Bitcoin Q&A: Misconceptions about Lightning Network
Channel: aantonop
Date: 2018-02-15

What are some misconceptions about the Lightning Network? How does the onion-routing work? How does channel funding work? Are there any security or legal risks to running a Lightning node? How far is the user experience development?

Chapters
0:00 Have you seen the video how banks bought bitcoin? It says that the Lightning Network will centralize bitcoin so that a few players have the power.
1:03 Two ways to resolve the increase in demand and limited capacity
2:28 Misunderstandings on how Lightning Network works
3:54 Lightning Network capabilities
6:46 How do routes across Lightning Network payment channels form? How does a node find an optimal path? 
8:17 Source routing
9:06 Onion routing
12:11 If each Lightning Network channel needs funding to stay up, won't that lock a lot of value?
13:03 Ways to route something that is greater than the amount you have in your channel
14:35 A few articles have popped up about AML regulation and how it might be applied to Lightning nodes. Are node operators likely to face a lot of risk and why?
17:23 Please explain how using a Lightning enabled wallet will be like? There's a lot of confusion about channels and the need to open and close them.
20:35 I'm interested in running a Lightning node, where's the best place to start?

This is not a choice between on-chain and off-chain. A large portion of transaction volume has already been conducted off-chain (i.e. within the private databases of exchanges) for years; what second-layer solutions like the Lightning Network do is to allow for similar low-cost activity without sacrificing most of the security model and trustless nature of Bitcoin. Decentralisation is not a Boolean value, it is a range. 

The Lightning Network is not only about payment channels, there is also routing between the payment channels of others. You do not need to open a channel with every party you want to transact with. If a merchant does open a channel, they do not have to close the channel in order to be paid.

LN Development Resources: http://dev.lightning.community/
LND Desktop Wallet - https://github.com/lightninglabs/lightning-app
ACINQ's Lightning implementation: https://github.com/ACINQ/eclair
Blockstream's C-Lightning implementation: https://github.com/ElementsProject/lightning
Zap, another Lightning wallet: http://zap.jackmallers.com/

More on contributors: http://lightning.community/release/software/lnd/lightning/2017/01/10/lightning-network-daemon-alpha-release/

This question is from the patron-only live Q&A which took place on January 27th 2018. If you want early-access to talks and a chance to participate in the monthly live Q&As with Andreas, become a patron: https://www.patreon.com/aantonop

RELATED:
The Lightning Network [playlist] https://www.youtube.com/playlist?list=PLPQwGV1aLnTurL4wU_y3jOhBi9rrpsYyi
Bitcoin, Lightning, and Streaming Money - https://youtu.be/gF_ZQ_eijPs
Advanced Bitcoin Scripting: Part 1 - https://youtu.be/8FeAXjkmDcQ
Advanced Bitcoin Scripting: Part 2 - https://youtu.be/pQbeBduVQ4I
Decentralised exchanges and counterparty risk - https://youtu.be/hi_jaw0dT9M
Scaling complex systems - https://youtu.be/dm9m1oQr6Ks
MimbleWimble and Schnorr signatures - https://youtu.be/qloq75ekxv0
SegWit adoption - https://youtu.be/KCsTVTRk6I4

Andreas M. Antonopoulos is a technologist and serial entrepreneur who has become one of the most well-known and respected figures in bitcoin.

Follow on Twitter: @aantonop https://twitter.com/aantonop
Website: https://antonopoulos.com/

He is the author of two books: “Mastering Bitcoin,” published by O’Reilly Media and considered the best technical guide to bitcoin; “The Internet of Money,” a book about why bitcoin matters.

Subscribe to the channel to learn more about Bitcoin & open blockchains; click on the red bell to enable notifications about new videos!

MASTERING BITCOIN, 2nd Edition: https://amzn.to/2xcdsY9

Translations of MASTERING BITCOIN: https://bitcoinbook.info/translations-of-mastering-bitcoin/

THE INTERNET OF MONEY, v1: https://amzn.to/2ykmXFs

THE INTERNET OF MONEY, v2: https://amzn.to/2IIG5BJ

Translations of THE INTERNET OF MONEY:
Spanish, 'Internet del Dinero' (v1) - https://amzn.to/2yoaTTq
French, 'L'internet de l'argent' (v1) - https://www.amazon.fr/Linternet-largent-Andreas-M-Antonopoulos/dp/2856083390
Russian, 'Интернет денег' (v1) - https://www.olbuss.ru/catalog/ekonomika-i-biznes/korporativnye-finansy-bankovskoe-delo/internet-deneg
Vietnamese, 'Internet Của Tiền Tệ' (v1) - https://alphabooks.vn/khi-tien-len-mang

MASTERING ETHEREUM (Q4): https://amzn.to/2xdxmlK

Music: "Unbounded" by Orfan (https://www.facebook.com/Orfan/)
Outro Graphics: Phneep (http://www.phneep.com/)
Outro Art: Rock Barcellos (http://www.rockincomics.com.br/)
Join the aantonop Channel: https://aantonop.io/joinaantonopyt