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Comment by jmoak3 | Hacker News Reader

Lightning Network is just a centralized company acting as a middleman, occasionally (if ever) committing changes to the blockchain right?

If that is the case, then theoretically Visa and Paypal are already lightning networks, just without the periodic bitcoin commits.

If so, wouldn't that mean that if Visa and Paypal are banned from letting country X citizens send funds to someone in country Y, wouldn't the gov of X just block whatever new lightning network companies pop up? Isn't it the same thing?

Either I don't understand, or Crypto finance is just a new way of doing the same thing but confusing enough to make politicians get bored reading about it, allowing them to avoid regulation

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No, Lightning Network is a distributed protocol. Here's a good intro: https://bitcoinmagazine.com/technical/understanding-the-ligh...

Technically, Lightning Network is fascinating and quite ingenious. Practically, the blogpost above was written in 2016, so more than 6 years ago, and LN - in my impression - hasn't really taken off yet... I wonder if it's due to its complexity, plus the potential need for watchtower services when using a node that isn't always online.

It just seems to me like it allows you to open a secure high speed channel with someone you expect to transact with frequently. That's interesting but most people transact with different people constantly - so unless I want to have an open channel that closes nightly/weekly/monthly with every store I shop at, wouldn't I use a centralized service?

How would that be different than opening an account with Paypal, and everyone you transact with also having a Paypal account, and you all using Paypal to send money between each other, and occasionally Paypal sending money to your real bank account?

EDIT:

I suppose I could just have a channel with every party I transact with that closes monthly (like a credit card), but the lack of reversals mean I would like a centralized service to be able to buffer my money from other parties, like my current credit card offers

It's a p2p mesh network. Lots of people open channels to lots of other people, payments are routed over the network.

Hmm so I have a channel with Target, Target has a channel with my neighbor, and my neighbor has a channel with my cousin.

You're saying I could send money to my cousin and Target and my neighbor would take some sort of cut if they agree to process the transaction?

How do they prevent double spend? What if I have that network, and also a channel with Walmart, and I send all my money to Walmart at the same time I send it all to my cousin, and they give me a sofa

In <some_time_period>'s time when everyone closes the channels, my cousin will have my money, Walmart won't have my money, and I have a sofa.

Am I understanding this correctly?

EDIT: Oh, I see, my coins get locked in the process, so I couldn’t have a separate channel with all of my coins with Walmart. They would have to have a channel with Target, and I assume a good chunk of people in the mesh would have to validate every transaction to prevent double spend. So it’s not totally broken, it just scales poorly as the size of the mesh network grows?

To service the needs of an entity like target which may have a channel with everyone at the same time, I still think a centralized company will emerge to take on the processing with an intermediate hot wallet, instead of a lightning mesh.

But thanks for helping me understand lightning!

Why you are posting so much about something you really don’t understand at all?

I was posting to understand, and people helped me

You sure started out pretty confident. I’m very interested in the intense emotional reactions to crypto currency technology, either immediately dismissive or extreme passion not based on facts.

What you described is a channel inside the network of nodes. What's great in lightning network is that you can route paths / a flow inside the network made of those channels that you just described trustlessly (not trusting the intermediate nodes either) using some simple but ingeniously designed smart contracts.

No, the Lightning Network is a free and open payment network on top of the Bitcoin Network.

It's a so called "layer 2" network (Bitcoin network being the layer 1).

Everyone can run a Lightning Network Node on e.g. a RaspberryPi.

One opens "Channels" to other Nodes. Multiple nodes and channels build a network and can transfer Bitcoin/Satoshis for relatively little costs from A to B.

Network nodes can charge a fee for routing payments (or data more generally speaking).

There are different implementations of a Lightning Network node. LND is probably the most used one today. But there is also C-Lightning.

Company? Lightning is a distributed network and anyone can participate.

I thought lightning was just code for "Off-Chain transactions processed by someone else".

Reading here: https://cointelegraph.com/bitcoin-for-beginners/what-is-the-...

I still get that impression:

>The Lightning Network is a second layer added to Bitcoin’s (BTC) blockchain that allows off-chain transactions, i.e. transactions between parties not on the blockchain network.

Can you help me understand how this will be different than Visa/Paypal with occasional commits to the chain?

You don't need a third-party, you can run your own node. It's a state channel. Visa could participate as a liquidity provider to help route payments but it's totally peer to peer.

Sure but most of the implementations are commercial

https://en.wikipedia.org/wiki/Lightning_Network#Implementati...

Sure, but in many cases people want to redeem the payment for local currency. In that situation, governments can manage the on/offramp to the network.

Much in the same way git is distributed.

Crypto and by extension Web3 may never take off because humans will always meddle.

If there is a transaction, someone wants to be a middleman. If there is a flow, someone wants to be a middleman. . it seems universal.

Every time someone comes in and tries to solve these problems cryptocurrencies have they end up recreating standard banks and payment processors, only without all the federally mandated consumer protections built into actual banks and financial institutions.

People are just hell-bent on re-learning 200 years of banking history firsthand.

> People are just hell-bent on re-learning 200 years of banking history firsthand.

Maybe just the last 109 years https://en.wikipedia.org/wiki/Federal_Reserve_Act

Or just the last 79 years https://en.wikipedia.org/wiki/Gold_Reserve_Act

Or just the last 51 years https://en.wikipedia.org/wiki/Nixon_shock

Or just the last 15 years https://en.wikipedia.org/wiki/Quantitative_easing#United_Sta...

Or just the last 2 years https://fred.stlouisfed.org/series/M2SL

Or just the last 1 year https://www.washingtontimes.com/news/2021/oct/19/democrats-s...

Or just the last 6 months https://www.businessinsider.com/trudeau-canada-freeze-bank-a... https://www.whitehouse.gov/briefing-room/presidential-action...

Or just the last week https://www.forbes.com/sites/robertwood/2022/08/11/irs-to-ad...

Maybe BTC isn't the answer, but there are some real downsides to "standard banks and payment processors."

Yes, but you are good as long as you stay in the Bitcoin and use lighting for day to day transactions. One you withdraw your Bitcoin from LN, it can not be banned.

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