Then two things happened: people figured out that it's actually very easy to connect the dots, particularly if somebody ever does something like: "donate here: (hash)".
And, Bitcoin is hard to get into. As soon as difficulty went up, making yourself some went out of the window. Now you have to buy it. And its characteristics mean that anyone selling any online wants to be really, really sure of your identity. Thus near everyone ends up creating accounts at Coinbase or wherever with very accurate identity verification, and now we've got real names connected to those random looking numbers.
Similarly I believe that HTTP Live Streaming is using Internet...
Basically Lightning is like a tab that you open in a bar. You perform various transactions on the tab, and only settle later. No one would say that you're using Visa when you tell the bartender to put some drink on your tab, even though at the end of the day or week or whatever, the transaction will go through Visa.
- At the bar is almost always a single direction: customer pays the bar. Lightning is both directions - sending money between friends and sometimes to shops.
- In this (bad) analogy bitcoin would not be Visa, but bitcoin would be "dollars". Both the bartender and customer would say that they are using dollars for the tab.
- The tab analogy doesn't really match the fact that you establish a "channel" (e.g. both you and the bartender would put some bitcoin into this channel and then you can pay your grandmother in another country with bitcoin in this channel... see the analogy doesn't work here), you can resize ("splice") the channel if you want, you can swap in and swap out...
In most solutions your wallet monitors the chain and it automatically resolves any of the dispute (e.g. Phoenix wallet, or Zeus). The time scale is also different, so even if power goes out for multiple days and you are running your own very private wallet without any associated service (LSP), then you still have on the order of weeks for your wallet to automatically resolve any issue.
Literally the only way anyone can see their wallet balance is by doing this.
Near as I can tell, you just don’t know how Bitcoin actually works?
For example, if I send cash through the post office, and I don't sign the envelope, that is a form of anonymous payment - it's impossible to tell who sent the payment (assuming there is no footage of the post box where I deposited the envelope, and I left no DNA on it, etc). If you receive a second payment, it's impossible to tell whether it came from the same person or someone else.
If I give you a dollar bill with the serial number 100100, it's impossible for you to prove that bill came from me (unless you have forensic evidence of me giving it to you, of course - but that's equivalent to having photo evidence of me typing in my private key to a BTC wallet) . If you find a dollar bill on the street, it's now yours, you can't know anything about its previous owner.
In contrast, a BTC address is a unique identifier for someone who owns the BTC. The blockchain stores all addresses that it ever interacted with, so even if you create thousands of wallets, they can all be-anonymized quite easily if one is, as you can track how money was sent between them.
But if Alice just gives private key to her address to Bob, then Bob generates new address (which we won't know is his) and transfers the coins there when we won't know for sure that the ownership of the coins changed. If we didn't see Alice passing the private key to Bob we have absolutely no reason to think that Bob owns any coins. We see that his known public address is still empty.