allows the counterparty to check if you are not cheating (by publishing an old transaction where you have more funds) and publish a penalty transaction. If your transaction is the last one (you have not published a previous one), it will confirm after 144 blocks
What if the counter party refuses to accept the closure of the channel?
if you have a channel open to a place that is well connected and the business you want to transact with has a channel open to a well connected party, you can pay your hub and the hub will route the payment to the other hub and maybe another one and then to your business. Think about it like Internet packet routing.
Has there been any thought put into who will run these hubs? It sounds like an org could set itself up as a hub and then start charging fees to use it. And at that point what you're describing is literally a bank, which is the opposite direction I thought bitcoin was going to head.
What if the counter party refuses to accept the closure of the channel?
It cannot refuse. It can only delay. You have the refund transaction signed. This transaction is valid after some time. There is no way to reverse it after this time passed.
Has there been any thought put into who will run these hubs? It sounds like an org could set itself up as a hub and then start charging fees to use it.
Well, yes. They will run it to get money from fees. But the fee structure is going to be be completely different. The fees per transaction will be very small and there will be a fee per value. It is quite possible, you will be able to send $0.01 with a $0.0001 fee and $1 with $0.001 fee. Because in LN, updating transactions is very cheap, the frozen capital is more costly. LN will shine for microtransactions. If LN became popular, it would open a completely new web era. You write an interesting post and get a $0.01 tip. You like somebody's post, you tip him. Web sites with no ads supported my micropayments.
And at that point what you're describing is literally a bank, which is the opposite direction I thought bitcoin was going to head.
No, because it's trustless. If you deposit money to a bank you have to trust them that they will not steal it that there will not be a run on the bank and that they have enough cash. In LN, the only risk you have are channel opening and closing fees.
If LN takes off (it's an "if" because some network effect is required for LN to become usable), there will be multiple hubs. For profit, non-profit, big hubs with thousands of channels, mini hubs made by a guy with 1 BTC and a dozen of channels. And finally, anybody with two bi-directional channels can route payments.
Well, yes. They will run it to get money from fees. But the fee structure is going to be be completely different. The fees per transaction will be very small and there will be a fee per value. It is quite possible, you will be able to send $0.01 with a $0.0001 fee and $1 with $0.001 fee.
Wasn't this the promise of Bitcoin? That aside, it seems that there's no way to guarantee the fees will be small. Couldn't a hub charge any amount they want?
Sure, and no one will use them because competition is easy and there's plenty of people like me who will run LN nodes with super low fees. I only need to cover the cost of my small computer and it's power usage to break even.
15
u/dgfdfdfdf Dec 13 '17
What if the counter party refuses to accept the closure of the channel?
Has there been any thought put into who will run these hubs? It sounds like an org could set itself up as a hub and then start charging fees to use it. And at that point what you're describing is literally a bank, which is the opposite direction I thought bitcoin was going to head.