PSA: LN is not a set of channels between each pair of buyer and seller, it is a routed network

It seem to be a common confusion about Lightning Network that it works something along the lines of "I open a channel to a coffee shop with 10mBTC, send multiple txes paying for coffee over it, and once the money run out i close the channel".

If it worked like that, then the whole thing would have been rather pointless.

Instead it is a network of payment channels. You open a channel once, to a node you respect, and then that node connects to node B that connects to node C that connects to a shop you want to pay.

One channel, many shops.

It's like the internet - you don't have a cable directly to Facebook, a cable directly to Google and a cable directly to Amazon. Rather, you only have a cable/radio link to an ISP or two, and the data is then routed across the backbone of the internet to reach whatever detination you need.

And unlike ISPs in places like USA, the network is uniconnected. Meaning you can pick any node you like at no extra cost. Imagine being able to have internet from an ISP in Moscow, Russia while living in Arkansas, USA. Same with payment channels.

Submitted January 22, 2018 at 11:21AM by theartlav http://ift.tt/2n1uFPJ