Clearly opposed to Segregated Witness and Lightning Network

Chapter 0 Introduction

Why can all mailboxes send emails to each other?

Why can't different chat tools chat with each other?

If you are a major stakeholder in Bitcoin, do you agree to build a layer of protocol between Bitcoin and Ethereum so that Ethereum coins can be sent to Bitcoin addresses?

Chapter 1: Controlling the Agreement Can Control the Interests

Why can all mailboxes send emails to each other? The answer is that all mail servers follow the transmission protocol for sending and receiving emails, which is called SMTP protocol for sending, POP protocol for receiving, and IMAP protocol for receiving.

Then why can't the various chat tools we have now chat with each other?

If only QQ could send messages to WeChat, if WeChat could add Skype friends, if Alipay could view WeChat’s Moments... How wonderful that would be, and the world would be such a wonderful place.

Ma Huateng would tell you: Dream on!

In fact, an organization defined the standard chat protocol for the Internet long ago, called IRC. Later, someone promoted the IM protocol XMPP. If various chat tools follow these standard protocol designs, they can send messages to each other. However, only companies with a small number of users in the field of instant messaging will design products according to these protocols. For example, Gtalk and Spark both use XMPP, and these can chat with each other. But products with large installations, such as QQ, WeChat, and WhatsApp, will ignore you. Why should I share user resources with you? Bah, get out.

In 2011 and 2012, many microblog products appeared in mainland China, including Tencent Weibo, Sina Weibo, Sohu Weibo, etc. Sina Weibo was the most powerful and had the largest number of users. Then Tencent Weibo and Sohu Weibo called on everyone to connect the various platforms and build a tool that allows users to post a 140-character or less content on this tool and synchronize it to all platforms at the same time. As a result, Sina Weibo refused to agree.

For Tencent and Sina Weibo, user resources are their biggest gold mine, and they cannot share these resources with other competing companies. This is why various chat tools cannot chat with each other.

Chapter 2: The Second Layer Payment Network on the Bitcoin Network - Lightning Network

The purpose of the Lightning Network is to make Bitcoin have unlimited scalability, small payments, and instant transactions. The essence of the Lightning Network is to allow participants to directly establish payment channels to complete transactions. Bitcoin on-chain transactions require the sender to construct and sign the transaction, then broadcast the transaction, and the miners package and confirm the transaction before it is completed. However, the payment channel allows the sender to send Bitcoin directly to the receiver without broadcasting the transaction to the Bitcoin blockchain network.

To open a payment channel, two people first construct a special multi-signature transaction and broadcast it on the Bitcoin blockchain network. Then they create a new transaction to return the original funds to each other, but this transaction is to lock the available time on the blockchain. For example, within the next 30 days, these funds cannot be used on the Bitcoin blockchain. During this time period, when the two parties need to send funds to each other, they can directly modify their respective fund balances. This is the payment channel. To close the payment channel, you can wait until the lock time ends, or both parties can actively send a transaction to close the channel and broadcast the final balance of both parties on the blockchain.

If a payment channel can only update the balance between two people, it is definitely useless, right? But the great thing about payment channels is that they can connect payment channels together. For example, if there is a channel between A and B, and there is a channel between B and C, then A can send Bitcoin to C through B.

If one person establishes a payment channel with everyone in the world at the same time, it means that everyone in the world can use this person as an intermediary to send Bitcoin, and this is completed almost instantly, without the need to broadcast transactions for miners to confirm like the Bitcoin main chain.

The above is a simple description of the establishment and networking of payment channels, which is described as the Lightning Network. In theory, it is possible for the nodes in the payment channel to not need to trust each other.

These are all very familiar voices. Many people have regarded the Lightning Network as the savior to save Bitcoin transaction congestion, and even the future of Bitcoin payment.

It is still difficult to build a lightning network on the Bitcoin network at present, and some additional functions need to be added, which is the segregated witness that miners are currently voting on.

Chapter 3: The Lightning Network, a Second-Layer Payment Network on Top of Altcoins and Other Blockchain Products

Chapter 2 describes the second-layer payment network built on top of Bitcoin, but it is also applicable to other blockchain products, such as building a lightning network on top of Litecoin or Ethereum. In theory, they are the same.

So far we have seen that the Lightning Network is a lovely and great thing to help corresponding blockchain products, and we think it is a great addition to Bitcoin.

But the Lightning Network will evolve. When the Lightning Network can be built on various blockchain products, in theory, the Lightning Network will connect these blockchain products to each other.

Let's see what this is called.

Chapter 4 Payment Networks on Bitcoin and Other Blockchain Tokens - Multi-party Offline State Networks

Bitcoin’s Lightning Network is based on the Bitcoin network. What does this mean? That is, Bitcoin’s Lightning Network requires Bitcoin’s own infrastructure and protocol. Without Bitcoin’s protocol, this Lightning Network is meaningless.

But this is only the theoretical basis of the lightning network that we are familiar with at present. The theoretical basis of the next generation lightning network will not be like this.

When I was reading Ethereum's white paper and other materials, I found that Ethereum was also designing a lightning network, but the Ethereum community used a new term called "多方线下状态网络"

The Ethereum network is a virtual machine on which various smart contracts can be installed. Ethereum's Lightning Network is designed to connect these smart contracts. It is also found that the Lightning Network itself is a smart contract, which can be designed as a smart contract of smart contracts, that is, to intelligently allocate tokens for various smart contracts.

I was surprised at that time!!!

The Lightning Network itself is a smart contract, which can lock BTC at one end of the payment channel in the Lightning Network and ETH at the other end. It can even lock more coins at the same time, such as LTC, Dogecoin, etc. At this time, the Lightning Network is a bridge between various blockchain products.

Later, I translated the white paper of the sidechain root chain, and I finally understood what a two-way payment channel is. A payment channel is a smart contract that uses hash time locks. As long as a certain blockchain product (such as BTC, ETH, LTC) provides the necessary smart protocol functions, a payment channel can be built on top of these blockchain products to adjust the balance within the channel without having to go back to their respective blockchains to broadcast transactions.

This passage is difficult to understand, so let me give you an example to explain it.

A and B have Bitcoin, Ethereum and Litecoin at the same time. A and B can open a payment channel 1 on Bitcoin to pay each other the Bitcoin balance in channel 1; A and B can also open a payment channel 2 on Ethereum to pay each other the Ethereum balance in channel 2; A and B can also open a payment channel 3 on Litecoin to pay each other the Litecoin balance in channel 3.

But, but, but, these three payment channels can actually use the same set of codes. That is, three currencies can be locked in one payment channel, and the balance can be adjusted freely in the channel. Even if A only has Bitcoin, B only has Litecoin, and C only has Ethereum, then a payment channel can also be established, allowing A to pay B Bitcoin, B to pay C Litecoin, and C to pay A Ethereum.

This lightning network (smart contract) can distribute offline balances between multiple blockchain products (such as BTC, ETH, and LTC).

This means that the Lightning Network is not actually Bitcoin’s second-layer payment network, but a network on top of all blockchains. Bitcoin has become a second-layer payment network.

Chapter 5: The protocol has extremely low user stickiness

There is a very strange phenomenon in Internet products, such as the SMTP/POP protocol, which is so great that it allows everyone to send emails freely, regardless of the domain name of the mailbox you use. However, the operators of these mailboxes make almost no money. They seem to be doing charity work, and only some large companies will operate these things.

If there is another layer of protocol on top of QQ, WeChat, MiTalk, UC, Alipay, WhatsApp, etc., which allows them to send messages to each other, it essentially means that the user resources of QQ and WeChat are shared with other chat tools, and users completely lose their stickiness to these tools themselves and can switch between them freely, just like we can change email addresses with different domain names at will. Then the commercial value of QQ and WeChat will definitely depreciate.

So when various small companies in instant messaging, such as UC and Gtalk, called on all chat tool companies to abide by the same agreement, Ma Huateng said: "Bah, get out."

So when many products with small user numbers, such as Tencent Weibo and Sohu Weibo, asked to share agreements with Sina Weibo, Sina Weibo said, "I am sick."

Bitcoin now has the largest user base, the highest user stickiness, and the greatest network effect value. Now we are faced with a choice: whether to make a modified protocol of segregated witness on Bitcoin, so that Bitcoin transactions can more conveniently use hash time locks and establish a more complex smart contract - the lightning network. Once established, other blockchain products can also establish a lightning network with the same protocol and evolve into a "multi-party offline state network". This will become a shared protocol for blockchain products. This is not Bitcoin's second-layer payment network, but a more basic protocol for all blockchain products including Bitcoin that can provide the necessary smart protocol functions. This is a bridge for various blockchain products. Once built, Bitcoin's user resources will be shared with other altcoins. Bitcoin's user stickiness will be reduced, and Bitcoin's commercial value will be greatly reduced. As for the price of Bitcoin, I think this is definitely self-evident.

I don’t need to send my Bitcoin to an Ethereum address, and I don’t need a “multi-party offline state network”.

When the Trisolarans received the message from Ye Wenjie on Earth, an interstellar pacifist wrote back:

Don't answer! Don't answer! Don't answer! ! !

My online name is Lightning. I like Bitcoin. Now a protocol called Lightning Network requests Bitcoin miners to activate Segregated Witness to facilitate Lightning Network to log in to Bitcoin. As a Bitcoin stakeholder, my answer is:

DO NOT ACTIVATE! DO NOT ACTIVATE!! DO NOT ACTIVATE!!!

Miners, please do not activate SegWit. Now is not the time, wait until Bitcoin is strong enough.

Only when the user base of Bitcoin is large enough, the user stickiness is strong enough, and the currency attributes of Bitcoin have been deeply rooted in people's minds, can we provide the necessary smart protocol functions. At that time, people will not need a "multi-party offline state network" to adjust the balance between various altcoins and Bitcoin. Instead, they will only use the powerful computing power of Bitcoin to realize more products, and currency and payment will only be done through Bitcoin chain transactions.

Chapter 6 Conclusion

If Ma Huateng and Cao Guowei were a Bitcoin stakeholder, they would definitely say to the Lightning Network and Segregated Witness: "Bah, get lost."