Hivemind Lightning Network Spec

[psztorc]

I put this here: http://bitcoinhivemind.com/blog/lightning-network

It has many advantages...instant trades (instant settlement), very very low transaction fees, no miner censorship of trades, no miner front-running.

Check it out!

[zack]

Because altcoins exists, and because you collect trading fees, lightning network introduces a flaw.
Pairs of traders can participate in hundreds of trades, then close their channel as if they had only participated in one trade.
This way, they don't have to pay as many trading fees.

They lock coins on the ethereum side as a promise not to bring each other to trial.

If the oracles aren't over-paid, they will steal.

[psztorc]

> Pairs of traders can participate in hundreds of trades, then close their channel as if they had only participated in one trade.

Those trades involve trust. And therefore they reintroduce the likelihood of an exit scam.


> They lock coins on the ethereum side as a promise not to bring each other to trial.

Check the math with a numeric example.

[zack]

A numeric example:
You and I have a channel on hivemind, we each put $1000 into it. We make 100 bets over a year-long period, each with a $1 fee, so there are $1900 left in our channel, all of it is on your side, because you kept winning bets more than me.

We each lock $100 into an ethereum contract promising to settle the hivemind contract at a sequence number of 1, and with the final balance of $1949 on your side, and $50 on my side.

The total amount of time $200 was locked up on ethereum is as long as it takes to close the channel on hivemind.

Case 1, we are both honest. on hivemind you get $1949, and I get $50, on ethereum we each get our $100 back.
Case 2, exit scam:
After we make the agreement on ethereum, I try to finalize the hivemind contract at the step where I had $950 and you had $1049, (after I had lost the first bet).
The ethereum contract locks our $200, and refuses to give it back.
You provide the guilt transaction. Hivemind gives you $1900, and it gives me $0.

[psztorc]

You are right that Ethereum can create parasite contracts.

I myself have written extensively about this.

But you said that:

> Because altcoins exists, and because you collect trading fees, lightning network introduces a flaw.

I don't see how the lightning network introduces a new flaw. In fact, it probably helps, because a lot of stuff happens off chain and with incentives for secrecy.