Understand the implications of Bitcoin's downfall in El Salvador. Learn about the failed economic bet and its impact on the country's financial stability.
You still use it as a settlement and security layer. The lightning network is made up of pairs of people that both lock money in a new account with a transaction. Both people get a fully signed copy of a second transaction to reclaim the money, but they don’t publish it immediately. If they need to make a new transaction between each other, they just replace the second fully signed transaction with a new one that divides the money according to the new balance. They can do this as many times as they want for as long as they want, and they only have to make two transactions: one to start and one to stop. If anyone tries to cheat, the only thing they can do is publish an older version of that second transaction that favors them, but you have… I think a day or three, I forget, to publish a newer version that proves they cheated, and if you do, you get ALL the money even if some was owed to them, so cheating won’t go well. The down side is you need a node that’s always online or connects to the network frequently so you can be ready to catch a cheater.
To make a network, they use some fancy cryptography to send money to someone if and only if they send it (minus very, very, very small fees) to the next person in line towards the destination. If anyone in the chain refuses or fails to commit, the transaction fails and no money moves at all. Because it’s all secured by the blockchain, you can trust that everyone both can and will complete the transaction exactly as requested, or the whole thing fails and nothing happens.
You realize “it’s so energy and time consuming that we had to create a secondary layer to try and make it actually usable” isn’t the defense you think it is, right?
Sure glad that’s not why they did it because you’re right, that’d be kinda stupid. That’s not why they made a secondary layer, though. They made a secondary layer so transaction throughput can grow exponentially while maintaining the security of the blockchain without significantly impacting fees or requiring the blockchain itself to become proportionally larger.
That last part is the real motivation. The goal is to above all else, remain decentralized. That means the average user needs to be able to run a full node capable of verifying any transaction it needs to. To do that, the blockchain can’t grow too quickly, or people will get forced out. If it grew exponentially faster as transactions grew likewise, nodes would eventually centralize in fewer and fewer hands until someone could exert control over the network.
The blockchain is currently something like 650-700 GB, which is a lot, but most people can manage it, even if it might be pushing it for poorer regions. Without the lightning network and with substantial user growth, the only option is to increase the block size, and to achieve an actually usable capacity of strictly on-chain transactions, you’d be looking at sizes on the order of hundreds of TB or pushing into PB territory. Nobody would be able to store the blockchain without a dedicated server rack. Not a single server, a whole rack. It’d costs thousands and thousands of dollars to run a node. Instead, we acknowledge that you purchasing a pack of gum at the convenience store doesn’t need to be immortalized on the blockchain and use the lightning network to secure your transaction without having to create a permanent record.
You still use it as a settlement and security layer. The lightning network is made up of pairs of people that both lock money in a new account with a transaction. Both people get a fully signed copy of a second transaction to reclaim the money, but they don’t publish it immediately. If they need to make a new transaction between each other, they just replace the second fully signed transaction with a new one that divides the money according to the new balance. They can do this as many times as they want for as long as they want, and they only have to make two transactions: one to start and one to stop. If anyone tries to cheat, the only thing they can do is publish an older version of that second transaction that favors them, but you have… I think a day or three, I forget, to publish a newer version that proves they cheated, and if you do, you get ALL the money even if some was owed to them, so cheating won’t go well. The down side is you need a node that’s always online or connects to the network frequently so you can be ready to catch a cheater.
To make a network, they use some fancy cryptography to send money to someone if and only if they send it (minus very, very, very small fees) to the next person in line towards the destination. If anyone in the chain refuses or fails to commit, the transaction fails and no money moves at all. Because it’s all secured by the blockchain, you can trust that everyone both can and will complete the transaction exactly as requested, or the whole thing fails and nothing happens.
You realize “it’s so energy and time consuming that we had to create a secondary layer to try and make it actually usable” isn’t the defense you think it is, right?
Sure glad that’s not why they did it because you’re right, that’d be kinda stupid. That’s not why they made a secondary layer, though. They made a secondary layer so transaction throughput can grow exponentially while maintaining the security of the blockchain without significantly impacting fees or requiring the blockchain itself to become proportionally larger.
That last part is the real motivation. The goal is to above all else, remain decentralized. That means the average user needs to be able to run a full node capable of verifying any transaction it needs to. To do that, the blockchain can’t grow too quickly, or people will get forced out. If it grew exponentially faster as transactions grew likewise, nodes would eventually centralize in fewer and fewer hands until someone could exert control over the network.
The blockchain is currently something like 650-700 GB, which is a lot, but most people can manage it, even if it might be pushing it for poorer regions. Without the lightning network and with substantial user growth, the only option is to increase the block size, and to achieve an actually usable capacity of strictly on-chain transactions, you’d be looking at sizes on the order of hundreds of TB or pushing into PB territory. Nobody would be able to store the blockchain without a dedicated server rack. Not a single server, a whole rack. It’d costs thousands and thousands of dollars to run a node. Instead, we acknowledge that you purchasing a pack of gum at the convenience store doesn’t need to be immortalized on the blockchain and use the lightning network to secure your transaction without having to create a permanent record.