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75 votes
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How does the Lightning network work in simple terms?

The Lightning Network is a collection of payment channels between pairs of nodes. To create a payment channel, two users commit funds to a UTXO under shared control. The shared funds allow the users ...
Murch's user avatar
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64 votes
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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 ...
David A. Harding's user avatar
14 votes
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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 ...
Murch's user avatar
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13 votes
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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 ...
Murch's user avatar
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12 votes
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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 ...
morsecoder's user avatar
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11 votes
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How many more transactions per second will be possible with SegWit?

Best estimates on effective blocksize with SegWit are 1.6-2.0 MB. Current transactions/second possible are around 3 tx/s. Given that the effective increase is 1.6 - 2.0x, the transactions/second are ...
Jimmy Song's user avatar
  • 7,759
11 votes

How does the Lightning network work in simple terms?

Lightning allows you to lock coins between two wallets, and then send special transactions between each wallet which only become "real" when they are added to the blockchain. But you don't do that, ...
Wouter Schut's user avatar
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 ...
Murch's user avatar
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8 votes
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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 ...
Pieter Wuille's user avatar
8 votes
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Lightning Network scaling alternatives?

The obvious one would be side chains, the idea being that the transactions on the side chain would be off the main chain. Most other scaling solutions are either on-chain or centralized. For example, ...
Jimmy Song's user avatar
  • 7,759
8 votes
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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: ...
Murch's user avatar
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7 votes
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Bitcoin distribution

A lot of people who accumulated thousands of coins in the early days spent them on silly things or cashed out during the 2012 bubble. Lazlo for example, spent 10,000 bitcoins on two pizzas. Nobody ...
m1xolyd1an's user avatar
  • 5,656
7 votes
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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 (...
Sergei Tikhomirov's user avatar
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 ...
Rajesh Prajapati's user avatar
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,...
seek adventure's user avatar
6 votes
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If there a formula to decide when more decimal places will be added to Bitcoin?

To the best of my knowledge this has not yet been codified and it is hard to imagine there being a need to smaller Bitcoin increments anytime soon. At this point smaller increments would suffer ...
user22576's user avatar
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6 votes
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Without side chains will transaction fees rise as block rewards fall?

You are correct that transaction fees per block are much smaller than block reward, but they are still significant and rising: https://www.smartbit.com.au/charts/transaction-fees-per-block Recently ...
John Adamson's user avatar
6 votes
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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 ...
Murch's user avatar
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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 ...
Pieter Wuille's user avatar
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 ...
Ava Chow's user avatar
  • 70.7k
5 votes
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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 ...
Ava Chow's user avatar
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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 ...
Jestin's user avatar
  • 8,812
5 votes
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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 ...
ranchalp's user avatar
  • 567
5 votes
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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 ...
Jeremy Rubin's user avatar
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 ...
sanket1729's user avatar
  • 1,402
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 ...
Nick ODell's user avatar
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3 votes
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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 ...
Dr.Haribo's user avatar
  • 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 ...
UTF-8's user avatar
  • 3,224
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 ...
David Schwartz's user avatar
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 ...
Murch's user avatar
  • 75.7k

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