Let's Talk Bitcoin! #390 Revisiting Lightning (Part 2)

What this episode covers

On Todays Episode of Let's Talk Bitcoin... Stephanie Murphy, Andreas Antonopoulos, and Adam B. Levine sit down for part two of our fresh look at the nascent but rapidly improving Lightning Network. --- Excerpted Selections from Episode 390 Curated and Transcribed provided by https://twitter.com/Sesame4Bitcoins Lightning Network Capacity   Adam B. Levine: Right now in the Lightning Network, you can only make transactions and hold value up to a certain size. Andreas, why is that? Andreas Antonopolous: It's to discourage people from putting too much money into something that was experimental, and also trying to do payments that are too big for most routes. The limit per payment is 4 million Satoshis (0.04 Bitcoin). The channel capacity maximum is 16.7 million Satoshis. You can create a channel for 16 million Satoshis and you can transmit payments of about 1/4 its total capacity at a time in each direction. That just prevents people from trying to use Lightning today for the types of payments that are probably best kept on-chain.   Adam B. Levine: Do you see the Lightning Network being used for larger transactions like the traditional Bitcoin network?   Andreas Antonopolous: Eventually yes. Eventually there's no reason why you wouldn't have your entire hot wallet in Lightning channels, and the only funds that are not in Lightning channels are cold storage funds. I see it eventually having much bigger transactions - it can span the entire range from tiny to very big.   Lightning Network Development   Adam B. Levine: How do you determine at what rate [channel capacity] should increase and who gets to decide if that should increase?   Andreas Antonopolous: The way lightning collaboration and interoperability happens is through a series of standards called BOLT (Basics of Lightning Technology). These are constantly under negotiation. The first iteration of BOLT standards is what created today's production Lightning Network, and allows three or four different software clients to interoperate very successfully.   Stephanie Murphy: Can we draw any parallels to the way that changes happen [on the Lightning Network], and in Bitcoin [base protocol layer]?   Andreas Antonopolous: This isn't a consensus rule. The difficulty with Bitcoin [base layer] is that everyone has to agree, because if one party doesn't agree, they can no longer maintain synchronization with the network. In Lightning, the scripts are part of the consensus because you need to be able to secure the transactions - everything else is up for negotiation. If some clients don't do big payments and other clients do big payments, it's OK, they can both coexist on the network quite happily. You don't need this rigid lockstep coordination on layer 2 as you do in layer 1. It's one of the reasons why layer 2 can move much faster in terms of innovation, because you don't need everybody to agree on all of the changes.   Next week is the second semi-annual

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