[HN Gopher] The Lightning Network: Turning Bitcoin into Money
___________________________________________________________________
The Lightning Network: Turning Bitcoin into Money
Author : olalonde
Score : 159 points
Date : 2022-07-13 08:16 UTC (14 hours ago)
(HTM) web link (papers.ssrn.com)
(TXT) w3m dump (papers.ssrn.com)
| petefromnorth wrote:
| Why use LN when other simple L1 solutions already work great as
| money.
|
| Litecoin (LTC) has cheap fees and lots of room. Bitcoin Cash
| (BCH) is constantly improving and has a ton of transaction room
| to grow, with increases if/when demand grows. Dogecoin (DOGE) not
| my favorite, but does work fine for the money use-case, but
| development, from what I can see is a bit stale.
|
| With these existing simple solutions, I don't see why Bitcoin
| (BTC) has to be anything more than the unit of account other
| crypto projects value themselves against.
| Centmo wrote:
| The holy grail is a cryptocurrency that can scale to billions
| of users while maintaining sufficient decentralization and
| security to be immune to state-level attack and corruption. BTC
| in combination with the higher level protocols such as
| Lightning (and others not yet conceived) is the only system
| that I believe can achieve this.
| [deleted]
| dieortin wrote:
| All those have problems. A huge amount of transactions in a
| distributed ledger means there's a big requirement for storage
| space and processing power, there's no way around it.
|
| Lightning reduces the amount of transactions that must be in
| the ledger, and in consequence the storage requirements can be
| kept down. The BCH model of just increasing the block size
| indefinitely is not sustainable.
| flowctrl wrote:
| Because bitcoin is money, and shitcoins are not.
| Aaronstotle wrote:
| Bitcoin is not fungible and because of its hard cap does not
| incentive actual use as a means of exchange.
|
| I'll never understand why BTC Maximalists refuse to
| acknowledge faults in BTC and see how other currencies can
| solve them.
| TrapLord_Rhodo wrote:
| > its hard cap does not incentive actual use as a means of
| exchange.
|
| Why?
|
| Is that because it's has 'Scarcity'? People will pay more
| for it in the future?
|
| If that case is so soundly put why would you not buy as
| much btc as possible?
|
| Playing a bit of devils advocate here but wouldn't you say
| that it's volitility leads to more trading?
|
| Means of exchange need to be further defined in this crazy
| overfinancialized world we live in. total trading volume of
| BTC is absolutely insane.
| Aaronstotle wrote:
| I'll use my own example, I purchased a month of a VPN
| service using BTC when it was ~11k, it's about $5 in fiat
| per month.
|
| If you believe BTC will only go up, I don't see why you
| would want to spend it if your money will be worth more
| if you wait.
|
| Regarding Volatility, yes it leads to a lot of trading, I
| mean means of exchange as purchasing everyday goods. The
| transaction history of BTC also adds regulatory hurdles.
| Vadoff wrote:
| That's like saying I don't see why anyone would spend
| cash when they could buy index funds instead (if you
| believe index funds will only go up).
| cardimart wrote:
| So if every grocery was to be priced in BTC, you wouldn't
| eat? :)
|
| Remember that the US was on the gold standard with a
| similar inflation profile to Bitcoin and consumers were
| consuming.
| giaour wrote:
| During the good times, you are correct that few people
| hoarded money in the hopes of deflation. During bad
| times, people actually do make this calculation (and so
| might be hamburger instead of steak). Deflation is
| believed to have significantly prolonged and worsened the
| Great Depression, and that experience was one of the
| motivating factors behind the global abandonment of the
| gold standard.
| shp0ngle wrote:
| Lightning Network is just around the corner for about 5 years now
| once_inc wrote:
| It is being actively used daily by a vast community of users. I
| don't understand what you are trying to imply with your
| statement.
| joosters wrote:
| The 'reference' implementation of the protocol,
| https://github.com/lightningnetwork/lnd is _still_ in beta,
| with warnings about how users could lose all their money.
| AFAIK, there 's no stable/reliable software out there.
|
| And don't forget, ordinary users need to monitor the
| blockchain 24/7 in order not to lose their money by a
| counterparty closing their channel fraudulently.
|
| It's far from ready for use.
| exabyte wrote:
| We use it at a cafe and receive several orders a day with
| people paying by lightning
| acdha wrote:
| Do you have a feel for whether those orders are
| cryptocurrency workers or normal people who happen to
| prefer it to a credit card?
| exabyte wrote:
| well I'm living in Guatemala at Lake Atitlan. We have
| quite a movement of crypto enthusiasm so the people that
| are using it are "normal" people who are part of that
| crypto group. We also have a Lamassu "cryptomat" for
| people to exchange the local currency to Bitcoin and the
| crypto group has been advocating people to use Muun
| wallet, which is easy for the average person to kind of
| have on-chain and lightning capability.
| lawn wrote:
| To get a pleasant experience today you also need to rely on
| third-parties to manage your channel, the very thing
| Bitcoin was set out to avoid.
| once_inc wrote:
| Define pleasant. There a quite a few people happily using
| umbrel or similar products that allow you on the LN with
| minimal hassle.
| lawn wrote:
| Install app on phone, ready to receive and then send to
| anyone.
|
| Umbrel and similar aren't even the same playing field
| here. Even if we disregard the tedious setup, you'll
| still have to manually open, close and refill channels.
|
| It's disingenuous to suggest LN is even close to
| convenient without third-party reliance.
| shp0ngle wrote:
| > As of this writing, lnd is still in beta and it is
| considered #reckless to put any life altering amounts of
| BTC into the network.
|
| Well I will take them by their word.
| blueflow wrote:
| Does this imply an admission that Bitcoin itself is not usable as
| money?
| once_inc wrote:
| What do you think is being exchanged on the Lightning Network?
|
| LN transactions are simply 2-of-2 multisig transactions made
| on-chain, where both parties can change the balance amongst
| themselves, and where settlement is possible at any moment.
|
| Bitcoin isn't being used as money on-chain. Why is this
| controversial? Bitcoin is the equivalent of gold, which was the
| hardest form of money that is accepted worldwide, before
| bitcoin was invented. Using it as a settlement layer for higher
| layers is the obvious scaling solution if you wish to remain
| decentralised.
| Hamuko wrote:
| > _Bitcoin is the equivalent of gold_
|
| That definitely wasn't the original goal of Bitcoin though.
| once_inc wrote:
| This argument usually comes down to the "Bitcoin: a peer-
| to-peer electronic cash" quote from the title.
|
| I'd like to point out that the word "cash" is used
| differently in the cyberpunk community from before 2008.
| BCH and BSV both interpret it as "money used for every
| transaction" and thus advocate bigger blocks, while
| cypherpunks back in the day used it for "permissionless
| value tokens" (my phrasing here).
| max51 wrote:
| The people using the intro of the whitepaper to justify
| BCH are also conveniently ignoring half the paper and
| pretends that entire technical sections are irrelevant
| and should be ignored.
|
| Ironically, trying to prove which chain is the "real"
| bitcoin by interpreting word from the introduction of the
| paper goes directly against the almost everything that is
| written in the rest of the paper.
| freeAgent wrote:
| It's absolutely not true that "the people using the intro
| of the whitepaper to justify BCH" ignore half the paper
| and pretend that entire technical sections are irrelevant
| and should be ignored. Please clarify.
| freeAgent wrote:
| How do you explain this: https://twitter.com/gavinandrese
| n/status/929377620000681984 ? You don't get much more
| "cyberpunk OG," especially in the realm of Bitcoin than
| Gavin Andresen. It's one thing to disagree, but it's
| another to ascribe beliefs to people that they don't
| hold.
| tfbkggjjji wrote:
| RileyJames wrote:
| And surveillance capitalism wasn't the original goal of the
| internet, yet here we are.
|
| What's your point?
|
| A technology should achieve its founding goal or GTFO?
| acdha wrote:
| More that people who spend a decade dissembling about
| easily validated technical claims have a trust issue
| which is hard to reconcile with providing financial
| services. There were so many people selling this dream
| world where your life would be full of Bitcoin
| microtransactions who were unwilling to acknowledge that
| the system could not possibly scale to that level.
| Lightning is good for being potentially usable but I
| would not trust my assets to anyone who wasn't saying
| something like it was necessary all along.
| cowtools wrote:
| Goalposts moved.
| azangru wrote:
| > That definitely wasn't the original goal of Bitcoin
| though.
|
| What was the original goal of gold?
| tvink wrote:
| To quote the Bitcoin Whitepaper:
|
| >A purely peer-to-peer version of electronic cash would
| allow online payments to be sent directly from one party
| to another without going through a financial institution
|
| It's fine that we've moved the goalpost as we've come to
| understand the limitations of this kind of blockchain,
| but it's also fine to highlight that "store of value that
| you can't directly transact with" was not what bitcoin
| was designed to accomplish, originally.
| WinstonSmith84 wrote:
| Quote to take maybe with a pinch of salt. Having been
| smart enough to invent Bitcoin, one could assume that
| Satoshi knew that waiting 10 minutes for a block time to
| be finalized along with a speed of 7tx/s was not going to
| be practical to go shopping ... regardless of tx fees.
| Something had to be invented, and this was just not there
| at the time of this whitepaper
| stonogo wrote:
| So why didn't he write that instead of being so smart
| that he knew his followers would retroactively put those
| words in his mouth? Why not just take him literally and
| interpret his writings at face value?
| cowtools wrote:
| Okay, so decrease block times or increase block sizes
| then. Satoshi was not afraid of hard forks.
| Geee wrote:
| Payment channels were originally suggested by Satoshi.
| https://en.bitcoin.it/wiki/Payment_channels
| BbzzbB wrote:
| It's also fine to highlight Satoshi talked about Bitcoin
| like gold since the beginning, as well as electronic
| cash, which people always omit when saying he deemed it
| to be cash not gold. He introduced the terminology of
| mining as a direct reference to gold mining [0]. Sure it
| didn't make it to the title, but the whole premise of
| Bitcoin being non-falsifiable and it's distribution
| outside of central banks' control is very much core to
| the whole thing. Arguably more so than being an e-cash,
| if it was just about sending cash on the Internet, he
| would've been making CashApp.
|
| FWIW, I don't even own a dime of crypto, I just find it
| disingenuous every time people bring up "it's failed to
| live up to it's email title so bitcoiners moved
| goalposts" as some sort of smack down, when those
| goalposts were set before the network even went live.
|
| 0: https://satoshi.nakamotoinstitute.org/quotes/mining/
| _Algernon_ wrote:
| Sometimes creators don't know what their creation is
| initially. _surprised pikachu_
| pibechorro wrote:
| If its taxed with capital gains it cant be, that law needs to
| change at minimum for smaller day to day transactions, say sub
| $600.
| 42e6e8c8-f7b8-4 wrote:
| See also "public ledger". PUBLIC LEDGER. Craziness. No wonder
| the US government is getting interested in it. Visibility into
| every single transaction. And they won't be the only one able
| to see everything.
| TheDudeMan wrote:
| Yes. Bitcoin transactions are too expensive for small payments.
| TradingPlaces wrote:
| "We can make the blockchain actually work for payments if we take
| payments off the blockchain." Sounds about right.
| victorvosk wrote:
| BTC and a lot of other chains are Level 1 (L1). Final
| settlement layers for transactions. To compare that to normal
| banking, your credit card is like an L5. Tons of things go on
| in-between your CC transactions before its actually settled
| even if it appears to be instant and final to the end user.
|
| Truth is crypto enthusiasts have been overly ambition in this
| space, insisting a single L1 chain will come along and be the
| solution.
|
| The average user A) Doesn't care and B) needs a higher level
| transaction layer that is flexible, where charges can be
| reversed or funds restored in the presence of theft or fraud.
| That stuff happens all the time in real life.
|
| There is no way to improve the blockchain as currency UX
| without a centralized mediator(s) for average people. People
| get scammed all the time despite there being dozens of safety
| nets in place. How is that going to work when an attacker just
| needs your crypto keys to steal your entire net worth?
| TradingPlaces wrote:
| How is this better than Visa and MC?
| Centmo wrote:
| The 1.5-3.5% credit card processing fee for starters. Also,
| you can't use a CC to send money peer-to-peer globally at
| near-zero cost.
| dmitriid wrote:
| > The 1.5-3.5% credit card processing fee for starters.
|
| Compared to... 1 dollar, no, 15 dollars, no, 5 dollars,
| no, 65 dollars, no, ... transaction fees for Bitcoin.
| bytelines wrote:
| That creates opprotunities for other Level 1 chains.
| Solana for example charges $0.00025 per transaction
| (however this is still denominated in the SOL currency so
| it will fluctuate). Hedera network is $0.0001 per
| transaction and is fixed in USD.
| Centmo wrote:
| How much are Lightning transaction fees?
| dmitriid wrote:
| Same. Lightning gets around them by bunching a bunch of
| transactions into one bitcoin transaction. Which is
| exactly what people have been doing with card processing
| for ages now.
|
| And of course there other payment systems around the
| world that don't rely on card transactions.
|
| And don't forget that the entire lightning thing is
| dependent on banks aka nodes with large sums of money to
| provide liquidity in the system.
| hiq wrote:
| More relevant: how much are Lightning transaction costs?
| bubersson wrote:
| Between 1 to 100 satoshi usually - so fractions of a
| cent. (1 BTC = 100 000 000 sats)
| [deleted]
| olalonde wrote:
| Visa and MC could be L5 networks for Bitcoin, why not?
| Lightning is lower level and more decentralized, but it
| doesn't solve issues like dispute arbitration which credit
| cards do.
| lxgr wrote:
| Settlement is among the least interesting problems that
| Visa and Mastercard solve for merchants and customers.
|
| Yes, being able to settle across currencies pretty
| efficiently is nice, but the real value is just what you
| mention: Dispute arbitration and managing liability in
| case of fraud.
| varajelle wrote:
| It keeps many of the properties of bitcoin:
|
| - decentralised
|
| - trustless
|
| - censure resistance
|
| Edit: - pseudonymous
| lxgr wrote:
| All of that remains to be proven in practice.
|
| The incentive structure of Lightning to me seems to
| heavily incentivize the formation of a few centralized
| nodes affiliated with wallet providers - a structure
| which would forfeit many, if not all, of these
| properties.
| pirate787 wrote:
| I'm confused by your comment, L2 transactions are by
| definition run by centralized entities.
| bubersson wrote:
| With LN you can have a private channel with your friend
| and do unlimited number of transactions with (literally!)
| 0 fees. Thanks to recent developments it's also much
| easier (and cheaper) to then swap those BTC to onchain -
| sometimes even cheaper than a comparable single onchain
| BTC transactions.
| varajelle wrote:
| What's your definition of L2 that include centralised
| entities?
|
| There is no central authority in LN. There may be "hubs"
| which are more or less important, but that's not
| centralisation because there are several of them, it can
| also work without them, and also they can't steal your
| money.
|
| Would you say that email is centralised because there
| area few big server (Gmail, Microsoft)? But even if it
| may more convenient to use one of the big server, you
| still have the choice not to use them.
| ftlio wrote:
| That's the whole problem that Lightning solves with other
| tradeoffs. There are no centralized entities.
| bendtheblock wrote:
| but what's the benefit of these?
|
| - decentralised: why is this good?
|
| - trustless: I trust the companies I use, it works
|
| - censure resistance: OK, fringe case for most
|
| - pseudonymous: why do I want anyone to be able to see my
| transaction history?
| Empact wrote:
| > The root problem with conventional currency is all the
| trust that's required to make it work. The central bank
| must be trusted not to debase the currency, but the
| history of fiat currencies is full of breaches of that
| trust. Banks must be trusted to hold our money and
| transfer it electronically, but they lend it out in waves
| of credit bubbles with barely a fraction in reserve. We
| have to trust them with our privacy, trust them not to
| let identity thieves drain our accounts. Their massive
| overhead costs make micropayments impossible.
|
| -- Satoshi, 2009-02-11 https://satoshi.nakamotoinstitute.
| org/posts/p2pfoundation/1/...
|
| > pseudonymous: why do I want anyone to be able to see my
| transaction history?
|
| Transactions are viewable in the blockchain so that every
| party involved can audit the system and confirm the
| issuance.
| cortesoft wrote:
| > Banks must be trusted to hold our money and transfer it
| electronically, but they lend it out in waves of credit
| bubbles with barely a fraction in reserve.
|
| Right, which is why we have regulations on reserve
| requirements for banks, as well as things like FDIC
| insurance that guarantees your money in a bank account.
| tfbkggjjji wrote:
| dmitriid wrote:
| > Satoshi, 2009-02-11
|
| Yes. Because society is built in trust. Something crypto
| world is busy rediscovering.
| olalonde wrote:
| - decentralised: why is this good?
|
| Imagine a world where the web is controlled by a single
| entity, say Facebook. They get to decide who is allowed
| to create a website. They get to decide how much it cost.
| If they're not happy with the site's content, they can
| take it offline. Do you believe that would be a better
| world to live in?
|
| - trustless: I trust the companies I use, it works
|
| That's because there's usually no alternative. But when
| there's a trustless alternative, you may find that it is
| less risky or costly. Many people chose e2e encrypted
| messengers because they don't trust a third party with
| their private messages.
|
| - censure resistance: OK, fringe case for most
|
| "[...] Then they came for me--and there was no one left
| to speak for me."
|
| It may be fringe but it's a massive issue for those who
| are censored. It's also not that uncommon. It is
| estimated that there are over 1 billion unbanked people
| worldwide. Also, try "PayPal horror stories" on Google.
|
| - pseudonymous: why do I want anyone to be able to see my
| transaction history?
|
| What parent meant is you can transact with people without
| knowing their real identity. I could send you a BTC tip
| on HN without knowing your name or address. Regarding
| your concern about privacy, no one can really determine
| your transaction history by looking at the blockchain.
| It's possible to do some guessing but all you really see
| are transactions going from opaque addresses to other
| opaque addresses with no attached identity information.
| Also, this can be further solved with CoinJoin[0].
|
| [0] https://en.bitcoin.it/wiki/CoinJoin
| dmitriid wrote:
| > you may find that it is less risky or costly. Many
| people chose e2e encrypted messengers because they don't
| trust a third party with their private messages
|
| Private messages are not money. Example: you ordered some
| goods and those arrived in bad shape. What's your
| recourse in the trustless world?
| olalonde wrote:
| There are some semi-trustless systems that work with
| escrows [0]. But realistically, an arbitration system
| does indeed require a trusted party.
|
| There is no trustless world, just a world where trustless
| is an option and where "trustful" systems can be built on
| trustless foundations.
|
| [0] Those systems give some guarantees about the trusted
| party (e.g. that they can't just run with the money).
| dmitriid wrote:
| > where the "trustful" systems are built on trustless
| foundations.
|
| You cannot build trust on a trustless foundation. As,
| again, the crypto world is busy rediscovering.
| olalonde wrote:
| What do you mean by that? I don't see why there couldn't
| be a centralized service offering payment dispute
| arbitration on top of Bitcoin (this is what I meant by
| building "trustful" systems being built on top of
| trustless foundations).
| dmitriid wrote:
| > why there couldn't be a centralized service offering
| payment dispute arbitration on top of Bitcoin
|
| What exactly does Bitcoin provide in this case?
|
| > this is what I meant by building "trustful" systems
| being built on top of trustless foundations
|
| So, a service that exists outside bitcoin, has a trust
| system built entirely outside bitcoin and only doing
| something with bitcoin because reasons... is "building
| trustful systems on top of trustless systems".
|
| I don't think you know what "building on top" means.
|
| _Edit_ : grammar and mobile typos
| bearjaws wrote:
| That just sounds like banking with extra steps.
| olalonde wrote:
| Spoken like someone who doesn't know the steps involved in
| opening a bank account (hint: many people can't), accepting
| online payments using a bank account (hint: hope you have
| deep pockets), using a bank for sending
| interbank/international payments (hint: might need to
| collect a page worth of information from your recipient.
| second hint: their bank might refuse to receive the
| payment), etc. Bonus steps: do all the above
| programmatically using an API (hint: you might have a
| billion-dollar startup in your hands).
|
| Now do all the above using Bitcoin/lightning network.
| You'll be done in 15 mins.
| bytelines wrote:
| Would lightning network approach comply with KYC laws?
| [deleted]
| olalonde wrote:
| That question is highly dependent on jurisdiction. The
| prevailing opinion right now is that Lightning nodes are
| not subject to KYC regulations in the US.
| jayd16 wrote:
| You know you're still supposed to collect all the same
| info for a BTC transaction, right? Just because it's easy
| doesn't mean it's not tax evasion.
| toolz wrote:
| Ignoring the fact it isn't tax evasion - just because
| it's against the law, doesn't mean it's unethical.
| Further, obeying laws can be (and often is) unethical.
| Not everything is on the level of requiring people to
| turn in jews, but there's plenty of room to argue that
| companies that are ill-equipped to protect your personal
| data should not be allowed, much less required, to
| collect your identifying information.
| olalonde wrote:
| No, you are not supposed to. KYC is a legal requirement
| for money transmitters[0]. It does not apply to Bitcoin
| users.
|
| [0] Money transmission is the act of receiving currency
| from one party and transferring it to another party.
| Basically, middlemen in a transaction (e.g. banks).
| dragonwriter wrote:
| If you are processing financial transactions (including
| something of "value that substitutes for currency")
| between other people at their direction, you are a money
| transmitter. The whole _point_ of both Bitcoin is
| decentralizing this function _from_ banks to a network of
| miners, and a similar thing is done in Lightning with its
| nodes.
| olalonde wrote:
| That's correct. In the case of Bitcoin, the thing that
| most closely resembles a "money transmitter" are miners
| but FinCEN ruled that they are not[0]. A sensible
| decision because otherwise, Bitcoin would have
| effectively been banned from the United States (or
| Bitcoin miners, at least).
|
| [0] https://www.coindesk.com/policy/2014/01/31/fincen-
| declares-b...
| cortesoft wrote:
| You can set up a stripe account to accept payments very
| easily.
|
| You can buy a prepaid Visa with cash in just a few
| minutes.
| olalonde wrote:
| > You can set up a stripe account to accept payments very
| easily.
|
| Doesn't it require having a U.S. corporation? That's a
| few hundred dollars off the bat. It also requires you to
| provide evidence that you are within the types of
| businesses they authorize. I also suppose it requires
| having a bank account. Opening a business bank account
| does not take a few minutes and it can be close to
| impossible for certain categories of businesses. Multiply
| that by 10 if you are not a citizen/resident. I also
| don't believe Stripe allows sending money. Furthermore,
| receiving payments on Stripe effectively takes a week due
| to the waiting period. Finally, if Stripe decides to
| freeze or terminate your account, you are f'ed.
| notpushkin wrote:
| Stripe is not worldwide, but works pretty much everywhere
| in EU at least. You can open a company in Estonia in a
| couple hours (once you have a digital signature key,
| which they offer to everybody now, not just Estonian
| citizens [1]). Getting a bank account might be a bit
| trickier, but still doable (hint: Wise [2], while not a
| bank, might be an easier option).
|
| That said, Bitcoin is still a whole lot easier to accept,
| and on the L1 level can't be blocked by anybody.
| Cryptocurrency is definitely the future, but traditional
| banking is trying to compete sometimes :-)
|
| [1]: https://e-resident.gov.ee/ [2]: https://wise.com/
| lxgr wrote:
| You'll also reduce your potential (new) customer base by
| almost 100%. Trust can't be bootstrapped trustlessly.
| MuffinFlavored wrote:
| > To compare that to normal banking, your credit card is like
| an L5.
|
| Could you tell us what L1, L2, L3, L4 are in a credit card
| example?
| olalonde wrote:
| It's an imperfect analogy but it might look something like
| this:
|
| L1: Central bank (implements monetary policy)
|
| L2: Member banks (have accounts at the central bank)
|
| L3: Non-member banks
|
| L4: Clearing house, SWIFT, etc. for interbank payments
|
| L5: Credit card networks
| koheripbal wrote:
| It's essentially a form of sharing, with lesser secure channels
| for less important transactions.
| TradingPlaces wrote:
| You say "less important;" I say "vast majority." How is this
| better than Visa or MC?
| toolz wrote:
| for one, the base currency in question is uncensorable.
| e.g. I for one find it detestable that fruits and nuts
| sellers in Iran suffer immensely because of US sanctions.
| The idea that innocent citizens are being made to suffer
| for their governments policy (especially in more
| authoritarian countries) is gross. I see it akin to
| punishing a child for their parents behavior.
| preseinger wrote:
| Humans make mistakes. Systems that intend to serve humans
| have to accommodate that flaw in order to be viable.
| Fixing mistakes means rewriting history. That means
| censorship. And so censorship isn't a bad thing. It's
| actually a core requirement for any system designed for
| broad usage.
| toolz wrote:
| Flawed logic, censorship can be a mistake just like
| anything else. Adding the ability to fix mistakes with
| censorship also adds the ability to make mistakes with
| censorship. Censorship, however is centralized power and
| therefore trades fixing small scale mistakes with the
| centralized power to make big mistakes. This is why
| western society and individual liberties have been so
| dominant in modern history. Authoritarian societies have
| fallen one after another, further evidence that it is
| incorrect to treat centralization as something other than
| a bad tradeoff.
| _mhr_ wrote:
| What do you mean by uncensorable? What does censorship
| have to do with sanctions hurting innocent economic
| participants?
| toolz wrote:
| if you sanction Iran, limiting their fruit sellers, you
| have to have means to track the trades in order to
| enforce those sanctions - lightening network is
| effectively untraceable at the moment (and tools built on
| top of bitcoin can make tracing payments provably
| impossible) which means the sanctions can't be easily
| enforced - no country is going to spend resources proving
| their businesses aren't doing fruit trades with
| sanctioned countries, so if you can't trace the money,
| you're going to have an incredibly hard time enforcing
| sanctions - which I would suggest means Iranian fruit
| sellers aren't going to be nearly as limited in their
| trade. Iran certainly isn't going to limit them and the
| sanctioning country (US in this example) isn't going to
| have the resources to audit every single import to every
| other country.
| ABeeSea wrote:
| The physical fruits and nuts still have to be smuggled
| out of Iran and into a country supporting the sanctions
| for this to make sense. And the physical smuggling seems
| way more difficult than figuring out the payments.
| toolz wrote:
| They don't have to be smuggled out of Iran - Iran
| explicitly wants to enable that trade. Who inside of Iran
| are they smuggling the fruits away from?
| ABeeSea wrote:
| They have to be smuggled INTO another country. One that
| has applied sanctions and doesn't want Iran's fruits and
| nuts. Violating import laws especially for agricultural
| products is a big deal.
| toolz wrote:
| no country _wants_ to reduce trade - they simply accept
| that sanctions are necessary. Reducing trade necessarily
| hurts both countries, and there aren't likely to be any
| functioning developed countries that want to act against
| their own interests. As such, it's not at all hard to
| imagine the receivers having a hard time enforcing
| sanctions. After all, with all the problems a country has
| - why would they dedicate time and resources to
| purposefully hurt their own?
| ABeeSea wrote:
| If the countries wanted to accept the fruits and nuts,
| they wouldn't need bitcoin for payments. They would do
| the usual trade processes. They have outlawed imports
| from Iran and bitcoin doesn't change the fact that
| circumventing agricultural import laws is a massive
| crime.
| Imnimo wrote:
| What has stopped the fruit sellers from using bitcoin to
| avoid sanctions for the past five years?
| toolz wrote:
| It hasn't stopped them or anyone else, people have been
| using bitcoin to bypass censorship for years.
| Imnimo wrote:
| Then why are they still "suffering immensely" if they can
| already use bitcoin to bypass the sanctions?
| toolz wrote:
| There are people bypassing sanctions with bitcoin that
| aren't suffering as much because of it.
|
| As for why everyone isn't using bitcoin to bypass? Good
| question.
| admax88qqq wrote:
| I don't think it's as hard as you think to track ships.
| They're all tracked already
|
| Government will adapt and just ban shipping vessels from
| visiting sanctioned countries, or create a vast make work
| agency to inspect cargo on ships that visited sanctioned
| countries.
| toolz wrote:
| and who is going to track those ships? The sanctioning
| country doesn't have the jurisdiction and likely doesn't
| have the resources to logistically stop it. The countries
| benefiting from the trade (both sanctioned and allied
| nations) have every incentive to allow the trade to
| happen if it can happen without detection - so who is
| going to stop it?
| Grim-444 wrote:
| But you're taking transactions off of the base currency,
| so it no longer matters what the properties of the base
| currency are.
| eldenwrong wrote:
| You settle on the main chain, which has to follow
| consensus rules. It does matter.
|
| We are scaling BTC like the internet, in layers..
| stonogo wrote:
| The internet does not scale in layers. This sounds more
| like Bitcoin is not scalable, so we're introducing
| abstractions to work around its limitations.
| eldenwrong wrote:
| Are you familiar with OSI and TCP/IP architecture?
| Because it definitely works in layers.
| notriddle wrote:
| TCP has stronger consistency guarantees, and worse
| performance, than the underlying IP network. Doing it the
| other way around is usually considered an anti-pattern
| [1].
|
| [1]: https://en.wikipedia.org/wiki/Abstraction_inversion
| stonogo wrote:
| Scaling is not a goal of the OSI model, and TCP/IP
| predates (and does not adhere to) the OSI model anyway.
| For insight into how and why this came about, I recommend
| Padlipsky's "The Elements of Networking Style."
| DonHopkins wrote:
| Yay! I love that book!
|
| "A really vicious critique of the misguided ISO
| networking standards attempt, written when the 'OSI
| model' was trendy & lots of people were babbling about
| the sacred seven layers."
|
| https://news.ycombinator.com/item?id=19866389
|
| Pfff, TCP/IP will never succeed. It doesn't have enough
| layers! /s
|
| https://archive.org/details/elementsofnetwor00padl
|
| "The Book": The Elements of Networking Style: And Other
| Essays & Animadversions of the Art of Intercomputer
| Networking, by M. A. Padlipsky (1985)
|
| The World's Only Know Constructively Snotty Computer
| Science Book: historically, its polemics for TCP/IP and
| against the international standardsmongers' "OSI" helped
| the Internet happen; currently, its principles of
| technoaesthetic criticism are still eminently applicable
| to the States of most (probably all) technical Arts-all
| this and Cover Cartoons, too but it's not for those who
| can't deal with real sentences.
|
| Standards: Threat or Menace, p. 193
|
| A final preliminary: Because ISORM is more widely touted
| than TCP/IP, and hence the clearer present danger, it
| seems only fair that it should be the target of the
| nastier of the questions. This is in the spirit of our
| title, for in my humble but dogmatic opinion even a good
| proposed Standard is a prima facie threat to further
| advance in the state of the art, but a sufficiently
| flawed standard is a menace even to maintaining the art
| in its present state, so if the ISORM school is wrong and
| isn't exposed the consequences could be extremely
| unfortunate. At least, the threat / menace paradigm
| applies, I submit in all seriousness, to protocol
| standards; that is, I wouldn't think of being
| gratuitously snotty to the developers of physical
| standards -- I like to be able to use the same cap to
| reclose sodapop bottles and beer bottles (though I
| suspect somebody as it were screwed up when it came to
| those damn "twist off" caps) -- but I find it difficult
| to be civil to advocates of "final," "ultimate" standards
| when they're dealing with logical constructs rather than
| physical ones. After all, as I understand it, a
| fundamental property of the stored program computer is
| its ability to be reprogrammed. Yes, I understand that to
| do so costs money and yes, I've heard of ROM, and no I'm
| not saying that I insist on some idealistic notion of
| optimality, but definitely I don't think it makes much
| sense to keep trudging to an outhouse if I can get indoor
| plumbing . . . even if the moon in the door is exactly
| like the one in my neighbor's.
|
| Appendix 3, The Self-Framed Slogans Suitable for Mounting
|
| https://donhopkins.com/home/Layers.png
| IF YOU KNOW WHAT YOU'RE DOING, THREE LAYERS IS
| ENOUGH; IF YOU DON'T, EVEN SEVENTEEN
| LEVELS WON'T HELP
|
| https://en.wikipedia.org/wiki/Michael_A._Padlipsky
|
| On the occasion of The Book's reissuance, Peter Salus
| wrote a review in Cisco's Internet Protocol Journal which
| included the following observations:
|
| Padlipsky brought together several strands that managed
| to result in the perfect chord for me over 15 years ago.
| I reread this slim volume (made up of a Foreword, 11
| chapters (each a separate arrow from Padlipsky's quiver)
| and three appendixes (made up of half a dozen darts of
| various lengths and a sheaf of cartoons and slogans)
| several months ago, and have concluded that it is as
| acerbic and as important now as it was 15 years ago.
| [Emphasis added] The instruments Padlipsky employs are a
| sharp wit (and a deep admiration for Francois Marie
| Arouet), a sincere detestation for the ISO Reference
| Model, a deep knowledge of the Advanced Research Projects
| Agency Network (ARPANET)/Internet, and wide reading in
| classic science fiction.
|
| In a lighter vein, The Book has been called "... beyond
| doubt the funniest technical book ever written."
| eldenwrong wrote:
| But TCP/IP does have layers that help it to scale...
|
| https://en.m.wikipedia.org/wiki/Internet_protocol_suite
| TradingPlaces wrote:
| "Evading laws is the killer app of Bitcoin."
|
| You will get no argument from me on that
| toolz wrote:
| It was illegal to protect jews from being enslaved and
| murdered not too long ago. Evading the law is exactly why
| it's important and it is the ethically superior position
| to support tools that enable people to bypass unethical
| laws.
| throwaway6977 wrote:
| You'd think people reading HACKER news would be less pro-
| establishment in their arguments.
| acdha wrote:
| That's not any normal definition of sharing. In the most
| flattering portrayal this is the equivalent of store accounts
| where you can make periodic large deposits to reduce
| transaction fees. Personally it seems more like an admission
| that the first decade of saying Bitcoin was suitable for use
| as a currency was in fact just as obviously wrong as critics
| said.
| olalonde wrote:
| I assume the implication is that doing off-chain transactions
| defeats the purpose of Bitcoin? It does not.
|
| Did you know that fiat doesn't even have a blockchain to
| withdraw to when you want to exit or switch payment
| network/provider?[0] Did you know that with fiat, the money
| supply can be changed arbitrarily?
|
| Those are problems that Bitcoin still solves when you use an
| off-chain transaction network (at least for the many people who
| believe those are problems worth solving). Also, it's worth
| noting that the Lightning network is hardly centralized. It's a
| bit more centralized than Bitcoin but we're light years away
| from say, Paypal.
|
| [0] The closest that comes to this is SWIFT, but it's not an
| open network. Even large payment systems like Paypal aren't
| connected to it. It's also not censorship resistant and you
| can't use it p2p.
| TradingPlaces wrote:
| "Blockchain is better because non-blockchain payment systems
| don't even have a blockchain."
| olalonde wrote:
| That's almost the opposite of what I said. My whole point
| was that it's possible to use non-blockchain payment
| systems (e.g. Lightning) to transact in Bitcoin while still
| reaping many of its benefits. I guess if you wanted to
| sarcastically quote me, you should have gone with "Bitcoin
| is better because fiat currencies don't even have a
| blockchain." (a statement I agree with).
| preseinger wrote:
| How is Lightning not a blockchain system?
|
| It depends on a blockchain?
| olalonde wrote:
| Yes, the lightning network is built on top of Bitcoin and
| depends on it but the transactions happen "off-chain". I
| was just making a generic claim about payment processors
| that enable "off-chain" BTC transactions, from the
| decentralized ones like Lightning to the completely
| centralized ones like Paypal.
| TradingPlaces wrote:
| Why is blockchain better than a centralized database for
| the end user? What specific advantages does it offer to
| me when I go to 7-11 and buy a Slurpee with my watch,
| which is how I do it now?
| olalonde wrote:
| Third attempt: it's not! The Bitcoin blockchain is not
| suitable for day-to-day transactions like buying a
| Slurpee. You should use your watch and a centralized
| database to do "offchain" BTC transactions instead[0].
| The real question is: why is BTC better than fiat (e.g.
| USD)? This is what I attempted to answer in my topmost
| comment.
|
| [0] Or better, use the lightning network. As an end user,
| its benefit over more centralized alternatives like
| Paypal or credit cards is that it's an open network. You
| don't have to ask permission and open an account to start
| using it. Also, low fees. Also, your account can't be
| frozen or confiscated. Also, it works everywhere in the
| world and there are no extra fees for international
| payments. Also, you can do peer-to-peer transactions.
| ftlio wrote:
| For the last 8-10 years it's been the same thing. Bitcoiners
| believe you can't sacrifice its finality, but can scale at a
| different layer. Other "blockchain" people believe something
| different.
|
| It is a weird line in the sand to me that something must either
| happen on a blockchain or not be the right solution, pretty
| much regardless of whether that blockchain's finality
| guarantees are worse if understood at all.
| ETH_start wrote:
| LN adoption/capacity cannot possibly explain the reduction in
| Bitcoin congestion.
|
| At its peak, there was only $200 million worth of BTC as
| collateral in LN channels:
|
| https://www.defipulse.com/address-tag/lightning-network
|
| This is against an ATH market cap of $1.25 trillion. LN
| collateral isn't even a rounding error relative to outstanding
| BTC.
|
| The much more likely explanation for reduced congestion is that
| people stopped using BTC as money, as major merchants like
| Expedia, Microsoft and Steam stopped accepting it.
| kevinak wrote:
| It's worth pointing out that you can only see public channels
| on these trackers. Large players probably have large private
| channels open with each other to guarantee better payment flows
| and less fees.
|
| Expedia, Steam and Microsoft not a likely reason cobnest ion
| got lowered. More likely exchanges and large players got better
| at handling their wallets.
| ETH_start wrote:
| The public LN channels define the routable space of the
| network, since a routing table is public by definition.
|
| The collateral in these channels is therefore a fair proxy
| for the overall size and usage of the LN.
| TrapLord_Rhodo wrote:
| Market Cap and volume don't need to correlate. Your line of
| reasoning is a red herring.
|
| BTC as a store of value can have a very low volume and those LN
| could be responsible for an inordinant amount of volume, with
| low collateral depending on how fast the trades are.
|
| With OTC, Wrapped versions, and leverage through sythetix its
| also an impossible task to be able to claim for certainty
| anyways.
| adrr wrote:
| Way i understand lightning is that you need a hot wallet that is
| connected most of the time to the internet. So you have to move
| money from your hardware wallet to your software based wallet and
| you're still constrained by the blockchain limitations between
| these transfers.
| exabyte wrote:
| I run a lightning node at a cafe and we receive a few orders a
| day. Record had been 8 orders in one day.
| ponyous wrote:
| Interesting. Where is that cafe located?
| exabyte wrote:
| In Guatemala at Lake Atitlan! I have a lightning node running
| BTCPay Server on a raspberry pi, and then also a web app that
| interfaces with it. I can show you the web site, although I'm
| hesitant to post it here cause i don't know how much traffic
| it can handle with the internet speeds here haha
| bubersson wrote:
| If you post ln address, I can send you some sats so you can
| have a coffee on me :)
| DennisP wrote:
| One drawback of Lightning is that if you want to receive funds,
| and you don't have a direct channel to the payer, then you have
| to be online. It's an interactive protocol, you can't just
| publish an address and check it later. Since most people don't
| run their own servers, LN is pretty much going to be a custodial
| system.
| Geee wrote:
| There is actually a solution for that, called Lightning Rod.[0]
| It should allow asynchronous payment flows when running LN
| nodes on a mobile device, which are offline most of the time.
| I'm not sure if it has been implemented yet (probably not).
|
| [0] https://github.com/breez/LightningRod
| knocte wrote:
| > if you want to receive funds, and you don't have a direct
| channel to the payer, then you have to be online
|
| Receiver of funds are normally merchants, and merchants
| normally already have payment systems that require some kind of
| connection anyway.
| TrapLord_Rhodo wrote:
| >LN is pretty much going to be a custodial system.
|
| like Chivo? take out the middleman(Banks) and put governments
| back in control of the funds.
|
| bingo :)
|
| Think about it...
|
| Imagine if you could have complete custodial access, control
| and oversight of the details of your citizens financial info?
| No bank accounts, no stash of gold. It all through the US-
| backed custodial wallet "Trump's Coin purse". Everyone download
| it now and get $30 free! Also, it's a requirement for all
| employeers now so, deal with it banks.
| rmac wrote:
| the server you have in your pocket (your phone) is always
| online and supports multiple communications protocols (NFC,
| Bluetooth, Wifi, LTE, Audio...)
| kag0 wrote:
| running an actual server on your phone would absolutely
| execute your battery life.
|
| if we hadn't had NAT and reverse tunneling then things might
| have evolved differently. maybe a way to push data to phones
| over UDP or low power servers that could wake up to handle
| single requests. but it didn't play out like that.
| TekMol wrote:
| If you have a lightning channel to the custodial service you
| use, you can transfer the funds to yourself any time though.
|
| So in contrast to a fiat bank, where you keep your funds
| permanently, you could use a "lightning bank" just to hold last
| nights payments and transfer them to yourself every morning. Or
| you automate the withdrawl to take place every hour.
|
| And: Couldn't your phone be your server? The way I understand
| LN, receiving funds just means to exchange a few bytes of data.
| Can't phone apps receive push messages?
| kevinak wrote:
| Here's a wallet that runs a node on your phone:
| https://blixtwallet.github.io
| bendtheblock wrote:
| Due to blockchain's architectural shortcomings, you need to do
| the transactions off chain. Fine...
|
| But crypto-"currencies" are actually highly speculative assets
| (as South Africa declared today [1]). No bro will spend them -
| the ideology is to HODL for 100k remember [2]? Earnest patron
| saints like Laszlo Hanyecz bought two papa john's pizzas in 2010
| for what would be worth today roughly $200,000,000 [3]. They
| wanted a new currency, but today the purpose is speculation. The
| whole point is not to be the greater fool.
|
| Bitcoin was never meant to be gold, it was meant to be spent. But
| that hasn't happened.
|
| [1] https://cointelegraph.com/news/bitcoin-not-a-currency-
| south-...
|
| [2] https://www.wealthsimple.com/en-ca/magazine/laser-eyes-
| crypt...
|
| [3] https://www.the-sun.com/news/2935660/bitcoin-pizza-laszlo-
| ha...
| bendtheblock wrote:
| what's wrong with this comment?! that it's anti-crypto?
| currency needs to be a medium of exchange, unit of account, and
| store of value. Given its volatility, Bitcoin could only ever
| realistically be useful for the latter, and only then as a
| risky speculation.
| plankers wrote:
| from the introduction:
|
| >The development of the Lightning Network may have consequences
| for welfare. First, as Bitcoin becomes a more efficient payments
| system, users are better off. Their transactions settle more
| quickly and more cheaply (Zimmerman (2020)). Second, since fewer
| transactions need to be recorded on the blockchain, less memory
| and energy are needed to run a Bitcoin node. This saving lowers
| the cost of maintaining the blockchain, allowing more nodes to
| participate and making the system more secure against a double-
| spending attack (Budish (2018)). Third, by reducing fees, the LN
| reduces the incentive for Bitcoin miners to use large amounts of
| computing power, meaning less energy use and positive
| consequences for the environment.5 Fourth, less blockchain
| congestion may mean lower barriers to arbitrage across
| cryptocurrency exchanges, thereby improving market liquidity (see
| Hautsch, Scheuch, and Voigt (2018)).
|
| >While this paper focuses on Bitcoin, the same technology can
| allow other cryptocurrencies to be widely used, secure, and
| decentralized. For example, the Raiden Network is a similar
| netting solution for Ethereum. Other solutions to the scalability
| problem have been proposed, including sharding, and batching at
| exchange level.6 If the scalability problem can be successfully
| addressed, it may be possible for a currency based on a
| permissionless blockchain to obtain wide acceptance.
|
| very cool to see this coming from the Federal Reserve Bank of
| Cleveland
| tromp wrote:
| > by reducing fees, the LN reduces the incentive for Bitcoin
| miners to use large amounts of computing power
|
| That's great for the environment, but in the long term of
| vanishing block subsidies, not so great for Bitcoin's security,
| as the costs of 51% or censorship attacks also decrease.
| FabHK wrote:
| Fees have constituted just 1% to 2% of mining revenue over
| the last year (the other 99% being the mining reward
| ("coinbase") of 6.25 BTC per block).
|
| So, LN does not reduce the incentive for Bitcoin miners in
| any meaningful way, unless I'm mistaken.
| ETH_start wrote:
| The mining reward declines geometrically, with a halvening
| every four years.
| sillysaurusx wrote:
| That's temporary. If you read the original white paper,
| satoshi designed bitcoin to be miner-free. "People will
| probably always be willing to verify transactions for
| free," or something to that effect. The rewards will
| transition to that 1% fee as the entirety of their business
| model.
| DJBunnies wrote:
| Bitcoin's security has not changed.
| FabHK wrote:
| > The views stated herein are those of the authors and not
| necessarily those of the Federal Reserve Bank of Cleveland or
| of the Board of Governors of the Federal Reserve System.
| plankers wrote:
| sure, but one of the authors works for the bank
| notriddle wrote:
| > Second, since fewer transactions need to be recorded on the
| blockchain, less memory and energy are needed to run a Bitcoin
| node.
|
| The vast majority of energy consumed by the bitcoin network is
| in mining, and that's not impacted by any of this.
| dieortin wrote:
| And what do you think mining does? Less transactions in the
| blockchain means less money to be made mining, and therefor
| less energy used.
| notriddle wrote:
| > Less transactions in the blockchain means less money to
| be made mining
|
| I don't think that's actually true. Mining earns money
| through transaction fees and the mining block reward.
|
| The block reward is directly set by an algorithm which
| lowers the amount over time. Transaction volume is totally
| irrelevant.
|
| Miners and users set the transaction fee by choosing what
| they'll accept, so it should respond directly to supply and
| demand. If the Jevons Paradox [1] holds, making
| transactions cheaper means that there will be more of them,
| so even though on-chain Bitcoin transactions now account
| for less than 100% of transactions denominated in BTC, that
| doesn't necessarily mean that there will be fewer total on-
| chain Bitcoin transactions. So transaction fees paid to
| miners might not actually go down, either.
|
| [1]: https://en.wikipedia.org/wiki/Jevons_paradox
| teekert wrote:
| A cool use of the Lightning network is the podcast 2.0 initative.
| Currently, as I listen to podcasts, I stream back satoshis
| (sats), value for value (I use Castamatic on iOS, fountain.fm is
| also an option on Android). You can also send messages with sats
| attached, called "boosts". Creators can transparantly split the
| sats they receive over various goals (i.e. FOSS projects
| [opensats], or guests on shows). There are no transaction fees
| afaik, that is just when your lightning node syncs with the main
| blockchain, and then you can bundle a lot of transactions.
|
| I find this a very healthy counter movement to the current
| centralization that is going on in Podcasting where indie
| creators are being sucked into Spotify and YouTube (and sometimes
| are being censored there).
|
| The podcast 2.0 movement is not all about value for value, there
| are also cool features like artwork per chapter, sharing of
| snippets, a way to specify different formats (like opus) for the
| same podcast/episode, and many more modern things. It's a cool
| community and if you ask me, the first really useful thing to
| come out of "blockchain".
|
| Edit: Yeah I want to add some references but my company uses
| Cisco Umbrella and some things are blocked. Moreover, I can see
| it also MITMs my own websites (like my NextCloud instance),
| because those are not my certs!... But I digress.
| shmatt wrote:
| Like 99% of crypto projects, this would work just as well under
| a centralized db / FIAT
| rewtraw wrote:
| I'm consistently surprised by HN's lack of vision in this
| area. The idea of a Network State / Internet-native economy
| is a cyberpunk dream, and crypto enables that. The constant
| doubt, rejection, and preference for SV-startup solutions is
| the opposite of what I would expect from a "Hacker Community"
| but I suppose HN is literally full of VCs (particularly
| FinTech) that don't want the competition from open crypto
| solutions.
|
| Meanwhile, devs in crypto are able to build without limits
| and are having an absolute _blast_ larping as anime cats on
| Twitter while cranking on bleeding edge ZK tech and other
| exciting projects.
| tablespoon wrote:
| > I'm consistently surprised by HN's lack of vision in this
| area. The idea of a Network State / Internet-native economy
| is a cyberpunk dream, and crypto enables that.
|
| How so? Isn't the "cyberpunk dream" a dystopia?
| teekert wrote:
| Not for me. This issue in particular seems to polarize
| our community.
| tablespoon wrote:
| > Not for me. This issue in particular seems to polarize
| our community.
|
| https://en.wikipedia.org/wiki/Cyberpunk:
|
| > Cyberpunk is a subgenre of science fiction in a
| _dystopian futuristic setting_ that tends to focus on a
| "combination of lowlife and high tech",[1] featuring
| futuristic technological and scientific achievements,
| such as artificial intelligence and cybernetics,
| juxtaposed with _societal collapse or decay_.
|
| It's the kind of world that's better to look at than
| actually inhabit.
| smoldesu wrote:
| "our community" is one that wouldn't know how to get to
| the bowling lanes if Uber went down. Hell, half of us
| probably wouldn't know how to get work done if Slack or
| Github has an afternoon outage. There's not a person on
| this site that would last in a cyberpunk distopia,
| putting the average HN user in the middle of an
| unmoderated forum would be like the end of Logan's Run.
| We'd all be standing around, stupefied by a world we
| don't understand.
|
| I'm being facetious, but it's true. The average person is
| a weenie, and we rely on a great deal of well-maintained,
| centralized infrastructure to keep us going. There's a
| reason why people here fight to keep Fortnite off their
| iPhone and tries to bite the hand of anyone peddling
| crypto: deep down, we're all scared! We need corporations
| to coddle and exploit us, just like they need our money.
| HN, and the world at large, wouldn't want crypto _even if
| it was_ "the right thing" to do.
| rglullis wrote:
| Do you know how much from it goes to middlemen?
|
| What if you wanted to support 200 open source developers by
| sending $0.25 every month?
| simonmales wrote:
| Not exactly. Lightning means they receiver gets 100% what I
| send. This is particularly interesting for micropayments. I
| can tip someone 1 cent, or less with no middle man.
| shmatt wrote:
| the fact you are using the lightning network means there is
| some _thing_ writing down a transaction from wallet a to
| wallet b
|
| smart contracts are a middle man, and not a great one from
| all the recent exploits executed on them
| simonmales wrote:
| If I were to send you satoshis via lightning. It wouldn't
| be recorded in the Bitcoin blockchain.
| noch wrote:
| > the fact you are using the lightning network means
| there is some thing writing down a transaction from
| wallet a to wallet b
|
| Correction: Lightning is a peer-to-peer payment network
| https://docs.lightning.engineering/the-lightning-
| network/pay...
| lxgr wrote:
| What's the incentive for anybody to open a lightning
| channel, providing connetivity etc. without compensation?
|
| And even if all of this was indeed done for free
| (sustainably, not as a loss leader): Dispute resolution and
| fraud costs money. Free leaves zero margin for either, and
| I wouldn't use a payment service not providing both.
| simonmales wrote:
| Peers don't need to have channels open to each other to
| exchange satoshis.
|
| As long you have some channels open and I have some
| channels open, the network will route my payment to you.
|
| As sender, I am responsible for any potential routing
| fees. You as the payee are not.
|
| If we were to transact with each other often, it could be
| worth opening a dedicated channel to enhance privacy and
| avoid routing fees.
| kevinak wrote:
| The parent here is exaggerating. It's not free, just very
| very very cheap. Nodes with channels can set fees and get
| paid when they a transaction is routed through them.
|
| There is work being done on non-custodial escrow services
| for LN. Here's one: https://lightningescrow.io
| lxgr wrote:
| What prevents a node connecting many consumer wallets
| from raising rates for "out-of-network" wallets,
| especially smaller ones, or independent nodes?
|
| Think of any network: Economic forces usually drive it
| towards centralization if not outright monopolization,
| especially if interfacing with end users (e.g. banks,
| electricity providers, ISPs, messengers...) unless there
| are (effective) laws in place prohibiting it.
|
| > There is work being done on non-custodial escrow
| services for LN.
|
| I'm very curious about efforts like that. Dispute
| resolution is extremely difficult to do in a way that is
| cost-effective, yet fair enough to not drive away either
| buyers or sellers.
| joshstrange wrote:
| I pay for 5 podcasts, I do it via Patreon, Memberful, and a
| custom (stripe-based) solution. I'm not really sure what
| problem needs to be solved in this space. I pay for 2 podcasts
| that I haven't listened to in months, I do it because I pay to
| support these creators. I don't need/want my listen history to
| directly correlate to sending money to hosts I like (nor do
| they, they'd much rather have the constant stream instead of
| peaks and valleys). Also, I actually hate the idea of "boosts",
| it just encourages bad behavior (just like IAP's that aren't
| one-time/DLC/remove-ads).
| bubersson wrote:
| Patreon bans podcasters sometimes, you also have to be in one
| of the lucky countries to be able to use it - other people
| are excluded. There are annoying fees that Patreon (and
| credit card providers) take on each transaction (afaik around
| 10%), so the actual podcasters get quite smaller amount
| compared to what you send...
| [deleted]
| soulofmischief wrote:
| It makes my eyes water sometimes when i see all of the cool
| things so many people on the planet are working on, and that
| they also have users.
| bethecloud wrote:
| This would be even more awesome if the underlying object
| storage was distributed on web3 via storj (would generate
| better bandwidth margins too)
| Grumbledour wrote:
| I really dislike this whole initiative and much prefer the
| patreon model.
|
| One reason of course might be that i am listening to Jupiter
| Broadcast and Chris pushes this stuff hard, really annoying me
| with the constant talk about lightning and especially the
| boosts, which seem to take over half the show, because somehow
| he seems not to realize that the problem he has in getting
| regular supporters is the insane price he asks (last i looked
| about $2,50 per episode), but likes to give everyone several
| minutes of the show who sent him 20 cents.
|
| But I think my misgivings go further than that and i am
| especially concerned about this taking over podcasts or even
| open source, because while I do understand that people need to
| eat, I think these two ecosystems especially thrive because so
| many people contribute to them without profit being their first
| motive. I would not ask people to do work for free, but I often
| find that that when profit comes into it, quality starts to
| suffer and ideals get lost.
|
| Sure, lightning is in some ways similar to patreon etc. because
| it might still be user financed, but I feel the
| unpredictability of getting funds, the more attention focused
| model, will have similar effects on creators than other
| platforms with similar models do and I am mostly not fond of
| this.
| teekert wrote:
| Chris indeed pushes it hard, I think indeed too hard, I
| agree. But it's reducing and moving to other shows (like
| OfficeHours.hair). To him this is the response to
| centralization of podcasting and I see that. As a member (I
| do 8$ a month, supporting 1 show but listen to all) I also
| see the imbalance in the attention that 2ct boosts get. It
| will go 1 of 2 ways I guess: 1) Boosts become the main income
| and keep getting attention (but at some cutoff like with
| NoAgenda donations. 2) Boosts remain a minor part and the
| attention decreases. If I were you I'd sit it out and let
| Chris try.
|
| I do like putting 100$ every (half?) year or so in my podcast
| app and letting the app distribute it over everything I
| listen to. But that's also because I'm at an age where I have
| disposable income. I pay for the membership to get the ads
| out of my fav podcast.
| aliqot wrote:
| I stopped listening out of guilt bc I didn't want to use
| it.
| mrguyorama wrote:
| If you want to see what "Boost" (donation) related content
| ends up looking like, look to popular twitch streamers.
| It's not great for those who want valuable and interesting
| content, and instead favors those who develop parasocial
| relationships and are addicted to getting their favorite
| personality to pretend to care about them.
| Grumbledour wrote:
| You are right and i should not even have mentioned him,
| because i don't support him (though i wanted to once) and
| so really have no grounds to complain. I let my annoyance
| get the better of me and it seems just mean now when i
| reread it.
|
| It also just undermines my skepticism and dislike of the
| podcasts 2.0 thing, which should have been my main point.
| teekert wrote:
| Well, fwiw, imho it's good criticism and skepticism is
| warranted and I agree with it. But it's early days.
|
| I always warn here on HN that we should not throw the
| baby away with the bathwater, meaning, don't kill (or
| over-regulate) blockchain before it can grow into
| something nice (from the monster it is now). Imho these
| are the seeds of something nice, but it's not there yet.
| I can feel it coming though, because of things like
| Podcasting 2.0.
|
| But again, podcasting 2.0 also enables (as you probably
| heard many times by now ;)) life streams right in the
| podcast app. It just displays a badge that your fav
| podcast is now life-streaming and you can participate. I
| think that is just really cool.
|
| Using the blockchain again though, you can make instant
| donations through BTC lightning, and have your value 4
| value boosts live-read as you listen. I mean, that is at
| least a bit cool right? The equivalent of throwing some
| cash... Hmm, this is going in the wrong direction
| again...
| hnthrow1010 wrote:
| It's not still early days. Bitcoin was created 13 years
| ago, it was useless for payments back then and it's still
| useless for payments now. Every direction that anyone
| takes it will be in the direction of some kind of pure
| money-making thing, usually in the form of a ponzi or
| pyramid scheme. This has happened over and over again for
| 13 years. There's simply no one else interested in
| building on this because everyone else can see that the
| technology is useless. The only way the scheme even works
| is because the miners are continually promised profits
| just for doing the useless "work" of running a node. If
| you take that away, you're left with an ordinary
| distributed database, and you can't use that to get VCs
| all excited with buzzwords and promises of instant
| profit, so nobody in the bubble does it.
|
| We should absolutely throw away the bathwater. There's no
| baby. I'll say it right out. Cryptocurrency should be
| completely banned by every country on the planet. They
| have no purpose that isn't outright fraud and theft.
| Everything described in Podcasting 2.0 can be done with
| regular old Web 2.0 technology, and it can be done more
| efficiently that way too.
|
| Edit to those downvoting: I will gladly retract this
| entire comment if you can demonstrate a single real, non-
| fraudulent usage of blockchains. I've been asking this
| for years and never gotten a straight answer. Everything
| is always "just around the corner" but every time I look
| around the corner all I see is more fraud and scams. If
| you really think there's something salvageable here, then
| let blockchains live on as a theoretical research project
| until somebody figures it out. In the meantime, _please
| stop_ encouraging the general public to put their money
| into this. It 's irresponsible to raise money this way.
| rafaelero wrote:
| Don't you want a money that people can't fuck with by
| printing according to politicians will?
| waoush wrote:
| (note: I didn't downvote, but have been working with
| blockchain and thought I would answer since you haven't
| gotten any yet)
|
| https://www.hyperledger.org/learn/case-studies
|
| Hyperledger is a set of open-source distributed ledger
| related technologies, the most well-known being Fabric,
| which is a framework for creating blockchain networks.
|
| The most interesting cases are S&P Global and Walmart,
| who use it to keep track of data for various auditing
| purposes. The idea is that since data on a blockchain
| can't be modified on a whim without that change being
| observed, it protects the integrity of the data being
| stored. Basically it is being treated as a sort of
| database.
| hnthrow1010 wrote:
| I've seen those and I wouldn't describe them as
| "blockchains" in the same sense that cryptocurrencies use
| it. The word seems to only be used for marketing
| purposes. Those are just an ordinary ledger with some
| sharding/mirroring.
| waoush wrote:
| Blockchain itself just refers to a linked list (the
| chain) of cryptographically hashed items such as a
| timestamp and the data it is time-stamping (the block),
| which is based on previous elements in the chain. This is
| also how how it is also described in the original Bitcoin
| paper.
|
| Blockchain doesn't rely on crypto, crypto was implemented
| using blockchain. Blockchain was invented long before
| crypto in the early 90s at Bellcore. Crypto may emphasize
| transactions and combating double-spending (due to nodes
| being on a public network), but no one is held to
| crypto's use of blockchain to _be_ blockchain. The
| Bitcoin paper cites both the original Bellcore paper and
| its follow-up discussing the use of Merkle Trees, and the
| Bellcore paper cites patent documents as a potential use-
| case. So I think what S &P Global and Walmart are doing
| are valid use of the technology.
|
| Now whether or not cryptocurrency itself or the networks
| they run on have value is a different story. For what
| it's worth, one of the use-cases for Corda that I found
| basically advertised itself as "we are better than
| transacting with paper" lol.
| wahnfrieden wrote:
| tired and copypasta-like impulsive response written in
| hysterics is why you're getting downvoted
| smoldesu wrote:
| It's only tired and copypasta-like because it can't be
| refuted. He's right. Cryptocurrency had it's shot, here's
| what we got out of it:
|
| 1. People trying to make a currency or interoperable
| token that they can directly or indirectly profit from
|
| 2. People trying to replace traditional object-relational
| databases or P2P networking with the Blockchain
|
| Neither of those are particularly meaningful to the
| average person. They buy their Cherry Pepsi with a
| Mastercard and then listen to Podcasts on Spotify or the
| preinstalled iPhone app. People won't care about this
| stuff until it's meaningfully integrated into our lives,
| which is something _all_ of these cryptocurrencies have
| failed to do. There is no killer app, there is no data
| revolution. People have been beating this
| decentralization drum for decades, and nothing happened.
| If you think that Cryptocurrency is going to deliver us
| from surveillance capitalism into another digital golden
| age, then you 're failing to see the entire picture.
| Luckily, proving this thesis right is simple: we just
| have to wait and watch as cryptocurrency values continue
| to plummet, and as VC interest in Blockchain-backed
| technology dries up. It's looking increasingly correct
| with every passing day.
|
| It's fun being starry-eyed about cool tech, but the
| Blockchain is a failed experiment. Our suspected fears
| are true: running an anonymous, distributed and append-
| only ledger where _anyone_ can be an operator is a bad
| idea.
| wahnfrieden wrote:
| ok
| hnthrow1010 wrote:
| That makes no sense. I wouldn't have to keep repeating
| myself if crypto people didn't also do the same thing.
| Also, please don't describe the act of disagreeing as
| being "in hysterics", that's bad discussion.
| wahnfrieden wrote:
| ok
| adamrezich wrote:
| why should content creators have to go through a centralized
| website like Patreon in order to get value from their
| consumers, giving Patreon a cut in the process? sure it's
| (for now) more straightforward for end-users, but as a
| content creator you're locking yourself into the Patreon
| Platform, you're building (at least some subset of) your
| content and your business around it being specifically
| "Patreon content". I'm generally wary of anything
| cryptocurrency but Podcasting 2.0 seems like an absolutely
| solid use-case of Bitcoin and Lightning--anything that helps
| to prevent centralized platform lock-in for content creators
| should be applauded!
| CharlesW wrote:
| > _why should content creators have to go through a
| centralized website like Patreon in order to get value from
| their consumers, giving Patreon a cut in the process? sure
| it 's (for now) more straightforward for end-users..._
|
| You answered your own question, but there's also no reason
| to use a "centralized website" (i.e. a 3rd-party service)
| if it doesn't add value. You just handle the subs yourself
| and provide a unique feed URL in return.
| adamrezich wrote:
| sure, if you want your podcast's business model to be
| "you must pay to access this content." it has been argued
| that this is not the best business model for a podcast,
| as you're either locking out your entire audience until
| they decide to start paying, or if you go for the
| "regular podcast is free but Paid Members get access to
| additional content" model, then you're producing content
| that only a fraction of your audience gets to experience.
| if you're doing a weekly show with an additional bonus
| paid weekly show, this can lead to situations where
| something is discussed at length on the the bonus paid
| show, and then referenced on the free show, leaving
| unpaid members in the dark as to wtf you're talking
| about.
|
| this is the traditional model of subscription-based
| content, but Podcasting 2.0 is based upon the "value-for-
| value" idea, where listeners are encouraged to
| _willingly_ give money to support the show, possibly in
| exchange for a shout-out (akin to YouTube "Superchats")
| or something like that. the model sounds unintuitive, but
| it has sustained No Agenda since the late '00s, and other
| shows as well.
|
| another podcast I tune into every week and love does the
| Patreon thing. they do a free, public weekly show, and an
| additional bonus show only for paid Patreon subscribers.
| I pay them through Patreon (who takes a cut) for the
| privilege of accessing a link to an unlisted YouTube
| video each week to watch the bonus show (which they
| explicitly refer to as a "bonus Patreon podcast" _in the
| show itself!_ why intertwine your brand with Patreon like
| this?!). each week the bonus show gets less than 100
| views, yet the cohosts go out of their way to record an
| additional 30-40 minute show just for these under-100
| viewers. this does not seem like a sound business
| strategy to me compared to value-for-value.
| [deleted]
| ghaff wrote:
| I'd put open source in a different category. Most people who
| make a reasonable living doing open source do so because a
| company is paying them to do so as their day job. There are
| certainly exceptions but, for most, writing (non-custom)
| software, writing books/articles/podcasts/video mostly works
| as either strictly a hobby or as something a company is
| paying them a salary to work on--at least in part.
| TekMol wrote:
| How do you handle the tax implications of streaming sats?
|
| As far as I know, every payment with Bitcoin triggers a taxable
| event?
|
| Do you record a gazillion log entrys "Paid $0.0000145 for
| listening podcasts, Paid $0.000142 for listening podcasts ...",
| crunch all the numbers and then at the end of the year put that
| gigantic list into your tax declaration?
| [deleted]
| worik wrote:
| > As far as I know, every payment with Bitcoin triggers a
| taxable event?
|
| tl:dr Unlikely
|
| Unsure what the regime in your area does, but...
|
| Here (Aotearoa) the tax authorities are not interested in
| rats and mice. I play in a rock band as a hobby. Occasionally
| we get paid ($300 is the most ever).
|
| We had a promoter not pay us because we had "not given him
| the tax forms".
|
| I contacted our tax authorities and was told, in no uncertain
| terms, if it is a hobby, if you are not making serious money,
| do not tell us about it. Please do not tell us.
|
| We have a transaction tax here that merchants have to charge
| and pay, but only when their revenues top $50,000
|
| So there are two data points that indicate that not every
| transaction incurs tax
| tzs wrote:
| Tax does indeed tend to be a hard problem in these kinds of
| systems, but I think you (and most responses so far to your
| comment) are looking at it from the wrong end. It's the
| _seller_ , not the _buyer_ , that has to deal with taxes in
| most jurisdictions. For podcasts I'd expect the podcaster to
| be the seller and the listener to be the buyer.
|
| Simplest example is the EU. When you sell a digital good to
| someone in the EU VAT is owed on that in the country in which
| the _buyer_ resides, but the _seller_ is responsible for
| collecting that VAT and then reporting and remitting it to
| the buyer 's country.
|
| The EU makes this simple. You can register with any EU
| country, and then report and remit you VAT for all EU
| countries to that one country's tax agency. That country's
| tax agency will then settle with the others. Ireland is a
| good EU country for this if you are a seller in a non-EU
| English speaking place. It takes about 10 minutes to register
| with Ireland online for this, and the quarterly tax filings
| with them are a simple CSV upload that you can also do in a
| few minutes.
|
| Note that this means the seller has to know how much they
| sold to buyers in each EU country each quarter. That
| necessitates some form of tracking.
|
| The situation is similar, but more work to deal with, in the
| US with sales tax and use tax. For sake of this discussion
| I'm just going to call both of those sales taxes [1].
|
| It's more work in the US because (1) thresholds for
| taxability are often of the form "N transaction or $X in
| sales" usually with N = 200 so you can get above the
| threshold on a very tiny sales amount as opposed to EU where
| thresholds are based just on amount of sales, (2) sales tax
| is often the sum of statewide, countywide, citywide, and
| special taxing district sales taxes, so to actually figure
| out the tax on any given sale you need to know the full
| physical address of the buyer, and (3) while there is some
| cooperation among about half the states to do a system
| conceptually like the EU's, for the other half of the states
| if you meet their thresholds you need to register with, file
| with, and remit to each of them separately.
|
| There is a way around this (besides just ignoring taxes). You
| can go through an intermediary that takes on legally the role
| of the seller. It is that intermediary that then needs to
| track how much is sold in each state and country and how much
| tax is owed.
|
| That's how it works for app developers selling through the
| Apple app store for example. Until tax laws are changed to be
| more friendly to micropayments directly to content creators,
| going through some kind of store that aggregates content from
| multiple creators is probably the best we can legally do.
|
| [1] A sales tax is a tax on the sale of something. A use tax
| is a tax on having something. The big difference is that a
| state makes the seller collect sales tax, but use tax is
| suppose to be dealt with be the person who owns the thing. It
| used to be that states could not force sellers to collect
| sales tax unless the seller had a presence in the state. So
| states would impose both a sales tax and a use tax, and the
| use tax was the exact same rate as the sales tax and had a
| deduction for the amount of sales tax paid. The net result
| was that if you bought something from an in-state seller they
| collected sales tax and you owed no use tax. If you bought
| something from an out-of-state seller, no sales tax was
| collected and you owed use tax on the full purchase price. If
| you travelled to another state, bought an item and paid sales
| tax to that state then brought the item home, and that other
| state's sales tax rate was lower than your state's use tax
| rate, you owed the difference in use tax.
|
| The use tax exactly equalling the sales tax and being
| discounted by any sales tax already paid is because the
| Constitution restricts the states from regulating interstate
| commerce. Applying a higher tax to goods from out out of
| state than you do to domestic goods would run afoul of that.
| By making it so that the total sales + use tax was the same
| for imported and domestic item the state was not interfering
| with interstate commerce.
|
| But a few years ago the Supreme Court overturned the cases
| that had said that states could not force sellers with no in-
| state presence to collect taxes. Now states can make out-of-
| state sellers collect the sales/use tax so for most purposes
| there is not much point in distinguishing between sales and
| use taxes.
| jsmith45 wrote:
| Except that in the US, cryptocurrencies are treated as
| goods, and using them to buy something is considered a
| barter transaction.
|
| For a barter transaction, you must recognize the current
| fair market value of the object received, and compare it
| with your cost basis of the object given. If the current
| price exceeds the cost basis you are required to recognize
| it as capital gains. (If below, you are generally allowed
| to recognize it as a capital loss, but recognizing capital
| losses is not strictly required, although in some cases
| there may be reporting requirements even if you chose not
| to recognize the loss).
|
| Given the volatility of most crypto assets, there is a very
| good chance that the crypto is worth more than when you
| bought it, and assuming the goods are fairly priced, it
| would be typically be required to recognize the fair market
| value of the goods as current value of the crypto used to
| buy the goods.
|
| Thus there is a meaningful burden imposed on people buying
| goods or services with cryptocurrencies.
|
| Slightly different rules but with similar net effect would
| occur with respect to an individual us taxpayer buying
| things with say Euros, except that if the increase in value
| of the euro used in the transaction was less than $200, it
| does not need to be reported or taxed. Also for personal
| transactions the gains on a foreign currency are always
| treated as ordinary income, not capital gains, so no
| discount for long term capital gains will apply.
| wj wrote:
| Your comment made me wish the tax code was small enough to
| be diagrammed on a napkin. Instead if feels like it is
| designed to inhibit innovation and new business.
| samatman wrote:
| I'm of the opinion that the rules are behind the law when it
| comes to BTC. I am deeply uninterested in being anywhere near
| the legal case that challenges this!
|
| But currency exchange for 'ordinary purposes' is not taxed,
| if my company bought some Euros to pay for foreign goods and
| the Euro rallied against the dollar before the purchase, no
| tax is owed.
|
| Well, BTC is legal tender in El Salvador, and there's no rule
| that the (in the above) Euros in question have to be paid to
| a country where the Euro is legal tender: perhaps they're a
| Singaporean business which mostly exports to Europe, so their
| prices are in Euros and it shouldn't matter.
|
| The US might not _like_ that El Salvator made BTC official,
| but that shouldn 't matter either.
|
| Better keep your books _very carefully_ though, because
| buying currency with the intention of selling it later (aka
| exchanging it for another currency) is investment purposes.
| preseinger wrote:
| Bitcoin is generally considered a security, not a currency.
| samatman wrote:
| Yes, and I'm saying that while the _rulings_ of the SEC
| on this subject consider it a security, I don 't believe
| _the law_ is on their side any longer, since El Salvador
| declared it legal tender. That straightforwardly makes it
| a currency, and I don 't believe there is any treaty
| framework for a country to say "lol no, your currency is
| fake, it's actually a security to us".
|
| Can you imagine the hassle if a country adopted Apple
| stock as a legal tender? That's basically what happened
| last year.
| ska wrote:
| I don't think the OP was bringing up the FX tax
| implications, but rather tax on the sale of a service.
| samatman wrote:
| That seems unlikely to me, since income tax has to be
| paid by recipients whether payment is in coin or in kind.
|
| BTC is a kind. If I pay you in silver rounds, you are
| responsible for paying income tax for the convertible
| value of the silver at the time of payment, but not
| capital gains at any point.
| ska wrote:
| sales tax, not income tax. someone has to calculate,
| report, and remit it for all these micro transactions
| somehow. I thought that is what GP was referring to , may
| be mistaken.
|
| In that context cap gains vs other sorts of income is
| irrelevant.
| samatman wrote:
| In this case it's definitely income, see
| https://support.patreon.com/hc/en-
| us/articles/207477063-US-C..., the scenario is directly
| analogous to Patreon or tipping a Twitch streamer.
|
| They may also owe sales tax!
| https://support.patreon.com/hc/en-
| us/articles/360043054911-P...
|
| Which, yikes, no wonder running your own business is such
| a drag, that feels like double-dipping to me. I didn't
| owe sales tax when I was freelancing, but it is what it
| is.
|
| Either way though, it's not any sort of headache, because
| the dollar is still used as unit of account, and what's
| owed is the value at the time of transaction: what you
| owe on $500 delivered in BTC is what you owe on $500,
| presuming you turn it into cash within a year (IANAL, I
| recall that goods paid in kind become investments after a
| year, such that gains are owed if sold at a profit).
|
| The problematic tax situation is when someone buys some
| Bitcoin, and then wants to spend it, since you have to
| figure out gains on each transaction and report it
| correctly, that's a huge hassle. I suspect most people
| who sincerely try to pay capital gains on Bitcoin
| purchases get it wrong: if you buy 0.1 BTC at 7K and 0.1
| BTC at 45K, then spend $1000 worth at 20K, what capital
| gains do you owe? Does it depend on which wallet you
| reached into?
|
| I have no idea and, really, feel like I shouldn't have to
| have any idea. It's the main thing that keeps me from
| paying in BTC when a vendor likes that form of payment. I
| could maybe pay a month's rent with the coin in my
| cushions, I have it because it tickles my fancy to pay
| for things with magic internet money, but it's just not
| worth the paperwork to actually do it.
| ska wrote:
| I didn't mean it wasn't income (it is, and they owe
| income tax) I meant that wasn't the issue that was being
| pointed out. With microtransactions the sales tax
| accounting etc. overhead is fixed, but the amounts are
| tiny...
|
| I may have misread GP.
|
| re: " if you buy 0.1 BTC at 7K and 0.1 BTC at 45K, then
| spend $1000 worth at 20K, what capital gains do you owe?
| Does it depend on which wallet you reached into?"
|
| These are not new problems, stock works the same way. You
| may feel like you shouldn't have to have an idea, but
| that's not how any of this works in practice.
| protonbob wrote:
| I think this is one of those circumstances where you just
| don't tell the IRS. Just like running a garage sale or a
| lemonade stand.
| cowtools wrote:
| lemonade stands do not keep an easily accessible eternal
| log of their payments
| RedNifre wrote:
| Lightning channels don't either, only the settled
| transaction in the end gets written back to the block
| chain.
| londons_explore wrote:
| Software can do it all for you. Not my problem that the IRS
| can't handle my 10 million page tax return...
| dopidopHN wrote:
| It's anoying for me. I remember living in place where doing
| my taxes was taking 15min total. Here, without third party
| software it's a challenge
| teekert wrote:
| I'm not on the receiving end, but to me this seems like the
| law is behind reality. Micropayments are coming, perhaps
| using blockchain, perhaps not, probably in a number of
| different ways.
|
| I guess this is a good question for the hosts of the podcasts
| that use these features (Like Linux Unplugged, and other
| shows from Jupiter Broadcasting or the No Agenda show by Adam
| Curry and John Dvorak.) Perhaps this is not answered yet.
|
| In the Netherlands this only becomes relevant over a certain
| amount, and I think you can then just bundle all amounts. But
| I'm also not sure.
| TekMol wrote:
| In the US and other countries I have heard about, it
| applies to the sender also.
|
| If you buy Bitcoin for $X and then buy something with those
| Bitcoin, then you have to record the "fair value" $Y of
| that something and pay taxes on $Y-$X. On the amount that
| your "Bitcoin speculation" has earned you.
|
| Looks like in the Netherland, it is different indeed.
| Making it much easier to use Bitcoin.
| FabHK wrote:
| > Micropayments are coming, perhaps using blockchain
|
| Blockchain is remarkably ill-suited for micropayments.
| gikrauss wrote:
| L2 solutions are proving that this is not quite true.
| dopidopHN wrote:
| Oh god yes. I manage block chain nodes those days. We
| build some type of wallet. Those things works. But the
| pain is fresh
| samatman wrote:
| Untrue both in general and in particular.
|
| Most blockchains are worthless and have nothing in the
| way of transaction fees or indeed transactions. Doge is
| perfect for micropayments! This was a fad on reddit back
| in the day.
|
| In particular, well, the title of the article says it
| all. If you have BTC, and you want to send a few sats and
| pay basically nothing, Lighting has existed for years and
| works just fine.
|
| Edit: I don't think micropayments are such a great idea
| to begin with, but the arguments for that have nothing to
| do with the medium of payment: assuming a perfect
| micropayment system, people still won't want to use it
| for off-topic reasons.
| hnthrow1010 wrote:
| The existence of Lightning is a failure of Bitcoin's
| designers to create a system that can scale well, they
| instead chose to focus on something that was going to be
| maximum profitable for the miners in the short term and
| dumped responsibility off onto "L2 chains" as a kludge.
| The Lightning Network also doesn't "work just fine", the
| network is fundamentally slow, insecure and unreliable
| and this will likely never be fixed, because the problem
| space (connect an infinite number of nodes to an infinite
| number of other nodes efficiently) is known to be
| unsolvable.
| samatman wrote:
| I'm only replying to say that, for all I know, you're
| correct in all of this. I don't think so, but that's a
| weakly held conviction about an entire ecosystem I don't
| use and understand only vaguely.
|
| The fact that I personally know people keeping hundreds
| of thousands of dollar-equivalent-sats on Lightning, who
| are happy with that arrangement, is what I'm balancing
| against that guy on the internet with strong opinions
| with 'throw' in his name.
|
| But hey maybe you know what you're talking about. It's
| possible. I don't.
| hnthrow1010 wrote:
| But you know that most people wouldn't put hundreds of
| thousands of dollars in a system like that. It would fall
| apart if that happened. Also, I don't know how they could
| be happy with it given the extreme crash over the last
| few months.
|
| Regarding my name: The short explanation is, I have a
| throwaway account in protest. If Satoshi's anonymity was
| enough to convince your friends to put down large sums of
| real money based solely on a hope, it should be enough
| for you to consider my (non-monetized) comments on this
| internet forum that's mostly pseudonymous anyway.
| samatman wrote:
| I was dismissive, and I did that on purpose, but I wasn't
| being sarcastic. Only time will tell which of you is
| right, all I've got is "eh. looks fine from here".
|
| As for their happiness, I know people with a lot of
| Bitcoin, and I know a few people who are underwater on
| their BTC, but there's no overlap in those groups. They
| might feel a twinge around 7k, more likely, they'd buy as
| much as they can afford.
| where_to_inc wrote:
| If you think multiple layers in a payments system is
| undesirable, I wonder whether you make all your purchases
| online by putting dollars and cents into envelopes and
| mailing them to the merchants, or whether you use that
| additional layer of credit built atop the lower layer
| hard money supply.
|
| Bitcoin was not designed to be "maximally profitable to
| miners", it was designed to be a currency that could not
| be captured and controlled by state actors or other large
| players yet would be able to sustain itself and its
| network by incentivizing miners to set up nodes and
| resist attempts at hostile takeovers of the network. [1]
|
| No other solution has managed to achieve this. There are
| proof-of-stake cryptocurrencies that opt to be more
| easily scalable on L1 at the cost that they are
| controllable by whoever holds the largest stakes.
|
| [1] https://bitcoin.org/bitcoin.pdf
| kevinak wrote:
| The subject of this thread is the literal solution to
| micropayments using "blockchains". And it works amazingly
| well! "
| preseinger wrote:
| Lightning is a hack, not a solution, and certainly not
| one that can be described as "amazing".
| kevinak wrote:
| Why is it a hack?
| adamrezich wrote:
| does No Agenda even accepts boosts? I was under the
| impression they didn't.
| wanderingbort wrote:
| Not a lawyer or accountant here but I think it would be
| reasonable to only treat the eventual on-chain withdraw as a
| taxable event.
|
| Until then, you have deposited some value in a number of
| lightening network nodes and have been negotiating a set of
| pairwise IOUs with them for later.
|
| DeFi/staking has a similar problem and I believe waiting
| until gains and losses are realized will be the way it goes
| down.
|
| For now, make a good faith effort to pay taxes or expect some
| friction later.
| yieldcrv wrote:
| hmmmmmmmm, you can't get those IOUs back though so you need
| to keep a record of transaction as they are no longer under
| your control, if you want to be compliant
| 4kimov wrote:
| That's right, moving sats via LN is done off-chain. Once
| the channel closes, that's when it settles to L1, at which
| point tools like Rotki can help you figure it out.
| lairv wrote:
| > it would be reasonable to only treat the eventual on-
| chain withdraw as a taxable event
|
| wouldn't that be an easy way to bypass taxes ? make all
| your transactions off-chain and just withdraw once a year ?
| meowkit wrote:
| No. Its a settlement layer.
|
| I do 1000 streaming transactions on a channel. When the
| channel is closed (withdrawn back to the L1 chain, or
| settled - offchain is the wrong term here Lightning is an
| L2 "channel"), the transactions are summarized and you
| can tax that summary event.
|
| It's a linear sum of taxes. Of course there are scenarios
| that complicates things like variable sales tax rates
| based on transaction type/location/good, but that's an
| extended conversation.
|
| If you really want tax enforcement, governments should be
| looking to develop CBDC integration on the merchant side
| with bridge support for major crypto currencies. Given
| Intuit's iron grip on tax lobbying I don't have much hope
| for innovate tax schemes though.
| lxgr wrote:
| By the same logic, anything you do on a custodial
| exchange could never be a taxable event because it's
| never settled on-chain. I'd be extremely surprised if the
| IRS would share your view.
| dboreham wrote:
| How does that bypass taxes?
| gamblor956 wrote:
| _Not a lawyer or accountant here but I think it would be
| reasonable to only treat the eventual on-chain withdraw as
| a taxable event._
|
| IAAL. Specifically, a tax lawyer. It would not be
| reasonable to treat the on-chain event as sole the taxable
| event.
|
| Every transaction in a cryptocurrency is a taxable event.
|
| This is the same tax treatment that applies any time a non-
| USD currency is used in a transaction (by an American).
| Similar rules apply to citizens of EU countries.
| yieldcrv wrote:
| podcast boosts? is bitcoin interesting again?
|
| are there cool applications using Taproot and Schnorr? are
| lightning network openings and closings looking identical as
| any other transaction or script, improving confidentiality?
|
| where are the current communities that talk about whats going
| on there? I don't visit bitcoin reddits anymore and the
| cryptocurrency communities are about pretty much everything
| else
| the_gastropod wrote:
| Let's ignore the Lightning Network for a moment, and dig into
| the meat of what you're suggesting: that people--in some
| meaningnful number--would _prefer_ to spend money to get a
| thing they currently get for free (with the caveat that they
| occasionally they have to listen to / watch advertisements).
| Maybe you're right! But: 1. I doubt it. And 2. Lightning
| Network isn't _the only_ technological solution to such an
| idea. This concept isn 't particularly common, probably,
| because most people will put up with a lot to avoid spending
| actual money.
| kylebenzle wrote:
| cryptica wrote:
| Lightning network is a hack. It doesn't actually work.
|
| - There are many ways for a malicious entity to rollback a
| payment and prevent it from being detected (just DoS the
| watchtowers).
|
| - You still need to make an on-chain transaction to open a new
| channel which incurs on-chain fees and limits the scalability of
| LN.
|
| It's incredible how money can corrupt large groups of people into
| convincing themselves that a solution works when it simply
| doesn't.
| TrapLord_Rhodo wrote:
| You're right, it's a hack. Doesn't mean it's wrong and doesn't
| work though.
|
| BTC stopped being practical for small payments when it got
| expensive. This is a way to make small, everyday payments cheap
| again. I'm not going to use LN to transfer large payments.
| "just DoS the watchtowers" is impracticle for a cup of coffee.
| Your second point is just plain false and there are many ways
| around those.
| snapcaster wrote:
| How can you say it doesn't work? isn't it working right this
| moment?
|
| edit: not rhetorical question, actually curious since it
| appears to be working already
| nailer wrote:
| Is lightning just another layer 2 scaling solution? Or am I
| missing something?
| once_inc wrote:
| Lighting is indeed one of the many layer 2 solutions.
| jstanley wrote:
| Isn't lightning _the_ layer 2 scaling solution? What other
| promising options are there?
| syzygyhack wrote:
| For Bitcoin, yes. For other networks, ZK and optimistic
| rollups are the main contenders.
| nailer wrote:
| > What other promising options are there?
|
| Fast layer 1s.
|
| That way I don't have to worry about integration between n
| layer 2s that my users are on (considering my users are
| unlikely to be on the same layer 2).
| kevinak wrote:
| No Layer 1 Blockchain can effectively scale to billions of
| users when you also take into account that you want the
| system to be decentralized.
|
| In practice, for Bitcoin, there is only one real L2 and
| that is the Lightning Network.
| tcfhgj wrote:
| GNU Taler
| once_inc wrote:
| The Liquid network comes to mind. Basically, any sort of
| system that allows users to swap coins and settle back to
| bitcoin is a layer 2 solution.
|
| Banks could build an SQL database, generate a single Bitcoin
| address, and tell everyone to deposit there and prove they
| owned the originating address(es). You get credited in
| SQLcoins, which are centrally managed by a federation of
| banks. Once you want to go out, they send coins to an address
| of your choice.
|
| If one of these layers becomes large enough, it might win the
| netwerk effect war and become the defacto layer 2 because
| everyone is on it.
| silverlake wrote:
| Lightning is a remix of the correspondent banking network. If it
| grows it will devolve into a small set of large centralized nodes
| that act as gateway for most transactions. Think JPMorgan and
| Citi as nodes. The reason is funding channels is expensive: you
| can't leave $10M sitting there doing nothing. It's got to earn
| it's cost of capital. This is why Western Union charges so much
| for transfers.
| gregwebs wrote:
| Lightning is an environment where all the nodes have to compete
| on cost (or speed) and everything is digital. The costs of
| transactions are currently near zero now, is there a reason you
| think it will increase?
|
| There are a lot of people that want to just hold onto Bitcoin
| right now. Maybe the cost of a Lightning transaction will go up
| dramatically if that changes? But if such a protocol evolves to
| support swapping coins in and out of the channel lockup from
| different owners than potentially anyone holding Bitcoin for
| any duration can contribute.
| kkielhofner wrote:
| When will the blockchain ecosystem provide something with that
| "WOW I need this in my life right now" factor to the average
| user?
|
| Google went from a research project to incorporated and usable on
| the internet in roughly two years with a total investment of
| about $2mm in 2022 money. Let's just say the pace of innovation
| had some serious roadblocks at the time (they literally had to
| build their own servers and host them in a garage). Not to
| mention the status of dev tools, frameworks/libraries, developer
| availability, etc in 1998 vs today.
|
| We are four years in to A16z alone raising roughly $16 BILLION
| dollars with their crypto funds. For at least half a decade it's
| been routine to see announcements of various blockchain companies
| with $5mm seed rounds (and beyond). Follow-up Series A and beyond
| in the hundreds of millions with multi-billion dollar valuations.
|
| I've been following the space extremely closely for over five
| years and I have yet to see an application or solution with that
| "WOW I need this in my life right now" factor. I still don't know
| a single person outside of the tech scene that uses anything
| blockchain related other than trading on an exchange.
|
| Bitcoin is 13 years old with an ecosystem that has had an
| incredible amount of investment and man hours thrown at it yet
| we're still getting research papers on how to make the original
| premise of bitcoin (Peer to peer digital cash) actually usable at
| any practical scale.
|
| I know LN has been live for some time yet looking at the best
| available numbers I can find it's only being used by an
| absolutely insignificant number of the world's five billion
| internet users (this goes for all other chains and L2+ that can
| be analyzed).
|
| I don't get it.
| nwiswell wrote:
| Broadly I agree with the argument that crypto is taking an
| awful long time to come up with the killer app, but this is not
| a fair analysis.
|
| Let's be clear: when Google exploded, that was the growth of
| _the Internet_ in the driver 's seat, not demand for Google
| specifically. Google's growth was a _side effect_ of the
| exponential growth of the internet because it solved a need
| where there was no adequate incumbent solution, and where
| demand for that solution was growing exponentially for _reasons
| basically unrelated to the quality of the solution_.
|
| This isn't the case for crypto, because there's an incumbent
| solution that works fine. More specifically, in our analogy,
| _money_ is the counterpart of _the Internet_. Crypto is in the
| position of needing to slowly sap market share from an
| incumbent (government fiat) in the same way that, for example,
| DuckDuckGo does even if you feel it 's a superior product.
|
| If Bitcoin was the first-ever instance of money, I assure you
| its growth profile would look like Google's did.
| ALittleLight wrote:
| I think this is less about growth factor and more about
| "killer app". The killer application of Google is that it
| actually finds what you are searching for really well (well,
| it did). That's what set Google apart from other search
| engines. The killer feature of crypto is...?
|
| DAOs, NFTs, smart contracts, random tokens all seem less like
| good features and more like transparent scams or terrible
| ideas that don't work. It's fine if adoption is slow - but
| there should actually be something beyond Ponzi schemers and
| hackers stealing from each other. Drugs and tax evasion,
| sure, but how far does that take you?
| kkielhofner wrote:
| The DuckDuckGo comparison is a perfect one. The average user
| has demonstrated they do not care about whatever creepy/evil
| thing Google is doing that we talk about here. They just want
| to lookup the hours of a restaurant as quickly, reliably, and
| easily as possible so they can eat and move on with their
| lives. Ditto use cases for Twitter, Facebook, etc, etc.
|
| Why (and when) will average users suddenly care "because
| blockchain"? They don't and won't (the usage numbers reflect
| this). They just want to get an answer to a question in
| seconds, Tweet their musings, endlessly scroll pictures on
| Facebook/Instagram/etc, or watch Youtube videos of cats,
| glitter bombs, or whatever. For free. As ridiculous as it is
| to me and most of HN the average person is even willing to
| have their TV and streaming services show them endless ads.
| They just like that they bought that 60" TV for $400 on Black
| Friday.
|
| Even the censorship/de-platforming argument falls flat. It's
| been demonstrated that people (as a whole), going back to our
| tribal roots, prefer to engage with like-minded others. It is
| fundamental human nature and there have been multiple studies
| conducted that show it's wired in to our reward circuitry.
|
| Trump gets booted off Twitter? Enter Truth, Parler, whatever
| where many millions of users moved in near record time. When
| it comes down to it people like echo chambers and they like
| free. Platform for free speech? Create a Truth account and
| start wandering in to flame wars that go against the
| political leanings there. You will get booted just as Trump
| got booted from Twitter.
|
| This is where I think blockchain and lack of censorship is
| also fundamentally flawed. They don't want to pay XYZ in some
| random coin to make a social media post. They also don't want
| to bump in to child pornography or some other universally
| objectionable content (in the case of true to the mantra
| decentralized blockchain platforms without any form of
| "censorship").
|
| The same argument goes for money. Almost no one cares - they
| want to swipe their credit card a few times a day and move on
| with their lives. They do not care about transaction fees,
| final settlement times, etc. It's invisible. Other than
| credit cards and cash the average person interacts with more
| complicated levels of the financial and banking systems a few
| times in their lives. They do not care if a lifetime of home
| ownership (as one example) cost them $50 in wire fees. They
| likely have no idea (and again don't care) how the 401(k)
| their employer set them up with actually works.
|
| They also don't want to discover that their wallet has been
| hacked, their exchange collapsed, or any of the other number
| of ways funds go "poof" with blockchain.
| olalonde wrote:
| Bitcoin is not a concrete product like Google Search or a
| smartphone. It's more of an idea, like free speech. The idea
| being money without a central authority, something that has
| never really existed before (digitally, at least). No one woke
| up one day and thought "WOW I need democracy" or "WOW I need
| free speech". It's abstract and doesn't gratify immediately.
| The average person does not even have a conception that money
| could be something entirely different.
|
| Also, Bitcoin threatens the status quo in a massive way. Not
| only private businesses like banks but also powerful entities
| like governments and intergovernmental organizations.
|
| Needless to say, I don't expect adoption to be comparable to
| that of a web search engine.
| kkielhofner wrote:
| I use these examples in layers (I have a networking
| background so my mind more or less thinks in OSI layers).
|
| For actual products bitcoin (and blockchains like Ethereum
| with EVM) are the fundamental enabling layer. I like to think
| of them somewhat akin to TCP/IP or even HTTP. Where are the
| higher layer applications and use cases built on blockchain
| with instant and obvious utility to the average person
| walking down the street? This is what I was getting at with
| the decade plus of development and billions of dollars of
| investment.
|
| The internet was a fundamental threat to all kinds of
| institutions - governments with censorship, big media
| (including state run), and even financial institutions. The
| internet provided instant untold value for democracy and free
| speech. Just widespread and instantly available encryption
| itself was a HUGE problem and threat to governments, law
| enforcement, militaries, intelligence agencies, etc. Remember
| the Clipper Chip "debate" and 40 bit encryption export
| controls? I do.
|
| Yet the obvious value and utility was so clear even
| governments like China (with the Great Firewall) knew it was
| of such incredible value to the economy and clamored for by
| the citizenry they figured out a way to make it work within
| their system of government. Inside of a decade billions of
| people were using the internet to further democracy, free
| speech, and the dissemination of information.
| olalonde wrote:
| I agree that the Internet's utility is more obvious than
| Bitcoin. Bitcoin has little or even negative value to
| authoritarians. Even in more liberal countries, financial
| sovereignty and privacy are not generally viewed as
| important. But to me, this is just more reason to believe
| that the pace of adoption will be slow and gradual.
| skinnyasianboi wrote:
| I don't know if it falls in the tech category but people play
| games without knowing there is a blockchain behind it.
| hamter wrote:
| which ones
| lrvick wrote:
| It is really important to understand that decentralized systems
| take dramatically longer to upgrade, and thus to mature, than
| centralized systems.
|
| They also tend to last forever once established: see e-mail.
| bananarchist wrote:
| No user has ever said "WOW I need Google search engine in my
| life right now" they said "WOW I need some gotdang funny cat
| pics" and google proved a means to resolve that desire.
|
| Similarly, no one will ever say "WOW I need blockchain in my
| life right now" but they might say "WOW I need to send some
| money" or "WOW some of my friends are making their money work
| for them maybe I too should do some speculating" or "WOW I
| distrust the government's control over the financial system"
| and blockchain will occasionally prove to scratch that itch.
| mullingitover wrote:
| > No user has ever said "WOW I need Google search engine in
| my life right now"
|
| I sure did, and I wasn't alone. I remember thinking the
| existing search engines were trash long before google came
| around. The market was starving for a search engine that was
| user-focused and not 200% bought and paid for by marketers.
| v4dok wrote:
| Wait, did you describe what Google is currently?
| kkielhofner wrote:
| Correct - no one asked for Google but it provided instant
| value and utility to anyone walking down the street inside of
| two years with $2mm.
|
| "WOW I need to send some money". Enter: PayPal, Venmo, Trust
| Wise, and any number of others.
|
| There are plenty of ways to gamble and speculate without
| touching blockchain if that's your thing. What's amazing is
| even a mafia bookie or the shadiest of casinos won't pull a
| Celsius on you.
|
| Don't trust the government? With blockchain you're expected
| to completely trust yourself and any number of shady
| characters in the blockchain space. Clicked the wrong link
| and your wallet got hacked? Sorry. Forget your
| seed/passphrase? Sorry. Some defi exchange with a buggy smart
| contract (as if there are any that don't have bugs)? Sorry.
| Picked the wrong exchange and the people behind it faked
| their own death and disappeared with your money? Sorry. The
| list goes on and on.
|
| Other than the absolute worst and shadiest governments in the
| world do you trust these factors and actors more? Does anyone
| else?
| eldenwrong wrote:
| Yeah sending value through the internet without an intermediary
| that can't be stopped, confiscated or censored is whatever
|
| Maybe the problem is that you lack an understanding of what
| money should be and what problems banking and fiat have?
| kkielhofner wrote:
| I do understand that use case and it has value. Question is -
| what portion of the 5 billion internet users see that as
| enough value to enter the space?
|
| I have friends that have fled war torn countries,
| dictatorships, etc and I'm glad blockchain now exists for
| that scenario but again - can that use case (fortunately very
| rare) justify tens if not hundreds of billions of dollars of
| investment and over 10 years of work?
|
| This is what I don't understand.
|
| I understand banking has problems (fiat is a much longer
| debate). What needs to be understood is how many of the 5
| billion internet users think the benefit of blockchain
| justifies throwing out the entire financial (and often legal)
| system and operating in a parallel one? Not to mention the
| willingness of average people to essentially be their own
| bank. For this reason alone I think blockchain is a non-
| starter for the overwhelming majority of internet users.
|
| How many people care? Answer is: a tiny portion. A very
| optimistic estimate of total blockchain "users" worldwide is
| in the range of 100m. 13 years and untold billions of dollars
| of investment to reach 2% adoption of the internet population
| isn't exactly a success story that speaks well to the utility
| of the solutions provided and the real world problems they
| solve.
| threeseed wrote:
| I would argue the negatives outweigh the positives here:
|
| Tax evasion, money laundering, trafficking, drugs, sanctions
| evasion etc.
|
| Since the introduction of KYC it's very hard to do any of
| these in the traditional finance system. And each of them has
| very serious implications for people's lives.
| [deleted]
| eldenwrong wrote:
| You must be joking. What exactly has stopped since KYC?
| Absolutely nothing. The ones doing the laundering are
| literally the banks/governments/big corps. KYC was just an
| excuse to increase surveillance
| lrvick wrote:
| I suppose you want cash and art banned too?
|
| Those are even better money laundering tools than Bitcoin.
| CharlesW wrote:
| > _Those are even better money laundering tools than
| Bitcoin._
|
| How are cash and art better for money laundering than
| Bitcoin?
| hamter wrote:
| you still need to do kyc to convert to real money, which is
| essentially the same as transferwise for example
| 4kimov wrote:
| Anyone interested in Lightning should also check out Taro
| protocol, which was announced recently by Lightning Labs.
|
| Possibility of stablecoins on Bitcoin via the Lightning Network.
| giuliomagnifico wrote:
| Interesting paper, surely the LN is miking the Bitcoin more
| useful as a payment/money system.
| sshine wrote:
| It seems really useful for people who are already making
| Bitcoin transactions.
|
| I'm not sure I see it function as a tool for increasing
| adoption, though.
|
| Anyone can send someone Bitcoin by asking them to install a
| wallet (or giving them a paper wallet).
|
| The story seems less simple if those were sent with Lightning.
| Maybe that's just a question of wallet support not being
| pervasive.
|
| One nice property of money is that you don't need to have read
| extensively about money for someone to give you money.
| shudza wrote:
| Try being a merchant and not using third party custodial
| services (Paypal) to accept payments on your website.
| jstanley wrote:
| > One nice property of money is that you don't need to have
| read extensively about money for someone to give you money.
|
| This is true of cash, but not true of debit cards. It is
| actually quite rate for ordinary people to be able to accept
| a debit card payment, but that doesn't make debit cards not
| useful.
| quickthrowman wrote:
| > It is actually quite rate for ordinary people to be able
| to accept a debit card payment, but that doesn't make debit
| cards not useful.
|
| Venmo and Cashapp allow you to receive debit card payments,
| and there are no fees if you transfer the money to your
| bank account.
| boxmonster wrote:
| Many are taken with the idea that blockchain can be trusted in a
| world without trust. Governments can't mutate it. No one owns it.
| My sense is that this inspires an almost religious faith in some
| people. Google's ability to find just what I was looking for
| inspired a similar sense of wonder in me.
|
| Unfortunately, SEO scam artists began to game Google and now they
| are corrupting the blockchain idea, but I don't think we should
| underestimate the power of people who keep the faith over the
| long haul to eventually make something legitimate out of it
| janandonly wrote:
| > Our analysis covers the period January 1, 2017, to September 5,
| 2019.
|
| Doesn't even include the explosive growth we've seen starting in
| 2020.
| revskill wrote:
| No, i'll use btc if i could buy pizza with it.
| bannedbybros wrote:
| cosmiccatnap wrote:
| Perhaps it should be called the alchemist network since it
| proposes to turn lead to gold.
| kag0 wrote:
| I've stopped following bitcoin at a deep level for some time.
| Could someone summarize for me what changes/problems led current
| bitcoin to need lightning?
| __s wrote:
| Lightning Network has been going on for years, I at least
| recall reading about it in 2017 when I started looking into
| bitcoin
|
| The idea of the Lightning Network is to allow transactions to
| exist on a separate layer where in theory transaction fees
| don't have to exist. & transactions don't have to wait for the
| next block. This allows for microtransactions etc. There are
| some blockchain transaction fees involved in creating channels
| & resolving disputes
| JofArnold wrote:
| The problem I have with Lightning is it further validates the
| existence of Bitcoin - a decrepit and highly polluting technology
| which has at best has failed to achieve any of objectives in any
| meaningful way, and at worst recreated a financial system more
| exploitative and toxic than anything that came before it. Let it
| die already.
| kordlessagain wrote:
| So you blame Lightning not for what it is, but what it enables?
| That doesn't make a lot of sense, especially given the creators
| built it to address the issues you raise here.
|
| With Lightning, micropayments for the Web can be a thing. Just
| because nobody has implemented it yet, doesn't mean it doesn't
| have a killer use case worth the cost of mining (which will
| decrease over a long period of time). Moving payments for API
| calls to Lightning becomes very efficient, given the (nearly
| instantaneous) transactions can occur off chain.
|
| I'm a big fan of mining with solar. Wish more miners were
| investing in this.
| pessimizer wrote:
| It doesn't make sense to blame Lightning for enabling
| Bitcoin, it only makes sense to praise Lightning for enabling
| Bitcoin?
| kordlessagain wrote:
| Does it make any sense to judge something used a biased
| argument or ask leading questions? No, it doesn't.
| simiones wrote:
| As others have explained, Lightning simply can't scale to any
| significant number of users - it would take months for a
| larger US state to all have channels, assuming all
| transactions on the Bitcoin blockchain for those months were
| new LN channels.
|
| So either you use a trusted 3rd party that opens a single
| channel for a large amount of users (so, a fully centralized
| L3 over L2 LN over L1 BTC), or you can't actually use LN any
| more than you can use BTC.
| JofArnold wrote:
| Correct. If you're going to build something like this, why on
| top of Bitcoin which - as I say - is rotten to its core. With
| Ethereum and its L2s instant, practically-free micropayments
| are already a thing. With Solana even... and others I'm not
| particularly in to but I hear work to various degrees.
|
| To be clear, the tech itself is interesting and broadly I
| remain fascinated in blockchain technologies and engaged with
| them to various degrees as you can see from my GitHub. But
| Bitcoin though? It's the oil of our time; dirty and
| corrupting.
|
| Edit: to address your point about solar (which along with
| using mining for heating is clearly a good way of reducing
| direct CO2 emissions) it's only part of the problem...
| e-waste is another and a pretty big one at that.
| kordlessagain wrote:
| The authors of the Lightning paper were well aware of the
| cost of Bitcoin mining to the environment. We (the authors
| and myself) speculated at the time that energy usage of
| Bitcoin mining could one day exceed the current output in
| the energy markets. I was the one that made the joke about
| forcing us to wrap the sun in a Dyson sphere one day to
| satisfy the need for power. It concerned us and they
| (Joseph and Tadge) ended up doing something about it, while
| I just sat back and watched.
|
| Lightning isn't limited to Bitcoin, either. As long as the
| cryptographic algos are compatible, cross-chain swaps can
| be a thing on the network. That said, Lighting was
| initially architected to take advantage of Bitcoin's
| scripting and post-dated payment abilities (which are done
| using full nodes, not miners). That means anything using
| Lightning doesn't necessarily contribute to excessive power
| usage by the Bitcoin network. This is why I called out the
| attack on Lightning by association to Bitcoin. Would it, if
| used widely, contribute to Bitcoin's power usage problem?
| No, it wouldn't. Bitcoin's power usage problem is unique to
| the mining strategy for the chain, not the use of the
| transactions it enables, off chain.
|
| Does Lightning still require on-chain transactions? Yes,
| but they can be done within the current capacity of the
| network AND even then that doesn't contribute much to the
| power usage given the full nodes process these payments,
| not the miners.
|
| If mining came to a near halt, Lightning would still be
| functional. This means blaming it for anything related to
| Bitcoin is not a valid argument, which is why I said what I
| said. It's not that you are wrong about mining costs to the
| environment or energy markets, but more that the thing you
| are blaming has little to do with those issues.
|
| Besides which, Bitcoin isn't the primary enemy here, it's
| the idea of PoW put into production plus human behavior to
| attempt to acquire wealth with it that is the real
| boogeyman. Ethereum is making a big bet on PoS, but some
| remain skeptical this can give way to a fair market. We'll
| see, I guess. Those folks appear to be way smarter than I
| am, even on a good day. In the meantime, Ethereum is still
| stupid slow and still uses PoW to do what it does.
| cesarb wrote:
| > This is why I called out the attack on Lightning by
| association to Bitcoin. Would it, if used widely,
| contribute to Bitcoin's power usage problem? No, it
| wouldn't. Bitcoin's power usage problem is unique to the
| mining strategy for the chain, not the use of the
| transactions it enables, off chain.
|
| The contribution to Bitcoin's power usage is a bit more
| indirect. The power usage of Bitcoin mining is capped by
| how much electric power miners can buy with the block
| rewards and fees (otherwise, the miners would lose
| money). The block rewards and fees are measured in
| Bitcoins, while the cost of electric power is measured in
| dollars (or whatever is the currency where the miner is
| located). To convert from Bitcoins to dollars, you
| multiply by the price of a Bitcoin. Therefore, whenever
| the Bitcoin price increases, the cap on how much power
| Bitcoin mining can use also increases.
|
| By making Bitcoin more useful, Lightning Network can
| increase the demand for Bitcoins. As we all know,
| increasing demand while keeping the supply the same (and
| Bitcoin's supply is fixed by its algorithm, it doesn't
| change to track the demand) tends to increase the price.
| And that means miners have more money they can use to buy
| more power to mine Bitcoin.
| dboreham wrote:
| If you prefer, there are LN-like systems that run with other L1
| chains.
| arcticbull wrote:
| Lightning is a solution that does not do what it says on the tin.
| It requires an on-chain transaction to open a channel, which at
| current block size limits requires about 75 years for everyone on
| earth to have one, and somewhere in the trillion dollar range in
| fees and the entire outstanding block reward. Factor in quadratic
| routing complexity, and even if you did onboard everyone it
| wouldn't work anyways. This is assuming that channels never close
| and of course that the blockchain doesn't do anything else at all
| except open channels.
|
| Even opening a channel for everyone in Bay Area requires the
| better part of a full month of the entire chain capacity's.
|
| It also has roughly speaking none of the guarantees of Bitcoin,
| and could really be used with any underlying asset.
|
| The only scaling solution is MySQL, just like the Bastion of
| Bitcoin, El Salvador is doing. Always was.
|
| Can we move on already?
| saalweachter wrote:
| > The only scaling solution is MySQL, just like the Bastion of
| Bitcoin, El Salvador is doing. Always was.
|
| I don't know why the internet thinks they can convince the
| world to use a new/better currency when they can't even make
| anyone switch off MySQL.
| lumannnn wrote:
| Not everyone needs to open a Channel. There are custodial
| solutions already. You just need some Satoshis and are good to
| go.
|
| Likewise, not everyone needs to create their own Visa or
| MasterCard. They may have their MySQL/PostgreSQL implementation
| where they scale and allow for many TX/s. But they don't settle
| all these transactions in real time. That's also done on a
| different, slower layer.
| arcticbull wrote:
| Custodial solutions offer zero benefits over putting your
| money in a bank - and have a ton of drawbacks associated with
| Bitcoin people only overlook _because_ of those benefits -
| and the L1 is so slow that any subset that wants to open a
| channel brings it to its knees.
|
| It's not a real solution. It's something coiners distract
| people with whenever someone points out the obvious and
| glaring flaws of the L1.
|
| [edit] To me it's pretty telling that critics offer specific
| quantifications (X people requires Y time) and proponents say
| "only some people need it!" - how many, exactly? How full do
| you anticipate blocks being with other things? How long is
| too long to open a channel? Currently it sounds like a Soviet
| phone line - better put in a request now otherwise you might
| be in your 80s before it gets installed.
| once_inc wrote:
| I'd like to counter that with the opinion that for most
| people, controlling their own keys isn't a priority. These
| are the people that don't even know there isn't any gold
| backing the dollar, or where money comes from. For these
| people, Bitcoin offers the option of digitally native money
| that is well suited for a rapidly digitizing world. They
| won't feel any problems holding their bitcoin in a walled
| garden maintained by banks or money transfer companies, and
| won't consider the counterparty-risk as something they need
| to be worried about.
| arcticbull wrote:
| Why would the dollar be backed by gold? You know that
| ended in 1933 right? I'd say 89 years is long enough for
| folks to have figured it out, but I'm always open to
| surprises.
| once_inc wrote:
| Please re-read my post. I specifically speak of people
| using money without being aware of all the specifics.
| Noting that the dollar is not backed by gold.
|
| That ended in 1971 by the way, when Nixon ended the gold
| standard for the US dollar because the government needed
| money to pay for the war in Vietnam.
| arcticbull wrote:
| Double-check what happened in 1971. FDR took the US off
| the gold standard in 1933. From this point forward until
| present, there was never again domestic convertibility of
| notes for gold. Nixon ended Bretton Woods (which started
| in 1944) - but that pertained solely to international
| convertibility of notes for gold in foreign exchange. It
| was not the gold standard. It was occasionally referred
| to as the 'gold exchange standard.'
|
| It's just popular to ascribe this to Nixon because you
| know, Nixon bad. Watergate, etc. But not everything a bad
| leader does is bad - Nixon gave us the EPA too. Stopped
| rivers catching on fire and everything.
|
| Money is already digital.
| alchemist1e9 wrote:
| > Money is already digital.
|
| We know, which being in a centralized MySQL database at
| the Fed made bailing out all the US elites in 2008 very
| easy.
| arcticbull wrote:
| The Fed didn't bail out anyone in 2008. Treasury did.
| Also, the bail-outs weren't grants, they were loans, and
| they have been re-paid yielding $110B in profit so far
| with plenty more to come. [1]
|
| I was opposed to bail-outs in 2008 personally, but in
| retrospect it's very difficult to look back and say that
| it was anything other than an unequivocal success.
| Hundreds of thousands of jobs were saved and it was super
| profitable. With that in mind, I'd suggest a new stalking
| horse.
|
| Also of note, I said the dollar was digital, not that it
| was centralized. The Fed doesn't have a central
| representation of all dollars in existence, the M numbers
| are estimates. The Federal Reserve System is a federated
| system, and money is created when loans are taken out at
| retail banks.
|
| [1] https://projects.propublica.org/bailout/
| alchemist1e9 wrote:
| Yes they did, Maiden Lane [1], which was distinct from
| TARP you are referring to. I had a somewhat upfront seat
| at that time and the unequivocal success narrative is, in
| my opinion, extremely dishonest and manipulative.
|
| We haven't even started to talk about QE which is
| actually why the Fed and TARP bailouts (aka investments)
| ended up being profitable. There are a huge number of
| losers from 2008 which can't be seen from a superficial
| surface view, instead it requires playing out an
| alternate reality where liquidations were forced, and
| that is a complex and difficult discussion. Paulson was a
| brilliant spin doctor and so successful that his fake
| stories of hundreds of thousands of jobs saved and ATMs
| that didn't run out of money is being taken as real
| history, instead of the evil deceptive game it was to
| insure all his people continued to dominate global
| finance. It would take a long discussion to try and
| explain to you how profoundly unethical and manipulative
| were the actions they took and the effects those actions
| still have today in terms of extreme inequality, caused
| not by capitalism itself, but this crony capitalism.
|
| Bitcoin was born from this reality and highly motivated
| by it. For a certain generation of finance technologists
| who had a close view of the inner workings of the system
| it was obviously rotten and corrupt to the core. The core
| being fiat.
|
| If you are trying to pretend that by explaining M1 and M3
| and the creation of money supply you claim somehow USD is
| "federated" and not centralized then in my opinion you
| don't actually understand what you think you do.
|
| Maybe read up on the Fed window and QE mechanisms and
| their balance sheet. USD is centralized with Fedwire,
| OCC, Treasury, Swift, BIS and all their regulatory
| operations, so they have very good information on most
| digital dollars in existence and certainly have
| incredible control over their creation and destruction.
|
| Bitcoin is likely here to stay and in my personal
| experience most people who hate on it were once believers
| who bought high then sold low after one of its crashes.
| they now how a very bitter taste and have decided there
| is some fundamental flaw with it as an idea, mostly
| motivated by their own emotions and not logic. the other
| haters tend to have some deranged love of governments and
| see it correctly as a challenge to government power so
| attempt to discredit it, I feel mostly out of anxiety the
| government isn't what they think it is and it scares
| them.
|
| [1]
| https://en.wikipedia.org/wiki/Maiden_Lane_Transactions
| arcticbull wrote:
| > On June 14, 2012, the Federal Reserve Bank of New York
| announced that its loans to Maiden Lane LLC (ML LLC) and
| Maiden Lane III LLC (ML III LLC) have been fully repaid
| with interest. Maiden Lane II LLC repaid its obligations
| of $19.4 billion on February 28, 2012.
|
| Loans. Fully paid, with interest - the profits also went
| to Treasury. Also, they seem to have been a rounding
| error compared to the scale of the rest of the program,
| but you're right that the actions weren't exclusively
| Treasury. However, they were _primarily_ Treasury.
| lumannnn wrote:
| Look into Taproot.
|
| Once adoption and implementation spreads, you'll realize
| you can open multiple channels with one on-chain
| transaction.
|
| This is an evolving space and scaling happens already.
|
| But sure, you can stick to the traditional monetary system
| where only a select few control the rules.
|
| You are free to adopt Bitcoin. No one will force you :)
| arcticbull wrote:
| Again, please specify exact quantities, I did, it's the
| least you can do.
|
| > But sure, you can stick to the traditional monetary
| system where only a select few control the rules.
|
| No, a body accountable to Congress (the Fed) which
| publishes quarterly audits is responsible for the
| currency. They act on behalf of the American people. As
| opposed to an un-elected, un-accountable cluster of core
| contributors and mining pools who seem to operate
| principally to the benefit of North Korea, ransomware
| operators, Ponzi schemers and various other kinds of
| criminals - financial and otherwise.
|
| > You are free to adopt Bitcoin. No one will force you :)
|
| And yet, if you hold an S&P 500 ETF you're exposed to
| this toxic nonsense via index components. If you're a
| pensioner in Quebec, you're exposed to this toxic
| nonsense via their stake in Celsius.
| alchemist1e9 wrote:
| You seem to have a very US centric worldview. Maybe ask
| some Turkish savers how they feel, or any number of
| endless examples worldwide where saving in their own
| government fiat isn't a good idea.
| plankers wrote:
| you can bet your bottom dollar there are some nerds in
| Sri Lanka who are very happy to own bitcoin right now.
| they'll be able to spend it as soon as the electricity
| comes back up.
| arcticbull wrote:
| I think we can all agree that they'd be strictly better
| off with a digital dollar substitute like USDC than with
| Bitcoin, as of course they'd be down bad with Bitcoin.
| ooaa wrote:
| Either lose all/most your money to inflation or risk not
| being able to spend money temporarily.
| acdha wrote:
| The big question there is whether or not their government
| allows businesses to operate outside of their control. I
| doubt many Turks would risk jail time by using a system
| which provides their government with a full transaction
| history, especially given the volatility - if you
| converted lira into Bitcoin a year ago, you'd be about
| even with not doing anything. If you bought 6 months ago,
| you'd have 50% losses.
| once_inc wrote:
| > As opposed to an un-elected, un-accountable cluster of
| core contributors and mining pools.
|
| These people don't control bitcoin. Developers and mining
| pool operators have their purposes in the network
| (designing new features and timestamping transactions
| respectively), but it's the users and node operators that
| validate the rules of the system. A code change to
| inflate bitcoin by 100% will never be adopted by node
| operators unless nakamoto consensus is reached.
| ooaa wrote:
| According to this website it is possible to batch
| multiple channel openings in one transcation. They refere
| to a batch transaction containing 13 channel openings but
| I don't know where the limitations of this approach are.
|
| http://satbase.org/bos-open/
| alchemist1e9 wrote:
| Maybe you are missing the point in regards to what "money"
| you put in your bank. Coiners can also use MySQL but they
| just won't be recording entries relative to another master
| MySQL database of the central bank and that does seem like
| a decentralized system with government removed.
| Technologically it is an upgrade, even if eventually, yes,
| people will need banks for everyone to use it. But guess
| what they don't need anymore ...
| librecoiner wrote:
| I disagree. Custodial Lightning Bitcoin is still way better
| than a bank account.
|
| - You can't open a bank account without KYC - You can send
| money without asking permission - You can receive money
| without asking permission - You can send money *privately*
| (onion layer) - You can send money around the globe faster
| - You can always take it on-chain on L1 via a submarine
| swap
| cowtools wrote:
| Custodial bitcoins defeat the entire purpose of bitcoin.
| The fact that you don't understand that speaks volumes
| about the bitcoin community.
| librecoiner wrote:
| I don't use Lightning. That doesn't prevent me from
| seeing how Custodial Lightning solutions like
| "BitcoinBeach" in ES are miles better than Banks.
| cowtools wrote:
| custodial ownership of bitcoins is a product of
| bitcoiners' defeatism: it only makes sense if you just
| want to make money and no longer care about the original
| values of bitcoin.
| preseinger wrote:
| KYC is good, not bad.
| gregwebs wrote:
| It's still a WIP. The new taro protocol that leverages Bitcoin
| taproot and Lightning can help address some scaling issues.
| mhluongo wrote:
| > The only scaling solution is MySQL, just like the Bastion of
| Bitcoin, El Salvador is doing. Always was.
|
| Channel-based scaling is hard, sure. But optimistic and ZK
| rollups on other chains have both proven to be strong scaling
| alternatives.
| shudza wrote:
| Some interesting points. IMHO, LN is far from THE solution. But
| it will help merchant adoption, more than end-user though.
|
| The fact is, most people would/will probably use custodial LN
| wallets, which is against some "crypto" postulates, and comes
| down to well known MySQL argument.
|
| The difference is MySQL on Bitcoin vs MySQL on USD (Paypal). As
| we will see in the coming months, fiat itself is a lot like a
| MySQL.
|
| So I would argue that there is nothing wrong with MySQL on
| Bitcoin, and in fact, is an upgrade on fiat.
| simiones wrote:
| > So I would argue that there is nothing wrong with MySQL on
| Bitcoin, and in fact, is an upgrade on fiat.
|
| The fact that the USD didn't lose ~50% of its value in the
| last few months suggests the pro vs con is more mixed.
| shudza wrote:
| Well 'scuse me, Mr Privileged. Countries which are not US
| do in fact exist, and are not using USD. Check some other
| CBCs YoY against USD, and tell me how much they lost on
| average.
| arcticbull wrote:
| So they have access to USDC. I love how people pull out
| the privilege card the second you suggest that a so-
| called currency that loses 70% of its value in a year
| (BTC) might not be that good for poor folks.
|
| True privilege is being able to lose 70% of your net
| currency value in a single year without being on the
| street and advocating for it even after. For everyone
| else, there are better choices.
|
| I suspect somewhere along the bull run you lost
| perspective.
| shudza wrote:
| USDC != USD. We know what happened to UST, the rest will
| follow. Poor folks are also buying homes, which will
| drop, in some places maybe 100% in the next year, but
| nobody doesn't seem to have a problem with that.
| arcticbull wrote:
| Obviously there's a world of difference between a Ponzi
| scheme like UST and USDC. However, that doesn't change my
| point - which is that a proper, tokenized dollar - or
| even USD CBDC would solve everything you're trying to
| solve but better. So let's start advocating for that.
| It's not privilege to call out that you have a bad
| solution and that better solutions exist.
| dmitriid wrote:
| > But it will help merchant adoption, more than end-user
| though.
|
| So, merchants will adopt it but users won't? So why would
| merchants want to adopt it?
| shudza wrote:
| Users will use "custodial LN". Which you could argue is not
| LN, but MySQL, L3, whatever, but merchants will still get
| their payments on L2
| dmitriid wrote:
| How exactly are users going to use MySQL?
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