Reading Assignment: Lightning Details

Lightning Network, Lapps & Segwit
#41
  1. How do two parties start a payment channel?
    They start a payment channel by creating a multi-sig transaction.
  2. How are you punished if you try to do an invalid transaction?
    All your funds of the channel are lost and received by the other member of the channel
  3. What is the purpose of “watchtowers”?
    They look out for dishonest transaction in case a member of a channel is not online and can not act in a case of a dishonest closing of a channel. so they would sign the transaction for a victim
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#42

1. How do two parties start a payment channel?

Through a multisig (2/2) transaction on the blockchain. At least one side must commit funds.

2. How are you punished if you try to do an invalid transaction?

If one party tries to close the channel in any other way than publishing the current balance sheet, the other party will be given 100 blocks worth of time to initiate a Breach Remedy Transaction which will essentially give all funds to the honest party.

3. What is the purpose of “watchtowers”?

Watchtowers are nodes that look out for fraudulent transactions. If they find one, they can sign the Breach Remedy Transaction on behalf of the honest party and they will receive a small portion of the proceeds as a reward.

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#43

  1. They parties start a payment channel by funding a channel between them - A Bitcoin onchain multisig transaction is set up betwen the parties - givin both parties the right to close the channel at any time

  2. You will loose all funds committed to the channel if you try and cheat.

  3. Watchtowers look out for fraudulent LN transactions - and by successfully doing so can get a reward if they discover and remedy one.

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#44

  1. Two parties start a payment channel by creating a multisig.

  2. You are punished by giving up the secret in the BRTX there by giving the participating conjoiner the time sensitive ability to take the BTC from you. Heck yeah, that’s sick!

  3. The purpose of “watchtowers” are to look out for dishonest transactions being broadcast. If the watchtowers detect that someone tried to publish a dishonest transaction, they can sign the penalty transaction for that person and be paid a small proportion of the penalty transaction as a reward for keeping that person honest.

2 Likes
#45

  1. Two parties start a payment channel by creating a multisig transaction on the blockchain, at least one party must commit funds to this transaction

  2. If you try to do an invalid transaction, then a timelock will lock the transaction and the other party can claim the entire capacity of the payment channel

  3. Watchtowers look out for dishonest transactions being broadcast and can sign the penalty transaction on behalf of the cheated party (and be rewarded for doing do). This is a safety net in case the cheated party is offline when the fraud occurs.

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#46
  1. How do two parties start a payment channel?
    By creating a multi-sig transaction on the blockchain. After the fund to this transaction, the channel can open on the lightning network and the transfers can begin.
  2. How are you punished if you try to do an invalid transaction?
    Your entire balance will go to the counterparty. There is a Timelock of 100 blocks that gives the counterparty enough time (16 hours and 40 minutes) to punish you with a confiscation of the entire balance.
  3. What is the purpose of “watchtowers”?
    They serve as back up if the timelock is not enough because the punisher is offline for more than 17 hours after committing fraud. The watchtower takes the punishment over and receive a small incentive for it.
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#47
  1. How do two parties start a payment channel?

They need to fund it by making an on-chain multi-sig transaction on the BTC blockchain, and both parties need to sign that transaction
2. How are you punished if you try to do an invalid transaction?

you could lose all of the funds used to fund the channel

  1. What is the purpose of “watchtowers”?

The purpose is to be “vigilantes” because not all of the users are online 100% of the time. So when a user is offline, the watchtowers are in charge of keeping fraudulent transactions at bay

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#48
  1. How do two parties start a payment channel?
    Two parties can initiate a payment channel by creating a multi-signature transaction on the blockchain.
  2. How are you punished if you try to do an invalid transaction?
    If you try to publish any balance sheet other than the most recent one (e.g., one in which you own more BTC than in the most recent balance sheet), your funds will be locked while the other party will be given the opportunity to publish a “penalty” transaction that will send the entire capacity of the payment channel to himself.
  3. What is the purpose of “watchtowers”?
    If the watchtowers detect that you tried to publish a dishonest transaction, they can sign the penalty transaction for the other party and be paid a small proportion of the penalty transaction as a reward for keeping users honest.
2 Likes
#49
  • How do two parties start a payment channel?
    with a multisig transaction
  • How are you punished if you try to do an invalid transaction?
    you are going to lose your funds.
  • What is the purpose of “watchtowers”?
    in the case someone on the lightning channel is offline ant the other try to cheat, the watchtowers penalized this .
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#50

  1. How do two parties start a payment channel?
    Both parties transfer btc to a multi key UTXO that is signed by both of them. This UTXO is added to the blockchain.

  2. How are you punished if you try to do an invalid transaction?
    With every transaction added to a channel an anti cheat transaction is created which requires a secret to claim. If a party tries to broadcast an invalid transaction this secret is exposed allowing the party that is not the bad actor to claim the entire funds provided to a channel by the other party.

  3. What is the purpose of “watchtowers”?
    If a party tries to fraudulently close a channel while the other party is not online to claim the anti cheat transaction, then watch towers could trigger the anti cheat transaction and receive a share of the reward from the bad actor’s btc.

2 Likes
#51

Lightning Details - Reading

  1. Two parties start a payment channel by initiating a payment channel -creating a multi-signature transaction on the blockchain. At least one party must commit funds to the transaction.

  2. If you try to do an invalid transaction, you are punish with a penalty - dishonest party’s fund will be locked. His/her funds will be forfeited and given to the other party. This serves as a deterrent to cheating.

  3. The purpose of Watchtowers (LN nodes) is to identify dishonest transaction being broadcast on the network. They are incentivise by having a share in the proceeds.

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#52

  1. By making a multi signature transaction with a side to send funds to this transactions.

  2. Trying an invalid transaction will be resulted by a punishment and losing there funds.

  3. To track dishonest transactions being broadcasted and to sign the penalty transaction for that part and being paid by a small amount of the penalty transaction as a reward.

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#53

Lightning Details :mag_right: :zap:

  1. How do two parties start a payment channel?
    Both parties have to participate in creating an on-chain (2 out of 2) multi-sig transaction in which at least one of them has to lock up some funds until this or a superseding version of that transaction get transmitted and realized on the blockchain.
  2. How are you punished if you try to do an invalid transaction?
    When a channel is being closed unilaterally the counter party has a certain time window to check if the transmitted balance to be settled on-chain is indeed the latest and thus correct one. If this is not the case the defrauded party can transmit the pre-signed penalty transaction that takes precedence and transfers all funds in the channel to that party.
  3. What is the purpose of “watchtowers”?
    Watchtowers can be set up to monitor that only the final/correct balances of particular channels will be settled and will (for a small fee) intervene in case of attempted fraud. This removes the necessity to constantly monitor one’s channels.
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#54
  1. How do two parties start a payment channel? — by creating a multi sig transaction on the blockchain and have at least one party commit funds to the transaction
  2. How are you punished if you try to do an invalid transaction? — your funds get locked while the other party can public a penalty transaction that will send the entire capacity of the channel to themselves
  3. What is the purpose of “watchtowers”? — to watch for dishonest transaction broadcasts and sign the penalty transaction if the party is offline and receive a small portion of the penalty reward
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#55
  1. How do two parties start a payment channel?
    Two parties can initiate a multisignature with one party deposits fund.
  2. How are you punished if you try to do an invalid transaction?
    Your fund will go into timelock with another party can publish penalty transaction and remove the entire fund in the payment channel.
  3. What is the purpose of “watchtowers”?
    To watch fraudulent transaction and perform penalty transaction, in turn receive a small fee for watching out the channel.
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#56

  1. Two parties can initiate a payment channel by creating a multi-signature transaction on the blockchain.

  2. You loose your funds.

  3. To watch for fraudulent behavior which they are incentivized to do.

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#57
  1. How do two parties start a payment channel?

Two parties can initiate a payment channel by creating a multi-signature transaction on the blockchain. At least one party must commit funds to this transaction. Once this channel is open and a payment channel is established on the LN, the participants can transfer funds between each other, instantly and with extremely low fees. Each transaction updates a “temporary” balance sheet, signed by each party’s private key. This balance sheet can be broadcast as a Bitcoin transaction at any time if either or both parties wants to close the channel. LN payments are done peer-to-peer, with no intermediary.

  1. How are you punished if you try to do an invalid transaction?

If Alice tries to publish any balance sheet other than the most recent one, her funds will be locked while Bob will be given the opportunity to publish a “penalty” transaction that will send the entire capacity of the payment channel to himself. This serves as a deterrent to cheating. In the case Bob cannot access the internet, there are “watchtowers”, which are LN nodes that look out for dishonest transactions being broadcast.

  1. What is the purpose of “watchtowers”?
    “watchtowers”, are LN nodes that look out for dishonest transactions being broadcast.
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#58
  1. How do two parties start a payment channel?
    At least one of them must put funds into a multi-signature wallet. Then they can send off-chain micro-transactions. When they are satisfied with the final balances, they can exit the multi-signature wallet and have total control of their funds again.
  2. How are you punished if you try to do an invalid transaction?
    If a party tries to publish an invalid transaction to the blockchain, their transaction is timelocked for 100 blocks and they reveal a secret. The secret can be used to create a Breach Remedy TX by the other party, where all UTXOs go to the other party. The party who published the invalid TX loses all of their funds.
  3. What is the purpose of “watchtowers”?
    Watchtowers look for invalid transactions. If they find an invalid transaction published by one party, they can publish a BRTX for the other party. The other party gets all the funds, except for a small fee to the watchtower.
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#59
  1. They create a multisig trx which specifies direction that funds can flow
  2. you forfeit your balance
  3. they can police the network for fraudulent transactions to earn part of the forfeited balance
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#60

1- 2 parties can initiate a payment channel by creating a multi-signatura transaction on the blockchain.
2- The other party has the opportunity to publish a penalty transaction that will send the entire capacity of the payment channel to himself.
3- Watchtowers are LN nodes that look out for dishonest transactions being broascast.

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