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Comment by rawtxapp | Hacker News Reader

> Please explain to me how scaling is solved in bitcoin. The lighting network requires an on-chain transaction to create and close a channel both times.

Channel factories solve this issue by being able to create and close many channels at once.

> LN also requires a constant observation of the LN network or malicious actors can just take more from a channel than allowed.

These are called watchtowers, they never have control of your funds, they are simply watching the blockchain for counterparty actions, which if they tried to steal your money, they would end up losing all theirs, so just knowing that you might be using a watchtower is a very strong deterrent to not cheat you.

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Channel factories do not work globally as far as I understand them. They only work within a group of addresses that know they won't close the channels every other hour or everybody would have to create yet another channel. It sounds very similar to a credit union.

Watchtowers are what I meant with payment processors. You need to pay them to watch the chain in case the other party tries to literally steal from you. You can call them whatever you want, it's a third-party, just like Visa.

I love how all these cryptocurrency concepts have "traditional" counterparts, btw. Or it's rather the other way around.

Exchanges could act as channel factories, for example, today they batch a bunch of withdrawals into a single transaction, there's really no reason why they couldn't simply open a channel for each person in that.

It can be a third-party or you could also run one yourself, there's nothing stopping you.

I wouldn't be surprised to see counterparts, just like email is "mail on the internet", but there are also fairly novel concepts like flash loans which are just not possible in current financial system.

You are just recentralising everything Bitcoin allegedly decentralized. It's ridiculous. Just pay cash, you are decentralized, are your own bank and can buy everything.

Problem solved without Bitcoin. You won't get rich from just holding it, though, and we all know that this is really the only goal of cryptocurrency proponents.

Everything is still de-centralized and you're the only person who has control over your funds.

With cash, not only you won't get rich holding, the FED is determined to make sure it's value goes to 0. It seems like you've already made up your mind anyways.

> Just pay cash, you are decentralized, are your own bank and can buy everything.

How do you send cash over the internet though? That part is hard.

I practice a lot

Two goals

Get rich

Destroy trust

Yes, it seems like flash loans are super legit...

https://www.coindesk.com/the-defi-flash-loan-attack-that-cha...

These attacks also showcase the power that it gives and it will force the ecosystem to become stronger over time which arguably a good thing even though it suffers in the short term.

That's one way to look at it, sure. Another is that it's the wild west and normal people will get bankrupt.

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