64
votes
Accepted
What are Channel Factories and how do they work?
What are Channel Factories?
In short, Channel Factories are payment channels that can be used to create more payment channels. That sounds weird, but it's really pretty simple:
In a regular payment ...
- 12.1k
14
votes
Accepted
Why do bitcoin exchanges use "central" wallets?
Note: This answer applies to Bitcoin, not "crypto" generically.
On terminology
I think you may be conflating "wallets" and "addresses". Addresses are used to communicate ...
- 76.9k
13
votes
Accepted
What is the Lightning Network proposal? What problem is it trying to solve?
Two issues with Bitcoin's design
Scalability of "everyone checks everything"
Bitcoin is a gossip network:
P2P nodes connect mostly randomly to each other and pass-on new information to each ...
- 76.9k
12
votes
Accepted
What is the User Activated Softfork (UASF) proposal? How do its risks compare to hardforks?
What does the UASF proposal entail?
The UASF proposal is an extension of BIP9 that allows soft-forks to specify a mandatory activation time. If miners have not started signaling support by this ...
- 14.2k
11
votes
Scalability problem: is the end of Bitcoin near?
TL;DR:
No, the end is not near—we're just getting started. 20× is boring, let's figure out how to do 100,000×.
Let's first talk about what we are trying to achieve. We are not actually trying to ...
- 76.9k
9
votes
Accepted
What is the difference between on-chain scaling and off-chain scaling?
Note, I use scaling, capacity, and scalability as follows:
Scaling: Growing the network's utility in any fashion.
Capacity: The number of payments that can be processed on the network.
Scalability: ...
- 76.9k
8
votes
Accepted
Why doesn't each node store only a portion of the blockchain?
Your question is vague, but I assume your real question is why every node must store the full blockchain.
The answer to that is that they don't. In fact, nodes can choose to not store any part of the ...
- 108k
7
votes
Accepted
What is the maximum number of transactions per seconds on Bitcoin Cash?
The throughput in Bitcoin is not defined in transactions per second, rather indirectly, via block size limit. What matters in the size of transactions in bytes. The more complex the transaction is (...
- 1,430
6
votes
How does the Lightning network work in simple terms?
Lightning Network is a layer on the top of the Bitcoin Blockchain. Le'me go in more detail.
It is a technology that makes bitcoin work faster, scalable and improve bitcoin in such a way that Bitcoin ...
- 171
6
votes
Arguments against Bitcoin using adaptive blocksizes
The strongest arguments against dynamic blocksizes which can be determined by miner actions, is that they do not necessarily represent the interests of other participants such as users, node operators,...
- 311
6
votes
Accepted
What is Wrapped Bitcoin WBTC?
Disclaimer: I worked at BitGo when WBTC was kicked off, but I didn't work on the WBTC project.
Wrapped Bitcoin (WBTC) is an ERC20 token fully backed by bitcoins held in BitGo's custody. BitGo mints ...
- 76.9k
5
votes
Which kinds of transactions show quadratic signature-hashing scaling?
Quadratic means that something grows as a square function of something else. If you're just talking about a one-input transaction, there is nothing that changes.
The quadratic hashing issue is that ...
- 108k
5
votes
How scalable is a Blockchain-based system?
Blockchains are not really scalable. For the most security, blockchains need to be replicated on as many devices as possible. Those devices are full nodes and must download and verify every single ...
- 71.5k
5
votes
Accepted
On-chain scaling still required with Lightning Network?
Yes, it would require on-chain capacity increases if there were a lot of channels being opened and closed as well as normal on-chain transactions. This need is directly referenced in the Lightning ...
- 71.5k
5
votes
How does LN solve the liquidity problem?
Whoever made that example doesn't seem to understand how the lightning network works. I think the creator of this scenario is confusing how the lightning network functions with how traditional ...
- 8,822
5
votes
Accepted
Is it possible to splice a new participant into a LN channel factory?
You are correct. It is not possible to get Diana into the Channel Factory without a transaction that closes and reopens with Diana.
Splicing-in and splicing-out as explained by Decker et al. in the ...
- 567
5
votes
Accepted
How is OP_CHECKTEMPLATEVERIFY a scaling solution
A bit of a meandering answer to the question, and to answer a side question: fundamentally what is a scaling solution?
OP_CTV does not increase the block space. Transactions using generally will use ...
- 299
4
votes
Accepted
How isn't blockchain fundamentally broken?
The chain works by verifying every previous block, right? How does this not become an exponential problem?
I think you are assuming Blockchain growth is exponential with time, but it is linear with ...
- 1,412
3
votes
Will Bitcoin scaling affect the amount of hashing power required to keep the network secure?
This is a comment from page 199 of Mastering Bitcoin. I think its meaning is to be interpreted taking into account the two preceding sentences:
Note that the target difficulty is independent of ...
- 193
3
votes
Which kinds of transactions show quadratic signature-hashing scaling?
The quadratic hashing issue appears in the verification of all pre-segwit transaction formats. It stems from the method of verifying the input scripts.
For each input the transaction has, all the ...
- 76.9k
3
votes
Quadratic hashing problem: Why not just create new OP code "CHECKSIG2" to fix?
Note: As of 2020 this answer is obsolete, as BIP143 / SegWit has been in use for years which fixes this concern.
You can fix it this way, and someone is in the process of doing so.
The problem with ...
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3
votes
Accepted
Incentives for Segwit vs BTU
Some Core developers work for Blockstream. Some people say they want small blocks so that you will be forced to use Blockstream products (sidechains) to use bitcoin.
Some say Bitmain uses ASICboost ...
- 8,469
3
votes
Why doesn't each node store only a portion of the blockchain?
The blockchain determines whether a transaction can be made. When a miner creates a new block, they are only allowed to include valid transactions. If they include an invalid one, their block is ...
- 3,234
3
votes
Why would I trust a cryptocurrency that allow only 3 transactions/s?
You are equating the value of a currency with the performance of just one way to exchange that currency. There are poor ways to exchange dollars as well.
Also, I'm not sure what you mean by "invest ...
- 51.6k
3
votes
Why not multiply "six confirmations" and divide Time-Between-Blocks and Reward by the same factor?
In consideration of replacing the 1 block with N blocks in the same time frame, N > 1, I see the following points:
Advantages
Expected time until first confirmation is reduced
Mining revenue is ...
- 76.9k
3
votes
Accepted
What is the smallest fee you can pay for an on chain transaction?
From what I understand, the smallest fee you can pay to miners per transaction is 1 Sat/byte.
It's not true. A transaction can contain a fee of any amount. There is nothing to stop you from ...
- 23.1k
3
votes
Is PBFT a consensus algorithm?
PBFT is Practical Byzantine Fault Tolerance. It is a "classical" consensus algorithm that uses a state machine. Uses leader and block election to select a leader.
PBFT is a three-phase, network-...
- 259
3
votes
Does a transaction always get verified/processed by ALL full nodes in the network before being added into the block by some mining node(s)?
Does a transaction always get verified and processed by ALL full nodes in the network before it is added into the block by some mining node(s)?
Technically no, but only because of the way you've ...
- 192
3
votes
What is the Big-O for LN bandwidth? Can anyone answer this or provide a link to a spec that is sufficient enough for us to calculate it?
This is an excellent question but still probably a little bit under specified. Let me try to give an answer and elaborate.
When looking at network bandwidth there are several componants playing into ...
- 11.9k
3
votes
Scalability problem: is the end of Bitcoin near?
The answer to this question is not entirely clear, as nobody can predict the future to see how successful the bitcoin network will ultimately be, and scaling to meet the financial demands of the world ...
- 18.3k
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