
Lightning Network: “Bitcoin Doesn’t Scale” [pdf] - bootload
http://lightning.network/lightning-network.pdf
======
bhouston
Interesting parallel to the growth and development of decentralized P2P
networks around 1999/2000.

First there was Gnutella (as Napster had a centralized directory) - but it
didn't scale, although it proved popular.

Then they added support to Gnutella for spoke/hub models, which had superpeers
that reduced the load on most individuals. But in the end Gnutella never
really took off.

What replaced Gnutella was bittorrent, which actually only did transfer via
P2P but the searching and discovery was centralized again PirateBay and
Trackers.

But for all bittorrent's success, Netflix (and others), which are centralized
and highly controlled alternatives, are far more popular and commercially
successful for watching online video -- it is just less work to use Netflix,
even though it doesn't have the benefits of being free and open.

So for all the attraction of P2P decentralization, often centralized,
commercial focused easy solutions win out. There are costs to be paid by being
decentralized and often general people who are not ideological do not want to
pay these costs.

But I am mostly an outsider with regards to Bitcoin so who knows.

~~~
celticninja
Im not sure that Netflix is the preferred option. You say

>(Netflix et al) are far more popular and commercially successful for watching
online video

File sharing versions are not aimed at being commercially successful so i
think that is an irrelevant comparison.

Also you I expect are from the USA, netflix/hulu etc arenot available
everywhere so they are certainly not more popular than the alternatives in
countries where they are not avaiable.

Popcorn Time was a free, decentralized Netflix alternative and it was hugely
popular, only that the developers pulled the plug on it did it not become the
defacto method of watching movies for free online.

Anyway not sure how these compare to bitcoin but I dont think your analogy
holds up even when not compared to bitcoin.

~~~
dublinben
It's worth mentioning that PopcornTime[0] is still available at a new domain,
and has been forked by at least one group of developers.

[0][http://popcorntime.io/](http://popcorntime.io/)

~~~
Fuxy
All the forking is not helping it gain popularity.

When there are so many similar versions which one do you choose.

Also you probably don't want it to be popular anyway unless you don't mind the
authorities knocking on your door.

------
sharpneli
Their assumption of 2 channel roll-overs per year per person is quite likely
far too low. In their comparison they basically state that a person would be
participant in a channel roll over per 3650 transactions made.

This seems to be overly optimistic considering that the acceptable credit card
chargeback rate is 1%. 36 times per the rate of channel roll overs.

In addition even nicely working channel has to be created. So even without
anything like chargebacks assuming 3650 transactions per year on a single
chain seems to be extremely optimistic.

It might reduce spam on the network though. Bringing us from the 240G blocks
into 24G blocks (Based on the well known Stetson-Harrison method). A fine
improvement, but doesn't really seem to be a silver bullet for the scalability
issues.

~~~
pash
If I'm reading the slides right, longer chains of transactions on a side
channel _do not_ increase risk, so it's innappropriate to imply that a more
heavily used side channel introduces risks comparable to credit-card
chargebacks.

Each party to the side channel has a multisig transaction signed by the other
parties involved, so if one party cheats (or fails to comply for innocuous
reasons), then any party can shift the entire chain of transactions to the
blockchain without risk. So the only reason you don't want side channels to
persist for too long is that each party has to keep around more and more
information as the number of transactions over the channel increases; that's
burdensome in its own right, but it also likely means that a side channel
naturally decays over time, as the probability increases that one of the
parties involved drops out or loses track of information. So you don't want to
roll over side channels too many times, but it's not a matter of risk of
trust.

This really is a very simple and elegant solution. Basically, it recognizes
(1) that cryptographic verification of intermediate transactions only needs to
be shared among the parties involved, rather than among the entire network,
and (2) that any sequence of transactions among a sub-network of parties can
be considered as a string of intermediate transactions. And (3) it requires no
trust because the entire sequence of transactions can be moved onto the
blockchain by any party at any time.

~~~
sharpneli
Sure. I simply meant that the assumption that an average person participates
only in 2 chains per year and performs 3650 transactions in one chain is
really far fetched.

Consider the amount of transactions you do. Basically every party becomes a
single side channel which requires some activity in the actual blockchain. It
would reduce the amount of transactions that are the style of "My local
supermarket which I visit every other day" but not anything else.

~~~
pash
This technique can be applied to created side channels among any connected
sub-network of Bitcoin users, so if we're able to build good technology to
figure out when to create a side channel (and with whom), it's likely that a
large fraction of all transactions could be moved into side channels. It
really does have very good potential for scaling the Bitcoin network by an
order of magnitude, or two or three.

Combined with increases in the block-size limit, this technology and others
are increasingly making it seem like scalability is unlikely ever to be a real
problem for the Bitcoin network. (And file that under great problems to have.)
Recently I've seen scalability cited as a demerit of the Bitcoin network more
and more by people who don't keep up with the technology and the community
developing it—and less and less by people who do. Good progress is being made.

But I agree with you that the rough assumptions the authors used to quantify
this technique's potential to scale the network don't make much sense.

------
oleganza
That's an interesting idea, can't wait for the paper to come out. Compared to
my scheme of Ripple-like IOU network with point-to-point joint escrow
([https://www.mail-archive.com/bitcoin-
development@lists.sourc...](https://www.mail-archive.com/bitcoin-
development@lists.sourceforge.net/msg07006.html)) here are pros/cons (to the
best of my understanding so far):

Pros:

1\. They already have a paper and I don't :-)

2\. No need for extra capital lock up between nodes to cover bidirectional
IOUs.

Cons:

1\. Channels can be "closed" any time forcing everyone in the chain (could be
7-10 nodes) to make a BTC tx whether they really want it or not.

2\. Necessary timeouts require channels to be closed after some time, while in
theory some of them can be kept open indefinitely. In my scheme, interior
pairs of nodes can pay each other accumulated transaction fees in separate
transactions whenever they want without affecting anyone.

------
DougN7
I've always wondered how long until the blockchain would grow before it became
unlikely new users/miners would want to hold a copy. At some point, it seems
like it would grow faster than typical network download rates meaning a new
miner, etc would never be able to get their initial copy.

~~~
desdiv
You don't need the full blockchain to become a miner, you just need a database
of all unspent transaction outputs. The last time I checked said database was
only a couple hundred MB.

As for people who _do_ need the full blockchain in the future scenario you
describe, they could always pay someone to sneakernet it to them.

~~~
TeMPOraL
> _As for people who do need the full blockchain in the future scenario you
> describe, they could always pay someone to sneakernet it to them._

I just imagined an armed convoy protecting a truck loaded with hard drives.

~~~
uptown
Which would make no sense. The whole idea of a distributed ledger is that
there's not one authoritative copy. Stealing those drives would yield nothing
because it wouldn't correlate to the rest of the copies in existence.

------
_cpancake
Bitcoin either needs tons of bandwidth and storage space, or centralization.
You can't have your cake and eat it too.

~~~
IkmoIkmo
Not really. US citizen makes 2 transactions per day. That's 1 kilobyte of data
total.

That's really not a problem, centralized or decentralized, for bandwidth,
storage or cpu to handle.

Fact of the matter is that a transaction costs some money, like 5 cents, which
is in a way the price to transmit 500 bytes of data, verify it and store it.
That's economical at any scale. And guess what, the marginal cost is only
decreasing due to technology improvements. (moore's, kryder's and nielsen's
laws)

The price of 1 gigabyte of storage is about 3 pennies today (retail), for
example. And storage is not permanent either, you can prune old transactions
(that's an innovation currently in development).

And again, that price is only dropping, in 1990 that price was a few thousand
dollars by comparison.

~~~
_cpancake
But I need the entire blockchain for it to be decentralized, or someone else
stores the entire blockchain, which is centralized.

~~~
oafitupa
Wrong. There are degrees of centralization. Hundreds or thousands of entities
holding the blockchain is certainly _not_ centralized. We don't need every
single participant to hold the blockchain.

------
Animats
That distributed-trust scheme is so complicated that there's probably a
security hole in there somewhere. Ripple tries to do something similar. How's
that working out? Are the fancier operations in Ripple actually used?

The Bitcoin transaction rate is currently only about 100K/day, or 1.1/sec.
That's only twice what it was two years ago. There's no urgency in solving
this problem.

------
inoop
While I appreciate the effort, I wonder why people think Bitcoin will gain
mainstream adoption in the first place. Besides buying drugs online, what is
really the killer app here?

~~~
rplnt
Getting rid of payment processors would benefit just about everyone. Only
benefit they have is insurance.

~~~
TylerE
For consumers that's a MASSIVE benefit.

~~~
aianus
Not really, the largest single transaction I've ever made on a credit card is
maybe $2000 in flight tickets.

At ~$30,000 a year in credit card spending I'm throwing that amount away in
credit card fees every two and a half years. I'm perfectly capable of and
would prefer the option to self-insure, thank you very much.

~~~
TylerE
Are you really naive enough to think that retailers won't just pocket whatever
savings they have?

~~~
aianus
Retail is not a very high-margin industry, I imagine Walmart, Amazon, Airlines
et al would pass on the savings.

------
knocte
Interesting! So I guess this means that thanks to the Lightning network, we
can have off-chain transactions without the need to rely on centralization
(i.e. ChangeTip).

------
late2part
Sorry, you lost me at:

The SQL Database Model ○ Very scalable, very fast

~~~
imaginenore
Pretty much every modern DB is capable of thousands of transactions per second
on moderate hardware.

