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Comment by AlexandrB | Hacker News Reader

I'm a long-time bitcoin skeptic, and I don't really understand the lightning network. If the lightning network doesn't depend on PoW for every transaction then how is it different than a normal database-backed payment network? I read that it involves smart contracts, have those been sufficiently audited against bugs?

> That's because you're looking at it in terms of USD, when you look at it in terms of satoshis per byte, it's actually much lower [1][3].

This is meaningless to me. Why would I care about transaction costs in satoshis per byte? I thought bitcoin is supposed to be a currency that replaces USD. At the current transaction fees bitcoin is not usable as a currency unless you're buying very expensive items.

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>I'm a long-time bitcoin skeptic, and I don't really understand the lightning network. If the lightning network doesn't depend on PoW for every transaction then how is it different than a normal database-backed payment network? I read that it involves smart contracts, have those been sufficiently audited against bugs?

https://wiki.ion.radar.tech/tech/lightning/lightning-network

tl;dr: you and the counterparty negotiate a series of transactions that represent the final closing balance. As funds are sent/received the transaction is updated. There's various mechanisms in there to prevent a misbehaving peer from broadcasting an older transaction, running away with the funds, or having your funds frozen if they ghost you.

A transaction is essentially just a signed cryptographic message broadcast to the network, just imagine that instead of broadcasting it, you keep iterating on it, you pass funds around, keep signing these messages, etc. There are measures to make sure you don't broadcast an old/outdated transaction to the network.

It's not meant for buying coffee, for those you would use layer 2 or centralized entities like Paypal, etc. The blockchain contains every single transaction ever made forever, people in 100 years from now don't need to be aware of every coffee transaction, that just wouldn't be efficient.

Thanks for taking the time to explain. I guess I remain skeptical as it seems like a lot of complexity that is slowly replicating the traditional banking system - just with transactions enumerated in a volatile equity instead of $currency. Perhaps I'm just getting old.

The key difference is this infrastructure is 100% trustless. Bitcoin transactions are backed by proof-of-work, and Lightning transactions are backed by HTLC (hashed timelock contracts) which are in turn backed by the proof-of-work. Think of the blockchain more like a settlement layer and the Lighting network an everyday transaction layer.

That's the current goal of the developers of these systems, anyway.

Bitcoin in the Lightning Network are backed by the bitcoin blockchain. Bitcoin get committed to the Lightning Network (using an on-chain transaction) and can then move between users of the network. There is no central database of all Lighting users or transactions. Transactions are done directly between users, or by routing payments through other users.

It's kept trustless, because people trying to cheat can get their bitcoin stolen. This is done using fancy bitcoin multi-signature scripts. Closing a Lighting Channel using an old state (ie: being dishonest) reveals keys that can be used by the other (honest) party to take your funds.

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