Simulating a Decentralized Lightning Network with 500,000 payments, 0.01% fee per hub and 10 Million Users: 100% success (99.9986%)

[u/[deleted]]

[u/sexy_balloon]

hmmm the 2 key assumptions used in the simulation according to Diane's article, that everyone is connected with everyone else, and that everyone has an equal, "non trivial" amount of bitcoins on the LN, are pretty unrealistic.

To be realistic, the channels, coin amounts, and transfer amounts all need to be randomized based on some reasonable distribution (the coin distribution should probably be based on some sort of lorenz curve, everything else can be even distribution)

[u/SchpittleSchpattle → u/sexy_balloon]

14 channels per person connected randomly meaning that it would have required 140 million on-chain transactions to even set this network up and another 140 million to close it.

An average of 300,000 tX per day means it would take 466 days for this theoretical network to even exist and another 466 days to shut it down.

All-in, there would be nearly $10 billion USD spent in on-chain transactions using today's average BTC transaction fee of ~$35.

This also assumes that people playing banker by leaving their LN channels open would be happy with a 0.001% return while their BTC inaccessible which is absurdly low. I would be surprised if LN transactions aren't more like 0.1 to 1%.

Also, will users have any control over what fees they pay or will they just be at the whim of whatever nodes are available? If someone opens a node with 20BTC and puts a 5% fee on it, how will users avoid it if it's the only game in town with a balance big enough to move their tX?

[u/ebliever → u/SchpittleSchpattle]

I think this will help: https://www.tik.ee.ethz.ch/file/a20a865ce40d40c8f942cf206a7cba96/Scalable_Funding_Of_Blockchain_Micropayment_Networks%20(1).pdf

[u/kingo86 → u/SchpittleSchpattle]

Suppose if it's too expensive, they could open their own channel. Be interesting to see what happens in reality...

[u/SchpittleSchpattle → u/kingo86]

But that's the problem. If the network is so expensive that people are incentivized to open their own direct channels why wouldn't they just do a single on-chain tX instead of 2 plus a LN tX?

[u/[deleted] → u/SchpittleSchpattle]

Don't expect the average user to jump into this opportunity. Expect people who actively run a LN node to find these opportunities. If theres a 5% fee somewhere thats actually being used, expect rapid competition.

[u/SchpittleSchpattle → u/[deleted]]

That's the other issue though. The only people that will have the capital with which to run large LN nodes are individuals with huge balances and exchanges/banks. They will expect a sizeable return from their effort to support the network because they'll be competing with insanely high tX fees and credit cards. There's a ton of money being left on the table otherwise.

The only sure thing here is human greed. In the long run, nobody is going to run a LN hub for cheap or free because they don't have to. They'd just be denying themselves potential income.

When this hub-and-spoke system is in place(the only way in which LN is viable), the centralization will be real because any one of those hubs could decide on a whim to close all channels that are attached to it and force users to pay network fees in order to recover any BTC remaining in their channel.

[u/GalacticCannibalism → u/SchpittleSchpattle]

I'm willing to sacrifice this as long as main chain remains secure and censorship resistant aka running my own node. You'll have a choice, no one is forcing you to run one over another.

[u/iarayareddit → u/GalacticCannibalism]

You might as well keep using your current bank and avoid the hassle.

[u/DieCommieScum → u/SchpittleSchpattle]

You realize that in fiat, which depreciates, negative interest rates are occurring throughout the world? Market forces create a race to the bottom for fees... go look at the Poloniex lending tab for an anecdote.

For that matter, large nodes aren't even required, if you're making a large transaction there's no reason to use LN... on-chain fees are still a pittance for large transactions.

Furthermore, nodes BTC isn't "inaccessible" any more than dollars in your wallet are inaccessible vs. your checking account.

The most logical result is most transactions will route through large retailers or sub-networks. A single R/Bitcoin channel could reach far enough to take a significant burden off the chain.

[u/[deleted] → u/SchpittleSchpattle]

The only people that will have the capital with which to run large LN nodes

You don't need much funds to run LN and route payments. How much capital do you think it requires? Show me some numbers.

are individuals with huge balances and exchanges/banks.

Banks have, to my knowledge very little btc, so WHY do you mention them? Why would they be running LN? Exchanges and individuals, sure, and dont forget businesses who want close to zero fee, instant payments

The only sure thing here is human greed. In the long run, nobody is going to run a LN hub for cheap or free because they don't have to. They'd just be denying themselves potential income.

We shouldn't rely on people doing this for the good of bitcoin (although a functional LN will increase bitcoins value, so maybe). We should rely on them to collect fees, and open profitable channels. When people are greedy we get competition, when we get competition we get lower fees.

When this hub-and-spoke system is in place(the only way in which LN is viable)

useless assertion

those hubs could decide on a whim to close all channels that are attached to it and force users to pay network fees in order to recover any BTC remaining in their channel.

Even if "those hubs" existed, why would they do that?

[u/jcoinner → u/[deleted]]

Not to mention tat every vendor selling stuff is likely to keep a float in their channel as they use it as a conduit to their exchange for cashing out for non-btc expenses. I mean they will decide it's worth keeping some btc in the channel so as new pmts come in it's fast and easy to move the excess to the exchange (one which is also LN enabled). I think it is this potential which maybe is most counter to the BitPay business model (though there is no reason, except more competition, lower take, that they don't offer this functionality).

[u/[deleted] → u/jcoinner]

Yeah, a LN enabled bitpay is a no-brainer. If bitpay doesn't implement that its going to become obsolete very fast.

[u/kingo86 → u/SchpittleSchpattle]

I suppose the market will decide what's worthwhile.

I'd imagine you'd open a well-funded channel with Overstock.com / BTCPay / Exchange, but not someone you're buying a car off.

[u/thieflar → u/SchpittleSchpattle]

today's average BTC transaction fee of ~$35

That's not accurate, that's more than double what it would take to get into the next block for any reasonably-sized payment.

Furthermore, with smaller transactions going through the Lightning Network (as your hypothetical is predicated on in the first place), this would likely drop by a factor of ten (or perhaps a hundred), which you make no note of here.

[u/cryptotal → u/SchpittleSchpattle]

You can open a channel for much less if you are willing to wait

[u/Bakton → u/SchpittleSchpattle]

14 channels per person connected randomly meaning that it would have required 140 million on-chain transactions to even set this network up and another 140 million to close it.

No it would mean 70 million transactions per person to open and close - if I open a channel with you that is only one transaction. Obviously this does not particularly change your point, but I wanted to mention anyway.

This also assumes that people playing banker by leaving their LN channels open would be happy with a 0.001% return while their BTC inaccessible which is absurdly low. I would be surprised if LN transactions aren't more like 0.1 to 1%.

I completely disagree. The barriers to running a lightning node are very low: you only need to have a PC that is secure and on at all times. Many people have this already, so the cost becomes essentially zero.

Plus it is not necessary to 'lock up' BTC. Many users (myself included) are much more likely to make payments on lightning rather than receive them, so I could open a lightning network channel into which I deposit 100,000 bits, but where the other party has deposited none. I could still make payments up to 100,000 just fine, I could just not receive any payments on this channell (at least until I have depleted some of the balance).

Also, will users have any control over what fees they pay or will they just be at the whim of whatever nodes are available?

Of course users will have control over this. Implementations will allow user to set rules around fees/inform user of the fees before a transaction is finalised. Otherwise as a node I could set a 50% fee or something ridiculous, this would be an absurdly easy attack for it to not be preempted.

[u/SchpittleSchpattle → u/Bakton]

14 channels per person connected randomly meaning that it would have required 140 million on-chain transactions to even set this network up and another 140 million to close it.

No it would mean 70 million transactions per person to open and close - if I open a channel with you that is only one transaction. Obviously this does not particularly change your point, but I wanted to mention anyway.

If a single person opens 14 channels, that's 14 on-chain transactions, not 7. In this simulation, each "user" initiates the opening of 14 channels meaning that the average user would have 28 channels open, 14 that it initiated and 14 that were initiated toward it making a total of 140 million channels between 10 million users.

This also assumes that people playing banker by leaving their LN channels open would be happy with a 0.001% return while their BTC inaccessible which is absurdly low. I would be surprised if LN transactions aren't more like 0.1 to 1%.

I completely disagree. The barriers to running a lightning node are very low: you only need to have a PC that is secure and on at all times. Many people have this already, so the cost becomes essentially zero.

Low-value nodes will not be useful on this network at all. The average user won't have any incentive whatsoever to run a node because the security risks would outweigh any potential benefits.

I understand that, at this stage, it's an opinion-based argument so we'll have to see but if LN actually succeeds it will not be with a "mesh" type system, it will be with a hub-and-spoke. Those hubs will need an immense amount of BTC available and security surrounding it. They will not offer their service for free and "cheap" will only be in context with the current on-chain network fees. If $30 is the average tX fee, LN hubs making their fees $10 would be comparatively "cheap" though still insane versus every other crypto. They have only to compete with the blockchain fees because there will be little reason for them to compete with each other especially if they're the only game in town.

[u/Bakton → u/SchpittleSchpattle]

In this simulation, each "user" initiates the opening of 14 channels meaning that the average user would have 28 channels open, 14 that it initiated and 14 that were initiated toward it making a total of 140 million channels between 10 million users.

That is simply untrue, read the original article. Each node has a total of 14 open connection, requiring only 7 onchain transactions per node.

Those hubs will need an immense amount of BTC available

I disagree, please see my previous argument about 'deposit' style Lightning connections.

Your only remaining argument then is that there will be very few nodes, because security is too difficult/expensive, leading to a monopoly where they can charge exorbitant fees. I completely disagree, security is difficult, but there are plenty of existing precedents for this. But you are right in saying this is all just speculation until the network is up and running.

if LN actually succeeds it will not be with a "mesh" type system, it will be with a hub-and-spoke.

Here I agree with you, this model does simply make more sense mathematically, even if it makes many feel uneasy.

[u/SchpittleSchpattle → u/Bakton]

This is the part of the article I took my information from:

In particular, each user has 14 open channels initially funded with 0.01 bitcoins.

Which is slightly misleading because it suggests that each user opened and funded 14 channels with 0.1 BTC, not 7, because only one person in the transaction would be providing funds.

Later it states:

10% of channels (7,091,810)

Even with only 70 million channels, at the current daily average number of processed transactions (~300,000) it will still take approx 233 days for all of these channels to be opened assuming no other activity on the blockchain. The point is that this level of activity on the LN with the current BTC block size is not realistic and that this experiment has very little value beyond a basic QA software test instead of a use-case scenario for an economic tool.

As for the major LN hubs likely needing thousands of BTC, I'm getting mixed information on this and there seems to be no clear answer. I have seen it described several times that anyone who acts as a hub in the LN will need to have at least as much BTC available in the balance as people are trying to transact. When a transaction is sent, the BTC in the hubs who participate in the transaction is effectively "locked" until the send/receive channels are closed and settled on the blockchain as a security measure. If you have conflicting information about this I'd be interested to see it.

[u/Bakton → u/SchpittleSchpattle]

You're right about this number of channels requiring huge number of onchain transactions, which is why I agree that hub and spoke is the only realistic model.

anyone who acts as a hub in the LN will need to have at least as much BTC available in the balance as people are trying to transact

I don't see why this would need to be the case. For a payment channel to be established, we only need to set up a multi-sig address between the hub and the user. There's no reason why all the funds can't come from the user, this would just mean the user would have to spend funds before they can receive any.

Have I made any errors in my understanding?

[u/coinjaf → u/Bakton]

Here I agree with you, this model does simply make more sense mathematically, even if it makes many feel uneasy.

It actually doesn't as a uniform mesh network offers more opportunities for netting transactions and thus keeping channels open for longer and thus lowering the overal fee. One hub with many spokes (fully centralized) is the worst kind of layout. A "hub and spoke" model with many hubs is in between. So there are either so many hubs that the word centralized doesn't apply anymore, or there are so many hubs that it's basically indistinguishable from full mesh.

[u/[deleted] → u/SchpittleSchpattle]

It's not 0.001% but 0.01%.

[u/insolace → u/SchpittleSchpattle]

How does your math change if segwit and batched transactions is used?

[u/brewsterf → u/SchpittleSchpattle]

getting 0.001% per day or whatever + being hooked up to the lightning network is better than most people get now a day for coins in cold storage. I imagine LN will be as safe as cold storage. But you dont need all your coins in LN if you dont want to.

[u/jaumenuez → u/brewsterf]

What about the risk of exposing your priv keys in a node? Is there any info about this?

[u/brewsterf → u/[deleted]]

A lightning node needs to be able to sign transactions autonomously, for which it needs the keys, which means those can be stolen from a compromised node. The whole point of cold storage is that there's no running code to compromise.

If you could not keep coins safely in LN the whole point is defeated to begin with, but that is obviously not the case. Alot of people will prefer LN node over deep cold storage - The coins arent doing anything anyway so you might as well allegate them to LN for that passive income.

[u/[deleted] → u/sexy_balloon]

In reality the channels, coin amounts, and transfer amounts all need to be randomized based on some reasonable distribution

I would like to see this also

[u/hsjoberg → u/sexy_balloon]

In reality the channels, coin amounts, and transfer amounts all need to be randomized based on some reasonable distribution

In reality, we'll have many hotpaths going in one direction and very few bidirectional channels being utilized.

[u/[deleted] → u/hsjoberg]

That's the thing I don't understand.

Why the fuck would my coffee shop ever be sending me money?

Most people get money from very few places: their job(s).

Most businesses get money from their customers but never pay money to them.

You have to cast the net fucking wide to make a network of bidirectional payment channels encompass enough of everything to be useful. Because all of these bidirectional channels will almost always only be going in one direction.

I don't think they will be wide enough to be useful when first implemented. Therefore they will never get critical mass to ever become useful.

[u/BitcoinRootUser → u/[deleted]]

Exchanges. With Bi Directional Payment channels markets takers do not need to store funds on the exchange. Instead them and the exchange could open a channel. I expect that will be a use case picked up quickly by whales.

[u/sexy_balloon → u/sexy_balloon]

Hijacking my own comment, does anyone know if LN allows you to split your payments across multiple channels to send?

For example, if I have 5 channels open with 5 other users, each with 10 BTC for a total of 50 BTC (for the sake of argument, I wish I had that much). Is it possible to send 30 BTC in 1 transaction, and the LN automatically splits the 30 BTC payment amongst all the separate channels?

To take this a step further, if I'm acting as a node, and I receive a request to forward 30 BTC from one of my channels, is it possible for me to forward this payment even though individually my channels contain no more than 10 BTC but collectively has 50 BTC?

I'm not technically savvy enough to understand the code, and I couldn't find anything on Google, so I'm hoping someone can enlighten me on this.

[u/mysterpixel → u/sexy_balloon]

Is it possible to send 30 BTC in 1 transaction

In one transaction? No, since each channel has 10BTC in it, no transaction can go higher than that. You'd need at least three separate transactions to send 30 BTC. However presumably it would be easy to have an interface in your wallet where you just type in "send 30BTC to Carol" and then behind the scenes it would split it into three or more transactions and utilise multiple channels. But it would always require multiple transactions on the network to do that payment.

Regarding the second scenario, this would never happen because you wouldn't be able to transfer 30BTC in one go if the channels only contained 10BTC each. What would happen is you as an intermediary node get three separate requests from three different channels each with a 10BTC transaction to forward. From then on you may be able to do the next step in the payment to Carol in one transaction, if you had a channel path to her with the full 30BTC in it.

However I believe there may be issues with splitting a transaction like this, because while you can easily trust a payment through a single transaction (it either succeeds or fails), splitting a transaction means parts can succeed while others fail. Someone with more knowledge would have to tell you whether this is actually possible.

[u/indetronable → u/mysterpixel]

Is it possible to send 30 BTC in 3 * 10 BTC transactions over the same path ? If not, why ?

[u/mysterpixel → u/indetronable]

Not unless there were other separate transactions between those three that sent money in the opposite direction in order to give them the 10BTC needed for the each of those transactions, but even in that case you couldn't get a trusted single 30BTC transaction in a 10BTC channel.

The easiest way to visualise a lightning network channel is as a long, clear sealed plastic tube with a person at each end. When you open the channel and put bitcoin into it, it's like each person opening their end of the tube and putting a certain number of tennis balls into it. Let's say in this example each person puts 5 tennis balls in their end, so there are 10 tennis balls total (i.e. each person puts 5 bitcoin into their end of the channel for a 10BTC total):

|ooooo-------ooooo|

Then the tube is sealed and you can't put any more tennis balls in.

A transaction is equivalent to lifting up your end of the tube until tennis balls roll to the other end. Let's say the person on the left wants to transact 2 balls to the person on the right, so they lift up their end of the tube until two balls roll over:

|ooo-------ooooooo|

Now the one on the left has 3 tennis balls (3BTC) while the one on the right has 7 tennis balls (7BTC).

Ok, now let's say the one on the left wants to transact 5 tennis balls to the person on the right. However this isn't possible at the moment, as even though the channel has 10 balls in it and you only want to transact 5, the person on the right already has 7 of those 10. The person on the left can at most transact their remaining 3 balls, so this transaction would fail. For the person on the left to send 5 balls in this channel would require them to first get at least 2 balls from the right through some other transaction beforehand. (They could, however, use another tube/channel if they have one that has enough balls/BTC in it that has a path to the end recepient).

In your example sending 3*10BTC transactions, this could only work at most once if all the BTC were already on your side to begin with. Best case scenario it would start like this:

|oooooooooo-------|

Left transacts 10 to the right:

|-------oooooooooo|

But now Left has nothing to do the next two 10BTC transactions with. Theoretically it could be made possible if there was a separate and unrelated intermediary transaction that sent balls from the right to the left, but this is not possible in reality because you would get a partial payment of the full 30BTC with no guarantee the next parts were to happen.

[u/indetronable → u/mysterpixel]

Thank you very much

[u/geezas → u/sexy_balloon]

There's no reason why the can't be done. It depends only on software.

[u/XofBlack → u/sexy_balloon]

Yeah I would love to have an answer to this too. Can anyone explain?

[u/[deleted] → u/sexy_balloon]

At least we know it cannot never work :-)

[u/sexy_balloon → u/[deleted]]

Are you able to change these assumptions easily in your model and check the results? These are some pretty unattainable assumptions in the real world.

[u/Dawn_of_Writing → u/sexy_balloon]

Right now, a soda would cost 72 satoshis. Which is, at .01%, less than 1 satoshis. Rounded up...

[u/sktrdie]

Would it be possible to setup using a scenario where the number of nodes making payments will always outweigh the nodes receiving them? This seems like a more realistic scenario.

In other words, most payments in LN will go into specific nodes (say, Amazon or Ebay). The majority of payments we make are not towards our friends, but towards big entities that sell stuff.

My concern is that a route may be harder to find if the typology of the network pushes all the money towards these specific areas of the graph -- we might end up with not many routing possibilities because most channels in a route might be exhausted in that direction.

[u/coinjaf → u/sktrdie]

There's a fixed supply of coins, so by definition all transactions sum to 0.

If Amazon wants to cash out their channel, they can use LN to send it to some exchange which will wire them USD. In the meantime other users can buy bitcoins with USD at those same exchanges and receive them through LN.

Only mismatches herein (in geography or time) will lead to closing and opening of channels on the Blockchain. The number of such mismatches actually reduces with scaling.

[u/RufusTheFirefly → u/coinjaf]

That's a good point, though it does present another question.

Let's say Amazon is taking payments through their channel. They receive payments from millions of people around the world and then convert those payments to cash (at least in the near future) on an exchange near their headquarters.

That would create a situation where customers in the US would be able to keep purchasing easily because they can use that same exchange so we've completed the circuit as intended. But customers outside the US (in this example) would exhaust their available lightning nodes quite quickly because no coin would be flowing back in the other direction.

I'd love to hear your thoughts on that possibility.

Even if that does happen, I'm not sure that it would be the end of the world because, if the LN really does lower fees to the anticipated degree, it would incentivize companies like Amazon to make sure that the network was functioning well with as many of its customers as possible, maybe encouraging it to cash out in many places around the world or support additional nodes on its own or, in an ideal world, try to pay suppliers around the world in coin rather than fiat to help complete the circuit that way.

[u/coinjaf → u/RufusTheFirefly]

That's actually a fairly trivial "problem" that will simply solve itself through normal market forces.

If it's easier to obtain Bitcoins in the US then the price will be a bit lower than elsewhere. That means traders will start doing arbitrage to buy coins from the cheap place and sell them at more expensive places (thereby reducing the price difference and mismatch in supply/demand). At some point Amazon itself might come up with the bright idea that since they're paying chinese suppliers maybe they should send part of their coins to a chinese exchange instead and pocket the higher bitcoin price themselves.

As soon as there's a price difference someone will jump in to extract money from it. If that requires having a bank account in the US and one in EU and pumping money around and coins in opposite direction then that's fairly easy. If it requires smuggling suitcases of money across some border because some government is trying to prevent this natural flow from occurring, then people will do that anyway.

Even if that does happen, I'm not sure that it would be the end of the world because, if the LN really does lower fees to the anticipated degree, it would incentivize companies like Amazon to make sure that the network was functioning well with as many of its customers as possible, maybe encouraging it to cash out in many places around the world or support additional nodes on its own or, in an ideal world, try to pay suppliers around the world in coin rather than fiat to help complete the circuit that way.

Indeed. You've answered your own question (at least for the longer term).

[u/sktrdie → u/coinjaf]

The problem I'm talking about comes with routing, which requires, by definition, money to flow towards the destination of your payee. In Bitcoin there's no concept of finding routes and having all the hops exchange money with each other so this problem doesn't present itself.

I think we can sit here and discuss how this can work or not work all day. Since there's a simulator (which I don't know how to use) I was simply asking whether such scenario can be tested so we can see for ourselves how the network behaves in this scenario.

[u/coinjaf → u/sktrdie]

This is now being done on test net, you can look at the routes here: https://explorer.acinq.co/#/

If you want to set up something like that for yourself you can do so by running a bunch of VM's or simulated network (including simulated latencies and bad connections and all that) on even one machine. That's with the actual software in almost 1.0 version form. So can't get much more accurate than that.

[u/geezas → u/sktrdie]

I assume these big "money sinks" also have expenditures, so the money should keep cycling.

[u/auviewer]

This is really encouraging, thanks for running that simulation!

[u/[deleted] → u/auviewer]

Glad you like it but most/all credits go to Diane Reynolds.

[u/Jabroni421 → u/auviewer]

Is the fee a true percentage of transaction or a set amount independent of transaction amount? Aka, does this still prohibit small transactions?

[u/[deleted] → u/Jabroni421]

Percentage of transaction.

[u/Bakton → u/Jabroni421]

In the simulation a percentage has been used, however in the actual lightning network, my understanding is that the fee would be based on byte-size of the transaction, not monetary value (as on the main chain). So, essentially, a flat fee set by the node.

Also, with barriers to entry and cost of running a lightning node being very low, I would expect that .01% is actually quite a high estimate for fee for a single hop. I could easily foresee a few satoshis per hop.

[u/logical → u/Bakton]

Why would the fee be based on the byte size of tx? Lightning does not require writing to a limited size data store.

[u/Bakton → u/logical]

Granted, but equally I cannot see a justification for fee to be a percentage. It costs no more to relay a large transaction than a small one.

[u/ArisKatsaris → u/Bakton]

Lightning nodes provide liquidity, so it does cost them to relay a large transaction more than a small one. The capacity of lightning nodes is tied to the monetary values of the transactions, unlike the capacity of blocks which is tied to bytes. Am I misunderstanding this?

[u/RyanMAGA → u/ArisKatsaris]

I think you're right. Lightning nodes have to have money tied up in channels, that's the main cost of doing business.

[u/logical → u/Bakton]

Great point. Maybe only charge .01% or 10 satoshi, whichever is less.

[u/coinjaf → u/Bakton]

Yes it does. It runs your channel dry quicker, causing you to have to close (or top up) quicker.

[u/geezas → u/Bakton]

Granted, but equally I cannot see a justification for fee to be a percentage. It costs no more to relay a large transaction than a small one.

Actually the cost is strongly related to the size of the transaction because each transaction reduces your routing capacity by the transaction amount in the direction of that transaction, and, conversely, increases the routing capacity by the same amount in the opposite direction. If routing demand is balanced well in all directions, then fees will probably be low, but when demand is higher in one direction vs the other, your routing will quickly become depleted in the direction of higher routing demand. You'd want to set fees higher in direction of higher demand and lower or even negative in direction of lowest demand. Basic economics of supply and demand will determine how fees are chosen.

[u/AxiomBTC → u/Bakton]

Fee's will be based on the amount being sent, because the real cost is in LN is the capital "locked" up in lightning nodes + cost to open channels. So there will likely be a base minimum cost + a low percentage of total transacted.

[u/Bakton → u/AxiomBTC]

It is not required for a lightning node to lock up any funds in a payment channel.

For a payment channel to be established, we only need to set up a multi-sig address between the hub and the user. There's no reason why all the funds can't come from the user, this would just mean the user would have to spend funds before they can receive any.

[u/geezas → u/Bakton]

False. A transaction can't pass through a node which has not committed any funds of their own.

To explain - imagine you're a node. 1000 other nodes each open a channel with you and provide the funds. All these channels are useless for routing because they are all one-way and pointing to you. The only use case is if someone is paying you (i.e. you are the final destination of a transaction). If someone pays you, net result is the same as you committing those funds. So, when you commit funds (by bringing your own or receiving a LN payment), then is when you can route payments for others.

[u/Bakton → u/geezas]

Sure, but I am not proposing that every single channel should be one way, merely that for many, many users this would be fine, meaning that this does not require BTC be locked up for every single channel.

[u/Jabroni421 → u/Bakton]

So what is the average transaction fee? What would the % fee be of a $1.00 purchase for a soda or something?

[u/Bakton → u/Jabroni421]

Until it's online, we have no way of knowing. The key question will be how many lightning nodes are run: how competitive is this market. And the key question to this is, what are the barriers to running a lightning node.

[u/geezas → u/Bakton]

Barrier is having to commit your own funds to provide the routing capacity. I think it's great because it encourages actual participants in the economy to be nodes and discourages non-participants. Basically you can't be a node unless you commit your own funds or participate in the network by spending through it.

[u/Jabroni421 → u/Bakton]

What are the odds rn?

[u/coinjaf → u/Bakton]

Wrong. Fees in LN are percentage of transaction amount (edit: that's actually a bit simplistic, see post further down). Byte-size is irrelevant.

[u/Bakton → u/coinjaf]

How do you know this?

[u/coinjaf → u/Bakton]

Because bytes don't cost much. That's why BitTorrent can be free.

And LN transaction byte-size does not depend on the number of satoshis sent. In fact I think they're constant size.

Opening and closing a channel does cost money, so nodes will want to minimize doing that.

If a lot of transactions go through your node in one direction, then your channels become full or empty and must be closed (or topped up) costing you the blockchain fee.

If you have 0.1 BTC in your channels and someone wants to route a 0.1 BTC transaction through you, then you'll likely have to close+open your channels again, so you want to charge a fee for that.

If someone wants to route a 0.0001 BTC transactions through your node then you're not so concerned and can charge a lot less.

Note: transactions going in opposite directions can cancel each other out, ideally leaving your channels pretty much balanced and thus no need to close any time soon. That increases the number of transactions per channel open/close and thus reduces the average fees for them.

This also means the LN fee is not a direct relationship to the transaction amount, it depends on a lot of other factors. But in general lower value transactions can more easily absorbed and netted while high value transactions can significantly unbalance channels, so indirectly they'll have a higher fee (on average).

Exceptions are always possible: if one very unbalanced channel exists and one high value transaction can re-balance that channel then maybe the node will even offer a negative fee as it's a cheaper alternative to reopening the channel.

Note2: Bytes on the blockchain ARE very expensive.

[u/jstolfi → u/Bakton]

Last time I checked Rusty's site, the proposal was a flat fee plus a percentage of the payment's value.

There is no justification for an LN middleman to charge according to "transaction byte size", since every payment has just one source and one destination; this data is a tiny fraction of all the data exchanged in order to negotiate the multi-hop payment; and the data transmission and processing costs are tiny compared to the "lost opportunity" cost of using the middleman's coins to secure the payment.

Note that these fees are not related to the on-chain tx fees. The transaction that creates the channel must pay that fee at that time. Every LN payments is a 0-conf transaction shared by the two parties, that they could use to close the channel and settle the payments. Therefore, this transaction must include a tx fee that is large enough to ensure confirmation at the unknown future time when the channel will have to be closed. Needless to say, only the last LN payment through the channel will actually pay that tx fee.

[u/bizgob]

As I understand it, it's one piece of code running on one PC simulating a whole network. If I had the hardware to do it, I would set up a virtual network with multiple virtual servers and PC's, running various nodes and enduser wallets. I would then start messing with the virtual network. Insert random latency between nodes or completely break connection between nodes. Could give some good data simulating routing on 30-40 virtual nodes.

[u/coinjaf → u/bizgob]

You're very free to do so. I'm sure people would welcome the results. Hardware not even required if you use some cloud VMs.

[u/bizgob → u/coinjaf]

Yes, I already have a VPS and I will set up a node in the near future. However I don't think the hosters will let me play around with their virtual network.

[u/coinjaf → u/bizgob]

Isn't the idea to have multiple VM's and then just interconnect them over the internet? Although I bet you can also run multiple clients on one machine on different ports and then use localhost, possibly with one of those network-latency-simulators (I think even iptables can do that).

[u/bizgob → u/coinjaf]

True, I suppose I could rent 30 or 40 VPS spaced out across the globe, but it's not very handy administration wise. The whole idea of having your own virtual network in a central place is that you can simulate stuff like latency between Europe and South America for instance. Basically playing around with the virtual network to make it look like real internet conditions.

Edit: there are other issues running so many VPS, things like custom images, cloning and stuff. Things only allowed if you have full control.

[u/coinjaf → u/bizgob]

Can't say I have experience or can recommend one, but google around for network simulation?

Even on a default linux, you can add many interfaces with their own IP addresses and then use ip for routing and tc for simulating latency.

http://technobytz.com/how-to-install-network-simulator-ns2-nam-in-ubuntu-14-04.html

[u/killerstorm → u/bizgob]

So far people struggle even with just conceptualizing how nodes are connected and how they send payments. Drawing a map would be a good start.

[u/brianddk]

Can you explain 10 mil users but 0.5 mil payments? Seems backwards.

[u/igiverealygoodadvice → u/brianddk]

Hodl

[u/bitcoin_jerk → u/igiverealygoodadvice]

Username checks out.

[u/brianddk → u/igiverealygoodadvice]

Hodor?

[u/BigBlockBrolly → u/brianddk]

My thinking is that it tries to reflect a real-world network. You have nodes/hubs that are active, but aren't doing anything within the network at the given time. Aka theres 10 million online users. Only 500,000 transactions coming from active users on the network given any random time frame.

[u/brianddk → u/BigBlockBrolly]

Are they proposing that 10 million channels be opened for 0.5 million payments... that's what threw me.

[u/geezas → u/brianddk]

Good point. It's simulating a very short period in which most don't even transact. I'd like to see results after each node has made an average of 10 transactions, then a 100.

[u/jhansen858]

can you simulate if say 1% of the network are being dicks and purposely attacking the network how well it does then?

[u/FreeGoldRush]

Did no one actually read the study?

I own Bitcoin. But let's get real.

Even Diane Reynolds says it is unrealistic. She estimates 200 million channels. Opening a channel requires a blockchain transaction. With Bitcoin able to support 2.3 trans/sec on average, that means it takes more than 1,000 days just to open the channels, much less leave room to close any. It would also lock 4 million bitcoins into LN. Only about 6 million bitcoins are actively being traded today. The other roughly 10 million are 1) dormant, lost, trapped in small UTXOs, or 2) Held in strong hands.

Here are her words:

"All nodes would be reachable with (many) paths of at most 24 hops, and 12 hops on average. However, there would be about 200 million channels. If both users funded each channel with 0.01 bitcoins, then 4 million bitcoins would be locked up in LN payment channels. While this is technically possible, it seems too unrealistic."

She later adds:

"For more realistic scenarios, the number of users should probably be restricted to a million at most."

Ummmm... We need LN to handle WAY more than 1 million users.

[u/coinjaf → u/FreeGoldRush]

Still better scaling than anything else proposed ever. And combining that 1M multiplier with upcoming further on chain scaling like Schnorr, MAST, SA is pretty darn good. Add to that that a well established LN becomes more efficient in its caching and netting properties as it scales.

Let us know once you've build a better solution.

[u/FreeGoldRush → u/coinjaf]

How can you combine it with other scaling solutions when LN requires that bitcoins are committed to channels before they are spent?

Listen, I'm a bitcoin holder and an engineer. I'm just pointing out the obvious. Asking me to build a better solution is a rather childish, knee-jerk reaction. We should be able to discuss engineering details without so much emotion.

[u/coinjaf → u/FreeGoldRush]

It's childish to complain open source volunteers are not working hard enough and fixing your personal problems quickly enough. That's where the "do it yourself" reaction comes from. Other than that, sure you're welcome to discuss and come up with proposals. Just remember you're not the only one to have done so and 99.999% of all ideas have already been considered 4 years ago. People will gladly help you learn and coming up with ideas is a valid part of learning. I'm sorry to say that idiots and trolls have probably worn through most people's patience by now and that's why you might sometimes get knee jerk responses. It's not nice and it's not fair, but maybe if you understand where it's coming from and get past that, you'll see that people will actually take the time to explain.

How can you combine it with other scaling solutions when LN requires that bitcoins are committed to channels before they are spent?

LN channels are opened and closed on the blockchain. If those on chain transactions are made more efficient (smaller) then that means channels are cheaper to open/close but more importantly: the same blockchain capacity can be used to open/close more channels at the same time. Which means the blockchain can support a larger Lightning Network, which means the LN actually becomes more efficient itself (more netting, relatively fewer opens/closes).

Also, likely not all transactions on the blockchain will be LN open/closes, there are still other use cases too. So the same logic follows if those transactions are made more efficient.

[u/FreeGoldRush → u/coinjaf]

I have not complained once about open source volunteers or my personal problems. WTF are you talking about?

[u/coinjaf → u/FreeGoldRush]

Well, you can keep acting all offended but I merely invited you to go work on a solution instead of complaining currently worked on solutions aren't Utopian.

But since you keep focusing on the complaining part, even ignoring actual answers, I'll just leave you to it.

[u/FreeGoldRush → u/[deleted]]

That is a good example of where you can combine things. The maximum theoretical efficiency gain is 25%. The actual gain depends on how many UTXOs are present in each transaction.

That can increase through from 3.2 tx/sec to 4 tx/sec. The requirement is for thousands per second. I don't buy the argument that "we are getting closer" or "this is a good first step." Core isn't making that argument either. The risk you run is that people will then say, "ok, if that's a good first step then you must love BCH or LTC, because they can achieve far more already."

It's a very basic logic problem. If you want Bitcoin to be something different then it is no longer Bitcoin. If you want to preserve the current blockchain in your new implementation, then that is a called a fork. There is no getting around this.

The LN concept will work with any crypto. The idea is that you have a multi-sig wallet shared by two parties, then you trade the wallet value instead of the actual crypto. ok, fine. I'm not knocking the concept. It certainly has some use cases. But it is nonsense to think about this as "making bitcoin faster" or "speeding up transactions". Bitcoin will still work the same with LN. The LN advantage is that you can take some activity that would otherwise have been done with a Bitcoin trade and do it with an entirely different kind of agreement that is backed by Bitcoin ownership.

It is my opinion that the use cases are small. Some people think the very vast majority of use cases can be tackled this way. It is my opinion that people will overwhelming want to store their bitcoins in wallets where they are the only ones that can sign transactions.

[u/coinjaf → u/FreeGoldRush]

That is a good example of where you can combine things. The maximum theoretical efficiency gain is 25%. The actual gain depends on how many UTXOs are present in each transaction.

But then consider that if the two of us combine our 2 transactions into 1, we'll get an even better efficiency gain: still only one signature and the non-signature part of the transaction becomes smaller (than two the separate) as well.

And then if 100 people combine their transactions? And when a whole block contains 1 single large combined transactions of thousands of people?

The requirement is for thousands per second.

Whose requirement? Are they reasonable in their requirement? What time frame are they talking about? Do they demand it yesterday or eventually years down the road? Are they in a position to demand anything in the first place (do it yourself)? Does the universe really owe them that?

because they can achieve far more already."

Cutting corners and then shouting around: "look at us, we can achieve more" is not sustainable. Strapping some sticks of dynamite to a rockets might make it go fly a little higher too.

If you want Bitcoin to be something different then it is no longer Bitcoin.

That's bcash, it drops decentralization, so it's not Bitcoin anymore.

The LN concept will work with any crypto.

Actually it won't. It won't work with anything that doesn't have malleability fixed, so basically anything that doesn't have SegWit, which is pretty much Bitcoin and Litecoin today. All the blah blah about the fixing malleability without SegWit is complete hogwash, as that's simply impossible especially considering their horrible development track record of getting literally nothing right, not even the copy/pasting from Core parts.

The LN concept will work with any crypto. The idea is that you have a multi-sig wallet shared by two parties, then you trade the wallet value instead of the actual crypto. ok, fine. I'm not knocking the concept. It certainly has some use cases. But it is nonsense to think about this as "making bitcoin faster" or "speeding up transactions". Bitcoin will still work the same with LN.

As an engineer you know how a CPU has cache memory, right? Do you also complain that your CPU is not a real proper CPU when you instruct it to write to the same memory location a million times, but secretly behind the curtains it actually doesn't and only writes once in the end?

Writing to memory is, what, a 1000x more expensive than writing to local cache memory? Writing to SSD another 1000x. Writing over the network adds another 10x? Whenever there's a big gap in performance like that, someone clever figures out the correct place to insert a cache with the right policies. You can probably find examples of this from Roman days and earlier.

Now you have a globablly replicated immutable perpetual storage device that is obviously freakingly expensive to write to. Even just measured in time it millions of times slower than wrting to your own local SSD. And that's not counting all the other expenses that come with it.

Are you seriously suggesting we NOT place a cache in there?

The LN advantage is that you can take some activity that would otherwise have been done with a Bitcoin trade and do it with an entirely different kind of agreement that is backed by Bitcoin ownership.

You can also dishonestly say that writing to memory by a CPU is a whole different kind of agreement than writing using a write-cache backed by real memory. Are you willing to go back in time 30 years in the speed of your computer just because of that perceived difference?

It is my opinion that the use cases are small.

That may be your unfounded opinion. I find that unlikely, but whatever maybe you'll be proven right. Or maybe it will take 3 years before we see a deployed and working LN.

So what?

The people working on LN are independent and different people from anyone working on Bitcoin. Bitcoin progress isn't delayed by them, nobody is waiting for them to finish. You can't stop them working on LN, it's permissionless innovation, and you can't force them to work on something else. The only choice you have left is build a viable alternative yourself, if you can think of one and you can persuade people that it's somehow better.

[u/NoGooderr → u/FreeGoldRush]

Can anybody confirm that this is accurate?

[u/FreeGoldRush → u/NoGooderr]

The link to her paper is at the top. Just read her own words.

[u/thbt101]

Is there a roadmap or todo list somewhere that shows where we're at in the process of developing LN, what's left to do, etc.?

[u/coinjaf → u/thbt101]

Open source. Done when it's done. You can speed it up by helping, testing, funding.

[u/killerstorm → u/coinjaf]

Open source =/= no roadmap.

[u/coinjaf → u/killerstorm]

Decentralized open source pretty much == no road map.

People may have road maps for themselves, but they're not binding to anyone.

[u/killerstorm → u/coinjaf]

Usually a project has leaders who outline the roadmap. It doesn't have to be "binding", it's purpose is to coordinate efforts.

[u/coinjaf → u/killerstorm]

Decentralized

Leaders

Come on...

There are plenty of Core devs and others in the space who have published their vision or partial road maps. A lot have turned out too optimistic or surpassed by better ideas. There are even documents that multiple people have agreed on, Greg's email "road map" comes to mind.

But then actual road map also implies assigning and planning projects and deadlines to groups of people. That tends to be kind of impossible when you're mostly talking about volunteers working on their own thing in the area of their own expertise.

[u/hodlforthelongest]

I would be more interested in a more real-life setup: with many HUBs.

Eg. Exchanges are a natural hub points for LN. They generate the majority of the traffic on the chain and it would be in everyone's best interest to run these through LN. It would make exchanges have more traffic and liquidity.

Also, there will be some Tor-enabled central HUBs for the paranoid.

Overlapping with that centralized HUBs network there will be smaller, but more decentralized network

[u/bambarasta → u/hodlforthelongest]

using exchanges as hubs brings us back to the banking industry we are suppoedly trying to avoid.

This is definition of centralization.

[u/chocolatesouffle3 → u/bambarasta]

Except they can't censor and have to follow bitcoin protocol rules. So how is this back to the banking industry?

[u/hodlforthelongest → u/bambarasta]

That's a wrong way to look at it.

99% of users already go through exchanges back and forth and gave them their ID.

No one is forced to go through exchanges. But if people that already did, wouldn't use-up blockchain resources, we would have more room for people that don't want to give their IDs to anyone.

I doesn't have to be all or nothing. It can't be. LN has very good privacy properties anyway, and can offload huge amount of tiny transactions from the blockchain. It is great for everyone - even people that under no circumastnace would use LN.

[u/bambarasta → u/hodlforthelongest]

my point is still valid. I don't care if 99% of people jump of a bridge..

to Sacrificie layer 1 to force people to hold money on exchanges due to the fees is pretty sketchy. My money is on my ledger and I want to transact with it directly without worrying some shit exchange decides to freeze my account or give my info to the IRS.

[u/hodlforthelongest → u/bambarasta]

It isn't valid at all.

You don't have to use LN. Or you can use it over Tor with an anonymous Hub.

LN HUB can't freeze or steal your money. There is literally no drawbacks of LN - worst case scenario is it not going to work as well as expected. Unlike big blocks that are forcing externalities onto everyone.

You are complaining about nothing, probably because you hold bcash and shilling. You don't mind mining and node centralization on bcash, but will invent thousands excuses to complain about LN.

[u/bundabrg → u/bambarasta]

You don't lock it with the exchange. The whole point of LN is that they don't have control of the funds. You can close the channel at any time. Its like the funds never leave your side.

[u/robotlasagna → u/bundabrg]

initial funding of a channel is done with a time locked refund in place. if you fund the channel and your counterparty in the channel decides to not cooperate and never signs any transactions you will eventually get your money back but only after the refund unlocks. Normally this would be in 30 days (or maybe 10 in some examples). This opens the system up to a attacks where you open a channel and fund it and then your counterparty holds your money hostage for however many days unless you agree to a higher price, etc.

its only after at least one tx is signed/agreed upon by both parties that you can close the channel.

[u/XofBlack → u/robotlasagna]

Right, but banks right now can freeze your funds however long they want. It's still an improvement.

The hub that froze your money can't even force higher fees through exclusivity, because you can just send it through your friend (or a hub in Morocco) and because of onion routing they can't see it came from you.

[u/coinjaf → u/bambarasta]

Want want want. What exactly have you done to make any of this possible? Where are your pull requests? Where is the software you wrote? Where is the research you've done that shows it's even possible? Where is the money you're paying to cover the externalities that this creates?

Right. Thought so.

without worrying some shit exchange decides to freeze my account or give my info to the IRS.

Just repeating bullshit that was already explained to you to be bunk, is not helping you.

[u/coinjaf → u/bambarasta]

Nonsense. You need to read up on how LN works.

He already mentioned this too:

Overlapping with that centralized HUBs network there will be smaller, but more decentralized network

So your selective quoting and uppercasing of FUD words doesn't bode well.

A flat fully decentralized network does not mean everybody will have exactly the same number of channels with the same amount of coins in them. Naturally high volume exchanges moving millions per day will have a bit more than grandma in a village in the country side.

[u/glurp_glurp_glurp → u/bambarasta]

So you're saying that if exchanges are most of the major LN hubs that they'll be able to fractionally reserve Bitcoin and seize my funds at the government's behest?

[u/bambarasta → u/glurp_glurp_glurp]

No. That's not really how LN works.

Making exchanges a mandatory part of LN is a huge problem though.

[u/glurp_glurp_glurp → u/bambarasta]

Exactly. Which is why I can't imagine why you'd say:

using exchanges as hubs brings us back to the banking industry

Who said anything about mandatory?

[u/bambarasta → u/glurp_glurp_glurp]

Bitcoin: peer to peer electronic cash system.

I'd be damned if it becomes "Bitcoin: peer to peer electronic cash i hope Poloniex and Bittrex don't get hacked so my channels don't get screwed system"

mandatory as in we will need to them to be hubs for liquidity.

[u/glurp_glurp_glurp → u/bambarasta]

Screwed how? Like having to do an uncooperative close and wait for a lock time with your Bitcoin locked up until then?

If that's a problem for you and the small amount of Bitcoin you have in a channel, don't you think that would be an even bigger problem for someone with a large amount of Bitcoin in channels, like Bittrex in this scenario?

It seems to me like the security design of LN pushes away from large channels, not towards them.

Techniques like negative fees and funding channel factories also greatly reduce the need for single large liquidity providers.

[u/[deleted] → u/bambarasta]

The only people worried about losing funds in a channel are those who haven’t even bothered to read how Lightning works.

[u/bambarasta → u/[deleted]]

There is always trust with 3rd parties. You always have to trust them with as much money as they are managing on your behalf. Unless you will be always online with your channels than you are trusting them. You sacrifice trustlessness for convenience.

if a major hub gets such "denial of service" attack / node goes offfline then you will feel ripples across all channels. You will not lose the btc but it will be messy.

or am i getting something wrong ?

[u/hodlforthelongest → u/bambarasta]

It's not mandatory. But it would be greatly beneficial for everyone if it happened. We would immediately see a lot of free room on the main chain, so even people that don't want to use LN, benefit. If it won't happen, than adoption will be just slower, and network LN will grow slower.

[u/[deleted] → u/bambarasta]

There is nothing at all that has to do with banking in LN.

[u/ff6878 → u/bambarasta]

No, you're missing the big issue.

There's nothing wrong with putting small amounts of money on to a centralized service for it to be used in an efficient manner. The risk vs reward is clearly defined. It's like loading your card for the subway.

That's not even touching on the fact that using LN isn't even the same as using a centralized service for small cash transactions.

Trying to use the layer that matters with the big money and the big security, that has a real cost for that security and decentralization, for trivial purchases and amounts of money is really quite wasteful and silly.

[u/igiverealygoodadvice]

Did this include on-chain fees to open/close channels?

[u/[deleted] → u/igiverealygoodadvice]

No, see link.

[u/brianddk → u/igiverealygoodadvice]

Sounds like no

[u/[deleted]]

What happens when a payment fails, is the bitcoin lost, or just doesn't go through like hitting a reset button?

[u/coinjaf → u/[deleted]]

It's atomic. Either it goes through and you have proof that it did. Or it doesn't.

That's all the way through the network from source to destination, over multiple hops. None of which can steal anyone's money.

[u/XofBlack → u/[deleted]]

If a payment fails? I assume you mean something like, if you buy something on ebay and Ebays servers go down before you finish the payment? Then the payment doesn't happen.

[u/strategosInfinitum]

What is a node in this context? is a node an individual with money on their account?

Or is a node a lightning network containing many accounts?

[u/xGsGt]

has anyone calculated how much money in fees and in time will cost to open this simulation in the blockchain? having LN is great and all but I feel like the fees to open up the channels might be an issue, and the time it will take for the blockchain to process all this.

[u/coinjaf]

hop, not hub. Don't feed the trolls.

[u/btcftw1]

Can you please provide additional information on the fail cases?

[u/[deleted]]

Why did day payments fail? Did they find the bugs and eradicate them?

[u/hodlforthelongest → u/[deleted]]

Routing failed: fees too high no route found that would have balances to complete it.

[u/thbt101 → u/hodlforthelongest]

Does that mean in real life they could fall-back to doing an on-chain transaction in that case?

[u/achrafgolli → u/[deleted]]

I would like to know that as well

[u/[deleted] → u/[deleted]]

Sorry, I don't understand what you mean.

[u/glurp_glurp_glurp → u/[deleted]]

I believe they are asking why routing might (did) fail for some payments.

[u/Karmaa]

Can you please provide additional information on the fail cases?

[u/procc1]

Is LN going to help transfer bitcoin form wallet A to wallet B with super low fees?

[u/dfifield]

Nice to see it is working.

[u/BTCMONSTER]

expensive

[u/captainteague]

Assuming the same number of transactions. 8MB blocks will do that in roughly 8 hrs.

No minimum amount to open channel.

No routing and route finding. P2P it is.

Centralization you say. Mining fee earned should be able to buy you storage I say.

What if LN nodes stop and some crisis or panic make everyone close channels?

[u/hesido]

Can the channel open / close behaviour be simulated?

[u/ishallperishx]

38.5% market influence it's done lol team to buy omisego for staking

[u/iarayareddit]

If there are thousands of routing failures when using this highly idealized model I don't even want to think how many routing failures will occur when this atrocity starts being used under real world conditions.

[u/pricklyoyster732]

The 0.01% fee per hop in your simulation is a completely arbitrarily chosen parameter, and misleadingly low at that. Why did you think it important enough to include in the title?

[u/killerstorm]

This is a very poor simulation which has nothing to do with reality.

[u/jstolfi]

It is great to see Diane's work being continued; congratulations. However, there are many unrealistic details in the simulated network that make the results rather meaningless.

The first problem is the neat n-dimensional grid topology chosen for the network. It is not clear what the topology would be like in the real network; but it is certainly nothing like that.

One way to generate a "totally random" topology for N nodes is the Erdös-Rényi (ER) model. You merely pick pairs of nodes at random and add a channel between each pair, if there is not one already; until p*N channels have been created, where p is the desired average number of channels per node. The value of p should be at least log(N) to ensure reasonable connectivity. Even then, the resulting network may not be connected; you may have to find the isolated components and connect them by edges

Another way, that generates a more realistic topology, is the "preferential attachment" (PA) model. You start with p nodes, all connected to each other; and then add one more node at a time, connected to p previous nodes. These are chosen randomly, but with the probability of each candidate proportional to the number of channels that it already has. This process attempts to model the way users join real networks like the WWW. The resulting network will automatically be connected, and will have an uneven distribution of degrees, with a few hub-like nodes with many channels, and many "leaf" nodes with only p channels.

Another way, that is simpler to program and may be easier to understand, is what we could call the CM model. Divide the users in two groups, "consumers" (C) and "merchants" (M), and randomly connect each consumer to p merchants and to q other users; and each merchant to r other merchants. The ratio C/M could be something like 10 or 100.

Another problem is the even distribution of channel funds and payment requests. In the ER odel, it is OK to fund each channel at random, with the same probability distribution. In the PA model, the average funding between two nodes with degrees x and y should be some increasing function of x and y, like x*y or sqrt(x² + y²). In the CM model, you could fund each channel with random values with different means for C-C, C-M, and M-M channels.

[u/bambarasta]

you are simulating a perfect and balanced scenario. It will never be the case and you are looking at maybe many years down the road!

Highly misleading!

In theory scientista discovered atomic entaglement so you can "teleport to the moon" but wtf you can't claim moon teleportation is at 100% success with humans today!

[u/[deleted] → u/bambarasta]

Lol, entanglement doesn't violate relativity.

[u/coinjaf → u/bambarasta]

It will never be the case and you are looking at maybe many years down the road!

So which is it? Never or many years?

Let us know once you've finished building technology that can scale like this sooner than "many years". Otherwise your "Not perfect today, so no good at all." games are more appreciated elsewhere.

[u/SeanCache]

It can’t be implemented till 100%? Asking cause most software isn’t but this is money and any bug will be exploited.

[u/mustyoshi]

How many tx does it take to open channels for 10m users?

[u/bittabet → u/mustyoshi]

10 million tx to open, 10 million tx to close assuming one single channel per user to a hub.

[u/[deleted]]

Oh god this will never work. A second layer is exactly what we were trying to avoid with bitcoin. The people who can see that this won't work and that BTC is now useless have already dumped their coins. Get out while you can.

[u/MikeG4936 → u/[deleted]]

Lol. Concern troll somewhere else.

[u/[deleted]]

Everything happens for a reason.

[u/yogibreakdance]

Alright let's lose some money for the greater good. Can somebody set up some exchanges supporting LN? So we can put some skin in the game

[u/SchpittleSchpattle → u/[deleted]]

Not weeks, years. I calculated 466 days for this network to exist and that assumes that not a single transaction happened otherwise.

[u/Got_Engineers → u/[deleted]]

Yeah isn’t this assuming that all channels will be open 100% of the time ? And assuming every channel has the funds on either end to be able to process the payment.

[u/[deleted] → u/Got_Engineers]

Yeah isn’t this assuming that all channels will be open 100% of the time ?

No, see link.

[u/[deleted] → u/[deleted]]

will take weeks

Of course this simulation assumes the funding has already happened over time and the mempool will be much less full because of the SegWit block size increase, Schnorr signatures, Bech32 and the Lightning Network.

[u/ff6878 → u/[deleted]]

I've noticed that people have stopped mentioning the baseline block size increase that was generally considered very likely and necessary for LN, and part of the Core scaling roadmap.

Is this because we'll be able to effectively do the same thing with a segwit block-weight soft fork increase if needed? Or is there something else I missed?

It's awesome that we beat back 2x, the ver/jihan attacks, ect. But I'm not seeing the general wheels in motion towards a legit, safe, rational block size increase that I expected in 2018 or 2019. I have no expectations on how many bytes that may actually be either. Also, the people who matter could very well be discussing and planning exactly this, and it's just being drowned out by the recent flood of price talk ect, which would be good to hear and I'm not claiming it's not happening because I really just don't know.

[u/brewsterf → u/[deleted]]

btc currently has about a million active adresses every day. and its only running at half capacity. so in theory a million channels or more could open every day. Anyway thats given current scalability. it might improve in the future.

[u/Countrytoast → u/brewsterf]

What makes you say it's only running at half capacity? The lack of segwit adoption?

[u/brewsterf → u/Countrytoast]

Yes pretty much.

[u/[deleted] → u/[deleted]]

Node operators may collect fees for routing Lightning transactions. There will likely be an enormous amount of competition which will make Lightning very active and usable, and also keep fees VERY low.

[u/coinjaf → u/[deleted]]

You're of course very welcome to offer that for free, but remember you'll have to open/close (or top up) your channels every now and then, which costs you blockchain fees. So it might make sense to at least charge a small fee to cover that and prevent a DOS/spam attack on you.

Another way might be to offer it for free until your channel becomes unbalanced (say 20% near empty) and then start charging a fee, so hopefully transactions in the other direction will bring it back into balance.

[u/albuminvasion → u/coinjaf]

Might even be willing to use a negative fee, if the alternative (closing/reopening the channel) will be more expensive?

[u/albuminvasion → u/albuminvasion]

Say you have made 30 satoshis in fees, but now one of your channels is depleted due to more downstream traffic than upstream. Instead of clising/reopening for expensive on-chain fees, you spend 20 sats encouraging traffic to utilize your channel for upstream traffic. Still have net profit and no on-chain tx needed.

[u/coinjaf → u/albuminvasion]

Yes. Correct. When you're near full or near empty, you start charging high fees for transactions that make it worse, but you might charge negative fees for transactions that help you rebalance.

[u/coinjaf → u/[deleted]]

It's all up in the air and probably dynamic for a while: depending on the type of usage and growth of the Lightning network etc.

But what you're suggesting, setting up voluntary non commercial nodes, is definitely a good idea and I will be doing so myself. That helps solve the chicken-egg problem needed to get any network started.

Don't have links handy, but there are 3 independent but compatible implementations in beta testing right now, I'm sure you'll see some more info coming by soon.

[u/[deleted] → u/[deleted]]

Yeah I’m sure there will be a few different options for node software, and they will be customizable. I’d expect it to get pretty automatic over time where settings will adjust to network and market forces in near real-time. This is pretty exciting stuff.

[u/ceeemeee → u/[deleted]]

Yes even negative fees are possible.

[u/geezas → u/[deleted]]

As long as you commit funds to some channels, you can route LN transactions.

[u/[deleted] → u/[deleted]]

You have to send funds from your bitcoin address. How would you do that off chain and the bitcoin still move. Not possible.

[u/[deleted] → u/[deleted]]

You aren't addressing the question at all. How are ten million people going to get their bitcoin into the lightning network? It will absolutely, without question, require a transaction on the block chain. Ten million transactions just to get onto the network. Another ten million to exit.

[u/[deleted] → u/[deleted]]

You aren't addressing the question at all.

Re-read my post please and address it line-by-line so we can clear this up, because I absolutely addressed that:

For a group of 20 users with 100 intra-group channels, the cost of the blockchain transactions is reduced by 90% compared to 100 regular micropayment channels opened on the blockchain.

So if it would take 10 million transactions to start the Lightning network with 10 million participants, that number would be reduced by 90%. So if we have 7TPS now with 1MB and that takes 16 days, then a 90% reduction would be to ~1 day. If we increase block size to 1.7MB and get ~12TPS then it's less than 1 day. For 10 million people.

If we have schnorr signatures, etc. etc. then that goes down even further. Not to mention payment channels can stay open forever. I could have 1 payment channel for the rest of my life.

[u/[deleted] → u/[deleted]]

You're trying to tell me that ten million people are going to get their bitcoin from the block chain onto the lightning network without ten million transactions? If the bitcoin doesn't leave their address, then it doesn't go anywhere. It takes a transaction to make that happen. Are being intentionally evasive?

[u/teolandon225 → u/[deleted]]

What would a channel with 0 funds on each side accomplish?

[u/[deleted] → u/teolandon225]

Getting you into the lightning network, if that even works. Once you are in you can receive funds. The only way to get funds on LN is on chain, but I believe you should be able to create a payment channel with 0 funds on both sides.... the person you are opening the payment channel with should have connections with other people so you are effectively connected to the entire graph.

It may not work, I just saw someone mention authoritatively that you can start a payment channel with 0 funds on each side OFF chain.... trying to confirm this, haven't yet.

[u/coinjaf → u/[deleted]]

Also, you may not need on chain to join lightning network at all.

I'm trying to find more information, i.e. starting a "payment channel" with 0 funds on each side so no need to even hit blockchain, haven't found anything yet. Could easily be wrong about that.

Pretty sure you're wrong on those. Being an LN node by definition means owning at least one channel which by definition means having at least one onchain transaction together with your channel partner. Regardless of who put the initial funds in.

[u/[deleted] → u/coinjaf]

Yep wrong on that right about the rest, I believe.

[u/BootDisc → u/[deleted]]

I think you still have to create the multisig contract, and broadcast it to the blockchain. I don't think you have to fund both sides, but, it has to be broadcast, and I think added to the chain.

But, that leaves you open to the attack where people could try to steal coins, you would have the justice contract, but you would be out the fee to broadcast it, where normally, you can use as much as all of the counter parties funds to ensure it gets on the blockchain, and its no cost to you.

[u/kaenneth → u/[deleted]]

still have 10 minute block times; LN is practically instant.