Lightning network

[Sherlock]

I am not sure whether you all follow BTC technical development, but it seems Lightning network (LN) is going too be live on mainnet.
In other words it is already possible to send bitcoins via other offchain way than classic way we all know that is called onchain.
It is possible only with specialized wallets on linux so far. You can see the network here: https://lnmainnet.gaben.win/

My team is currently starting to run our 1st node.

If you want something fundamental and not just stupid price speculations, just read about it and be prepared. I think it is safe to say that BTC fate is in LN hands. Either this L2 (layer2) solution succeeds, or another solution like that, or BTC is done in long term.

In short how does it work:

Your wallet will open a channel to some of the nodes (you see them on the link above). The channel opening cost like normal segwit transaction. Then you load some BTC there and you can transact with anybody connected to the LN. Once you want to cash out, you pay again the normal tx fee and channel is closed. It is impossible to steal your money, but it is possible that someone will close your channel, so you pay forcibly the miner fee.

The advantages:
- fast BTC transactions (withing seconds)
- cheap transactions (the nodes will charge fees as well, but they will be probably very very low; it is not like miners, the nodes do not need special hardware and electricity, so there will be a free market)
- no need of centralized points of trust to do offchain transactions (e.g. Coinbase "transfers" bitcoins in-house, which is cheap and great, but not so great for gambling and other grave sins)

The disadvantages:
- need of new or adjusted wallets
- need to have money locked in the channels
- need to pay 2x miners fee
- It is more centralized solution and BTC flows are more trackable

If this works, it is a big news for BTC. Not directly to us directly, because if affiliate programs pay 0.1 or 10 USD per transaction is not a problem for affiliates, who cash out large sums. But for Bitcoin usability it is a great news. We have seen that during last weeks transactions went as high as to 30 USD for transaction with 1 input and 2 outputs. But with more inputs it was possible to see fees in hundreds of USD. And that sadly started to be prohibitive even for (US) gambling. Small and average bettors were losing too high money with BTC transactions. Also other non-gambling BTC users were losing interest because of the economical reasons. Altcoins flourished because of that partially.

Now the situation is maybe changing again. LN has the potential to change everything once again. I am not saying it is the solution that will work and that it is already ready for everyone. Adoption, even if goes well, might take very long time. But LN is working with real money and people start buying some cheap things.

I am not a moderator, but it would be nice if we can keep the discussion civil. If there are a certain bitter people who need to disrupt any thread about cryptos with cr4p like that it is for criminals and so on, I am asking them upfront to stay away. Which does not mean that nobody has to criticize LN from technical or economical standpoint.

[TheGooner]

Sounds very complicated - but very interesting. Thanks for posting.

Looking at the network I see that there is 3.6 BTC on it (42K USD) - so clearly in testing phase.

Some questions :

1/ How do we (the average person) know who is on lightning network - merchants - wallets? Is it obvious from the address?
2/ How long can you keep a channel open? Forever? Only as long as the wallet is online?

3/ As it costs 2x miners fees (to go in and out) I assume that this is only suitable for business-to-business with multiple payments ?

eg. It is pointless for end users to be receiving BTC by lightning, unless there are immediately going to pay it on - as they would pay 2x miners fees instead of zero (as receiver). So this is for large volume payers to other large volume lightning addresses.

(or is there a good primer source for understanding the functional use of lightning network that you can point me too).

[Sherlock]

Looking at the network I see that there is 3.6 BTC on it (42K USD) - so clearly in testing phase.

Yes, it has been tested for over a year I believe on testnet (bitcoin testnet is parallel btc network, where coins have no value), but now it is live, so anyone can test it with real money.

1) The wallets are still not done, just some very raw wallet in linux. I did not touch it, the guy who is doing it for me is the one who is doing servers. How to run the node (and using LN at this phase) is here: https://medium.com/@dougvk/run-your-...e-2d2eab628a8b

Once the wallets will be done for end users, I think there will be an option for users to choose either onchain payment or lightning payment over node. It will be (I think and hope) like internet banking where you have in EU option to send it like SWIFT or SEPA.

2) Few months ago I read the channels should close by themselves in one week or so, but now it seems they can be open forever (but each party can close them). I think/hope the channels can be open even if wallet is offline. However the coins dedicated are locked there. I understand it now as analogy of prepaid card. But here I am not 100% sure.
3) Casual users are customers. So they spend money. If it works it will be most suitable for the casual shopping on internet for small and medium amounts. You simply pay 2x fee, but you can do many transactions.

Lets assume miner fee is 5 USD and you want to:
Buy a sticker for 3 USD
Deposit 50 USD to casino
Donate to Nazi party Deutschland 25 USD
Buy a coffee at hipster shop 3 USD
Pay for some online game 40 USD

Without LN you pay 3+50+25+3+40 + 5x5
With LN you pay 3+50+25+3+40 + 2x5 + some really low fees to LN nodes

The more you use it, the more you save. You have just the fixed fee of 2x miners fee and then the minimal fees to LN nodes.

Since it pays of them as to customers, they will then have one channel open and then they can also receive money via LN. The idea is that defacto all BTC users will have an open channel for micro and mezzo transactions.

LN is not intended for large payments, where fees are not a crucial problem. From calculation above you can see that if user will pay more than 2 merchants, it is cheaper for him to have a channel open [yes it is more complicated, yes the money is locked there etc.]

I would like to have a good source as well, but this is just another thing where it is about devs only and they have their own secret society. Hopefully links explaining it better will emerge.

Big surplus is that LN should be even faster than CC payment. No waiting for confirmations anymore.

[Sherlock]

2) So yes, it is confirmed. Channel can stay open even if node is disconnected (so also if the end user wallet goes offline).

[Roulette Zeitung]

The next hype and weird fantasy!

For the audience: Obviously only one time a Lightning Network transaction was allegedly made.
And how, this tells again the whole story.
The allegedly transaction was made with TorGuard, a tool for the Darknet Bitcoin Crime Universe.
A [anonymous] Reddit user claims, he acquired a AR300M VPN-Router from TorGuard as a result of Lightning Network.

Even in the hyped Bitcoin comminity only a part believes in the Lightning Network fantasies, because it's nothing else than a betrayal of the former standards and principles of Bitcoin due to the tendency to centralization. The final hypocrisy.

Due to a study of Credit Suisse, it's a proven fact, that 97% of all Bitcoins are in the hands of only 4% of all owners, the whales. So ask yourself, who benefits most?

And smart people, who are mental stable, they already figured out, that even mathematical proof exist, that the Lightning Network cannot be a decentralized Bitcoin scaling solution:

===> https://medium.com/@jonaldfyookball/...n-1b8147650800

Leopold

[Sherlock]

On a side note: You are retarded idiot who can just use Google and not brain. You understanding of cryptos is on level of medusa. Jonald Fyookball is creator of BCH wallet and BTC hater. Every idiot can google arguments against anything and post random link, which is exactly what you are doing all the time.

It is of course just a nickname. An anonymous lover of blackmarkets. You twist the words and the reality as much as you want. You are quoting someone who is proposing and working on BTC fork, so obviously someone who believes in crypto and in bitcoin (just he is for broader onchain scaling).

Just **** off Leo. Write the nonsense in the stupid threads created by you. Normal people do not touch old retards like you. It is a pain just to see you existing.

[Progger]

I have no idea what Sherlock means, i have read it 2 times and still only...question marks over my head..

But, calm down...this leads to nothing...it's Sunday ...time for Coffee and Cake

[Roulette Zeitung]

Backup:

You are retarded idiot

Just **** off Leo.

just shut up finally

you really are retarded

weird creature

There is nothing dishonest with "black hat SEO

black hat SEO is 100% legal and as even white hat SEO

Normal people do not touch old retards like you.

It is a pain just to see you existing.

I always try to imagine a jailbait girl

Write the nonsense in the stupid threads.

Precautionary chronology fact check: There is no "each other"

Leopold

[Sherlock]

Back to the debate about LN. The problem about LN, BTC and cryptos is that apart of imbeciles, which do not know anything, the only other party that is involved in conversation are developers.

And the developers are very narrow minded people who do not understand economy. So they, for example, like the Electron wallet creator from RZ link, try to make solution that is good forever. So there are debates like How will be bitcoin in 2140 after block reward is 0. It is a narrative from developers mind, where those people can focus only on certain thing and not to the holistic problem.

LN or L2 is not a final solution. There are already proposals for L3 and if BTC has to scale really globally, L3 will be needed sometimes in future. Now L2 can allow BTC to breathe. One does not need to write so much paper as Jonald Fyookball. It is simpe math:

If Segwit bitcoin (that is far from being adopted and most transactions are not Segwit yet) has capacity 7tx / sec, then yearly capacity for onchain transactions are:

7 x 60 x 60 x 24 x 365 = 220 M

Even if people had to transact only via LN and there would be no connections between nodes, then we can connect only 220M LN wallets per year and none of them can close the channel! So it is obvious that LN is not the final solution.

But there are L3 plans for future, when it is needed. Maybe it will be too complicated solution. It will be interesting to watch how will people react, because there are many alternative ways to offchain transfers (atomic swaps, altcoins, transfers within hubs etc.)

[Sherlock]

I have no idea what Sherlock means, i have read it 2 times and still only...question marks over my head..

But, calm down...this leads to nothing...it's Sunday ...time for Coffee and Cake

I do not think you are the right person who should others to calm down. Maybe to yourself. RZ is a retard who is destroying the debates on this forum more than vtunby or what is her name. He is the real toxic waste.

If you have any questions about LN or BTC I am here for you. My suggestion, as by everybody who is not involved, is really: install the wallet, get some coins. If you want, I will send you some, just PM me and we can test it together.

The problem with cryptos is that it is really developing so fast, that if you want to know what is going on, you have to be in. Sure it brings questions when this will be user friendly for regular users, because obviously, if the gap between insiders and outsiders is wider and wider, it is not a sign of mass adoption.

But anyone who wants to stay ahead has to try to jump in. I am teaching various people (forum guys, bankers, lawyers) in various countries the basic things; online and offline. I am giving them hardware wallets, sending cryptos. This is the first step needed to understand it. It changes a lot once you touch it. Like affiliate marketing: you will also learn nothing just by reading. You have to try to catch the first conversion. Then all reading makes much more sense and maybe is not even needed.

Just contact me, or anyone else. I have one telegram group already. We can do GPWA crypto group for anyone who is lagging behind. I am doing it only for technical things, not about crypto prices and suggestions. Price and profit is the result, but it is also the boring sh1t around it.

[Progger]

but for sure i am the right one,sometimes

i like technology and progress,but the whole btc-thing,is not so easy to understand.
I need Zap to open a wallet, right ? This tool is syncing since 15m .

Hardware-wallets...sounds good, but how u can move the coins to a casino ? (google, dont give me the right infos)

Regards

[Sherlock]

It is not really easy to understand. It is impossible to understand it. You can just slightly limit how much you misunderstand it, but it is worth of it. That is why when somebody tells you he understands or knows something, he is probably a liar.

I do not know what is "Zap".

You need a wallet that is suitable for the cryptocurrency/coin. If you want to do tests with BTC, then everyone will tell you some opinion what is best.

For free you can download electrum wallet https://electrum.org/#home for PC or for example coinomi for Android (those are SW wallets)
or buy for 50-100 E the Hardware wallet called Ledger Nano or Trezor.

Never go for online wallet. It means: if you are being asked to make an account, it is an online wallet. You do not want it, because you do not have the access to your coins then. You have just a promise. Having HW or SW vs having an online wallet is like having physical gold vs some gold based paper.

The main difference between the wallets is that HW wallet is more secure in one way: you do not have to be afraid of viruses in your computer. It is a USD device that you connect to computer.

The non-HW wallets on the other side have more options and I feel I am more in control there, but they are harder to use, if you want to use them securely (but then they are even more secure than HW wallets).

So I propose to download the Electrum for tests, since it is free and you do not have to wait. Once you get more serious, you will be able to decide by yourself. Most people think HW wallets are the top security, I do not think so. But I think it is now good enough security for most people. Because if you want to have really a secure SW wallet it will cost you much more than the HW wallet - the software is free, but you have to have dedicated computer at least.

There is no ideal solution in cryptoworld about anything; yet you will find people just telling they have it. Not surprisingly it will be people who have no coins at all.

If you ever install the Electrum or other wallet, feel free to contact me via PM.

[Progger]

I do not know what is "Zap".

https://zap.jackmallers.com/
https://www.youtube.com/watch?v=Xrx2...vbX4vW&index=4

Thanks for the answer,

[Sherlock]

I see. That is misunderstanding, but thanks you actually stayed on topic. I was talking about wallets for onchain transactions, you already was talking about LN. My point is that first you have to have experience with normal onchain BTC transactions. Even that takes time. To know how to set up fees, what are differences between Segwit and legacy chaiand so on takes some time.

I do not know the ZAP wallet and I do not know if it is compatible with the current lightning (proto)network. I am reading description:
This is the first public cross-platform Zap release. Everything you need to experience the Lightning Network is packaged in this release. This release runs LND with neutrino, autopilot enabled and on Bitcoin's testnet.
... and it suggest this wallet is only for BTC testnet. What I am talking about is bitcoin mainnet. The node client there is only in linux. No way it is intended for normal users like me or you. But it is working already with real bitcoins. That said the ZAP wallet is probably possible somehow connect to Bitcoin mainnet as well, but it is risky atm. It will take time to tune it. It will be years, until it will be in phase click and pay with crypto. But then the price will be at different level.

[PROFRBcom]

Never go for online wallet. It means: if you are being asked to make an account, it is an online wallet. You do not want it, because you do not have the access to your coins then. You have just a promise. Having HW or SW vs having an online wallet is like having physical gold vs some gold based paper.

This statement isn't entirely true. You own your coins with Blockchain.info's online wallet, which is why it is what we refer our newbie crypto customers to use. Here is a snipped of their statement to law enforcement which should help explain:

Blockchain is not a financial intermediary. This is different than how virtual currency exchanges operate. We never know any of our users’ private keys.
We don’t take control of or transmit our users’ virtual currency. Blockchain is noncustodial. Blockchain users can store and spend the same virtual currencies, in as many other industry-standard software wallets as they like... at the same time as they are stored in a Blockchain wallet.

You can read more at their website, which gives more thorough information as to what they can and can not do with your coins (not much at all).
https://www.blockchain.com/legal/index.html

[Sherlock]

You are right, this wallet improved, they use standardized seed now, so you have the coins, but you never have 100% proof that you are the only one who "has the coins".

Because how you verify that blockchain.info or someone who might already hacked them, does not see the recovery phrase? It is hard to trust to seed that is transmitted over internet. In other words: If a user from this wallet wants to have safe backup of his coins, then he has to trust blockchain.info that what they say (like they do not have access to coins and everything is encrypted) is true and also he has to do his own backups and that process is very risky, because he is doing it (online and with browser).

I am not trying to nitpick, but this is a time bomb, really. Yes, online wallets are needed and blockchain.info is probably more secure than any casino around still, but they are not secure enough for storing the coins for anyone and even less for newbies.

[TheGooner]

As I understand the storage solutions :

Online wallets and exchanges are nominally secure (especially the big brands) - rating 4/10
As they are online that are constantly hackable 24x7x365. They are a target with a big payload - so we will see breaches from time to time. Mt Gox, and Coincheck just recently (NEM). You also run the risk of being caught by login/password sniffing trojans when sending data.

I am assuming that there is little real risk of employee fraud and/or software backdoors at the best places.

Software wallets on Phones are nominally secure. rating 5/10
The phone is dropable, prone to being misplaced, and (usually) always online.
While it's not a big target - if someone knows you a have a phone wallet - then you might be targetted. There is also the issue that many people have quite weak passwords on mobile apps.

Software wallets on connected Desktops are somewhat secure. rating 7/10
It's physically secure (unless stolen from home).
But you run the risk of contracting malware during your browsing that might be hunting for software wallets.
Good security software can help you - as can intelligent browsing habits - but there is a risk.

Paper Wallets are mostly secure. Rating 8/10
But it's like a "bearer bond". If it gets stolen then the holder has access to the funds.

Software Wallets on unconnected computers (unless sending) - Rating 9/10.
Again they can be stolen so store securely, but even then the funds are safe unless they can break the software encryption.

Hardware Wallets are highly secure. Rating 9.9/10.
These can of course be stolen - but if you have them physically hidden / secure then this is minimal.
There is "almost zero" software risk due to the limited software interface.

------------------------

What I wonder is where the lightning network sits for security? Isn't like having something on a lightening node - a bit like an online exchange?
You have to be online / connected to use, the wallet software is new / buggy and possibly prone to early targeting within the network?

[Voids]

As I understand the storage solutions :

Online wallets and exchanges are nominally secure (especially the big brands) - rating 4/10
As they are online that are constantly hackable 24x7x365. They are a target with a big payload - so we will see breaches from time to time. Mt Gox, and Coincheck just recently (NEM). You also run the risk of being caught by login/password sniffing trojans when sending data.

I am assuming that there is little real risk of employee fraud and/or software backdoors at the best places.

Software wallets on Phones are nominally secure. rating 5/10
The phone is dropable, prone to being misplaced, and (usually) always online.
While it's not a big target - if someone knows you a have a phone wallet - then you might be targetted. There is also the issue that many people have quite weak passwords on mobile apps.

Software wallets on connected Desktops are somewhat secure. rating 7/10
It's physically secure (unless stolen from home).
But you run the risk of contracting malware during your browsing that might be hunting for software wallets.
Good security software can help you - as can intelligent browsing habits - but there is a risk.

Paper Wallets are mostly secure. Rating 8/10
But it's like a "bearer bond". If it gets stolen then the holder has access to the funds.

Software Wallets on unconnected computers (unless sending) - Rating 9/10.
Again they can be stolen so store securely, but even then the funds are safe unless they can break the software encryption.

Hardware Wallets are highly secure. Rating 9.9/10.
These can of course be stolen - but if you have them physically hidden / secure then this is minimal.
There is "almost zero" software risk due to the limited software interface.

------------------------

What I wonder is where the lightning network sits for security? Isn't like having something on a lightening node - a bit like an online exchange?
You have to be online / connected to use, the wallet software is new / buggy and possibly prone to early targeting within the network?

Yeah my understanding of the lightning wallet is basically a hot, or online wallet. It's almost as if your lightning wallet is the same as your actual wallet. You deposit from your bank into your wallet so you can use it on a daily basis, or even like moving from a savings account into your current account.

[TheGooner]

Yeah my understanding of the lightning wallet is basically a hot, or online wallet. It's almost as if your lightning wallet is the same as your actual wallet. You deposit from your bank into your wallet so you can use it on a daily basis, or even like moving from a savings account into your current account.

But if you do THAT then you are paying a mining fee EVERY day to move funds into the lightning network?
That's not really a solution for the average consumer.

[Sherlock]

As I understand the storage solutions :

Online wallets and exchanges are nominally secure (especially the big brands) - rating 4/10
As they are online that are constantly hackable 24x7x365. They are a target with a big payload - so we will see breaches from time to time. Mt Gox, and Coincheck just recently (NEM). You also run the risk of being caught by login/password sniffing trojans when sending data.

I am assuming that there is little real risk of employee fraud and/or software backdoors at the best places.

Software wallets on Phones are nominally secure. rating 5/10
The phone is dropable, prone to being misplaced, and (usually) always online.
While it's not a big target - if someone knows you a have a phone wallet - then you might be targetted. There is also the issue that many people have quite weak passwords on mobile apps.

Software wallets on connected Desktops are somewhat secure. rating 7/10
It's physically secure (unless stolen from home).
But you run the risk of contracting malware during your browsing that might be hunting for software wallets.
Good security software can help you - as can intelligent browsing habits - but there is a risk.

Paper Wallets are mostly secure. Rating 8/10
But it's like a "bearer bond". If it gets stolen then the holder has access to the funds.

Software Wallets on unconnected computers (unless sending) - Rating 9/10.
Again they can be stolen so store securely, but even then the funds are safe unless they can break the software encryption.

Hardware Wallets are highly secure. Rating 9.9/10.
These can of course be stolen - but if you have them physically hidden / secure then this is minimal.
There is "almost zero" software risk due to the limited software interface.

I disagree with this rating. Not that it is not accurate, but because it is misleading. It may be accurate just for anyone and at certain situation and people have to understand it. If we start doing charts we make more mess than understand the situation.

Some examples to think about:
Any wallet that has no backups is much less safe than online wallet.
Computer that is not well maintained is dangerous regardless if it is online or offline.
Backups that are not properly stored (as plain text or even worse, in connected computer in non-decrypted form) decrease the security.
Mobile phones that are used only for wallets are ceteris paribus safer than unconnected computers.
Hardware wallet is never as safe as properly made paper wallet, especially because the HW wallet must have paper backup.

It is a non-linear solution. There is no good solution for all times and everybody. I do not trust HW wallets, but I am using them on my ways and I am giving them to people, because for most, it is the best solution for long time and maybe forever.

Cryptocurrencies are simply complex and bring complexity into our lives. Those who accept it win. It is now even more complex, because we have the forks, that are "free money", but only for those, who can claim it. And here is the irony, that the most secure wallets have the hardest way to claim forks (properly secured paper wallet is usually physically distributed and therefore not accessible; Segwit wallets which are both HW wallets did not provide some forks like BTG).

------------------------------

What I wonder is where the lightning network sits for security? Isn't like having something on a lightening node - a bit like an online exchange?
You have to be online / connected to use, the wallet software is new / buggy and possibly prone to early targeting within the network?

This will be another question. Either way as I said the wallets are not ready and LN will be just a feature of wallets (not of paper wallets ofc). LN wallet will not be LN node in future! Your wallet will just connect to the node, open/close channels and submit or receive transactions. There should be no additional risk (but it is IT and crypto..). You have to be online as much as by signing an onchain tx. You can do it offline and let the wallet just broadcast it I HOPE, as by now.

Yeah my understanding of the lightning wallet is basically a hot, or online wallet.

No, definitely it is not as I wrote above (maybe it was modersated because of flame war with intruders).
You do not have the wallet connected to keep the channel open. Having open channel has nothing to do with connection. Channel can be opened even if the wallet is offline. The coins are locked there, so it is still trustless setup. Maybe open/close channel was not a good expression, because it implies something like open/close channel in wireless communication. The developers are not that crazy that they would us all force to be online.

If you open the channel, you simply dedicate some money to the channel and you pay the miners fee. Just like when you load a fiat prepaid card for a fee. Then you can spend the funds over the time as you like for almost 0 fees. When the balance on the "prepaid LN card" hits zero, you pay the closing fee or you can decide that you want to return the funds from the "prepaid LN card" and you pay the miner fee again. This is how I understand LN and you should probably too.