For buying and selling Bitcoin, possibly. Transactions with Bitcoin will still have the usual transaction fees, as you still need to pay the miners verifying/realizing them.
Imagine a transaction as being a simple cryptographic signed message that sends 1 BTC to someone, you just broadcast it to the network and it gets recorded immediately. But if you expect to continue transacting with the same person, instead of broadcasting the transaction, you can hold on to it and keep iterating on top of it with new balances, each time signing the transaction so that your counterparty can always go to blockchain to claim their coins.
There's obviously some mechanism to avoid broadcasting old state and making sure you actually have the funds, etc, but you can't flood the network, even if you tried, you'd only be flooding your immediate neighbor which still charges fees, but much smaller fees than the blockchain. There's also mechanism for connecting those channels, so you don't need to have a direct channel with someone you want to pay, you just need a path to them.
So attacker could potentially do this but if they get caught they get punished for losing everything and they get caught if the other side node is online when this happens. There are also watchtowers that can monitor the network for hacks like this
But the way this swap happen trustlessly between onchain and LN channel funds it's complicated, I don't have it clear right now
If you want to get an idea how later the balances updates happen trustlessly see my other comment https://news.ycombinator.com/item?id=27451184
This solution doesn’t have to be crypto at all, however. I’ve been to China where even food carts have QR codes printed on them for people to take wechat pay and ali pay.
We have Bank QR codes and something simillar to M-Pesa, but its not that widespread because there is no one standard for QR payments or similar. That makes it less practical to use because both you and the vendor must use the same bank. (El Salvador is small and there are many finatial instituions.)
Something like U.S. Zelle or Swedish Swish would help, but banks have not standardized yet.
If WhatsApp started something like WeChat payments it would become a hit. Like they did in Brazil.
Free mobile banking accounts have been available for a while in El Salvador, and can be opened with a selfie and a photo of your national ID. They are only avaialble for those 18+ and older though.
it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community.
I plan to visit later this year and have friends who work with Strike team etc.
The future is looking optimistic!
LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.
If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
The price matters because they are BTC-denominated. If the price of Bitcoin doubles every 4 years, the security of the system can stay at parity with what it is today (assuming the real value of transaction fees stays roughly the same).
There basically are two different views currently on the future scalability and funding model of the network.
The LN/small block view is to keep that layer limited and small and build on top of it and the idea is that with such limited transaction volume these "settlement" transactions will eventually cost a lot. I don't really see this working since to compete with block subsidy rewards you would need very costly transactions.
The big block or "Bitcoin Cash" view is to scale the block size up and eventually you will have very high volume of on-chain transactions.
This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered.
There's no required amount of energy used for mining and miners are offered 0 guarantee of reward. Mining difficulty automatically increases and decreases depending on how profitably miners can operate. If the reward drops to the point that a miner using expensive coal can't compete with a miner using cheap solar, then they simply go out of business and hope they can sell their equipment to someone who can still turn a profit.
Miners don't dictate the reward they get. The subsidy is the "block reward" that started at 50 BTC and halves every 4 years, which is currently at 6.25 BTC - it will be halved again in a few years to 3.125, etc. Blocks are as full as they can be right now and rarely get to the 1.0 BTC mark, so basically if you want the transaction fee market to pay for blocks without increasing the size you'll need to pay close to 6X to 10X higher fees than the current price.
> There's no required amount of energy used for mining
This is true and actually the difficulty can decrease, but none of that changes how many transactions can actually fit into a block.
> Mining difficulty automatically increases and decreases depending on how profitably miners can operate.
Mostly accurate. Mining difficulty decreases if a block took too long to mine. There are lots of scenarios where mining difficulty could get easier - most of which don't seem plausible right now though.
I mean, sure, “the government will be your bank for free” solves the problem of the unbanked, but renders the identity and features of the underlying currency mostly irrelevant.
There are still other cryptos that have further benefits as well.
Monero for example is fully private and can do ~1500tps on chain atm. Bitcoin adoption is just one avenue to competing currencies that bring freedom back. If the LN can remain distributed and bring anonymity to its users, then great, but if not there's still further alternatives, and with decentralized exchanges, governments won't be able to stop the use of a better system.
Currency competition is just plain great for human rights and freedom.
I’m talking about specifically the benefit being sold as “Bitcoin is solving the problem of the unbanked”: if the solution involves the government being a free universal payment intermediary, the underlying currency choice isn’t what is solving the problem of tje unbanked, its the government providing free universal banking services, to which the underlying currency is mostly irrelevant, that is solving that problem.
The currency choice might be relevant to other things, though.
Since the goals are to 'give people without bank accounts access' and 'To make it easier to send back remittance payments'. I suppose they are just negating the value of bitcoin in general, though not for their specific use-case. Especially give the fact that the current legal tender there is currently USD which anyhow does not give the country any control over monetary policy.
It's not entirely off chain. It's hedged in that a transaction is created sending X BTC between us, we repeatedly update that transaction off chain every time we move small amounts of money between eachother, then after Y days we submit the final transaction to the blockchain to resolve the total amounts.
The idea being if one of us starts to be uncooperative, the other can just submit the transaction at its latest state so that we don't lose anything except that last update that we disagreed upon.
But as you said, coffee shop needs some path to you to make that feasible. So then you get BTCVisa (c) or whatever, which is a channel provider that has built a network of channels open with lots of vendors. If you open a channel with them then you get to benefit from getting to use the wallet you already have. There is cross-channel routing of course so maybe that doesn't happen but it seems like a natural result.
LN is neat in concept, but I'm not sure I really see the point compared to Bitcoin cash or the like that just say scale on chain. I guess we'll see.
So, most likely the coffee shop has just one or a few channels open to popular exchanges or dedicated LN services. You open a channel either directly or indirectly to the same exchange / service.
You and that party can now transact freely between each other with no fees, but if that other party is a gateway, it can route payments through it and through other gateways too, and each of them charge fees for routing.
Once any of the parties decide to close the channel, is when a new onchain transaction is created with the last balances state.
While the LN channel is open, only the parties involved know the current state of the balance.
EDIT: ah, I think "nicpottier" explains a little more, below. about having an account on LN requires a certain amount of a deposit (like a debit account).
To know how they update trustlessly you should read my other comment https://news.ycombinator.com/item?id=27451184
LN eliminates the need of escrow completely by using bitcoin's script (smart contracts) in clever ways and a bit of cryptography
I'm out of the loop, I didn't realize bitcoin had contracts yet. Cool.
But you can express things like "if X and Y cooperate they can spend this transaction or Y can spend after 1000 blocks or X can spend if it reveals the preimage of this hash ____"
These logics are what LN uses in its update-transactions
Taproot is also a rad upgrade that is going to improve bitcoin's layer one scripting in some interesting ways, https://bitcoinmagazine.com/technical/taproot-coming-what-it...
I haven't looked into this much, but there are projects like Rootstock, https://www.rsk.co/, that essentially recreate all of Ethereum's functionality as a bitcoin sidechain.
Every transaction in a LN channel is not a simple transaction, it's a smart contract transaction that, if broadcasted, closes the channel automatically but have multiple ways of spending it further, and one of those ways allows a party to get all the funds if he has proof that the counter party cheated (closed the channel using and old-state transaction).
So those transactions that are created are never published if both party cooperate, instead, they serve as a forced-closing mechanism if the other party is uncooperative
That was just a high level view of updating channels, but opening a channel and routing a payment is another story
Do you think that the only thing that matters for crypto is speed and fees? You don't think trust/security/decentralization have any value?
Bitcoin chooses trust and security above everything else, as it should. Then you can have layers on top where you transact at the speed of network packets.
https://www.coindesk.com/nanos-network-flooded-spam-nodes-ou...
Lightning scales with the number of transactions, but does not scale with the number of users. For that it still needs the bitcoin network to verify, and you're back at your transaction bottleneck but with added complexity.
Unless if you’re going to do a bunch of off chain stuff, which seems pointless.
Is that a speculation? Surely if they’re not doing this for the first time ever on an entire country?
Someone has already used a large scale lightning network before right?
Last time I checked (2019) it was processing 5,000 transactions per month.
And while six million isn’t a huge country comparatively, I personally would be mighty pissed off if my entire country was used as a massive financial experiment for crypto enthusiasts.
I mean fiat currency and gold's value still fluctuate on a day to day basis, nothing is set in stone.
Fiat currency not controlled by major economic powers has been know to do that (and there are a few cases for major powers, too, in conditions like just after losing major wars with other such powers.)
Conversely, if you aren’t a major economic power, a fiat currency that is controlled by one is at the mercy of other countries. (And, even if you are a major power, your currency has some exposure to your relationships with othe countrieds, though “at the mercy of” may be too strong.)
Not all fiat is “the USD from the perspective of the US”.
Instead USD drops by ~95% over a 100 year period[1].
1: https://www.statista.com/statistics/1032048/value-us-dollar-...
The word “but” implies some kind of contrast with what is to follow; there is none. Your support to lack thereof is orthogonal to the next point.