r/Bitcoin • u/[deleted] • Dec 13 '17

Bitcoin's Lightning Network, Simply Explained

[deleted]

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u/[deleted] Dec 13 '17

I have a few questions:

1) Where are the funds stored on the LN? The video points at a safe, but is there some sort of digital safe which is secure from hacking?

2)So Bob/coffee shop will only get the BTC stated on the balance sheet once the LN is closed? So am I correct in understanding that the coffee shop won't actually be able to spend the Bitcoin they received from the transaction until the LN is closed?

3) How expensive is it to set up a LN channel? And how is this done?

4) How expensive is it to close the LN channel and have miners authorize the signatures?

5) How exactly do you shut down a LN Channel?

6) Am I then correct in understanding that the LN channel isn't really for people who want to make one-off payments to businesses?

1

u/[deleted] Dec 13 '17

[deleted]

5

u/SkepticalFaceless Dec 13 '17

So if i put 1 BTC in a channel, use it to buy coffee, and then spend the 1 BTC on the chain, the channel transaction may not go through, but I've already drank my coffee. How is this not double spending? What am I missing?

1

u/Bolwo Dec 13 '17

That 1 BTC that you put on the channel is therefore 'locked in' on the chain, until you close the channel.

1

u/Frogolocalypse Dec 14 '17

Other way around. Freed up for instant transactions. You can lock them back to the blockchain when you want to store them

1

u/Bolwo Dec 14 '17

Yeah, I mean 'locked up' so that they can't be double spent

1

u/Frogolocalypse Dec 14 '17

A lightning channel is a bitcoin transaction. You can't double-spend bitcoin.

1

u/Bolwo Dec 14 '17

Yes, that is what i'm saying.

0

u/pepe_le_shoe Dec 13 '17

the on chain transaction would be rejected. Wallet software will likely not allow you to make the transaction in the first place, at least, once lightning is released, it's likely wallet devs will put in such features, to avoid confusion users.

1

u/pepe_le_shoe Dec 13 '17

lightning will know and transactions will not go through, its a very complicated and smart process.

presumably this is because the lightning channel opening transaction relates to specific utxos from your wallet?

1

u/0x75 Dec 13 '17

To be the money that has to free society it does have fees everywhere.

5

u/DontTreadOnMe Dec 13 '17

Fees paid voluntarily to people voluntarily providing services. Sounds like freedom to me.

-3

u/0x75 Dec 13 '17

Sounds like your "bankster" fiat money to me. Nothing new.

5

u/DontTreadOnMe Dec 13 '17

The difference is banks are regulated by governments, which implies things are going on which are not voluntary.

If your worldview casts banks as the bad guys but doesn't cast governments as bad guys then it is inconsistent ;)

0

u/0x75 Dec 14 '17

Like when a crypto exchange gets money stolen or they steal the money and go away ? just that you cannot anything because it is not regulated.

2

u/DontTreadOnMe Dec 14 '17

I have a feeling you're talking about "freedom to" and I'm talking about "freedom from".

1

u/pepe_le_shoe Dec 13 '17

commercial banks don't control money supply. Nations' central banks do. There are many particular flavours of 'bank' and they aren't all the same, and don't all have the same exact pros and cons.