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14:42 < Luke-Jr> uh, isn't this completely wrong? https://www.reddit.com/r/Bitcoin/comments/3ok8ga/blockstream_announces_liquid_bitcoins_first/cvydu90
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14:57 < CodeShark> it looks more sorta right than completely wrong to me
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14:58 < CodeShark> although it isn't completely right either because the guy is really talking about bidirectional payment channels, not lightning
14:58 < CodeShark> bidirectional payment channels are just one part of lightning
15:40 < Luke-Jr> but there's no case someone can just take all your money afaik?
15:42 < CodeShark> they can take everything in the channel
15:42 < CodeShark> that's how you disincentivize the broadcast of revoked contracts
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15:43 < CodeShark> it's what makes it bidirectional
15:45 < CodeShark> and it really needs to be everything in the channel so that it's a strictly worse outcome for the person who broadcasts it than any future contract they might make in the channel
15:47 < CodeShark> in LN you'd generally want to have channels open with at least two different people if not more, though - so the "ALL your monies" isn't strictly correct if you want to nitpick ;)
15:57 < rusty> Luke-Jr: no it's pretty accurate.  The penalty for trying to cheat is loss of all funds in channel.
15:58 < Luke-Jr> huh? I thought it was just impractical because the later settlements had an earlier locktime?
15:58 < rusty> This is why my implementation will never produce and sign the commit tx unless it's about to use it (ie. comms breakdown).
15:58 < rusty> Luke-Jr: naah, we don't use locktime for enforcement.  That was the model by the Zurich (?) guys, and it's limited.
15:59 < Luke-Jr> :/
15:59 < rusty> Luke-Jr: instead, there's a "if you know the secret you can steal all the moneys" so I give you the secret once we've updated to a new tx.
15:59 < Luke-Jr> so what stops someone from going around burning money just to screw people over?
15:59 < rusty> Luke-Jr: they can't?  You only revoke the previous tx when you've agreed on the new one.
15:59 < CodeShark> it's like a ratchet
15:59 < rusty> Of course, they can stop talking to you and you have to dump to blockchain, which means delays and fees.
16:00 < Luke-Jr> you can't know *who* broadcast the earlier one, so I assume the funds don't go to either party?
16:01 < CodeShark> each party has a different transaction that is still missing their signature
16:01 < CodeShark> but both spend the same output
16:01 < Luke-Jr> hmm
16:01 < CodeShark> so only one or the other will get confirmed
16:02 < CodeShark> at any time either party can sign and broadcast their transaction
16:03 < CodeShark> so it's not really a matter of who broadcast - it's this is clear
16:03 < CodeShark> s/it's//
16:03 < rusty> Luke-Jr: I think we got lost somewhere.... channel is open by tx with output that is 2x2, which commit txs spend.  Initially you give me sig on commit tx with single "all  money with rusty's sig after 1 day delay, OR to luke's sig + secret".
16:03 < rusty> Luke-Jr: (Assuming I put in all the funds).
16:05 < rusty> Luke-Jr: Now, to pay you 1 satoshi, you give me sig on commit with two outputs: "N-1 satoshi with rusty's sig after 1 day delay, OR to luke's sig + secret" and "1 satoshi luke's sig".  I give you sig on a mirror commit: "N-1 satoshi with rusty's sig" and "1 satoshi Luke's sig after 1 day delay OR rusty's sig + secret".
16:06 < rusty> Luke-Jr: once the sig exchange has checked out, I send your secret for that initial commit, so if I were to broadcast it you'd just steal it.
16:09 < CodeShark> since there's no way to retroactively invalidate the transaction (in the sense that if signed and broadcast it still satisfies the consensus rules) - so instead you just make it so that the only party that can sign and broadcast it would also lose the ability to claim any of the outputs were they to do so
16:10 < CodeShark> which basically forces them to never sign it and just erase it
16:11 < rusty> hence "revocable transactions".
16:18 < CodeShark> in other words, the last transaction you negotiated is always strictly more in your interest to broadcast than the previous one
16:18 < CodeShark> regardless of which direction the payments flow
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16:24 < CodeShark> or perhaps it's better to state that in the negative - the previous transaction is always strictly less in your interest to broadcast than the last one
16:25 < CodeShark> most in your interest is to either keep the channel open or to negotiate a close with the counterparty so you can both withdraw your funds immediately
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22:03 < rusty> W00t!  Crypto between two nodes operational...
22:03 < rusty> (They don't say anything useful yet, though)
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