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97 lines
2.7 KiB
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97 lines
2.7 KiB
Plaintext
[role="pagenumrestart"]
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[[ch02_How_Lightning_Works]]
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== How the Lightning Network Works
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=== Payment channels
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* trustless between peers
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* operation takes place off chain
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* throughput bound by TCP/IP traffic
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* have capacity which is split into a balance sheet
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* instant payments between peers
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==== Multisig address
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* short review of bitcoin transactions
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* review of segwit multisig addresses
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==== Funding Transaction
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* opens the payment channel
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* encodes the capacity of the channel
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* not clear who owns what fraction of the capacity
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* visible onchain transaction (even for private channels)
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==== Commitment Transaction
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* encodes the balance of the payment channel
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* kept secretly between channel partners
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* everyone has their own set of transactions
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* encumbered with a time lock to give time to penalize protocol breach
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* smart contract inside which gives possability to penalize protocol breach
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==== Announcing the channel
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* gossip protocol
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* option to have private channels
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==== closing the channel
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* the good way - mutal close
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* the bad way - force close
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* the ugly way - protocol breach
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=== Invoices
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an alternative structure for the subsections of the invoice section (while covering the same topics) could be: (creating, decoding, paying as 3 sub chapters)
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* creating invoices
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* decoding invoices
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* bech32 encoding and human readable part of invoices
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==== Payment Hash
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* `pre_image` as proof of payment
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* random numbers and selecting the pre_image
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==== Meta Data
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* Description
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* routing hints
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* fallback address
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* expire time
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* signature
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=== Delivering the payment
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* gossip protocol
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* network of payment channels
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* different scope of the network
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** global path finding (entire knowledge of the network necessary)
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** multihop routing (onion necessary only a subset of nodes involved)
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** locally setting up and setteling htlcs (only peers involved)
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==== Finding a path
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* trivial case / channel partner as destination with enough funds in the channel
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* topology information from the gossip protocol
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* fees and pathfinding from destination to source
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==== Onion routing
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* construct an onion using
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** SPHINX
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** payment hash
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** path
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==== Payment Forwarding Algorithm
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* receive an incoming HTLC
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* forward an HTLC
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* BOLT 02 channel update protocol
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* sending back errors
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=== Comparison with Bitcoin
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* select outputs vs select payment channels / finding a path
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* change outputs vs no change on lightning
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* mining fees vs routing fees
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* public transactions on the blockchain vs. secret payments
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* waiting for confirmations vs instant settlement (if everything works smoothly)
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* arbitrary amounts vs capacity restrictions
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* variying fees depending on the traffic vs announced fees (might become dynamic too?)
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* blockchain to save all transactions vs blockchain as a court system
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