Bitcoin Q&A: Lightning Clients, Capacity, and Dust - YouTube

"[Does] Lightning have the same UTXO model, or is only the invoice amount sent?"

"Is Lightning a blockchain?" No, Lightning is not a blockchain.

Lightning is a routable network of smart contracts that are exchanged between parties.

In the case of the Lightning Network, those smart contracts are signed bitcoin transactions.

They can also be signed Litecoin transactions because it is a multi-currency network.

Participants in the network exchange signed bitcoin transactions that...

they don't [broadcast] on the public blockchain, but which the Bitcoin blockchain provides security for.

Lightning is different than Bitcoin. It runs on top of Bitcoin and other blockchains.

It provides a way to very quickly exchange value.

[Payments] are confirmed instantly, can be for very small amounts,

and scales to a much larger degree than a blockchain [alone] does.

It uses the security of the underlying blockchain. But no, Lightning isn't a blockchain.

"How can I practically participate in the Lightning Network? Do wallets support this?"

"Should I download and run a node?"

There are a number of ways that you can participate in Lightning...

that do not involve downloading and running a node. The best way, of course, is to download and run a node.

But you may find that a bit difficult to configure. You would need to run a full Bitcoin node [first].

At least at the moment. In the future, we will see a lightweight client called Neutrino.

But for the moment, you need to run a full Bitcoin node and a Lightning node on top of it.

That is fairly technical, so you might find that difficult to do.

[One way] to run a full node that is easier, is through a desktop wallet called Zap.

The Zap wallet includes the functionality of a full node with a nice user interface. You could try that.

It will take up quite a few gigabytes on your hard drive, I think almost 200 gigabytes to sync a full node.

If you don't have one synced already.

An easier way is a mobile wallet, which already exist for Lightning.

For example, I have some running on my mobile at the moment, both for Android and iOS.

You will find more [options for] Android. You could try Eclair, which means "lightning" in French.

Those wallets work pretty well and can introduce you to the world of Lightning,

[some] without having to run a full node.

"Was the recent testing of Lightning payments successful in terms of satisfying...

[the goals] that Lightning was designed to serve?"

It was not specific testing. Since January 2018, people have run [Lightning nodes on Bitcoin mainnet].

The production network has more than 6,000 nodes and almost $4 million in capacity.

It is [processing] thousands of payments every single day.

It is not like there was a one-off task. This is now a running production network.

It is working spectacularly well. Payments are near instantaneous.

That is one of the things which surprises people when they first try Lightning;

the fact that they can press a button on their mobile wallet to send a payment and in the time it takes...

to look [back] at the screen of a vendors' point-of-sale system, [the payment] has already gone through.

It literally takes less than a second, in many cases. So when it works, it works spectacularly well.

Sometimes payments fail because your node is not well-connected or your wallet isn't set up properly.

These are learning steps. For the most part, once you have it set up properly, it works very well.

"What is the Lightning torch? How do people pass it to each other?"

The Lightning torch is just a game intended to test the setup of your nodes and wallets.

You can find out if your nodes and wallets are set up [correctly].

It is really a simple idea. [First], I send you some money over the Lightning Network.

Instead of keeping it, you add a small amount.

I believe the last time, it was 100,000 satoshis. So you would add a small amount to that payment.

Then you find someone else to send it to, they add a small amount, and then they send it forward too.

So it keeps getting bigger and bigger as everybody adds just a tiny amount, one dollar or two.

You need to trust who you send it to, to keep [the game going]. If you play the game honorably,

[and everyone keeps] sending it to the next person with a bit more money,

as it gradually grows, it becomes a bit more difficult [to pass around].

The reason it becomes more difficult is because: the bigger the payment is, the more capacity you need...

in your node and in the other nodes.

Channels need to be available for routing, but there will be fewer routes available with [enough] capacity.

It becomes a bit more challenging when it reaches the payment limit, which is 4 million satoshis.

At that point, just a few nodes [have enough capacity] in their current configuration.

Your node must be [configured correctly and well-connected].

I participated in this game.

My node is very well connected. It has plenty of capacity in well-balanced channels.

I have been working on it for nine months now, so it certainly works very well.

I had no problem passing the torch.

You can try it as a game. If you give someone an invoice in order to receive the torch with the latest amount,

they can send it to you and then you need to send it out.

There is a chance that they can't send it to you, if you don't have enough incoming channel capacity.

[By participating] in this game, you will learn something for sure.

I think there are a couple of Lightning torches going around with different values,

so you can try with a smaller amount.

"Is there a limit of bitcoin [below] which you cannot transact, as it would not be economical for miners...

to include in the block?"

Yes, this is called the dust limit. There is a dust limit of 546 satoshis [on-chain].

Below this, your transaction will not be accepted on the network.

Separately, there is a practical limit.

If you try to make a payment [less than] the minimum fee [usually] required [by wallets], which is 0.0001,

you would [spend twice the amount you want to send], which would not make much sense.

The second follow-up question: "In the Lightning Network, is there such a limit?"

"Is it possible to transact as low as one satoshi?" It is possible to transact with one satoshi.

Even better, on the Lightning Network, you can actually transact in milli-satoshis,

which are thousandths of a satoshi.

You can transact with as little as one milli-satoshi, one thousandth of a satoshi.

Of course, you cannot settle the balance of that channel on-chain in milli-satoshis.

It will round up those amounts if you decide to close the channel.

But in terms of Lightning payments, you can go all the way down to milli-satoshis.

This is one of the advantages of the Lightning Network. It breaks the barrier for micro-transactions.

It pushes below the dust limit, allowing transactions which would otherwise be economically nonviable...

because of limitations on the network.

In Lightning, none of those limitations exist. You can [transact with as little] as a milli-satoshi...

for an unimaginable [array of possible applications], without any problems.