@ -77,7 +77,7 @@ A problem that needed to be solved for any payment channel construction that we
During the first couple of years, the Bitcoin network was growing and the focus of many enthusiasts was on adoption, rather than the blocksize and scaling. However, in 2012 Gavin Andresen proposed the Ultra Transaction server on his blog.footnote:[Gavin Andresen's blog - July 4th 2012 - Off-the-chain transactions - http://web.archive.org/web/20190730234737/http://gavintech.blogspot.com/2012/07/off-chain-transactions.html]
The Ultra Transaction server was proposed to be a trusted partner of a 2-2 multisig wallet that could not steal funds but allowed signing transactions from a 2-2 multisig wallet.
Andresen observed that with such a mechanism, payments would effectively take place offchain, allowing the number of transacations which could be handled by the system to be increased.
Andresen observed that with such a mechanism, payments would effectively take place offchain, allowing the number of transactions which could be handled by the system to be increased.
Andresen noted that there might be a better construction which would require less trust in the Ultra Server, and while his proposal was a step in the right direction, a few issues remained to be solved before the design of fully trustless payment channels was complete.
Andresen's work led to many discussions on Bitcointalk forum, and later on the bitcoin-development mailing list. These discussions resulted in the first construction of the first unidirectional payment channels.
@ -87,13 +87,13 @@ They key difference was that a trusted party would have co-signed the spend of t
The Ultra Server was not able to steal Bitcoin.
The next day, probably in response to Gavin's blogpost, Meni Rosenfeld started a discussion related to how these ideas could be combined.footnote:[Meni Rosenfeld on Bitcointalk - July 5th 2012 - Trustless, instant, off-the-chain Bitcoin payments http://web.archive.org/web/20190419103457/https://bitcointalk.org/index.php?topic=91732.0]
As Hashed Timelocked Contracts have neither been invented nor seen to solve the issue of trustless routing Rosenfeld imagined trusted routing nodes.
As Hashed Timelocked Contracts have neither been invented nor seen to solve the issue of trustless routing, Rosenfeld imagined trusted routing nodes.
Without mentioning the term network or routing of payments the idea of connecting payment channels and being able to send funds from anyone to anyone else even if there was no direct channel was born.
In Rosenfelds solution payment providers would be the ultraservers and they would among themselves settle the transactions based on trust.
In Rosenfelds solution payment providers would be the ultraservers and they would settle the transactions among themselves based on trust.
It took us another 3 years until the LN whitepaper emerged which had solved all the bits and bolts necessary to get rid of the trust in Rosenfelds solution.
It was 2013 that Bitcoin developer Mike Hearn referred to Meni Rosenfelds proposal and suggesting to reactivate the `nSequence` field which Satoshi preiviously had deactivated.footnote:HearnBitcoinDev[]
Also Hearn referred to a section on the contracts article talking about the case of micropayment channels with the help of `nSequence`
It was 2013 that Bitcoin developer Mike Hearn referred to Meni Rosenfelds proposal and suggesting to reactivate the `nSequence` field which Satoshi previously had deactivated.footnote:HearnBitcoinDev[]
Also Hearn referred to a section on the contracts article talking about the case of micropayment channels with the help of `nSequence`.
As an electronic cash system it preserves the 3 most important properties of money (medium of exchange, store of value, and unit of account).
The invention of money (and in particular Bitcoin) was primarily made to facilitate trade and enable the exchange of value between people.
However, without the LN, Bitcoin is hard to use concurrently by millions of people.
However, without the LN, Bitcoin is hard to be used concurrently by millions of people.
Therefore, in order to fully understand the uses of the LN, we'll examine it from the perspective of people using it.
In particular the use cases will come from previous users of Bitcoin as well as people who have not used Bitcoin before.
Each of the people and their stories, as listed here, illustrates one or more specific use cases.
@ -130,20 +130,20 @@ A person or platform offering content on the web.
They want to install a pay wall or get tipped by their fans and consumers.
This could even include music or video streaming on demand paying in real time.
John is a 9 year old boy from Australia, who wanted a games console just like his friends. However he was told by his dad that in order to buy it, he had to earn the money by himself. Now John is an aspiring artist so he knows that while he is still learning, he can't charge much for his artwork. After learning about Bitcoin, he managed to setup a website to sell his drawings across the internet. By using the LN, John was able to charge as little as $1 for one of his drawings. By being able to set a fair price, which would normally be considered a micropayment and as such not possible with other payment methods, and by using a global currency such as Bitcoin, John was able to sell his art work to customers all over the world and in the end buy the games console he so very much wanted.
John is a 9 year old boy from Australia, who wanted a game console just like his friends. However, his dad told him that in order to buy it, he had to earn the money by himself. Now John is an aspiring artist so he knows that while he is still learning, he can't charge much for his artwork. After learning about Bitcoin, he managed to setup a website to sell his drawings across the internet. By using the LN, John was able to charge as little as $1 for one of his drawings. By being able to set a fair price, which would normally be considered a micropayment and as such not possible with other payment methods, and by using a global currency such as Bitcoin, John was able to sell his art work to customers all over the world and in the end buy the game console he wanted so much.
gamer::
Similar to the content creator, a gamer and live streamer would like to be tipped.
However, in gaming (and gambling) the transfer of bitcoin could be part of the game for example to trade items or to wage for bets.
migrant::
Remittance is an important way for refugees to help their loved one in their home country.
Remittance is an important way for refugees to help their loved ones in their home country.
Characteristic for remittance is that the payments usually are cross border and relatively small.
However, they might happen on a monthly base as they are just a fraction of the monthly wage.
professional bitcoiner::
A person who wants to earn interest on their bitcoin without the risk of lending them to other people could decide to set up routing nodes on the LN.
By providing liquidity to the LN the routing capacities will be increased offering the chance to earn routing fees on the owned bitcoin.
By providing liquidity to the LN, the routing capacities will be increased offering the chance to earn routing fees on the owned bitcoin.
merchants::
Merchants live on the margin of the sold goods.
@ -173,7 +173,7 @@ Ultimately this allows her to provide a better service or to offer better pricin
* We start with a mobile wallet like eclair
* Verify the authenticity of the software (e.g. App store / Acinq website / github)
** discuss that a general phising scheme might consist of tricking you to download a similar looking software
** discuss that a general phishing scheme might consist of tricking you to download a similar looking software
[[getting_first_bitcoin]]
==== Getting Your First Bitcoin on the Lightning Network
@ -183,7 +183,7 @@ Ultimately this allows her to provide a better service or to offer better pricin
[[using_own_bitcoin]]
==== Process for people who already own Bitcoin ====
* send bitcoin to lightning wallet (1 onchain transaction - soon nodes / wallets may support funding a channel directly without sending bitcoins to the lightning network wallet first)
* send bitcoin to lightning wallet (1 on-chain transaction - soon nodes / wallets may support funding a channel directly without sending bitcoins to the lightning network wallet first)
* find a node to open a channel with (Node explorer / Autopilots / ...)
* open a connection
* open a channel
@ -191,7 +191,7 @@ Ultimately this allows her to provide a better service or to offer better pricin
[[sending_receiving]]
==== Sending and Receiving Bitcoin on the Lightning Network
* have the person who helps onbording open a payment channel (As complex as a bitcoin transaction)
* have the person who helps onboarding open a payment channel (As complex as a bitcoin transaction)
* showcase how the funds now can be send back and forth
Doru Muntean
5 years ago
committed by
Rene Pickhardt