Thanks Mark.
Ok next obvious question (apologies for all of these but it seems you are
the authority on Lightning here). Is the Lightning system limited in the
number of hops there can be in the payment channel? I am looking at the
initial Lightning slides presented in February and it looks like the
locktime decrements by 1-day along each hop. So the more hops there are the
longer my bitcoins are potentially locked up for?

On 9 August 2015 at 21:18, Mark Friedenbach <mark@friedenbach.org> wrote:

> Child pays for parent, and potentially future sighash modes implemented in
> the checksig2 operator lightning needs anyway which enable adding inputs to
> provide additional fee.
> On Aug 9, 2015 1:15 PM, "Hector Chu" <hectorchu@gmail.com> wrote:
>
>> In the Lightning network it is assumed that the balances can always be
>> settled on the blockchain if any of the parties along the channel has a
>> problem. What if the fee on the settlement transactions is not high enough
>> to enter the blockchain? You can't do replace-by-fee after the fact. Do the
>> fees always have to assume worst case scenarios on the Bitcoin fee market?
>>
>> On 9 August 2015 at 19:54, Mark Friedenbach via bitcoin-dev <
>> bitcoin-dev@lists.linuxfoundation.org> wrote:
>>
>>> Tom, you appear to be misunderstanding how lightning network and
>>> micropayment hub-and-spoke models in general work.
>>>
>>> > But neither can Bob receive money, unless payment hub has
>>> advanced it to the channel (or (2) below applies).  Nothing requires the
>>> payment hub to do this.
>>>
>>> On the contrary the funds were advanced by the hub on the creation of
>>> the channel. There is no credit involved. if the funds aren't already
>>> available for Bob to immediately claim his balance, the payment doesn't go
>>> through in the first place.
>>>
>>> On Sun, Aug 9, 2015 at 11:46 AM, Tom Harding via bitcoin-dev <
>>> bitcoin-dev@lists.linuxfoundation.org> wrote:
>>>
>>>> On 8/4/2015 4:27 AM, Pieter Wuille via bitcoin-dev wrote:
>>>>
>>>> > Don't turn Bitcoin into something uninteresting, please.
>>>>
>>>> Consider how Bob will receive money using the Lightning Network.
>>>>
>>>> Bob receives a payment by applying a contract to his local payment
>>>> channel, increasing the amount payable to him when the channel is
>>>> closed.
>>>>
>>>> There are two possible sources of funding for Bob's increased claim.
>>>> They can appear alone, or in combination:
>>>>
>>>>
>>>> Funding Source (1)
>>>> A deposit from Bob's payment hub
>>>>
>>>> Bob can receive funds, if his payment hub has made a deposit to the
>>>> channel.  Another name for this is "credit".
>>>>
>>>> This credit has no default risk: Bob cannot just take payment hub's
>>>> deposit. But neither can Bob receive money, unless payment hub has
>>>> advanced it to the channel (or (2) below applies).  Nothing requires the
>>>> payment hub to do this.
>>>>
>>>> This is a 3rd-party dependency totally absent with plain old bitcoin.
>>>> It will come with a fee and, in an important way, it is worse than the
>>>> current banking system.  If a bank will not even open an account for Bob
>>>> today, why would a payment hub lock up hard bitcoin to allow Bob to be
>>>> paid through a Poon-Dryja channel?
>>>>
>>>>
>>>> Funding Source (2)
>>>> Bob's previous spends
>>>>
>>>> If Bob has previously spent from the channel, decreasing his claim on
>>>> its funds (which he could have deposited himself), that claim can be
>>>> re-increased.
>>>>
>>>> To avoid needing credit (1), Bob has an incentive to consolidate
>>>> spending and income in the same payment channel, just as with today's
>>>> banks.  This is at odds with the idea that Bob will have accounts with
>>>> many payment hubs.  It is an incentive for centralization.
>>>>
>>>>
>>>> With Lightning Network, Bob will need a powerful middleman to send and
>>>> receive money effectively.  *That* is uninteresting to me.
>>>>
>>>>
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>>>>
>>>
>>>
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>>>
>>