Reading Assignment: Lightning Basics

Lightning Network, Lapps & Segwit
#81

  • How many times can you refill your LN channel?
    As many times as you want at the cost of transaction fee on blockchain.

  • What’s the difference between Advertised and non-advertised channels?
    Advertised Channels are basically nodes or bridges or gateways. they have open and advertised path that scale up the network. These channels have both inflow and outflow.

Non Advertised channels are end users. they are mostly on mobile or personal computers. they usually have only inflow.

  • How does Buffer capital work?
    It’s a minimum amount that must be maintained over a period of time to keep the node running and avoid “Not enough funds” situation until the account balanced itself again. when there is much difference in inflow and outflow transactions, channel lost its balance and one of the challenge of the LN is to keep all channels balanced as quickly as possible.

  • What is onion routing?
    Onion routing is used in multi-hop payments with intermediate nodes. The intermediate nodes only know the the predecessor and successor in the route. No one can see the full routing path. It gives privacy and security to the sender and end user.

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#82
  1. How many times can you refill your LN channel?
  • unlimited times
  1. What’s the difference between Advertised and non-advertised channels?
  • advertised channels are permanently available for routing, or at least do they aim to be given they have enough balance in their channel
  1. How does Buffer capital work?
  • it’s the amount of capital that a routing node must have to be able to hand over a transaction to the next node/recipient. It’s like putting it temporarily on the nodes’ balance sheet for further processing.
  1. What is onion routing?
  • encapsulation for payment processing, where the current node transferring the payment to the next hop it the one representing the transaction, hence it’s necessary that the processing node has enough buffer capital
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#83
o How many times can you refill your LN channel?
Unlimited as long as balance is present.
o What’s the difference between Advertised and non-advertised channels?
An advertised channel is typically a channel that is online all the time and therefor can be a permanent routing method for payment network transactions. The non-advertised typically and end user would be an Iphone or laptop which is not always available in the network as it may not be in use at all times. It cannot be seen in the main routing network and can only be accessed through “hints” about its routing path
o How does Buffer capital work?
Routing nodes that run continuously in network will keep sufficient btc buffer to accommodate for inbalances in the network. For instance a lot of spending is happening exhausting some channels. BTC Buffer is needed in times of over spending and over receiving. If the buffer isn’t there the transaction will be cancelled funds are stuck in incomplete transactions.
o What is onion routing?
It is used for multi-hop payments. Intermediate nodes in payment path know only the identity of their immediate predecessor and successor in the route. This protects the identity of the senders and receivers to enhance user privacy and censorship resistance.
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#84

  1. a LN channel can be refilled as many times as you want. It is also possible to resize it.

  2. non-advertised channels are not available for routing and are not visible in the network graph. These are mainly the default nodes of end users. Instead, advertised channels are visible in the network graph.

  3. A routing node has to have sufficient buffer capital in order to being able to have enough funds for rebalancing eventual inflow overflows or outflow overflows.

  4. onion routing means that the intermediate nodes where a transaction will be passed through don’t get to know every node passing the transaction, but only the one before and after itself.

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#85

  1. You can refill your lightning channel an unlimited number of times.

  2. An advertised channel is one that is publicly available on lightning explorers. The node endpoint is available for the public to see. An non-advertised channel requires additional information called “routing-hints” in order to receive payments.

  3. Lightning is about liquidity and availability. Buffer capital is the term given to a node that has sufficient capital to route any meaningful payment. A node that is experiencing capital exhaustion will be disconnected from other nodes because there is a higher likelihood of routing failure. In a nut shell, buffer capital is there to provide a balance for a routing nodes inflows and outflows.

  4. Onion routing is a method of information exchange wherein the current holder of the information knows the identity of its last sender, and the next recipient. Not the original sender, or the final receiver.

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#86
  1. You can refill your channel unlimited times.
  2. Non-advertised channels are the ones intermittently availably, usually belonging to end users and not used for routing. Advertised channels, on the other hand, are available for routing.
  3. Buffer capital is a liquidity reserve to keep the routing working in situations when there are not enough funds flowing in.
  4. Onion Routing is a method for multi-hop payments that only reveals the identity of immediate predecessor and successor nodes in the route.
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#87

1. How many times can you refill your LN channel?

As many times as needed.

2. What’s the difference between Advertised and non-advertised channels?

End-users will typically not be running channels permanently, meaning that these channels will not be reliably online most of the time and, therefore, will be non-advertised channels.

Whereas, advertised channels will be the ones that are reliably online and available (permanently, ideally).

3. How does Buffer capital work?

Buffer capital is the capacity of major routing nodes to withstand imbalances in either inflows or outflows, so that they do not exhaust.

4. What is onion routing?

Onion routing means that intermediate nodes only know about the immediate predecessor and successor in the route of the payment.

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#88
  1. Unlimited
  2. Channels that are always online (advertised) and channels that are intermittent online (non-advertised)
  3. Buffer capital holds a buffer of BTC on the node until the flow of funds reverses and channels return to a more balanced state
  4. Onion routing enables multi-hop payments. This means that intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route. Importantly, the combination of source routing and onion routing protects the identities of payment senders and receivers so as to enhance user privacy and censorship-resistance.
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#89

  1. How many times can you refill your LN channel?
    unlimited times

  2. What’s the difference between Advertised and non-advertised channels?
    advertised channels are channels that lightning nodes advertise to the rest of the network when requested. non-advertised channels are channels that lightning nodes do not advertise to the rest of the network when requested but instead can be found through the use of channel hints embedded in payment requests.

  3. How does Buffer capital work?
    Buffer capital is used as a means to keep channels operational during times of channel imbalance. The more extra capital you put into channels, the more resilient your channel will be to channel exhaustion.

  4. What is onion routing?
    Onion routing is a method of routing whereby each node between the sender and receiver of a transaction can only deduce the previous node and the next node.

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#90

  1. You can refill your LN channel as many times as you empty it… which is practically unlimited.

  2. Non-advertised channels are not visible in the network as they are generally end user nodes run on mobile devices or computers, which are only intermittently available and not available for routing.
    Advertised channels are available as routing nodes with the aim to be available at all times, have access to the Bitcoin network and have the ability to earn fees by routing Lightning payments.

  3. If the outbound transaction volume exceeds the inbound transaction volume the node needs the ability to supply the difference, buffer capital, so that the node does not run out of funds.

  4. Onion routing is a way of sending data between two computers using a P2P network and encryption so that an unintended observer or network participant cannot identify the original sender or intended receiver of the data or access the original data.

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#91

  1. How many times can you refill your LN channel?
    As many as you want

  2. What’s the difference between Advertised and non-advertised channels?
    non-advertised channels (from end-user nodes) are intermittently available and shouldnt be used for routing. Advertised channels should always be connected and have access to the Bitcoin network.

  3. How does Buffer capital work?
    Nodes should have enough capital to cover periods of imbalance (more funds flowing in one direction). If they dont have the buffer capital then the network will seek out different routes and the node wont receive any fees.

  4. What is onion routing?
    the intermediate nodes in the payment path only know their two connections (predecessor / successor), but not necessarily the funding source or final destination. This provides extra layer of security.

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#92 
 1. How many times can you refill your LN channel?
    as often as the user desires to do so

2. What’s the difference between Advertised and non-advertised channels?
    non-advertised channels are not advertised for routing and consist of devices that are intermittently available, such as, phones and laptops
    advertised channels are advertised reliable devices for routing 

3. How does Buffer capital work?
    as reserve capital to off set user spending and prevent channel exhaustion

4. What is onion routing?

multi-hop payment routing with enhanced user privacy and censorship-resistance

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#93
  1. As many times as you want
  2. Advertised channels re available for routing and are visible on the network graph. Non-advertised channels cannot be used for routing except for when extra routing information like routing hints are embedded in payment requests
  3. Nodes must maintain enough Buffer capital to be able to wait until the flow of funds reverses and channels return to more balanced state
  4. Onion routing is a privacy concept, so that the intermediate nodes does only know the predecessor and successor in the route
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#94

  • How many times can you refill your LN channel?
    As many as you want.

  • What’s the difference between Advertised and non-advertised channels?
    Non-advertised is for normal users. Advertised is for nodes with continuous uptime that are looking to help support the network. They code be routing nodes.

  • How does Buffer capital work?
    It’s the funds a routing node has in order to facilitate routing. It constantly balances between receiving and sending funds.

  • What is onion routing?
    On the lighting network, only the next recipient is revealed not the final receiving party.

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#95
  1. You can refill your LN as many times as you want.
  2. Advertised channels are meant for bigger payment processors and require much more bandwidth and a constant connections, while non-advertised channels are for individual users with standard devices to do ordinary transactions.
  3. they provide capital or liquidity so that, in the case of inflows and outflows happening concurrently, there will be enough capital to complete transactions without exhausting the network.
  4. Onion routing is the Tor network where connections are routed through multiple servers around the world to create privacy.
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#96

A.1. Lightning Network channels can be refilled always. There are no limits. They are similar to a bank account—money in, money out!

A.2. Advertised channels are channels available for routing and they are visible to the network graph. Advertised channels announce their capacity, fees required to forward payments and the timeout they need. Good routing nodes have to be always available and therefore advertise channels by default. That means it needs to be running and maintain active channels with the network. Channels allow a payment sender to build routes with a combination of public and non-public hops in the network.

Non-advertised channels are channels not be available for routing and are not be visible in the network graph. End user nodes (smartphones, laptops, etc.) are not “advertise” channels by default. These non-advertised channels will be accessible through the use of extra routing information or “routing hints” embedded in Lightning payment requests.

A.3. Channels are required to maintain some buffer capital, meaning a minimum balance of outgoing and incoming capacity. This is to ensure the channel is able to route at all times, as other nodes may no longer choose you as a hop if they experience routing failures due to low buffer capital.

A.4. Onion routing is used for multi-hop payments. This means that intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route. The combination of source routing and onion routing protects the identities of payment senders and receivers so as to enhance user privacy and censorship-resistance.

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#97
  • Reading Assignment (blog post)
    1. How many times can you refill your LN channel?
      *
    2. What’s the difference between Advertised and non-advertised channels?
      • Advertised
        • Available and visible in the network graph
        • Always on heavier duty hardware
        • Usually merchant or exchange
      • Non-Advertised
        • Not visible in the network graph
        • Require extra routing info to use channel
          • Routing hints
        • End user hardware
          • Smartphones
          • Laptop
    3. How does Buffer capital work?
      • Routing nodes requires adequate buffer capital to sustain periods where the outflow exceed the inflows eg more stats are spent through the channel the received. Therefore a buffer is required until the inbound tx return balancing the liquidity in the channel. Routing nodes should provide enough buffer capital to avoid channel exhaustion and routing failures
    4. What is onion routing?
      • Intermediate nodes in the payment path know only the identity of their immediate predecessor and successor in the route
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#98

  1. How many times can you refill your LN channel?
    Unlimited. You can spend it and refill it, over and over.

  2. What’s the difference between Advertised and non-advertised channels?
    Advertised channels are your ‘always-online’ routing nodes - reliable. Non-Advertised are really your end users, guys using the network to spend and receive payments instantly and for low fees ($0.01). They aren’t online except for intermittently, just when they are connected/using the network.

  3. How does Buffer capital work?
    Buffer capital is the extra balance you keep in your node to help make sure there is breathing room in case of node exhaustion in one direction or the other (inflows and outflows)

  4. What is onion routing?
    Onion routing is the concept that keeps your scope as local as possible. You cannot see who is sending you payments, or who is receiving yours, except for your immediate predecessors - aka the one who sent you the payment or the one you sent the payment to. This helps with censorship-resistance and overall privacy

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#99

  1. You can refill a LN Channel as many times as you like.

  2. advertised channels are meant to serve as proper gateway nodes for dealing with bulk transactions.
    Whereas non advertised channels are end user nodes such as a smartphone.

  3. Buffer capital is used to mitigate the risk of draining the channel balance to zero, rendering the node useless and unable to perform.

  4. onion routing is a routing technique where the intermediary nodes dont know where a transaction originated from and also doesn’t know where the final destination is. It only knows about its immediate neighbors.

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#100

1. How many times can you refill your LN channel?
Unlimited number of refills
2. What’s the difference between Advertised and non-advertised channels?
Advertised channels are connections between Gateway Nodes that are reliably open and funded These are visible on the Network Graph. Non advertised channels connect end users to these Gateway Nodes and are not visible on the Network Graph. For payments to find their way to these nodes routing hints are embedded in the payment request.
3. How does Buffer capital work?
Since channels are opened with a balance on both ends, if payments go primarily in one direction for an extended time, the sats will be depleted on one side of the channel. To be able to keep routing payments through this channel it will have to be replenished from a “Buffer” by the affected node on the depleted side until it can be rebalanced.
4. What is onion routing?
Onion routing is a layered encryption that reveal only who the previous node was, and where to route a payment next. It does not say who the original sender is or the final receiver is to the node routing the payment. This makes Lightning payments very anonymous and censorship resistant.

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