Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Lightning Network: Turning Bitcoin into Money

papers.ssrn.com

Post reply on HN
Print view View original

341–350 of 448 posts

Re: The Lightning Network: Turning Bitcoin into Money

#341

Post by alchemist1e9 »

arcticbull wrote: post #314
alchemist1e9 wrote: post #279

Earlier quoted context omitted.

Yes they did, Maiden Lane [1], which was distinct from TARP you are referring to. I had a somewhat upfront seat at that time and the unequivocal success narrative is, in my opinion, extremely dishonest and manipulative. We haven’t even started to talk about QE which is actually why the Fed and TARP bailouts (aka investments) ended up being profitable. There are a huge number of losers from 2008 which can’t be seen fr…

> On June 14, 2012, the Federal Reserve Bank of New York announced that its loans to Maiden Lane LLC (ML LLC) and Maiden Lane III LLC (ML III LLC) have been fully repaid with interest. Maiden Lane II LLC repaid its obligations of $19.4 billion on February 28, 2012. Loans. Fully paid, with interest - the profits also went to Treasury. Also, they seem to have been a rounding error compared to the scale of the rest of t…

Is it possible for TARP or ML to have actually lost money on those loans if the very same distressed assets the borrowing entities held were being simultaneously bought in the open market by the same Fed using QE?

Is not possible and all of it was a complicated shell game with analogies to money laundering. You have picked the wrong savior with central banks and are clearly drinking their Kool-Aid, roughly $8T of it.

https://crsreports.congress.gov/product/pdf/IF/IF12147

Re: The Lightning Network: Turning Bitcoin into Money

#342

Post by shudza »

arcticbull wrote: post #323
shudza wrote: post #287

Earlier quoted context omitted.

USDC != USD. We know what happened to UST, the rest will follow. Poor folks are also buying homes, which will drop, in some places maybe 100% in the next year, but nobody doesn't seem to have a problem with that.

Obviously there's a world of difference between a Ponzi scheme like UST and USDC. However, that doesn't change my point - which is that a proper, tokenized dollar - or even USD CBDC would solve everything you're trying to solve but better. So let's start advocating for that. It's not privilege to call out that you have a bad solution and that better solutions exist.

A year ago you were one of the guys saying printing money won't cause inflation, didn't you?

Re: The Lightning Network: Turning Bitcoin into Money

#343

Post by CharlesW »

adamrezich wrote: post #338
CharlesW wrote: post #328

Earlier quoted context omitted.

> why should content creators have to go through a centralized website like Patreon in order to get value from their consumers, giving Patreon a cut in the process? sure it's (for now) more straightforward for end-users… You answered your own question, but there's also no reason to use a "centralized website" (i.e. a 3rd-party service) if it doesn't add value. You just handle the subs yourself and provide a unique fe…

sure, if you want your podcast's business model to be "you must pay to access this content." it has been argued that this is not the best business model for a podcast, as you're either locking out your entire audience until they decide to start paying, or if you go for the "regular podcast is free but Paid Members get access to additional content" model, then you're producing content that only a fraction of your audi…

> …the model sounds unintuitive, but it has sustained No Agenda since the late '00s, and other shows as well.

Yes, donations are the oldest monetization model for podcasts, and this is even easier to do than authenticated feeds. Certainly, it does not require "blockchain technology".

Re: The Lightning Network: Turning Bitcoin into Money

#344

Post by ETH_start »

TrapLord_Rhodo wrote: post #213
ETH_start wrote: post #69

LN adoption/capacity cannot possibly explain the reduction in Bitcoin congestion. At its peak, there was only $200 million worth of BTC as collateral in LN channels: https://www.defipulse.com/address-tag/lightning-network This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC. The much more likely explanation for reduced congestion is that people sto…

Market Cap and volume don't need to correlate. Your line of reasoning is a red herring. BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are. With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.

>>and those LN could be responsible for an inordinant amount of volume

Theoretically yes, in practice no.

Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases.

Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral.

For these reasons, low collateral reliably maps to low usage.

Re: The Lightning Network: Turning Bitcoin into Money

#345

Post by null0pointer »

kag0 wrote: post #264

I've stopped following bitcoin at a deep level for some time. Could someone summarize for me what changes/problems led current bitcoin to need lightning?

Some years ago bitcoin started running into scaling issues. The period between blocks is fixed at 10 minutes and the maximum size of each block is also fixed at 1Mb so the network transaction throughput was quite limited. Because of the limited transaction throughput the fees per transaction increased significantly because miners prioritize the high-fee transactions for inclusion in blocks. Low fee transactions would sit in the mempool until they were stale or dropped.

This limited throughput led to a massive debate amongst the community about how best to scale bitcoin. One side wanted to change the blocksize (either a step-up in size or to use dynamic scaling), and the other main side wanted to keep the block size at 1Mb and implement off-chain scaling (Lightning Network). I won't recount their arguments for/against, or even tell the story of the debate because it would be very long and there was so much shenanigans involved that I would probably struggle to remain neutral. The long and short of it though is that the side that wanted to keep the block size fixed at 1Mb won out and got to keep the Bitcoin (BTC) name while the other side spun out into a fork called Bitcoin Cash (BCH).

Re: The Lightning Network: Turning Bitcoin into Money

#346

Post by ftlio »

ALittleLight wrote: post #335
nwiswell wrote: post #316

Earlier quoted context omitted.

Broadly I agree with the argument that crypto is taking an awful long time to come up with the killer app, but this is not a fair analysis. Let's be clear: when Google exploded, that was the growth of the Internet in the driver's seat, not demand for Google specifically. Google's growth was a side effect of the exponential growth of the internet because it solved a need where there was no adequate incumbent solution,…

I think this is less about growth factor and more about "killer app". The killer application of Google is that it actually finds what you are searching for really well (well, it did). That's what set Google apart from other search engines. The killer feature of crypto is...? DAOs, NFTs, smart contracts, random tokens all seem less like good features and more like transparent scams or terrible ideas that don't work. I…

What was money's killer app? Bitcoin is money from the ground up. It's going fantastically fast. As for smart contracts, these are the basis of Bitcoin. A permissionless ledger inherently requires smart contracts. Their killer app is a a distributed ledger. There are already a few different contracts that can be made on Bitcoin that allow for different custodial schemes.

What people are selling as far as DAOs, NFTs, and "smart contracts" where they mean are better and more sophisticated than Bitcoin, can all be favorably described as the application of Bitcoin's critique of money to the issuance and governance of other tokens representing other forms of property, and are inherently more complex. Least favorably described, they are scams to boost leverage powered attacks. The middle of the road might be that they're the naive notion that building more complex constructs on top of what Bitcoin defined is immediately achievable without compromising invariants that matter for useful money.

All to say that the "killer app" critique of Bitcoin probably ins't the best lens, and that if it's more complicated than custody and payments, especially for people where that isn't readily available, it's probably further out than is survivable for a single company requiring the kind of trajectory of those that create "apps".

Re: The Lightning Network: Turning Bitcoin into Money

#347

Post by freeAgent »

dieortin wrote: post #273
petefromnorth wrote: post #121

Why use LN when other simple L1 solutions already work great as money. Litecoin (LTC) has cheap fees and lots of room. Bitcoin Cash (BCH) is constantly improving and has a ton of transaction room to grow, with increases if/when demand grows. Dogecoin (DOGE) not my favorite, but does work fine for the money use-case, but development, from what I can see is a bit stale. With these existing simple solutions, I don't see…

All those have problems. A huge amount of transactions in a distributed ledger means there’s a big requirement for storage space and processing power, there’s no way around it. Lightning reduces the amount of transactions that must be in the ledger, and in consequence the storage requirements can be kept down. The BCH model of just increasing the block size indefinitely is not sustainable.

There is a way around huge storage requirements. Pruning, UTXO commitments, and things like Utreexo are all solutions for different aspects of that problem.

Re: The Lightning Network: Turning Bitcoin into Money

#348

Post by samatman »

ska wrote: post #304
samatman wrote: post #271

Earlier quoted context omitted.

In this case it's definitely income, see https://support.patreon.com/hc/en-us/articles/207477063-US-C... , the scenario is directly analogous to Patreon or tipping a Twitch streamer. They may also owe sales tax! https://support.patreon.com/hc/en-us/articles/360043054911-P... Which, yikes, no wonder running your own business is such a drag, that feels like double-dipping to me. I didn't owe sales tax when I was freela…

I didn't mean it wasn't income (it is, and they owe income tax) I meant that wasn't the issue that was being pointed out. With microtransactions the sales tax accounting etc. overhead is fixed, but the amounts are tiny... I may have misread GP. re: " if you buy 0.1 BTC at 7K and 0.1 BTC at 45K, then spend $1000 worth at 20K, what capital gains do you owe? Does it depend on which wallet you reached into?" These are no…

I disagree, but since I've made myself clear elsewhere, "El Salvador".

Re: The Lightning Network: Turning Bitcoin into Money

#349

Post by nayuki »

kkielhofner wrote: post #289

When will the blockchain ecosystem provide something with that "WOW I need this in my life right now" factor to the average user? Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host the…

> When will the blockchain ecosystem provide something [...] to the average user?

> Google went from a research project to incorporated and usable on the internet in roughly two years

I don't think this is a fair comparison. Google is a late bloomer, being preceded by lukewarm online services AltaVista, Yahoo!, and AOL. Just like how Facebook became successful when MySpace did not, the latecomer can have a substantial advantage in speed and scale.

Moreover, Google is an application. The Internet is a platform. Google was founded several decades after the Internet. The first few decades of the Internet were clunky, slow, and expensive.

I would compare Bitcoin to the Internet. It is the raw, unsightly engine room that most people should not directly tinker with. Where are the killer applications that will run on top of Bitcoin? We're still figuring that out.

Re: The Lightning Network: Turning Bitcoin into Money

#350

Post by TradingPlaces »

olalonde wrote: post #254
TradingPlaces wrote: post #211

Earlier quoted context omitted.

Why is blockchain better than a centralized database for the end user? What specific advantages does it offer to me when I go to 7-11 and buy a Slurpee with my watch, which is how I do it now?

Third attempt: it's not! The Bitcoin blockchain is not suitable for day-to-day transactions like buying a Slurpee. You should use your watch and a centralized database to do "offchain" BTC transactions instead[0]. The real question is: why is BTC better than fiat (e.g. USD)? This is what I attempted to answer in my topmost comment. [0] Or better, use the lightning network. As an end user, its benefit over more centra…

I am asking why I would open an account in the first place when the current system works great for me. I am sorry you find it so frustrating that I would like to know why I should switch to using Lightning. The only answer seems to be “because blockchain,” and that explains exactly nothing.

Edge cases are not mass deployment use cases

Post reply on HN