Be Firmly and Openly against SegeWit and Lightning
Why are different mailboxes able to send emails to each other?
Why aren’t messaging apps able to send messages to each other?
If you are a key stakeholder of Bitcoin, will you agree to establish a protocol for Bitcoin and Ethereum to make transferring coins from Ethereum to Bitocoin possible?
Part 1: You need to control protocols before you control your interests.
The answer for why free message exchanges between mailboxes are available is that all mail servers comply with SMTP, an outgoing mail protocol, POP, a receiving protocol and IMAP.
Then why can’t messaging apps send messages to each other? What if QQ could send messages to Wechat(the most popular app of Tencent), Wechat could add friend from Skype and Alipay users could see moments of Wechat? What a wonderful life!
But Pony Ma, Tencent’s CEO will only reply: “never”
There has long been protocol for internet messaging apps called Internet Relay Chat(IRC) and Extensible Messaging and Presence Protocol (XMPP). If these protocols are upheld, then people can send messages between different apps. Companies will small number of users will take these protocols like Gtalk and Spark both use XMPP. But those with large user bases like QQ, Wechat, WhatsApp will ignore the protocols. “Why on earth do I need to share user resources with you?” It’s impossible for companies to share their most valuable resources-users.
Part 2: Lightning is the second layer payment network overriding Bitcoin’s base network.
The purpose of Lightning is to enable Bitcoin to have unlimited payment malleability, small transaction payment and instant confirmation. The essence of Lightning is to set up a direct payment channel to complete transactions. The onchain transactions of Bitcoin only completes when transaction is initiated and signed, broadcasted and confirmed via miners. But Lightning, as a payment channel will eliminate the need for coin senders to broadcast via Bitcoin’s blockchain. The coins will be sent to receiver directly.
To set up a payment channel for two parties, the first thing is to initiate a transaction with multiple signatures and broadcast it via Bitocoin’s blockchain. Then the two parties need to create a new transaction to bring back the coins to the original side and the coins involved needs to be locked-up like “these coins can’t be transacted on Bitcoin’s blockchain in the future 30 days”. During this period, the two sides can adjust their balances directly when needed. This is what we call a payment channel. The two can close the channel when the lock-up period ends or when voluntarily start a transaction to close it. Finally, the account balances of the two parties will be broadcasted on the blockchain.
The greatness of payment channel is that different channels can be connected. If A has payment channel with B and B has channel with C, then A can send coins to C via B.If someone in the world has set up a payment channel with the rest of the world, then all the people can send coins through this person. And the process will be instantaneous as there is no need to broadcast the transactions like the mainchain of Bitcoin.
Above is the simple depiction of the establishment of (connected) payment channel. These connected channels are called Lightning network. LN can make it technically possible for the nodes on payment channels to need no trust.
It’s still hard to set up Lightning network on current lightning network so some functions need to be added. And one added function is just Segregated Witness, on which miners are voting now.
Part 3 :LN-a second layer payment network that overrides Altcoins and other blockchain products
In Part 2 we have described a payment network that overrides bitcoin network. But LN can also be suitable for other Blockchain products like on Litecoin or Ethereum.
From these analyses we can see lightning is a great and adorable help for blockchain. It will make Bitcoin even better.
However, LG will evolve. Theoretically speaking, LG can connect all the blockchain products if applied.
Then what is it in this situation?
Part 4 :Multi-party Offline Network—one that overrides Bitcoin network and other altcoins
Now we say Bitcoin’s LN is based on Bitcoin. It means Bitcoin’s LN needs the base structure and protocol of Bitcoin. If Bitcoin’s protocol is not the base anymore, LG will be meaningless.
But the theory of next generation of LN will be different.
When reading whitepaper of Ethereum, I found it is also designing LN but Ehereum community call it Multi-party Offline Network(MON). Ethereum network is a virtual machine and various smart contracts can be tied on it and Ethereum’s LN is designed to connect these contracts. Furthermore. I have noticed that LN is itself a smart contract. It is the smart contract of smart contracts. In another word, it can distribute coins smartly for various smart contracts.
I was stunned when I realized it.
LN is a smart contract which enables payment channels on it to connect BTC, ETH or even more coins like LTC simultaneously. LN will be the bridge for different Blockchain products. On the other hand, payment channel is a smart contract that use hash time to lock up. It can be set up on any Blockchain products (like BTC,ETH or LTC) that can provide necessary smart contract function. Adjustment of account balances can be made in this payment channel without the need to be broadcast the transactions on the chains of these products.
Let me make it clear with an example.
A and B both own Bitocin, Ethereum coin and Litecoin in the meantime. Now A and B can open 3 payment channels to transact the three coins. But the three channels could have the same set of codes, namely one payment channel can lock up the 3 coins and adjust balances of the 3 coins. Furthermore, if A, B and C only have Bitocin, Ethereum coin and Litecoin respectively, then the same payment channel can enable them to send different coins to each other.
This type of LN (smart contract) just can distribute coins offline between multiple Blockchain products (like BTH, ETH, and LTC). To put it into other words, LN is not the second-layer payment network of Bitcoin but a network that overrides all the Blockchains. Bitcoin becomes the second-layer network.
Part 5 :Protocol will undermine user loyalty.
Email operators seldom make money out of emails though protocols like SMTP/POP make free communication between different mail boxed possible. Only big companies will operate email servers. If QQ, Wechat, WhatsApp and Alipay exchange their user resources based on a protocol, users will be far less sticky as they can change different apps like changing email domains. These companies will be depreciated.
Now Bitcoin has big user base and high user loyalty and far-reaching influence. Bitcoin’s users are deciding whether they want an adjustment protocol of SW-LB, which can enable users to lock up transactions by hash time and build more complex transactions. If LN is applied, other Blockchain protocols can all use LG and it evolve into Multi-party Offline Network. The MON will become the protocol of all Blockchain products. Bitcoin’s user resources will be shared with other altcoins and the user loyalty will be undermined. The commercial value of Bitcoin will be undermined, too. It’s easy to imagine what the Bitcoin price could be under such circumstance
I don’t need to send my bitcoins to Ethereum. I don’t need Multi-party Offline Netwrok.
I love Bitcoin. Now LN wants miners to activate SW. As a stakeholder, my response to SW is: Do not activate SW!
Miners, please do not activate it. It’s not the time yet. We have to wait until Bitcoin is strong enough. Only when Bitcoin has gained enough user base, user loyalty and broad recognition as a currency should it provide necessary smart contract function. At that time, we just need the strong computing power of Bitcoin instead of “Multi-party Offline Network” to handle transactions between different coins.
This is translation of article written by Huang Shiliang, famous opinion leader in China’s Bitcoin community. The article dose not represent the opinions of 8btc. see original text.
To tip the author Mr. Huang, here is his Bitcoin address: 14mhzjkJ71oMAMkKu3dy98dnUpkyQBHL1r