17 thoughts on “PSA: Lightning is NOT an IOU or a bank

  1. auviewer February 13, 2018 / 7:58 pm

    So , to be clear, an open channel means you can have a valid bitcoin that you own in that channel? if someone sends you money through that channel you can close the channel with that amount sent to you?

  2. brando555 February 13, 2018 / 7:58 pm

    Sorry if this is a dumb question, but you don’t need a direct channel to which ever entity you plan on sending BTC to right? At some point the network will be large enough that you can send BTC to anyone with a lightning wallet?

  3. Mistermathman February 13, 2018 / 7:58 pm

    Openning a channel is comparable to going to an ATM and putting fiat in your pocket, it is now waiting to be spent. You only put in your pocket that which you believe you will need and maybe a bit extra. Same goes for funding a channel. Except the ATM charges a much bigger fee.

  4. JonRubio February 13, 2018 / 7:58 pm

    Can someone provide me with the best lightning breakdown the can provide that is sort of ELI13? The whole IOU rhetoric makes me very hesitant to use and I would like a better understanding of it.

  5. philm88 February 13, 2018 / 7:58 pm

    I have physical cash on me now that literally has printed on it “I promise to pay the bearer on demand the sub of five pounds” because (historically) you could take your £5 note to a bank and have it ‘cashed-out’ for the equivalent value in gold – because gold has actual value, paper notes are just IOUs.

    Lightning network is all about promising that at any point you can ‘cash-out’ the current state in your payment channels to the blockchain – ie, the equivalent balance in BTC. That promise is backed up by mathematics.

    BTC & lightning network are trustless in that you don’t need to trust an entity like a bank to keep your funds safe or fulfil their promise to provide you actual value. You do, however, need to trust the system, the mathematics, the cryptography etc. Which I and many other people on this sub think is fine. I’d rather do that than trust a bank.

    I have never reviewed bitcoin or lnd’s code. Even if I did, I probably don’t have the education or skill required to do a good job of that (crypto is *hard*). So although I don’t have to trust a bank, I am placing my trust in a lot of other things and people.

  6. isoldmywifeonEbay February 13, 2018 / 7:58 pm

    An IOU can be trustless. Technically they are trustless IOUs. It’s people associating IOU negatively that is causing this.

    My £5 note says ‘I promise to pay the bearer on demand the sum of £5’. That is a trustless IOU too.

  7. Hyogita February 13, 2018 / 7:58 pm

    I’m sorry but Ligntning is exactly an IOU. It promises that upon closing of the channel, bitcoin will be paid to the corresponding parties.

  8. zefy_zef February 13, 2018 / 7:58 pm

    I feel there are going to be some unforeseen circumstances and challenges following a wide release.

  9. Michigander5420 February 13, 2018 / 7:58 pm

    what is economic experimentation and issued assets if not like a bank creating its own$$?????????

    https://blockstream.com/sidechains.pdf

    5.1.2 Economic experimentation

    5.2 Issued assets?????

    “However, it is possible for sidechains to produce their own tokens, or issued assets, which carry their own semantics”
    and “Issued asset chains have many applications, including traditional financial instruments such
    as shares, bonds, vouchers, and IOUs” …sounds like banking….

    PS: plz dont ban me for posting whats on blockstream PDF not FUD for whatever…….lol it says IOUs in the pdf…

  10. obsidience February 13, 2018 / 7:58 pm

    Like others have pointed out, Lightning transactions are indeed IOUs as in “This is a signed contract that the recipient can redeem in Bitcoin once broadcasted to the Bitcoin network”. There’s nothing wrong with it being an IOU as long as there are no bugs in the design, implementation and usage of LN.

    So I think your post may be adding to the “uncertainty” and “doubt” aspects.

  11. pepe_le_shoe February 13, 2018 / 7:58 pm

    People who say things like this are either too stupid or biased to be able to comprehend how lightning actually works.

  12. iwantfreebitcoin February 13, 2018 / 7:58 pm

    Wait, wait, wait….so you are telling me that the kind folks over at r/btc are *wrong*??? gasp!!

    EDIT: I assumed people would get that this was sarcastic…

  13. roguesarecool February 13, 2018 / 7:58 pm

    hahahahahaha the threads these days defending LN are hilarious.

  14. ep7i0CtZek February 13, 2018 / 7:58 pm

    Correction: This is not the primary FUD that is spouted by anti-bitcoin folks. Most people like Lightning and would love to see it succeed. **Lightning can be easily anchored to any other chain.**

    The primary FUD is that Lightning is primarily discussed and promoted here at r/bitcoin. While it should be discussed at r/TheLightningNetwork. And r/bitcoin should be focusing their attention on how to deal with the capacity problems.

    But when people express these critical valid concerns here. Those comments get ignored or downvoted.

  15. mkuraja February 13, 2018 / 7:58 pm

    Money on the public ledger is safe and secure from anyone taking it away from you. But what if someone with a badge, warrant, and/or gun powers down the Lightning Network, or even a subset of that network? Unlike the “decentralized” block chain with many synced yet independent copies around the globe, can’t a person lose their money if the Lightning Network is interrupted as just suggested?

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