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0 pointsmundo6y ago0 comments

Correct me if I'm misunderstanding things, but Lightning Network means off-chain transactions, right? Which can be be reneged on if one party is malicious, meaning they'll only occur between trusted parties? And in practice, that means traditional financial services companies and their KYC-compliant customers, which is the exact 180 degree opposite of the originally envisioned use case.

From where I sit, it seems like BTC was designed to be a currency that would free us from financial regulation, it has failed on both counts, and crypto enthusiasts are trying to turn it into an over-elaborate debit card because the alternative is for it to become a historical curiosity.

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moduspol6y ago

It's complicated, and I'm not sold on the Lightning Network as the future, but

> Which can be be reneged on if one party is malicious, meaning they'll only occur between trusted parties?

This is not correct. My understanding is essentially each party is tying up Bitcoin as being between them on the blockchain, then trading cryptographically verifiable assertions of each other off-chain about what the latest status of the ongoing "tab" is between them. Either of them can close the tab at any time and reconcile to the blockchain.

They don't really need to trust each other, although this does introduce a dependency on some entity (whether the user's own server or a third party) to publish the latest version of the "tab" if the other guy maliciously tries to publish an older version of the "tab." And of course, that means you need some redundant storage / handling of those cryptographic assertions from the other guy about what the status of the latest "tab" is. But that doesn't require trust--you'd want to do it even if you trust the other party.

Or at least that's my understanding of it. I like the conceptual idea of LN but some of these details seem like dealbreakers to me.

ericb6y ago

Ever meet someone with a startup idea that is really an insanely complicated way of achieving something people already can do? It's like, you want to tell them "people will never do steps m,n,o,p,q,r,s and t because that's not how people think, and they have other simpler ways to get what they want.

That's the Lightning Network.

gingeropolous6y ago

Thats also bitcoin/cryptocurrencies. Decentralized money is insanely complicated compared to centralized money. There is no efficiency here.

mundoOP6y ago

> My understanding is...

That's how two finserv companies would transact off-chain with each other, but when I go to buy a cup of coffee with a bitcoin, I'm not opening up a payment channel with them for one transaction, that would defeat the whole point. The coffee shop will use a payment processor, who isn't going to deal with me off-chain unless I'm the KYC'd customer of them or some other finserv they trust. (please correct me if I'm wrong here)

moduspol6y ago

I think you're correct in that this will be the inevitable result. It just won't really be for trust reasons.

You won't want to open up a payment channel to them, but you don't need to. You just need an already open payment channel to someone who is, or (more importantly) there is some route of payment channels between you and them through any number of intermediaries.

There won't be a way to enforce KYC on the network itself, and you don't need trust for this to work.

But because of the inherent cost / time / complexity reduction benefits of just maintaining big channels between large entities, normal people and businesses will inevitably be incentivized to just work through banks to do this. The banks can just hold all their money and handle keeping the channels between themselves open and funded.

And that's where I think you're correct. It leads to a world where KYC can be required easily because the vast majority of legitimate use cases will be through centralized endpoints.

xur176y ago

In the case of purchasing coffee, your payment can make multiple hops (through multiple channels) to the coffee shop. This means you only need a channel open with 1 participant in order to be able to transact, and none of you need to trust each other.

pixelperfect6y ago

Lightning Network is primarily off-chain transactions, but parties don't have to trust each other. If you open a payment channel with a malicious party, there's no way for them to benefit, and the worst they can do is make you wait a few days for a timelock to expire in order to withdraw your funds. Admittedly, that's a bit of a nuisance, which is why I'm surprised fees for Lightning Network transactions are so low currently (approximately $0.00). I've already used Lightning Network several times without ever doing KYC.

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moduspol6y ago

It's complicated, and I'm not sold on the Lightning Network as the future, but

> Which can be be reneged on if one party is malicious, meaning they'll only occur between trusted parties?

Or at least that's my understanding of it. I like the conceptual idea of LN but some of these details seem like dealbreakers to me.

ericb6y ago

That's the Lightning Network.

gingeropolous6y ago

Thats also bitcoin/cryptocurrencies. Decentralized money is insanely complicated compared to centralized money. There is no efficiency here.

mundoOP6y ago

> My understanding is...

moduspol6y ago

I think you're correct in that this will be the inevitable result. It just won't really be for trust reasons.

There won't be a way to enforce KYC on the network itself, and you don't need trust for this to work.

And that's where I think you're correct. It leads to a world where KYC can be required easily because the vast majority of legitimate use cases will be through centralized endpoints.

xur176y ago

pixelperfect6y ago

j / k navigate · click thread line to collapse