Lightning network in terms of bitcoin is good or bad?
Lightning network has been predicted for bitcoin extended to the future, but with two separate camps to increase bitcoin trading volume began to draw a line between different views, this technology is worth to look at with a pragmatic perspective, assume that using this technology, the community will find it hard to escape 1.
First of all, I want to say lightning network as a concept is quite interesting. I think it will have many uses in the bitcoin world. Yes, I have read the white paper (including long and short version version), I believe I on its working principle have good understanding. Disclaimer: since most Bitfury development is completed in closed condition, it is difficult for any new development has not issued a comment, such as the development of routing algorithm.
Analysis of risk and return time!
We analyze the advantages and disadvantages of a lightning overlay network.
Make sure not to be sorted;
Require the use of bitcoin;
Lightning network first and biggest feature is that it allows any number in between does not touch the bitcoin blockchain case sent all txns. This means that, in theory, if you and I opened a channel, we each have a 10 BTC, then we between any number of payment results will be, I have 20BTC and you have 0BTC, or vice versa, can complete the chain under way. In addition, these two channels can be connected in series between the channel, people pay direct payment as no open link. For the extension of your daily payment (your utility company, in your workplace of Starbucks) between the parties is good for trading. Not clear in this case is, how many links between payment and collection, settlement mechanism and does not use the center of the (hub) to remove the money from anyone to others. A hub only need to open deposit payment channels, customers in the 100% BTC (hub does not provide anything), because when the customer wants to extract a new channel of money, some funds have 100% reserve requirements of channel can be extracted, channel funds may have been set up for the monthly maximum withdrawal amount. Sound familiar? Should be, because it is your bank today’s operation.
Secondly, lightning network through cleverly signing commitment to bitcoin exchange to solve the dual problem of payment. Double payment can be avoided, through to the channel of trading each other to provide the entire channel capacity and revocation if trying to release the invalid state for cheating, will judge all invalid (e.g., money paid in advance).
Third, the lightning in the channel network to “lock” some tokens of value, so that the channel is valuable. At present it is bitcoin based, which means that as the two effect it will require more people to buy and use the BTC in the channel. This number is likely to increase bitcoin user base. Although the LN developers also mentioned that it is very easy to copy in the etheric square or any other encryption currency, but does not rule out in the future for the implementation of the work of this chain block. Maybe even play the role of a bridge in the LN block chain as a decentralized exchange or hook mechanism. (in the end of BTC and ETH on the other end of the channel is possible in theory)
Now to analyze the negative side and its balance:
Extended to the infinite txns, only technology can work, but it does not extend the user.
Compared with bitcoin, a security model upside down.
In the channel lock and bitcoin encryption, which affected the interchangeability of bitcoin.
For payment center (hub) center.
So first of all, said TxN unlimited expansion will solve all the problems, this concept is wrong. In fact it is not. Because every time open / close LN channel means a bitcoin block on the chain (a little stronger) TxN, an interesting effect is extended into double chain interaction problems, bottlenecks trading volume chain into a number of bottlenecks can be opened or closed in the chain of payment channels. This creates an interesting situation, if the LNtxns is extended to include the whole world daily trading value (often touted the “VISA” standard), so if for any reason a sudden need to shut down a large number of one-time payment channel, it will become a problem. This situation with the bank run in the real world encountered “fire drill” effect is different, when people panic rush to withdraw money from the bank account, which triggered a liquidity crisis, which in turn exacerbated the panic, and produced a vicious spiral, until the light extraction bank all the money, economic collapse. The infinite extension (TxN dimension) system in an absolutely limited system is dangerous, the control system to switch the ramp into the system. In addition, this dimension expansion can only help payment. Lightning network will be used to help the bitcoin blockchain all other application scenarios, such as the use of OP_RETURN second layer color currency overlay network, or OP_MULTISIG will embed metadata bitcoin blockchain.
Secondly, the use of security model and bitcoin lightning in the network model on the contrary. In bitcoin, you don’t have any money until I send you. Not what you do, unless you stole my private key, take the money. On the contrary, in the lightning network, continuous monitoring of safety need to pay channels, to ensure that your counterparty not released through the old channel state to the network to steal your money.
This means that you must have a running software (to be developed) invalid channel state constant node to monitor the blockchain (and you will be forced to close the channel, and the release of funds to wait before the delay time required) or you can pay for the service. The service is called channel insurance company or the center of the new payment service provider. If you choose not to use the channel of insurance, and decided to do the service, if you are not careful you may be vulnerable to attacks in which malicious nodes overlap, will try to isolate and hide (or replace) the actual situation you block in the chain, so that you will not notice this is trying to steal your money in the channel. Basically, the security model of bitcoin is the one you must take the initiative to prevent theft, but not when you are passive security model (assuming you manage your private key).
Third, lightning network channels bitcoin not easy to use in the lightning network. Although supporters say, this is not a problem, if there are enough people to use lightning network, so you can give everyone in the network payment. For most of the growth stage of the network, will not be the case, it will have a price premium for bitcoin, in the lightning channel network * not * will be hindered. The bitcoin interchangeability is harmful, because it will have a single market for lightning bitcoin, and is free of * *. At least the price difference is not closed in the payment channel cooperation channel case must be locked the duration of waiting time is 2 weeks. If you think about it, this means that the lightning network is only a pseudo decentralized bank account. Different from the real world bank account, you don’t need to worry about the bank to get declared bankruptcy with your money, but your money already blocked in their system, the money may be removed from the system in trouble. Even worse, if everyone is assigned too much or too little to create a channel, then this will be based on the bitcoin layer created more chain txns, which may not be able to handle it.
Fourth, pay economy and N channels for efficient routing between M endpoints means network the most effective (hops in minimization) configuration will be the payment center, which will make all the other people have open channels (and each other). So, if Alice wants to remit money to the Ben, then the route will be the Alice – >[hub0..N] – >Ben. In Alice and Ben are friends, which may not be hub, but the Ben is around half the earth stranger circumstances, may have more than one hub, and through their payment processing. The number of the system will tend to minimize the hub, because it is more effective, only by the number of free capital hub in order to maintain the payment channels required (in BTC). This means that who have more money will be able to open and maintain the payment channel more, become a payment center. Who has the most free capital? Bank。 The bank will be the best role in running payment center. The only difference between the current system is that you don’t need a license to start the payment center (aka bank). Although I will worry if there is enough unregulated payment center, governments around the world may make them illegal operations, resulting in a large number of bitcoin leave payment center and a large number of channel closing. It is the peak of the TxN flow, if we do not expand the network at the same time, bitcoin will not be able to maintain.
Innovation? Or just the old plot a new turning point?
In the long run, lightning is definitely will expand bitcoin txns to VISA level. The encrypted signed commitments to transfer to the bitcoin is a very clever idea, but it is not the original idea. We have a more than 600 years of “lightning” network, called a bank account, we basically just move the IOU and the value of commitment. The only advantage is the lightning network encryption signature to prevent theft, and to enable the system to maintain the ability to the center, so you do not need a license to operate Hawaladar. The bitcoin system is often touted as a digital gold, but surprisingly, many supporters do not admit any real gold investors will immediately that he heard the second layer network iou. Of course, this is exactly the same way, finally a robust monetary system in the world is being systematically eroded and eliminated. Gold trading is too expensive, so the issue of paper vouchers to replace it. We all know this has ended.