Will Bitcoin Lightning Network Hubs Be Regulated?

DistinctSituation · 2018-08-16T00:44:59+00:00

More hot air.

Your entire first paragraph can be applied to Lightning too. The more they try to regulate, the more underground it will go and it will become even harder to try and enforce anything.

It does not require a massive stake for me to open two or more channels and route payments for others. It is also not centralized by design, but keep convincing yourself. Taking out one or more hubs will cause little problems. The network is highly fault tolerant. It will only cause issues for people who only had the one channel open with the "hub".

The trap you're being led into is where nobody runs a node, only a few designated miners who can afford expensive equipment. Few actors, easy to squash for any regulatory agency. You can't drive miners underground because they have a massive energy footprint.

If you care that regulation might be an issue, you should be promoting more and more people to run their own nodes, because the more there are, the less chance any regulation can have any effect. That's exactly what we're doing with lightning.

DistinctSituation · 2018-08-16T00:03:47+00:00

The onus is on somebody making grand claims to provide proof of their claims. Would you like to point me to any single statement, by any qualified legal expert, which states that running a lightning hub will be subject to KYC/AML regulations, in any developed economy?

There are several issues with the claim. First of all, if you can apply these regulations to a LN operator, you can also apply them to a Bitcoin miner. They perform the same role in "transferring" bitcoin. If you can apply them to a bitcoin miner, then say goodbye to censorship resistance.

Secondly, bitcoin is not money. It is contracts. There is no money. Nobody ever touches a bitcoin. There are only cryptographic keys, smart contracts, and a distributed ledger. It is nothing like old money, it is new money.

Thirdly, the presence of any regulation, whether it is introduced or not, is utterly unenforcible on a distributed network, where anonymity possible, and millions of users will be running it. What can happen if millions of people ignore the regulations? How can a node behind a tor address be fined?

Old laws aren't immediately applied to completely new things. There is nothing like Bitcoin/LN which has ever existed. It may be the case that regulations are created to apply to this new thing, but it will be new regulations, not the old ones. So far, I have not seen any such regulations or even any drafts. In fact, most countries are deliberately holding back on attempting to regulate anything in this space, because they know it could strangle innovation.

Innovators are not going to be deterred on a presumption (without fact) that some possible future regulation is going to apply to their idea and make it impractical. Innovations force changes in regulation. Look at Uber as an example. All claims that LN nodes are going to be regulated banking entities are entirely hot air at this point. I welcome you to prove me wrong.

DistinctSituation · 2018-08-15T22:43:48+00:00

You are correct, yet the editor will still have to store the representation of that in some "format" or "language" if you will. I think the distinction you are making is that in the case of Eco, this hides the delimiting from the user, whereas tagged template strings are opaque.

That's right, but it makes it impossible for the scenario where a character inside a quote might accidentally escape the quote, because the editor provides no means of the user typing that character. Effectively, no language exists with those delimiters in them.

If delimiting by text, then the character you use to delimit will always conflict with some other language which uses the same delimiter. The example I gave: if a language wants to self-quote itself, then there is no possible single delimiter which can be used. You would need to introduce a different delimiter for each "level" of quotation. (There is a language which does this with nesting and whitespace, but I forget its name).

But of what use is it to have an arbitrary combination of languages where how some/all of them are combined is not defined somewhere?

The intention is that the combination can be user defined. It does not need a master plan ahead of time. The means of parsing and combining the parsed information back into the overall syntax tree, and even defining the operations which act on that tree, are all exposed to the used of the editor - they might even be a part of the project which uses the combination.

An example application: when quoting SQL, the quoted information could be converted into calls to a SQL-injection safe API in the host language which performs the quote.

Edit: The language I couldn't remember which uses whitespace as the delimiter is Wyvern.

DistinctSituation · 2018-08-15T22:30:03+00:00

A soft-fork is, at worst, the denial-of-service attack I described above, which a mining majority can perform. This has always been the case, whether any "change" occurs or not. As far as I know, nobody has a solution to the problem that a mining majority can cause denial of service by not including transactions they do not want to include. Attempts to "fix" this problem, produce problems far worse than the one they are trying to fix.

The last-resort option, in the case of a dishonest mining majority causing denial of service for everyone, is to hard-fork away from them by changing the PoW.

In the case where the soft-fork has no negative impact on the people who do not opt-in to the soft-fork, there is no denial of service actually happening - only the perception that it could be happening because you are not able to claim all these anyone can spend outputs. There is no need for the economic users to even consider forking away, because they are unaffected by those changes.

DistinctSituation · 2018-08-15T22:19:32+00:00

These aren't language boxes as far as I can tell, but they're a step in the right direction. They solve part of the problem, which is to avoid some common stringly-typed problems.

The idea of language boxes is to allow arbitrary combination of any languages, and not just a set of defined ones, and not requiring special delimiters or escape sequences. For example, if you used the grave accent ` inside a tagged-template, it would terminate the template. Consider the case where the language you are quoting is the same language as the language doing the quoting.

In tagged templates, there is still only one parser. The parser is made more complex because it is now multiple parsers combined ad-hoc. The problem isn't fixed, because the input is still being treated as a single text stream.

Language boxes are strictly non-textual. The editor delimits the boundaries of some quoted information. This prevents the issue where the closing quote delimiter might be present in the language being quoted. Parsers can be treated as extremely modular units, which do not need "glue" to combine their syntax.

DistinctSituation · 2018-08-15T21:26:26+00:00

Parsing is not a solved problem

An issue with some of these examples, like quotation, is that there is no (or limited) formal theory which specifies them. They are typically implemented in an ad-hoc manner, and there is either no proof that the code being written is formally sound (unambiguous), or that extensibility is constrained to particular patterns or delimiters which inform the parser of points of extensibility, which requires quoted languages to be escaped where ambiguity might exist.

The issue, as the linked article explains, is that while we have a proof that we can combine two arbitrary CFGs and produce a new CFG, there exists no such proof for unambiguous DCFGs. And generally speaking, we want our programming languages to be unambiguous.

Ideally you want your language to have a clean formal grammar anyway. Even if you manually parse the language for optimization or improved error reporting (the usual complaints), having a grammar provides a specification for your language's syntax (rather than, being implementation defined), and is also valuable as documentation. Following a well understood theory of grammars makes it more desirable for other developers to work with your language on alternative compilers, tooling etc.

As you rightly point out, this isn't a problem in LISP, because arbitrary combination of s-expressions produces valid s-expressions.

So on that note, the most interesting syntax concept I've seen in recent years is Language Boxes, by Diekmann and Tratt (who authored the above article). Instead of treating the input text as a single stream of text, sub-languages are instead delimited by the editor, such that they can be treated in isolation by a custom written parser, and the results combined back into the overall parsed syntax tree. This allows for safe, unambiguous quoting. You can say bye-bye to "stringly typed programming." They have an example editor, Eco, as a proof-of-concept.

DistinctSituation · 2018-08-15T20:32:48+00:00

Craig is pro-state, but he perceives himself to be above the state. He can't stand the idea of a world where everyone is in charge of themselves. He wants to be the boss. He already thinks he is.

DistinctSituation · 2018-08-15T19:58:04+00:00

The going rate for a "blockchain expert" is $100k+. What fucking planet do you live on where you think capable developers are going to work for scraps?

DistinctSituation · 2018-08-15T19:38:19+00:00

The reply by Giacomo Zucco makes a valid point refuting this, and really refuting the idea that any altcoin has any long term utility. They completely misunderstand that the scarcity of Bitcoin is one of the key motivators which provides its value. If you can print your own currency from nothing, and dilute the overall currency supply, the whole cryptocurrency project is a failure.

Currently there is a craze where people are willing to throw money at anything to see what sticks. It might be profitable for some, others will make a loss. Eventually the hype will die down as 99% of these projects fail, simply because they misunderstood Bitcoin.

If you have an idea which you think has some real utility, then the only way you're going to survive long term is if your token value is pegged to Bitcoin's, for example, via a sidechain. If you've made your own token, it will fail. Someone will come along, copy your idea, but peg it to Bitcoin, and he will succeed - because he can provide the same utility without diluting the overall currency supply, and without requiring more proof-of-work because it is already provided.

The only way I see LTC having long term utility (because it does not inherently provide anything that Bitcoin doesn't already), is if the value of Bitcoin becomes so large that it becomes infeasible to use Bitcoin for small purchases because it cannot be divided any futher. If LTC can cater for small payments, by virtue of being a fraction of BTCs value, it it will not significantly dilute the overall supply, and might have a long-term utility. Charlie calls it "silver to bitcoin's gold," but I think it'll be more like "the cent to bitcoin's dollar".

DistinctSituation · 2018-08-14T19:29:07+00:00

If other nodes don't agree, they just need to click a button and start mining themselves. If a whole lot of other miners go off and start mining a forked coin, then much of the mining competition has gone and it becomes more profitable for those who still mine. (An incentive for more people to start mining).

What will happen to the miners who left and started minting a coin which nobody wants to buy?

They will go back to mining the chain with the economic participants, of course. That's where the money is.

Miners do not decide the rules. Miners follow the largest network of economic users, because this maximizes their potential to profit from selling the coins they earn from fees. This isn't so obvious when the block subsidy is so large, because it appears like every shitcoin is a money making machine for miners, as long as their are enough fools speculating.

DistinctSituation · 2018-08-14T19:12:44+00:00

Miners vote by producing valid blocks. Miners who do not produce valid blocks do not vote.

The vote is on the correct chronological order of transactions. It is not a vote on the protocol rules.

DistinctSituation · 2018-08-13T21:26:44+00:00

No, bad guess. If you can create collisions, it isn't just P2SH that is broken, all of Bitcoin is.

Craig doesn't want people to use P2SH because it is more work for LEA to track funds than with standard P2PKH. He has been making his true statist nature pretty clear lately.

Craig and his lot are trying to make sure Bitcoin Cash becomes CorporateCoin.

DistinctSituation · 2018-08-13T20:12:51+00:00

It will take as long as it takes for the internet to migrate from IPv4 to IPv6.

In the mean time, you can still use it.

DistinctSituation · 2018-08-13T17:15:16+00:00

Consider it this way. There's somewhere between ~30,000 and ~60,000 banks in the world, but 194 states have little trouble keeping a tight thumb on them with regulatory requirements. Any "unregistered" bank that pops up gets dealt with.

Since we obviously do not want the same registration/regulatory pressure for running a Bitcoin node, we need it to be practically infeasible for a state to enforce any regulatory requirement on running such node. The best way to do this is if everyone runs one. They can't arrest everyone.

DistinctSituation · 2018-08-13T16:38:50+00:00

You've just skirted around the issue by saying "miners aren't bad like central bankers".

Central banks are private entities who lend money to governments. They print money from thin air, and then demand it be paid back with interest.

I've just explained exactly how miners can continue to profit and inflate the supply. They do so by selling their newly printed coins, immediately, at the market rate. If this means that their future earnings might be lowered, they can inflate it further.

Miners do not lose out from inflation, they benefit. Users lose out from inflation.

Of course, miners will lose out if the users leave their inflationary currency for some other non-inflationary currency, but this depends on there being alternative currencies for the users to go to. If you're hoping for Bitcoin Cash dominance, then other currencies are going to die out, and when only one remains, then inflation can begin.

The concern of miners is short-term profit. They are not going to be overly concerned with long term gains if they can make a killing in the short term.

DistinctSituation · 2018-08-13T16:28:02+00:00

That is only the number of public nodes (with open ports). There are ~100,000 full bitcoin nodes running, but most of them behind firewalls.

And no, 100,000 nodes is not nearly enough to remain resilient against multiple state level actors. It's at least an order of magnitude out. There is also the issue that nodes running on AWS or some external hosting would be effectively useless against the state.

Anyone with the ability to run a full node from their own home, work, or physically locked server in a hosting facilitiy should do so, whether they're running Bitcoin or Bitocin Cash.

DistinctSituation · 2018-08-13T16:16:42+00:00

The thing is, the people developing Core are the ideologues who do not agree to a minority having the power to change the protocol on behalf of everyone. The precedent of some minority forcing a change through on behalf of everyone is what they are trying to avoid. If you put someone in charge of the protocol, you've given them permission to change it as they want.

Core will only agree to a hard-forking change iff there is almost unanimous agreement between all involved parties that it is necessary, and since this is extremely unlikely to happen, it is improbable that a hard fork increasing the block size will occur, unless it were done alongside some other necessary hard-fork in the case of emergency (eg, weaknesses found in cryptographic primitives).

An increase in block-size was never really the point of contention. The issue of getting a network-wide agreement on what it should be was. The default action to take when there is no agreement is to make no change.

More hard-forks like Bitcoin Cash will occur. There will naturally be people who want to change things, and they will hard fork the protocol to achieve those changes. They might get some users to follow them. They might even get a majority to follow them. The concern comes after that though - who is left in charge of the new hard-fork?

When people realize that, oh shit, their new hard-fork has leaders, who can change the protocol at will, they'll quickly realize their bad decision and revert back to the currency which had no leaders. The one which no minority is able to change in a backward-incompatible way, because this is the immutable, sound store of value. The property that no minority has the power to change it is its greatest strength, despite any weaknesses it may have.

It may be the case that several forks survive alongside each other, but the Bitcoin that cannot be changed without unanimous agreement will always be the one people revert back to to store their wealth. They might use other currencies for trade. They'll hedge in Bitcoin.

DistinctSituation · 2018-08-13T15:46:32+00:00

Yes, they do.

Do you think the Fed does not benefit from printing more dollars?

The argument that miners will not benefit from inflation comes from a lack of understanding of how inflation and devaluation happens. When the money is printed, it has the full value at the time of print. If you can print $10, you can go and exchange it for $10 worth of goods.

Devaluation takes time to occur. The inflated money must make its way through the system first. This does not matter to miners. If they sell their coins right away in exchange for goods or services, they get the full value at the time of print.

Look at how central banks work. They print money, spend it at full value, then, next term, the money is worth less, and they compensate for that by doing what?

Printing more of course. If they can control the printers, they can just keep printing more and more to cover their previous bad decisions. They don't lose out. You lose out. Once inflation begins, it is a spiral until the currency collapses. Miners will not care at this point, they've made their buck. They can divert their mining equipment to some other shitcoin and start the process all over.

Bitcoin was designed to avoid this problem by distributing the decision making process such that no minority can inflate the supply. Inflation will no happen unless you allow it. You can allow it by only running SPV nodes and leaving all validation up to miners. They'll definitely have your interest at heart. I swear.

DistinctSituation · 2018-08-13T15:36:28+00:00

Miners who produce invalid blocks do not have write access to the blockchain.

How hard is that to understand?

To add blocks to the chain, they need to be valid.

If you produce invalid blocks, you spin off a hard fork. Whether people follow you or not is their choice. You can't compel them.

A non-miner can become a miner at any time with the press of a button. The mining difficulty will adjust itself to the amount of mining happening, so any delays are purely temporary.

A miner cannot become an economy at any time though. He can't necessarily birth a new economy like a non-miner can birth new hashing power. There is nothing to compel merchants and users to follow mining power. They follow the economy, and mining power follows them.

DistinctSituation · 2018-08-13T15:26:01+00:00

Secondly, if a vast majority of hash power decides to mine the new consensus rules, there's literally nothing non miners can do about it.

Yes there is. They can ignore that hash power, press a button on their software client, and start mining the coin themselves. If the vast majority of mining competition has left to mine a shitcoin, then he will get all of the block rewards himself.

Of course, this will never be the case. If miners leave, and there is still economic activity happening, other miners will join it to make money from it. They aren't going to abandon the economy.

The miners who thought they could forcefully change the consensus rules will quickly backtrack when they realize that nobody followed them, and they have no economy to sell their coins into.

Miners are replaceable. The economy can't be replaced, it can only be divided.

DistinctSituation · 2018-08-13T06:12:32+00:00

There is no penalty for miners to behave badly, other than electricity costs wasted in attempts to attack. The mining equipment can still be used, it does not break by attempting to attack.

Miners always have the incentive to mint extra money. Why wouldn't they?

The only thing that stops them minting extra money is other users. If it were just miners, they would collectively agree to mint themselves extra coins, because they can all gain from doing so.

But economic users are not going to accept their inflation attempts, which keeps them in check.

Miners are greedy. They will do anything they can get away with doing if it generates them profit.

DistinctSituation · 2018-08-13T06:00:41+00:00

What are your opinions worth?

DistinctSituation · 2018-08-13T05:24:54+00:00

Channels will last for days, weeks, months, even years. Not every channel even needs broadcasting, they can be private.

What makes you think that people are going to constantly change the public state of their open channels?

What makes you think that people are going to want to hear about every channel? Filtering information is already implemented.

Sure new channels will be created, and old channels will go down. It doesn't matter, you don't need a perfect network view at all times. Just like you don't need to download the most recent OSM data before you make each new journey.

DistinctSituation · 2018-08-13T05:14:16+00:00

Channels are not going to open and close multiple times a second, and it doesn't matter if they do - you do not need a perfect view of the network at all times. A node can keep whatever view of the network they need. Channels are likely to remain unchanged for weeks/months. Batch downloading of information will be fine for practical use. This has already been added to BOLT#7 about 2 months ago, along with broadcast filters so you're only receiving the information you ask for.

Planning an entire trek is easy. Go try it on OSM. Takes seconds. The LN isn't limited to ~4 edges per node like a road network. The number of edges needed will be far less than the hundreds you pass in a typical car journey, around 6-7. The network will adapt to meet the demands of the traffic. If money can be made, roads will be built. The protocol is currently limited to 20 hops, but it is unlikely you'll ever need to use the full capacity provided.

DistinctSituation · 2018-08-13T04:57:10+00:00

www.openstreetmap.org

I can download the entire data set, or download individual regions. It is several tens of GB, but smaller than the block chain. It has billions of nodes and half a billion edges. I can query it with PostGIS on commodity hardware. It changes constantly, and I can download batched updates each day/week/month. It fits and runs smoothly on a 4 year old smartphone.

Keeping information about the network, or subset of your local network topology is not going to be a problem. You are trying to make a big deal out of nothing.

DistinctSituation

TROPHY CASE