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Lightning Network - Does anyone know how it works?
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Lightning Network - Does anyone know how it works?

randvegetarandvegeta Member, Host Rep

Hello all,

I'm struggling to find clear information on how things work with Lightning Network.

1.) Does it require Segwit? If so, isn't it the case that Segwit adoption has reduced to just 10% of miners?

2.) If Segwit is not required, is it really 'trustless'?

3.) For opening a channel, does this require 2 or 4 transactions in total? I assume 4 as there are 2 parties and a transaction is required for opening and closing the channel (so 2x2 = 4).

4.) As Lightning network expects to use processing nodes to 'route' funds around the network, don't nodes NEED to have funds locked up in the channel to ensure they can actually send money around?

For example, lets assume there is a single processing node (called NODE), and there is a typical buyer (called 'A') and a merchant (called 'B') and A wants to send money to B.

A establishes a channel with NODE. B also establishes a channel with NODE. The maximum amount A can transfer to B is the deposit made by NODE to open the channel with B.

i.e. A opens a channel with NODE with 2BTC. B is a merchant and expects to RECEIVE and not spend, so opens the channel with nothing (or next to nothing). But as B expects to recieve payments, NODE must open the channel WITh some BTC right? So if the channel was opened with 1BTC, then this is the maximum amount of BTC that can be sent to B from the node. So A cannot send B more than 1BTC even though they have opened the channel with 2BTC. And since merchants will typically receive much more than they spend, the channels opened may require pretty enormous deposits.

Is this correct?

5.) How long are channels expected to be open for?

Comments

  • Looking for the same information :D.

    Btw, the upcoming Ethereum's Raiden Network looks like more than "lightning" I think.

  • I don't think segwit is required, looking at the following article: https://bitcoinmagazine.com/articles/segwit-or-not-bitfury-ready-lightning-successful-bitcoin-main-net-test/ but I think it might help when implementing Lightning Network.

    You can find some information on their whitepaper too: https://lightning.network/lightning-network-paper.pdf

  • randvegetarandvegeta Member, Host Rep

    Windmm said: Looking for the same information :D.

    Btw, the upcoming Ethereum's Raiden Network looks like more than "lightning" I think.

    Looks very similar to LN though. As far as I can tell, it still has the limitation where you cannot transfer more funds than initially deposited into a channel, so the 4th point I made in my initial post still seems relevant.

    Falco33 said: I don't think segwit is required, looking at the following article:

    How does it work without Segwit?

  • @randvegeta said:

    Windmm said: Looking for the same information :D.

    Btw, the upcoming Ethereum's Raiden Network looks like more than "lightning" I think.

    Looks very similar to LN though. As far as I can tell, it still has the limitation where you cannot transfer more funds than initially deposited into a channel, so the 4th point I made in my initial post still seems relevant.

    Falco33 said: I don't think segwit is required, looking at the following article:

    How does it work without Segwit?

    I'm not sure how it's done, but it is possible.

    "Bitfury is the first company to get a version of the Lightning Network up and running on the current Bitcoin protocol."

    “We released this first experimental version of the Lightning Network for Bitcoin because we think the Lightning Network is an essential technology for Bitcoin and would love to see it made available as soon as possible,” Vavilov said. “We are proud that our developers found a way to adopt the Lightning Network for Bitcoin without SegWit. It’s a huge step forward for Bitcoin scalability.”

    Your last question related to how long the channels are open for depends. You have so called Hash-Time locked contracts which have a time-out or time limit to them.

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