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The Lightning Network: Turning Bitcoin into Money

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Re: The Lightning Network: Turning Bitcoin into Money

#261

Post by kordlessagain »

JofArnold wrote: post #118
kordlessagain wrote: post #112

Earlier quoted context omitted.

So you blame Lightning not for what it is, but what it enables? That doesn't make a lot of sense, especially given the creators built it to address the issues you raise here. With Lightning, micropayments for the Web can be a thing. Just because nobody has implemented it yet, doesn't mean it doesn't have a killer use case worth the cost of mining (which will decrease over a long period of time). Moving payments for A…

Correct. If you're going to build something like this, why on top of Bitcoin which - as I say - is rotten to its core. With Ethereum and its L2s instant, practically-free micropayments are already a thing. With Solana even... and others I'm not particularly in to but I hear work to various degrees. To be clear, the tech itself is interesting and broadly I remain fascinated in blockchain technologies and engaged with…

The authors of the Lightning paper were well aware of the cost of Bitcoin mining to the environment. We (the authors and myself) speculated at the time that energy usage of Bitcoin mining could one day exceed the current output in the energy markets. I was the one that made the joke about forcing us to wrap the sun in a Dyson sphere one day to satisfy the need for power. It concerned us and they (Joseph and Tadge) ended up doing something about it, while I just sat back and watched.

Lightning isn't limited to Bitcoin, either. As long as the cryptographic algos are compatible, cross-chain swaps can be a thing on the network. That said, Lighting was initially architected to take advantage of Bitcoin's scripting and post-dated payment abilities (which are done using full nodes, not miners). That means anything using Lightning doesn't necessarily contribute to excessive power usage by the Bitcoin network. This is why I called out the attack on Lightning by association to Bitcoin. Would it, if used widely, contribute to Bitcoin's power usage problem? No, it wouldn't. Bitcoin's power usage problem is unique to the mining strategy for the chain, not the use of the transactions it enables, off chain.

Does Lightning still require on-chain transactions? Yes, but they can be done within the current capacity of the network AND even then that doesn't contribute much to the power usage given the full nodes process these payments, not the miners.

If mining came to a near halt, Lightning would still be functional. This means blaming it for anything related to Bitcoin is not a valid argument, which is why I said what I said. It's not that you are wrong about mining costs to the environment or energy markets, but more that the thing you are blaming has little to do with those issues.

Besides which, Bitcoin isn't the primary enemy here, it's the idea of PoW put into production plus human behavior to attempt to acquire wealth with it that is the real boogeyman. Ethereum is making a big bet on PoS, but some remain skeptical this can give way to a fair market. We'll see, I guess. Those folks appear to be way smarter than I am, even on a good day. In the meantime, Ethereum is still stupid slow and still uses PoW to do what it does.

Re: The Lightning Network: Turning Bitcoin into Money

#262

Post by wj »

tzs wrote: post #123
TekMol wrote: post #32

Earlier quoted context omitted.

How do you handle the tax implications of streaming sats? As far as I know, every payment with Bitcoin triggers a taxable event? Do you record a gazillion log entrys "Paid $0.0000145 for listening podcasts, Paid $0.000142 for listening podcasts ...", crunch all the numbers and then at the end of the year put that gigantic list into your tax declaration?

Tax does indeed tend to be a hard problem in these kinds of systems, but I think you (and most responses so far to your comment) are looking at it from the wrong end. It's the seller , not the buyer , that has to deal with taxes in most jurisdictions. For podcasts I'd expect the podcaster to be the seller and the listener to be the buyer. Simplest example is the EU. When you sell a digital good to someone in the EU V…

Your comment made me wish the tax code was small enough to be diagrammed on a napkin. Instead if feels like it is designed to inhibit innovation and new business.

Re: The Lightning Network: Turning Bitcoin into Money

#263

Post by samatman »

hnthrow1010 wrote: post #231
samatman wrote: post #219

Earlier quoted context omitted.

I'm only replying to say that, for all I know, you're correct in all of this. I don't think so, but that's a weakly held conviction about an entire ecosystem I don't use and understand only vaguely. The fact that I personally know people keeping hundreds of thousands of dollar-equivalent-sats on Lightning, who are happy with that arrangement, is what I'm balancing against that guy on the internet with strong opinions…

But you know that most people wouldn't put hundreds of thousands of dollars in a system like that. It would fall apart if that happened. Also, I don't know how they could be happy with it given the extreme crash over the last few months. Regarding my name: The short explanation is, I have a throwaway account in protest. If Satoshi's anonymity was enough to convince your friends to put down large sums of real money ba…

I was dismissive, and I did that on purpose, but I wasn't being sarcastic. Only time will tell which of you is right, all I've got is "eh. looks fine from here".

As for their happiness, I know people with a lot of Bitcoin, and I know a few people who are underwater on their BTC, but there's no overlap in those groups. They might feel a twinge around 7k, more likely, they'd buy as much as they can afford.

Re: The Lightning Network: Turning Bitcoin into Money

#265

Post by where_to_inc »

hnthrow1010 wrote: post #132
samatman wrote: post #64

Earlier quoted context omitted.

Untrue both in general and in particular. Most blockchains are worthless and have nothing in the way of transaction fees or indeed transactions. Doge is perfect for micropayments! This was a fad on reddit back in the day. In particular, well, the title of the article says it all. If you have BTC, and you want to send a few sats and pay basically nothing, Lighting has existed for years and works just fine. Edit: I don…

The existence of Lightning is a failure of Bitcoin's designers to create a system that can scale well, they instead chose to focus on something that was going to be maximum profitable for the miners in the short term and dumped responsibility off onto "L2 chains" as a kludge. The Lightning Network also doesn't "work just fine", the network is fundamentally slow, insecure and unreliable and this will likely never be f…

If you think multiple layers in a payments system is undesirable, I wonder whether you make all your purchases online by putting dollars and cents into envelopes and mailing them to the merchants, or whether you use that additional layer of credit built atop the lower layer hard money supply.

Bitcoin was not designed to be “maximally profitable to miners”, it was designed to be a currency that could not be captured and controlled by state actors or other large players yet would be able to sustain itself and its network by incentivizing miners to set up nodes and resist attempts at hostile takeovers of the network. [1]

No other solution has managed to achieve this. There are proof-of-stake cryptocurrencies that opt to be more easily scalable on L1 at the cost that they are controllable by whoever holds the largest stakes.

[1] https://bitcoin.org/bitcoin.pdf

Re: The Lightning Network: Turning Bitcoin into Money

#266

Post by preseinger »

toolz wrote: post #97
TradingPlaces wrote: post #85

Earlier quoted context omitted.

You say “less important;” I say “vast majority.” How is this better than Visa or MC?

for one, the base currency in question is uncensorable. e.g. I for one find it detestable that fruits and nuts sellers in Iran suffer immensely because of US sanctions. The idea that innocent citizens are being made to suffer for their governments policy (especially in more authoritarian countries) is gross. I see it akin to punishing a child for their parents behavior.

Humans make mistakes. Systems that intend to serve humans have to accommodate that flaw in order to be viable. Fixing mistakes means rewriting history. That means censorship. And so censorship isn't a bad thing. It's actually a core requirement for any system designed for broad usage.

Re: The Lightning Network: Turning Bitcoin into Money

#267

Post by lxgr »

kevinak wrote: post #260
lxgr wrote: post #215

Earlier quoted context omitted.

What's the incentive for anybody to open a lightning channel, providing connetivity etc. without compensation? And even if all of this was indeed done for free (sustainably, not as a loss leader): Dispute resolution and fraud costs money. Free leaves zero margin for either, and I wouldn't use a payment service not providing both.

The parent here is exaggerating. It's not free, just very very very cheap. Nodes with channels can set fees and get paid when they a transaction is routed through them. There is work being done on non-custodial escrow services for LN. Here's one: https://lightningescrow.io

What prevents a node connecting many consumer wallets from raising rates for "out-of-network" wallets, especially smaller ones, or independent nodes?

Think of any network: Economic forces usually drive it towards centralization if not outright monopolization, especially if interfacing with end users (e.g. banks, electricity providers, ISPs, messengers...) unless there are (effective) laws in place prohibiting it.

> There is work being done on non-custodial escrow services for LN.

I'm very curious about efforts like that. Dispute resolution is extremely difficult to do in a way that is cost-effective, yet fair enough to not drive away either buyers or sellers.

Re: The Lightning Network: Turning Bitcoin into Money

#268

Post by MuffinFlavored »

victorvosk wrote: post #87
TradingPlaces wrote: post #68

“We can make the blockchain actually work for payments if we take payments off the blockchain.” Sounds about right.

BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Tons of things go on in-between your CC transactions before its actually settled even if it appears to be instant and final to the end user. Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be th…

> To compare that to normal banking, your credit card is like an L5.

Could you tell us what L1, L2, L3, L4 are in a credit card example?

Re: The Lightning Network: Turning Bitcoin into Money

#269

Post by dieortin »

notriddle wrote: post #180
plankers wrote: post #4

from the introduction: >The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of ma…

> Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. The vast majority of energy consumed by the bitcoin network is in mining, and that's not impacted by any of this.

And what do you think mining does? Less transactions in the blockchain means less money to be made mining, and therefor less energy used.

Re: The Lightning Network: Turning Bitcoin into Money

#270

Post by rglullis »

shmatt wrote: post #195
teekert wrote: post #5

A cool use of the Lightning network is the podcast 2.0 initative. Currently, as I listen to podcasts, I stream back satoshis (sats), value for value (I use Castamatic on iOS, fountain.fm is also an option on Android). You can also send messages with sats attached, called “boosts”. Creators can transparantly split the sats they receive over various goals (i.e. FOSS projects [opensats], or guests on shows). There are n…

Like 99% of crypto projects, this would work just as well under a centralized db / FIAT

Do you know how much from it goes to middlemen?

What if you wanted to support 200 open source developers by sending $0.25 every month?

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