[d5000]

PayPal [...] uses the traditional banking system to perform its transactions.

No, they use an internal database. They are connected to the traditional banking system, but that does not mean they don't operate separately from it when it comes to transfers between internal accounts, i.e. inside their walled garden.

Stablecoins are not different. They are also a walled garden and aren't interoperable natively so they also need a "bridge" or exchange for example to transfer from USDC to USDT. Which is basically the "banking system" (=a custodial and regulated financial institution) too. Most of their "advantages" are only there because people tend to use them inside of their walled garden, due to the oligopoly of USDC and USDT in particular.

you have to use that product natively, not with an L2, and you need to use it purely with self-custody,

The second part of the sentence is true, the first part is wrong though. Re-read the part with the unilateral exit. You retain self-custody if you have that feature.

Ark and Lightning are... their own system. They are not Bitcoin.

These "statements" do not carry any specific meaning. To change that,

1) define "their own system" and "not Bitcoin".
2) challenge the assumption that Ark and Lightning don't provide self-custody if they provide an unilateral exit mechanism. Do it with technical arguments. Then we're talking

[legiteum]

Ark and Lightning are... their own system. They are not Bitcoin.

These "statements" do not carry any specific meaning. To change that,

1) define "their own system" and "not Bitcoin".
2) challenge the assumption that Ark and Lightning don't provide self-custody if they provide an unilateral exit mechanism. Do it with technical arguments. Then we're talking

Ark and Lightning (or any L2) are not the Bitcoin codebase. They are not the Bitcoin network. They do not have the attributes of the Bitcoin network.

You keep trying to pretend that L2's are "nothing", that they have no codebase, they have no servers, they have no interface with the user, they have no nodes, they have no nothing, and because of that, you can just call the L2 "the same as Bitcoin" (but somehow that "nothing" scales to every transaction on the planet whereas Bitcoin can't get within 1000x of that).

If you don't have a PoW scheme and a set of nodes like Bitcoin, then it's not Bitcoin.

If you DO have a PoW scheme and thousands of nodes, then the system will never scale beyond a handful of daily transactions like Bitcoin. Its limited by the laws of physics.

If they could make Bitcoin faster in a way that the Bitcoin community would accept, then they would simply change Bitcoin core to work that way. (Indeed, I have brought this up for discussion before).

Or perhaps the simplest way to put it is, if the L2 is just as good as Bitcoin, then why not make Bitcoin like the L2?

I suspect the answer goes something like, "but you ultimately have to store the transaction on the Bitcoin chain for safety reason" etc. But if that's the case, then that must mean you don't trust the L2, which means the L2 is not trustworthy, which means it introduces its own sets of problems--just like any other digital currency.

You can't have it both ways.

[d5000]

Ark and Lightning (or any L2) are not the Bitcoin codebase. They are not the Bitcoin network. They do not have the attributes of the Bitcoin network. [...]If you don't have a PoW scheme [...] then it's not Bitcoin

Okay, finally something falsifiable.

They use Bitcoin UTXOs, and these are validated the same way than other Bitcoin transactions if they are pushed to the L1 (which occurs in the unilateral exit). Thus they also use the PoW scheme.

Thus Ark and Lightning do use the Bitcoin "codebase" and "network" and also the attributes of the network. The difference is that they use a set of rules to bundle several (up to millions of) transactions together which can be instantly confirmed due to these additional rules.

You keep trying to pretend that L2's are "nothing", that they have no codebase, they have no servers, they have no interface with the user, they have no nodes,

No, this is a strawman. I have not said that.

Ark and Lightning use the Bitcoin L1 directly. They need this L1 for the unilateral exit. I'd say they are Bitcoin but with an extension. They do have own nodes, but they also use the Bitcoin nodes.

If they could make Bitcoin faster in a way that the Bitcoin community would accept, then they would simply change Bitcoin core to work that way.

No, that doesn't work. With sidechains it would be a valid argument, but Ark and Lightning use the Bitcoin L1 directly, and thus they cannot work "independently".

I suspect the answer goes something like, "but you ultimately have to store the transaction on the Bitcoin chain for safety reason" etc. But if that's the case, then that must mean you don't trust the L2, which means the L2 is not trustworthy, which means it introduces its own sets of problems--just like any other digital currency.

Again a fallacy because you treat Ark and Lightning like separate chains or systems that are independent of Bitcoin. But Ark and Lightning simply cannot work independently from the Bitcoin L1 because they use L1 transactions. Think of it as a safety net for instant L1 transactions. Instant L1 transaction without this net would fall victim to the double spend problem, but Ark and Lightning do not due to their penalty mechanism and the unilateral exit.

We don't have two separate chains here. We have simply a category of mechanisms to use the L1 chain only in some cases.

We could say Ark and Lightning reduce Bitcoin to the core feature to prevent double spends: It only needs a confirmation (via unilateral exit) if there really is double spend risk. And as Ark and Lightning make it more difficult to double spend, then you can use them most of the time completely off chain.

[legiteum]

Ark and Lightning (or any L2) are not the Bitcoin codebase. They are not the Bitcoin network. They do not have the attributes of the Bitcoin network. [...]If you don't have a PoW scheme [...] then it's not Bitcoin

Okay, finally something falsifiable.

They use Bitcoin UTXOs, and these are validated the same way than other Bitcoin transactions if they are pushed to the L1 (which occurs in the unilateral exit). Thus they also use the PoW scheme.

Thus Ark and Lightning do use the Bitcoin "codebase" and "network" and also the attributes of the network. The difference is that they use a set of rules to bundle several (up to millions of) transactions together which can be instantly confirmed due to these additional rules.

Yes, which means it is NOT BITCOIN.

This is getting silly. You can describe it in any way you want, but if the transaction does not occur directly on the Bitcoin chain, then it's not Bitcoin and thus you don't get to claim it has all of the features that Bitcoin has.

Security (using that concept very broadly) is a chain: it's only as strong as the weakest link. Insofar as you trust the L2, you completely trust that network or product. The network it uses after it processes your transaction is immaterial.

Ark and Lightning use the Bitcoin L1 directly.

So does CoinBase and Binance. So does any product keeps track of some transactions and batches them and then places them on the chain. All of these products are separate products with their own sets of problems and features. They are not Bitcoin, and they can be (and usually are) centralized in order to gain speed and lower costs. Hence you are connecting a centralized system to a decentralized system, which means the end product is absolutely centralized because the weakest link counteracts any advantages you gain from the stronger links.

If they could make Bitcoin faster in a way that the Bitcoin community would accept, then they would simply change Bitcoin core to work that way.

No, that doesn't work. With sidechains it would be a valid argument, but Ark and Lightning use the Bitcoin L1 directly, and thus they cannot work "independently".

Why wouldn't it work? Why not just make Ark or Lightning the Bitcoin core? (Answer this, and you'll answer why L2s are not Bitcoin).

And as Ark and Lightning make it more difficult to double spend, then you can use them most of the time completely off chain.

If that's the case, and Ark/Lightning are so completely safe and perfect, why not just use them as a stand-alone product with a local data store? Why use the Bitcoin blockchain, with PoW, and highly distributed nodes? (Same point as above in the inverse).

[dzonikg28]

First of all I think your core disagreement could be about semantics:

If "Bitcoin means the L1 network and consensus system, Lightning and Ark are not Bitcoin. But if "Bitcoin" means the broader ecosystem of protocols that inherit Bitcoin's settlement assurances, Lightning and Ark are Bitcoin-based systems that preserve important Bitcoin properties. Your discussion is getting off the rails because you both think one of you must be right and one of you must be wrong. There is no discussion that Ark and Lightning are Bitcoin-native protocols that anchor their security and settlement to Bitcoin.

Look, Lightning and Ark don't just use Bitcoin, but inherit the security of Bitcoin. Their security is only as strong as the security of the underlying network. Therefore I tend to agree with d5000. In normal language you would say "you owe me Bitcoin" and the answer would be "yes, you ok if I send via Lightning?". That's because Lightning is essentially Bitcoin, nobody would accept Lightning payments with "Shitcoin" if the network security is crap.

Where d5000 does perhaps one step to far is when dependence is mistaken for identity. Lightning and Ark are not identical with Bitcoin the network, but they are partially with the ecosystem. Lightning and Ark can't exist without Bitcoin, but Bitcoun can exist without the two. Almost nobody proposes building Bitcoin-style payment layers on tiny POW chains and the security of the base layer is not incidental, it is the fundamental reason these L2 constructions are valuable in the first place.

legiteum I think where you couldn't be more wrong is this part

Insofar as you trust the L2, you completely trust that network or product. The network it uses after it processes your transaction is immaterial.

The whole point of Bitcoin-native L2s is that users do not completely trust the L2.

For example, in Lighning you don't trust routing nodes with custody of your funds, you don't trust channel counterparties to behave honestly and you don't trust the Lightning network to settle disputes by itself. Instead you rely on the ability to enforce your rights on the Bitcoin blockchain and that is a fundamentally different trust model from something like a bank, exchange, PayPal or a custodial payment network. In those systems if the operator cheats, your recourse is legal. In Lightning, your recourse is cryptographic and ultimately enforced by Bitcoin consensus.

Take this thought experiment: suppose Lightning existed unchanged, but Bitcoin's hashpower dropped by 99% and the chain became easily reorganizable. Would Lightning become less secure? Yes. But if you assume that you were correct, then

The network it uses after it processes your transaction is immaterial

and Lightning security shouldn't change at all, but that is wrong and suggests the underlying chain is not immaterial, but a critical part of the whole security model. L2s add additional operational risks, but claiming that L1 is immaterial is completely wrong. The unilateral exit mechanism is only valuable if the settlement chain can reliably enforce it and that is why Bitcoin (its security level) is by no means immaterial and does real work in the Lightning security model.

This is a great conversation to have, but I think you guys took it too far.  Wouldn't you agree that there are many aspects where you guys simply differ semantically and then smaller fractions of your arguments that could actually be attacked technically?

[legiteum]

Look, Lightning and Ark don't just use Bitcoin, but inherit the security of Bitcoin.

NO THEY DO NOT.

It doesn't work that way. If you hire somebody to put your money in a safe, you don't get to claim your money is "automatically" in the safe since you are also trusting the person you hired to put it there.

You don't get to skip over an entire network and software just because the system promises to "eventually" put your money someplace safe--you are stuck trusting the network that puts it there.

And insofar as L2s are not decentralized and don't have all of the features that the Bitcoin religious hard-cores hold dear, then the product you are using is not the same thing.

That's because Lightning is essentially Bitcoin,

Like saying that using Bitcoin via an app like Robinhood is "essentially Bitcoin". Maybe it looks and feels like Bitcoin, but it's not decentralized, for starters.

nobody would accept Lightning payments with "Shitcoin" if the network security is crap.

I'm not saying Lightning, or Ark or any of the L2s are not secure--they may be just fine. But you are trusting the L2, not Bitcoin. From a security standpoint, Bitcoin has nothing to do with it.

Insofar as you trust the L2, you completely trust that network or product. The network it uses after it processes your transaction is immaterial.

The whole point of Bitcoin-native L2s is that users do not completely trust the L2.

LOL, "completely". With security--especially info security--it's either secure or not secure, every step of the way. If there is a "weak link" then that is the status of the system. Every single exploit--every single one--happens because 99.9999% of the system is totally secure, and 0.00001% has a problem. That's what exploits are.

When you use an L2, you... use the L2. It might only be for a few minutes, but it doesn't matter: you are completely dependent on that system to handle your money.

And if you are dependent on a system to handle your money, it's only fair that you evaluate the given system the same way you evaluate systems you are saying have equivalent features.

All of these conversations involve hand-waving: the actual mechanism the L2 uses to eventually store your money is taken as a given, as something that is impossible to hack, impossible for the government to stop, etc. etc. But that's a fallacy. L2s aren't Bitcoin.

For example, in Lighning you don't trust routing nodes with custody of your funds, you don't trust channel counterparties to behave honestly and you don't trust the Lightning network to settle disputes by itself. Instead you rely on the ability to enforce your rights on the Bitcoin blockchain and that is a fundamentally different trust model from something like a bank, exchange, PayPal or a custodial payment network.

So in other words, for every single transaction, in order to be safe, you need to verify that the transaction was executed on the Bitcoin chain.

Great, but... this completely negates the point of the L2.

In those systems if the operator cheats, your recourse is legal. In Lightning, your recourse is cryptographic and ultimately enforced by Bitcoin consensus.

LOL, exactly. Just like... a bank! This is a thoroughly centralized model! It's not Bitcoin, and you don't get to pretend it's Bitcoin, decentralized, etc.

In this scenario you are depending on the fact that you know the name and address of the node operator, you can sue them, etc. No different than making a wire transfer to a bank and suing of the transfer lost your funds.

That's not decentralized, that's traditional finance.

This is a great conversation to have, but I think you guys took it too far.  Wouldn't you agree that there are many aspects where you guys simply differ semantically and then smaller fractions of your arguments that could actually be attacked technically?

My core beef here is this: you don't get to claim that Bitcoin is fast and able to handle the world's daily transactions and also claim its a highly decentralized PoW network. You pick one or the other. Anything else is BS somebody is trying to sell you.

The implications of this are sometimes difficult for Bitcoin religious hard-cores to take: that Bitcoin will never handle the world's daily transactions because it was never designed to do that. In fact, it was intentionally created to be slow and expensive to transact (PoW) along with other design decisions that make true scale impossible.

Hence the common answer is to claim that this other thing solves that problem, and then claim, incorrectly, that the other thing is "also Bitcoin" including all of the features the zealots tout as Bitcoin being, e.g. "censorship resistant" e.g. decentralized.

And the real world is backing this up: L2s haven't taken off because they are a pointless waste of time. When you adopt the L2, you are necessarily lose the religion. But when you lose the religion, then you might as well just use something more efficient and built from the ground up to handle your requirement. (And frankly, the folks making these L2s have absolutely no clue about truly scaling systems to all-internet loads, and get excited about puny numbers like "1000 tps" or something. The correct loading requirement is millions of tps, and none of these L2 systems even remotely comprehend that sort of scale).

Stablecoins are taking over as a common transaction mechanism, and Bitcoin is not, nor are L2s. Bitcoin is for speculation and value store, not utility. It will never be otherwise unless the Bitcoin core is radically changed to be a centralized model.

[d5000]

Security (using that concept very broadly) is a chain: it's only as strong as the weakest link. Insofar as you trust the L2, you completely trust that network or product.

You don't trust the L2 in Ark and Lightning. You trust the L1. There is no counterparty risk in L2 because of L1.

Your comparison with Coinbase does not make any sense. When you move BTC to the Coinbase universe, they can double spend at will. There is no unilateral exit.

I'm almost sure you understand the difference

Why wouldn't it work? Why not just make Ark or Lightning the Bitcoin core? (Answer this, and you'll answer why L2s are not Bitcoin).

I have already answered. Because they are irrevocably linked with L1. They are simply transaction bundling techniques for L1.

I think the big problem is perhaps that we're calling Ark/Lightning "L2s" and not simply "transaction bundling methods". This is not entirely semantics because we can't really talk about a "layer" here if the security is still only provided by 1) the traditional on-chain consensus method and 2) the transaction structure in pure Bitcoin Script (HTLCs).

If "Bitcoin means the L1 network and consensus system, Lightning and Ark are not Bitcoin.

Bitcoin's L1 and its consensus solves everything what Ark/Lightning needs them to solve: the double spend problem.

Bitcoin's only reason to exist is the double spend problem. Ark and Lightning's idea is to solve the double spend problem only in the situations where it could be relevant.

Let's examine the double spend problem further.

Double spends can only be performed by the party that makes a payment (the payer).

If you use Lightning or Ark in the role of the payer, you are agreeing to certain limitations, i.e. a (pure Bitcoin Script) off-chain spending format which enables the payee (receiver) to reject your "payment" and impede it to be confirmed. This means you're "renouncing" to the double spend possibilities the protocol gives you with a traditional transaction.

In other words let's compare the contracts of the "traditional on-chain transaction" and the "lightning transaction":

- On-chain: The Bitcoins are sent to the address X. But if I change my mind before it is confirmed, I can still send them to address Y.
- Lightning: The Bitcoins are sent to the address X as early as the receiver has detected the transaction. If I was to change my mind, then the receiver has the right to reject the payment and even penalize me.

Or:

- The traditional transaction explicitly allows a double spend until the transaction is confirmed.
- In Lightning, the payer enters a contract with the receiver: If I try to double spend, then you have the right to penalize me on-chain.
 

Wouldn't you agree that there are many aspects where you guys simply differ semantically and then smaller fractions of your arguments that could actually be attacked technically?

I agree that "X is (not) Bitcoin" is a too vague sentence to be the base of a real technical discussion.

The interesting question indeed is:

Does Bitcoin (it's consensus and blockchain) provide the security for Ark / Lightning, without additional trust assumptions?

And here the answer only can be "yes". See my long explanation above. In sidechains, in contrast, the answer would be "no", even in Drivechain there are minimal additional trust assumptions (in this case, the miner can be seen as the "person who was hired" to "put the money in a safe").


PS: I'm perhaps WAY too patient here ...

[legiteum]

Security (using that concept very broadly) is a chain: it's only as strong as the weakest link. Insofar as you trust the L2, you completely trust that network or product.

You don't trust the L2 in Ark and Lightning. You trust the L1. There is no counterparty risk in L2 because of L1.

Insofar as you use the L2, you must trust the L2. If the L2 is compromised, then you are compromised. If the L2 is being controlled by a government, then your activity is being controlled by the government.

Again, you keep trying to pretend that the L2 literally doesn't exist. That the software exists in another dimension that doesn't count and thus you can just say, "it's Bitcoin". That's simply not the case. Insofar as the behavior changes, there's systems, networks and software involved. And that architecture needs to be evaluated just like you evaluate Bitcoin.

Your comparison with Coinbase does not make any sense. When you move BTC to the Coinbase universe, they can double spend at will. There is no unilateral exit.

An L2 can double spend at will, too. It can do anything it wants. It's just software which can favor one user over another or do a million other things. It can censor transactions. It can do all of the things people say can't be done with plain Bitcoin. That's why it's not Bitcoin.

Why wouldn't it work? Why not just make Ark or Lightning the Bitcoin core? (Answer this, and you'll answer why L2s are not Bitcoin).

I have already answered. Because they are irrevocably linked with L1. They are simply transaction bundling techniques for L1.

That bundling doesn't happen by magic, it happens with a software and hardware system that bundles transactions for you (just like CoinBase et. al.).

If you use Lightning or Ark in the role of the payer, you are agreeing to certain limitations, i.e. a (pure Bitcoin Script) off-chain spending format which enables the payee (receiver) to reject your "payment" and impede it to be confirmed. This means you're "renouncing" to the double spend possibilities the protocol gives you with a traditional transaction.

Your implied assumption here is that the transaction is a good one on the Bitcoin network. How do you know that until you've committed the transaction on the Bitcoin chain? You don't. Perhaps the L2 is reserving the right to reverse the transaction later. If that's the case, you just blew away a key tenant of Bitcoin, which is that transactions are immutable. And how do you know the network hasn't been taken over by a malign actor? Probably because you are trusting a limited set of nodes: that's also know as a centralized architecture, aka NOT BITCOIN.

You can't pretend that Bitcoin can handle all of the world's daily transactions by offering "Bitcoin+this other thing" and then calling it "Bitcoin". And insofar as you tout the wonders of your L2, then all you are doing is making a case for dropping the L1 i.e. the Bitcoin chain.

Logically, your choices are:

1. Use Bitcoin natively, self-custody, no broker, no app, no ETF, no L2--and perform all of your transactions directly on the chain.

-or-

2. Use a centralized system of some kind.