U's avatar
U 2 years ago
Hello world! This is my first note on nostr 🙂 It has been popular to compare Btc txs to cross border bank txs and conclude that Bitcoin is faster. It has also been popular to compare lightning-network txs to credit card txs and conclude that those two are about equally fast. However since a Bitcoin transaction is actually changing custody of something scarce, I think it's more appropriate to compare Bitcoin txs to physical gold/money transports. And since you need your lightning node to be online, and only transfer "kind of" IOUs (unsettled txs), I think it's fair to compare lightning nodes to banks, and compare lightning txs to bank transfers. So what is then the Bitcoin equivalent of credit card txs? Well, cutting corners by letting others handle liquidity/transfer for you. We see this with nostr when sending zaps where people, as of now, mostly use Wallet of Satoshi. Also federated services like Blockstream's Liquid network and Fedi's ecash system optimize transfer speed and fee costs. These services are still so new that I'd argue we can't really make proper comparisons to the credit card systems just yet. In other words Bitcoin txs will become much faster and cheaper in the future. We are (even now) still early!

Replies (8)

Max's avatar
Max max@towardsliberty.com 2 years ago
Why is that categorically different to the technical challenges of securing an onchain singlesig utxo? Like keeping the private key secret, running a node or wallet without back doors etc.
2 replies ↓
jimbocoin 🃏's avatar
jimbocoin 🃏 2 years ago
In #Bitcoin, the token is the thing itself. This continues to be the case in Lightning, where channel-update transactions are themselves legit Bitcoin transactions. Nothing is owed. Neither channel participant is a creditor nor debtor of the other. It’s a peer-to-peer, electronic, cash system.
1 replies ↓
Max's avatar
Max max@towardsliberty.com 2 years ago
Bitcoin, and multisig specifically, made federated custody of base money possible, that's a monumental breakthrough in 2012 or so. Eric discovered an obscure cryptography paper that made federated blind signatures possible, that's fedimint 2021 or so. Combine both, and you have a federated money warehouse with federated custody and federated anonymous IOU accounting. Money warehouses have always been, and will continue to be, an ethical and useful service that entrepreneurs provide. These two tech breakthroughs just take it to the next level in terms of security and trust assumptions.
U's avatar
U 2 years ago
You oc has the challenge of keeping you keys safe, but you will have those challenges after settling a lightning channel anyways, so those evens out. For a channel specifically you have something unsettled. That is, there can exist multiple unpublished txs in competition with each other. We use timelocks to try to favor one tx over the other. I see it as a hare vs tortoise version of the double spend problem. If the hare sleeps or it's house burns down and it looses its TX it looses the race to the tortoise. Only when settled the Bitcoin is yours.
U's avatar
U 2 years ago
Also with ln you need your machinery online and so the last resort option of buy and hold for 10 years while being in a gullack camp doesn't work well with your ln node @pkt can I get an amen?
U's avatar
U 2 years ago
Problem is you have several competing channel-update transactions just hanging there until one of them is used and then it's a race where someone with a newer update-transaction can overrule the old, but only for a limited time period. So the participants can be perceived as creditor or debitor of each other.
U's avatar
U 1 year ago
Re-posting my very first #NOSTR note from one year ago. I think it's still relevant. This year I'll add @calle 's Cashu Protocol to the mix 🥜 #btc #stillearly View quoted note →
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