
Launch HN: Sparkswap (YC S18) – Buy Bitcoin Instantly over the Lightning Network - tg3
Hi everyone!<p>I’m Trey, the founder of Sparkswap (<a href="https:&#x2F;&#x2F;sparkswap.com" rel="nofollow">https:&#x2F;&#x2F;sparkswap.com</a>). We&#x27;ve built a new desktop app to purchase Bitcoin with USD directly into your wallet using the Lightning Network, instantly. This is not Bitcoin held in your name by an institution - it’s your wallet, and your private keys.<p>Today, the vast majority of the billions of dollars worth of Bitcoin^1 traded on a daily basis is done on custodial exchanges, meaning users deposit their currencies with the exchange, trade within the system, and then withdraw their new currency balance at a later time. This runs counter to the original goal of Bitcoin, which was to give users full control of their money through a system without central authorities or middlemen. Unfortunately, users historically haven’t had much of a choice, as using custodial exchanges has been the only way to get reliable pricing, use a bank account, and achieve reasonable settlement times for transactions.<p>Then came the Lightning Network (LN), first introduced in 2016 in this white paper: <a href="https:&#x2F;&#x2F;lightning.network&#x2F;lightning-network-paper.pdf" rel="nofollow">https:&#x2F;&#x2F;lightning.network&#x2F;lightning-network-paper.pdf</a>. One of the original goals of the LN was to solve Bitcoin’s scalability problem. It works by creating a second <i>local</i> consensus layer between two parties on top of the main Bitcoin blockchain, only going back to layer 1 for final settlement or dispute resolution, thereby decongesting the main blockchain and enabling faster transaction speeds. At Sparkswap, we’re taking advantage of Lightning’s fast transaction speeds to build an alternative to existing custodial exchanges: for the first time, you can have fast, convenient trading without custodial trust.<p>I started working on Bitcoin after two years in wealth management technology at BlackRock, where I got to see how the financial system operates at a mechanical level. As an engineer, looking at the antiquated way that money actually moves around the system (you’d be surprised how many FTP uploads and CSVs are involved) and how reliant it is on a small group of institutions that have to trust each other, it was immediately clear to me that we can do much better. Bitcoin offers a way to re-architect our financial system in an internet-native way that removes reliance on those central parties, opening opportunities for more people to access it, and for new service providers to thrive like they have on the internet. But there is still a lot of work to be done to solve fundamental problems like custody - and that&#x27;s why I started working on Sparkswap.<p>After almost two years of hard work, we’ve just launched Sparkswap Desktop, our Lightning-powered app for buying Bitcoin. With the app, because every purchase is executed on the LN, it’s both instantaneous and you never have to give up control of your Bitcoin private keys. As the saying goes, not your keys, not your coins^2.<p>Here&#x27;s how it works. When you deposit USD via ACH in the open source Sparkswap app (<a href="https:&#x2F;&#x2F;github.com&#x2F;sparkswap&#x2F;sparkswap-desktop" rel="nofollow">https:&#x2F;&#x2F;github.com&#x2F;sparkswap&#x2F;sparkswap-desktop</a>), it is sent to a US-domiciled bank account that Sparkswap (the company) doesn&#x27;t own or control. Then later when you buy Bitcoin in the app, the Bitcoin payment to you is put in escrow (called a Hash&#x2F;Time-lock Contract, or HTLC) locked by a cryptographic hash on the Lightning Network. This means that if you can produce the preimage of the hash, you get the Bitcoin, but at this point only Sparkswap knows the preimage. Then the app creates an escrow payment to Sparkswap for the USD price of the Bitcoin locked by the same hash using our payment partner. Since Sparkswap has the preimage, we can then immediately claim the escrowed dollars by sending the preimage to our payment partner. This gives you access to the preimage through our payment partner’s API, which the app then uses to claim the BTC on your behalf. The escrows also have timeouts so that they can be canceled if they aren&#x27;t executed after a certain time. This whole process results in USD being swapped for BTC with a level of security that popular services don&#x27;t provide, and in most cases swaps complete in just a few seconds.<p>In addition, every Bitcoin you buy with Sparkswap is instantly available in a channel on the Lightning Network. That means that you can easily spend that Bitcoin on the dozens of games, apps, and merchants building Lightning-powered services. And since Sparkswap opens Lightning channels to you, after initial setup you can transfer funds from your bank, buy Bitcoin, and spend it on the Lightning Network all in a matter of seconds, making it one of the easiest ways to get started on Lightning.<p>The first version of the app is designed for users that run LND (a popular Lightning node, <a href="https:&#x2F;&#x2F;github.com&#x2F;lightningnetwork&#x2F;lnd" rel="nofollow">https:&#x2F;&#x2F;github.com&#x2F;lightningnetwork&#x2F;lnd</a>) already. If you don’t, we recommend Zap (<a href="https:&#x2F;&#x2F;github.com&#x2F;LN-Zap&#x2F;zap-desktop&#x2F;releases" rel="nofollow">https:&#x2F;&#x2F;github.com&#x2F;LN-Zap&#x2F;zap-desktop&#x2F;releases</a>), a desktop Lightning Wallet that lets you run a light client so you don’t have to sync the full blockchain. The current release of Sparkswap Desktop also only supports purchasing Bitcoin with USD. However, we have plans to support selling Bitcoin, as well as other Lightning implementations and clients (and mobile!), so stay tuned for updates.<p>We know cryptocurrency certainly has its issues, and we’re working to try to fix one of them. In just the first half of 2019, almost $500M^3 was stolen from custodial exchanges. We believe it’s critical to the value and future success of Bitcoin to establish trustless, non-custodial trading. We don’t have a token, and we’re not selling vaporware - we’ve shipped a real product that solves a real problem and enhances the biggest proven use case in the cryptocurrency industry: buying Bitcoin.<p>We&#x27;d love feedback on the product from all — Lightning Network enthusiasts, critics, and those that don’t know much about it. If you have any trouble getting started, please ask us for help! (support at sparkswap.com)<p>Thanks!<p>Trey<p>[1] <a href="https:&#x2F;&#x2F;www.coindesk.com&#x2F;bitcoin-trading-volume-tops-11-billion-for-first-time-in-nearly-a-year" rel="nofollow">https:&#x2F;&#x2F;www.coindesk.com&#x2F;bitcoin-trading-volume-tops-11-bill...</a><p>[2] <a href="https:&#x2F;&#x2F;www.coindesk.com&#x2F;2018-a-record-breaking-year-for-crypto-exchange-hacks" rel="nofollow">https:&#x2F;&#x2F;www.coindesk.com&#x2F;2018-a-record-breaking-year-for-cry...</a><p>[3] <a href="https:&#x2F;&#x2F;www.coindesk.com&#x2F;exit-scams-swindled-3-1-billion-from-crypto-investors-in-2019-report" rel="nofollow">https:&#x2F;&#x2F;www.coindesk.com&#x2F;exit-scams-swindled-3-1-billion-fro...</a>
======
evbots
Can you go into a little more detail about who owns the bank account that
users are depositing into when they use sparkswap?

~~~
tg3
AnchorUSD is our payment partner who operates the API we interact with (it's a
custom API that they built for us).

The escrow account is held with a trust company in AnchorUSD's name, but is
designed so that only the users they onboard can access the funds. Funds
cannot be legally used for any other purpose.

~~~
notyourday
> The escrow account is held with a trust company in AnchorUSD's name,

That means the total FDIC insurance on all the money in all accounts is capped
at $250K between _all the users of your platform_. One Bitcoin quoting at
$10,288, means that at most money needed to buy 24.3 bitcoins are insured
across the entire platform.

~~~
mpoteat
Personally, I don't expect FDIC insurance on swap space used for trading, or
generally anything except my bank account.

~~~
notyourday
It is not about trading - customer's funds are deposited into a bank account
of a US financial institution partner under under a name of a trust created by
their service provider. Until those funds are "spent" they sit in that
account. That account is FDIC ensured to $250k.

Compare this to you depositing money with your brokerage to trade stocks. The
account is opened at _clearing broker_ in _your name_ , which means that the
SPIC coverage limit is just yours.

------
freediver
So I need to trust

1.AnchorUSD

2.Their trust company where escrow is held

3.Zap for lightning network wallet

4.Abacus for identity verification

5.and you (sparkswap)

I'd say this is neither direct nor instant (just abacus verification adds
crazy friction). And the trust issue is real, I'd personally feel better with
one large custodial institution than a number of startups in this chain that I
know nothing about (or their security practices).

If you can solve that there is market for sure.

~~~
d-d
> I'd say this is neither direct nor instant

You're correct in other ways as well:

The "lightning" network (heh) still requires slow Bitcoin transactions to
initiate and close. And it's between two trusted parties anyway, so this
negates the need for a trustless network like Bitcoin.

A far better "lightning network" has existed for many years. It's called a
shared SQL database.

~~~
nemild
No it's not between two trusted parties. If those parties disagree, they have
recourse to the blockchain, and so don't have to fully trust each other.

The lightning network couldn't be built without having a lower level trustless
party. Bitcoin actually lets us bootstrap trust.

More thoughts on bootstrapping trust:

[https://www.nemil.com/crypto/why-cryptocontracts-
matter.html](https://www.nemil.com/crypto/why-cryptocontracts-matter.html)

------
HashThis
How do you handle ACH clawbacks? What your business models needs to protect
against is... hackers steal a victim's private information enough to be able
to submit the ACH to you. The victim reports it to their bank several days
after the theft. The bank does an ACH clawback from your banking partner.

Where is your time gap to get past ACH clawbacks?

~~~
tg3
We have guards in place to protect against fraud by verifying your identity in
a few different ways, but this is something we'll monitor and make
improvements to over time. It's critical to the survival of the business that
we have strong fraud detection methods.

However, we also think that the experience of instant transfers is valuable,
so on a risk-based approach we allow instant transfers using ACH for certain
customers and certain transaction sizes.

~~~
notyourday
> However, we also think that the experience of instant transfers is valuable,
> so on a risk-based approach we allow instant transfers using ACH for certain
> customers and certain transaction sizes.

You have a fundamental misunderstanding how ACHs work. There's no such thing
as an ACH that is "completed". At +180 days the state is "It is probably going
to be fine". At +365 days the state is "It is probably most likely going to be
fine" etc.

Source: Done consulting for execs at medium sized banks.

~~~
jstanley
You might have a fundamental misunderstanding of their business model.

They don't need to classify an ACH as "completed" or "not completed", they
only need to place a confidence interval on its completion state, which
becomes easier as they process more transfers.

~~~
notyourday
> They don't need to classify an ACH as "completed" or "not completed", they
> only need to place a confidence interval on its completion state, which
> becomes easier as they process more transfers

They ignore financial regulations to the level of Uber ignoring taxi
regulations. The difference between the taxi commission or whatever its name
is in San Fran and US Department of Treasury is that the later relies on
people with guns and can block customer's ability to do any financial
transactions.

The reason why in the standard custodial scheme ACH transactions are fine (
but still are frowned upon ) is because the appreciating asset can be
reclaimed from a custodian via courts.

------
option_greek
Any plans to make this less technical and more user friendly (like users not
knowing even about lightning network). I think this has a lot of potential if
you make it more mainstream by abstracting away the tech stuff.

~~~
tg3
Yes, that's definitely a goal of ours over time. We're starting with the
existing Lightning community, but we plan to continue to reduce the technical
requirements so that users don't need to know anything about Lightning to use
Sparkswap.

------
pseudozach
Great to see this, easy onboarding to Lightning Network is needed and this
solves a real pain point with added benefits.

~~~
wheelerwj
what would you say are the real pain points that are being solved here?

~~~
russdpale
Namely that Im not using coinbase, who are essentially the facebook of the
crypto world.

~~~
bduerst
How do you know AnchorUSD, Zap, Abacus, or Sparkswap are not doing the same as
Coinbase either?

------
wheelerwj
aka, buy bitcoin instantly once you've deposited your USD into some partner
bank account which you don't have access to but Sparkswap absolutely does.

This isn't really new or interesting and has been shut down repeatedly before
because most crypto companies can't handle the fraud mitgation, here's a clue,
it's not cheap or easy and can't be automated at this small scale. Instant
access to the coins has never really been a boon to anyone other than
scammers. The loss of private keys is a huge setback to the consumer and to
adoption, which is why Coinbase has been one of the most successful
applications within the crypto space.

I don't mean to say that this isn't something idea and shouldn't be done, its
just not really interesting or useful.

buuuuuuuuttttttt, then you had to go and say this: > a real product that
solves a real problem and enhances the biggest proven use case in the
cryptocurrency industry: buying Bitcoin.

the biggest proven use case in cryptocurrency is... buying crypto...?

I've been in crypto full time for the last 6.5 years and that statement
actually makes me want to quit.

~~~
russdpale
I want to say it means more like the on ramps to crypto are kind of fucked.
Coinbase and other on ramp providers have terrible fees, its almost
exclusively the primary reason I don't swap fiat into crypto currency.

~~~
bduerst
Those fees exist to cover risk mitigation - i.e. a certain percentage of on-
ramps are fraudulent and the fee disperses the loss spread to everyone who is
on-ramping.

Unless this service has invented some new technology in fraud prevention, it's
going to eat that risk at a loss to themselves.

------
zallarak
Wow, this was seamless. It auto-detected my lightning wallet, and the purchase
was instant.

As far as I know, this is literally the only way to get Bitcoin on lightning
directly with USD.

~~~
40four
I have had good experience buying bitcoin through Square Cash app. It can then
immediately be sent to the walet of my choosing.

------
ruigomes
Congrats on the launch Trey! I'm very excited for the future of Sparkswap and
the Lightning Network ecosystem.

Shameless plug: I've built a platform that showcases apps that are powered by
the Lightning Network.

Most of them are experiments with instant settlements and micropayments, but
it should give you a good idea why you should care about Lightning:
[https://www.lapps.co](https://www.lapps.co)

------
omarchowdhury
Any plans to support the opposite feature: selling Bitcoin over the Lightning
Network?

~~~
tg3
Yes absolutely! Enabling selling Bitcoin is near the top of our list of
priorities.

------
xur17
First of all, this is very neat. I just tried this with $15, but I'm receiving
the error message "your account must be approved prior to trading". At the
same time I received an email from AnchorUSD stating "We expect your USDx to
post to your account by September 25, 2019". Does it really take 6 days for
the funds to be available in my account, or am I misunderstanding?

~~~
tg3
I think we're working together in our support channel, but the email you
received was in error - we're working to resolve.

~~~
xur17
Yup, I'm all setup now. Thanks for the help.

------
rhlala
Very interesting, i cant find neither in your post nor your website, how you
are winning money. (and how much are the fees)

~~~
tg3
Good question - we make money by selling Bitcoin for slightly higher than we
buy it from a few sources. We aim to have very competitive prices (lower than
many places you can buy Bitcoin today), but we don't have a set fee rate that
we publish.

~~~
gnode
So if I understand correctly, the business model is to be the only seller in
this exchange, with a profit margin justified by the convenience of instantly
available Bitcoin funds.

Would it not be possible for a competitor to undermine this business model by
running an exchange (based on the same technology, perhaps the same
implementation) where selling is more permissive?

~~~
tg3
When we add Bitcoin sales, it will look more like what you're describing.
We've experimented with an open orderbook model in the past, and we're not
opposed to it, but we've found that the UX of a listed price is better for
most users.

------
40four
This looks promising. Looking forward to trying it out! I do wish there was
more information on the website about how it works, fees etc.

I am admittedly a crypto currency novice, so I'm not real familiar with the
lightning network and how it works. I am curious how your product differs from
the Bitcoin feature on Square Cash app?

I have had a good experience buying Bitcoin with USD from Square. It's fast,
there is no fee (although they pad the price a little bit), and I can then
immediately send the coins to the wallet of my choosing.

Seems like your product is very similar. Are there any major differences? What
are the reasons to use your app and not keep buying from Square?

~~~
tg3
The product is very similar to the Square Cash app. The main difference is
that when you buy Bitcoin with Sparkswap, the Bitcoin goes instantly (and
without paying on-chain fees) into a wallet for which you hold the private
keys (rather than a company holding the keys on your behalf). And that Bitcoin
is available for spending on the Lightning Network.

The downside is that you have to be comfortable being responsible for the
keys, which not everyone is.

~~~
40four
Great, thanks for the information! Depositing straight into my own wallet is
very appealing.

I'm just starting to get into buying crypto, but for someone like me, I'm ONLY
interested in managing my own private keys.

I don't typically buy large amounts of bitcoin at a time, so when I do it is
advantageous to reduce the fees as much as possoble.

Excgange fees and/or network transaction fees can take a painful percentage
from small transactions, so I will certainly be happy to give Sparkswap a try!

------
mihaifm
Is there any cost reduction of using this method, compared to buying bitcoin
from a regular exchange? As I recall taking money in and out of the LN
channels still costs the blockchain transaction fee.

~~~
tg3
If you close a Lightning channel (or use a service provider to translate a
Lightning payment to an on-chain payment, a common way to "withdraw" from
Lightning channels), you will incur a blockchain transaction fee, similar to
using regular exchange. You'll have more control over that fee based on your
time preference, and importantly, you won't need to incur that fee to make
sure that the Bitcoin is actually in your possession. So it will likely end up
about neutral cost-wise (maybe slightly cheaper?) but you'll have more control
over the whole lifecycle.

~~~
lawn
You do need to pay to both open and close a channel, so you'll incur two
transaction fees in contrast to one with a regular exchange.

~~~
tg3
Sparkswap opens the channel to the user, so Sparkswap will incur the channel
opening and closing fee.

~~~
lawn
That's nice. So similar to how a regular exchange pays for your withdrawal
transaction. (And of course if it's better or worse depends on how much
they'll charge).

~~~
xur17
One advantage is that your funds are already in a lightning channel, so you
can immediately use it for payments within the lightning network with very low
fees (vs having to pay onchain fees).

------
Nursie
Given that the average computer user is not very tech savvy, and is likely to
succumb to malware and drive-by hacking attempts, what makes you think it's
safer to encourage people to be their own custodians?

Or doesn't it matter at that point, because you're off the hook?

~~~
tg3
It's true that this isn't ready for the average computer user. But there are
projects that I do think make it safer, for example dedicated hardware devices
like the Casa node.

I think that as this technology (Bitcoin and Lightning generally) matures,
we'll get better tools to make it safer for average users (just as we've done
on the web).

------
otoburb
Congratulations on launching!

How are you handling AML/KYC? Is this something that AnchorUSD will front
first, and is there a fee that they take for the deposit? Also -- do you have
to restrict usage for certain jurisdictions (e.g. NY state residents)?

~~~
tg3
We have an AML program in place and do identity verification on users that
want to buy Bitcoin. We are restricted to 22 states in the US right now (which
excludes NY state) but we're expanding that number rapidly, and hoping to
expand internationally in the coming months.

There are no fees for deposits.

~~~
xur17
Do you have a list of states you operate in?

------
mudlus
This company will mess this up at some point (user data breach, or lost
funds). Just wait until Bisq integrates with lightning at some point. Be
patient, wait for, and if you can, contribute to, the open source version.

------
trickstra
What is an ACH?

And when you say "Connect your bank account..." does that mean this only works
in the USA? Would be nice if this was mentioned somewhere.

~~~
tg3
ACH is a method for sending money between banks primarily in the US. Yes,
unfortunately we're limited to 22 states in the US right now, but we're
working to expand to more states and internationally in the coming months.
We're working on publishing that information more broadly, thanks for the
feedback.

------
365cash
A good cryptocurrency exchange-[https://365cash.co](https://365cash.co)

------
tylerchambers
This is awesome! Congrats! Self custody + lightning out of box is a winning
combo.

------
hello2
will you also make an android application available?

------
paggle
Sad to see so much talent continue to go down the Bitcoin toilet.

------
lawn
> for the first time, you can have fast, convenient trading without custodial
> trust.

Really? From your description it sounds like I would have to trust Sparkswap
and some other unknown bank with my fiat.

> In just the first half of 2019, almost $500M^3 was stolen from custodial
> exchanges.

And why would you be immune to this?

> product that solves a real problem

What problem? To buy LN coins instead of Bitcoins?

~~~
nullc
[replying because I previously downvoted and another respondent didn't know
why people were downvoting.]

> Really? From your description it sounds like I would have to trust Sparkswap
> and some other unknown bank with my fiat.

Fiat transactions have extremely high reversibility often for months after the
fact, and law enforcement is actually responsive around fiat theft in a way
they haven't been around cryptocurrency theft. As a result, at least so-far,
exchange thefts have not centered around the fiat side of the operations, and
in the rare cases fiat has been lost it seems to have always, AFAIK, been
cases where the exchange self-traded in order to cover up a cryptocurrency
loss. But perhaps as the cryptocurrency side gets derisked we'll see more fiat
shenanigans.

>> In just the first half of 2019, almost $500M^3 was stolen from custodial
exchanges.

> And why would you be immune to this?

They'd be immune because those thefts targeted huge standing balances of
highly liquid, irreversible cryptocurrencies, that users left on exchanges for
convenience in trade. It sounds like their intent is to eliminate all large
standing cryptocurrency balances. I have no idea if they will be successful,
but if they are it should be a substantial derisking.

> What problem? To buy LN coins instead of Bitcoins?

There is no such thing as "LN coins", lightning is a bitcoin smart contract
that allows effectively instantaneous transfers of Bitcoin between users. It
works by telling the bitcoin network that some collection of your coins will
be governed by a programmatic contract between you and another user, then you
can trade your coins back and forth as fast as you want at no cost, and you
only need to go back to the network if there is a dispute between parties
(where the network then forces correct handling) or you want to remove the
coins from the agreement.

This is conceptually similar to how you enjoy the protection of the law and
the courts while virtually never going to court yourself-- except more
powerful because taking your dispute to the network is completely automated,
radically cheaper than a court, and not so subject to making a wrong decision.
:)

(The network part of the name comes in because the lighting contracts allow
transitive trade, e.g. if Alice and Mallory have funds subject to lightning
contract, and Mallory and Bob have funds subject to lighting contract-- then
Alice can pay Bob, transitively via Mallory without posting transactions in
public. This is possible because the protocol is constructed so that multiple
trades can be made cryptographically atomic-- where either all succeed or all
fail.)

Part of the reason that you're being downvoted is because misinformation
claiming that lightning issues some kind of additional or alternative
cryptocurrency is a dog whistle of some well known cryptocurrency scammers,
such as Craig Wright and his staff.

Downvoters may have been assuming that you were employed by one of these
scammers, but it's just as possible that you simply picked up some of their
terminology in ignorance.

Cheers.

~~~
lawn
Readers should now this is one of the main Bitcoin developers behind the "fee
market" and in 2017 celebrated $50 fees, caused by his ideas.[0] While being
the CTO of Blockstream, a company whose business plan is to create side-chains
like LN. By keeping on-chain fees high they managed to artificially create a
need for side-chains, which they could fill with LN and recently Liquid.

Anyway that's a lot of words to not answer my questions other than guessing
their intent to eliminate large cryptocurrency balances (using LN means they
do have to hold Bitcoins).

I used the term "LN coins" to signify that LN have fundamentally different
properties than Bitcoin, whereas your wall of newspeak suggest LN and Bitcoins
are the same. They are not.

LN operates by trading unconfirmed Bitcoin transactions, and holders are
expected to challenge fraud not to loose their coins. Yes this mean you have
to be always online (or you need someone else to be for you). Also you might
not be able to pay someone, because there is no route with sufficient funds.
There is something called the "inbound capacity problem"[1] which limits how
much you can receive.

In fact LN developers are saying that LN is not ready and should not be used
in production, simply because it's not ready. See for example a recent CVE
which has been exploited in the wild.[2]

Implying, as you do, that using LN is as good as using Bitcoin is far worse
misinformation than you misinterpreting my choice of words as if I said LN is
another cryptocurrency. (Also funny how you react to that, as if all
cryptocurrencies other than Bitcoin are scams, which is of course not the
case).

[0]: [https://lists.linuxfoundation.org/pipermail/bitcoin-
dev/2017...](https://lists.linuxfoundation.org/pipermail/bitcoin-
dev/2017-December/015455.html)

[1]: [https://blockonomi.com/lightning-network-inbound-
capacity/](https://blockonomi.com/lightning-network-inbound-capacity/)

[2]: [https://lists.linuxfoundation.org/pipermail/lightning-
dev/20...](https://lists.linuxfoundation.org/pipermail/lightning-
dev/2019-September/002148.html)

~~~
grubles
Transitioning from subsidy to transaction fees to reward miners existed as an
idea before nullc. It's in the whitepaper for crying out loud.

>Once a predetermined number of coins have entered circulation, the incentive
can transition entirely to transaction fees and be completely inflation free.

At any rate, the rest of your commentary is inaccurate. Lightning channels can
go offline and be completely fine. I've had one offline for months before I
brought my node back online and everything was fine.

The inbound liquidity issues are being resolved through dual-funded channels,
which means both parties of a channel coordinate to start a channel off with
the liquidity balanced between them instead of completely on one side.

LN is in fact still in beta, and you should expect bugs like any other beta
software. That should come as no surprise.

Lightning is however in a state where it is more or less safe to use. The
twitter bot I run that relays Blockstream Satellite transmissions has on order
of 3,000 tweets -- which means there have been 3,000 payments with Lightning
for just this one service.

Keep in mind Lightning in general is more suited to small amounts given the
very cheap fees and divisibility down to 0.00000000001 of a bitcoin.

So to sum it all up, your post is pretty inaccurate.

~~~
lawn
> Transitioning from subsidy to transaction fees to reward miners existed as
> an idea before nullc.

That's a completely different idea than having full blocks where users compete
for fees. You can also fund miners via lot's of transactions instead of few
transactions with large fees.

> Lightning channels can go offline and be completely fine.

That's only because the other party didn't do anything. It's like saying
leaving your door unlocked and open is safe because you did it once and nobody
walked in to steal your stuff. You were lucky.

> Lightning is however in a state where it is more or less safe to use.

I did post link to a recent bug where LN is exploited to steal users funds
didn't I? This kind of misinformation that "LN is more or less safe" really
downplays the existing issues. It is beta software and should be treated as
such.

> So to sum it all up, your post is pretty inaccurate.

To sum it all up, I was saying transactions in LN are different than Bitcoin
transactions and that LN is only in beta, which you also confirm.

