The problem with Lightning: too much focus on internal routing, not enough real utility

tobetada 2 years ago

as always great work!

@tipu curate

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tipu 2 years ago

Upvoted 👌 (Mana: 38/48) Liquid rewards.

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olympicdragon 2 years ago

Thank you for all the interesting information. The lightning service is so useful !

3 votes

borsengelaber 2 years ago

Thanks for the Tipp, @brianoflondon! Have downloaded the Episode of Kevin Rooke you mentioned and will tune in. (Of course via Fountain)
Sounds very interesting. 👍🏻

3 votes

brianoflondon 2 years ago

He also talks about using his reputation to run a service which isn't completely trustless i.e. you rely on and trust him.

This is a similar model to what I'm doing. The question I asked on Twitter (for which nobody has a good response) is what happens when you lose your Twitter account or you get deleted. Where is your public reputation.

This is a huge deal and something we've solved here on Hive.

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6 votes

borsengelaber 2 years ago

Definitely! We just have to make more and the right people aware of that. 👍🏻

emeka4 2 years ago

Your contributions towards making lightning more easier and useful is awesome and thanks for sharing I really appreciate every part of it.

1 vote

akumagai 2 years ago

No idea what you are talking about in terms of technical aspect of the post, but still think its value adding so keep it up man.

3 votes

chekohler 2 years ago

Yes wallets and exchanges are going to be the biggest routing nodes but I think that even though that won’t change it gets diluted as running a node becomes cheaper in terms of parts or doing on cloud like the green light model I’m just not sure how things will change with on chain fees, perhaps payjoins will help with cheaper channel creation or channel factories

I think a node shouldn’t be anyones business model but part of your income stream

Let’s do a simple example a coffee shop they can cut out that middle man and run their own node directly if they choose and route their own payments

And if they do have spare liquidity they can use it in lightning pool or magma to earn a yield when that liquidity is not required for daily operations.

If you’re just going to sit and yield farm LN right now you gotta have large bags and be crazily active on your channel management

brianoflondon 2 years ago

Wallets and Exchanges will not be routing nodes. As Danny makes clear on the podcast they don't want to route payments and they're frankly worried about the regulatory framework around anonymous money transmission.

I don't think running a node is legal in the USA. It's just a matter of whether there is any appetite to prosecute. But if they want you for anything, running a routing node might be what they use to get the search warrants.

chekohler 2 years ago

And there won't be regulatory arbitrage? what would the case be on hosting your node in another country, how do they define where the capital is sitting locale-wise?

If they do come down hard there not just be KYC routes and non-kyc routes? How do you account for private channels?

1 vote

brianoflondon 2 years ago

For a routing node in the middle of a path there is no real way to know the source and destination of a payment. One can make educated guesses at best. For example I have a fairly active channel to PodcastIndex and another to the GetAlby wallet. I forward quite a few transactions for boosting podcasts. I can tell by the size and frequency and when they occur.

Beyond that, pure routing is money transmission from one anonymous place to another for a fee. It perfectly fits the definition of what sent Charlie Shrem to prison. "Shrem officially pleaded guilty in September 2014 to aiding and abetting an unlicensed money transmitting business."

One could easily see that the entire network is unlicensed money transmitting business. I can absolutely see why Cash App want no part in forwarding transactions.

Private channels is probably the wrong name for them. They should be called un-announced channels.

For example I have a few private channels. I can send OUT on those channels but unless I send an invoice to someone who is paying directly from one of those private channels, nothing will come in via the private channels.

The exception is that I can explicitly mention my private channels in my invoices (which I actually do). This actually makes the QR codes I generate for Lightning Addresses on Hive a little more complicated than they would otherwise be. I may dump my private channels at some point. Right now I control routing with fees.

chekohler 2 years ago

Yes I can see how from a legal sense you're providing liquidity for illicit transactions, I always wondered how blacklisted UTXOs would be handled too, because you could use it to open a channel and use your tainted bitcoin

Thanks for all the insights, I appreciate it, I am still learning how to use my node and all the issues around it and always want to know possible attack vectors, ill have to think this one over for a while and give that poddy a listen

Great food for thought