LN Does Needs Segwit so that LN can be trust less.
Otherwise LN requires a separate Trust system in place or very long extensive Time Locks , Both of which LN Devs don't want.
https://www.reddit.com/r/Bitcoin/comments/5eqm2b/can_ln_work_without_segwit/?st=izzovrzk&sh=b2fe8b0a
In Short , without Segwit any version of LN is going to be crap.
OK, we are getting somewhere.Otherwise LN requires a separate Trust system in place or very long extensive Time Locks , Both of which LN Devs don't want.
https://www.reddit.com/r/Bitcoin/comments/5eqm2b/can_ln_work_without_segwit/?st=izzovrzk&sh=b2fe8b0a
Quote
Yeah you can do LN without segwit. It's less efficient, and there are some features you won't be able to do.
With segwit, you can have a 3rd party "watch" your channel for you in case your counterparty tries to broadcast an old, fraudulent transaction.
The 3rd party can automatically grab your money back for you. And the watcher doesn't even know about your transactions or your balances while watching.
That whole feature is pretty much gone without segwit.
You'd have to tell the watcher everything about your channel, and the only thing they'd be able to do is e-mail you to let you know if fraud occurred.
The other main disadvantage to segwit-less LN is that channels would have a preset duration. That's a pretty big downside.
If segwit doesn't activate after a long time, we could re-program some of the current code to work without segwit.
I think everyone's hoping we don't have to as that'd be a bit disappointing, but doable.
As I meme'd at scaling HK, there are levels of LN we are prepared to accept
With segwit, you can have a 3rd party "watch" your channel for you in case your counterparty tries to broadcast an old, fraudulent transaction.
The 3rd party can automatically grab your money back for you. And the watcher doesn't even know about your transactions or your balances while watching.
That whole feature is pretty much gone without segwit.
You'd have to tell the watcher everything about your channel, and the only thing they'd be able to do is e-mail you to let you know if fraud occurred.
The other main disadvantage to segwit-less LN is that channels would have a preset duration. That's a pretty big downside.
If segwit doesn't activate after a long time, we could re-program some of the current code to work without segwit.
I think everyone's hoping we don't have to as that'd be a bit disappointing, but doable.
As I meme'd at scaling HK, there are levels of LN we are prepared to accept
In Short , without Segwit any version of LN is going to be crap.
First of all, I'd like to note, that when I mention LN without explicitly stating which version, I mean segwit LN.
Secondly, with CLTV and CSV (already adopted on Bitcoin mainnet), permanent channels are possible even without malleability fix: https://bitcointalk.org/index.php?topic=1711460.0 Their opening is a bit cumbersome and involves temporarily locking additional (to what is going to be put in a channel) funds, but after all, permanent channels are possible even without fixing malleability.
LN Notes are a Offchain Representation of the value of a BTC (with the actual BTC locked in place on the actual BTC Onchain Blockchain)
LN Devs have continuously implied that BTC will be placed on LN and very rarely if ever be returned / unlocked on the real BTC Blockchain.
Combined the Chinese Mining Pools have over 51% necessary for an attack, (~68% at last count).
(With a 51% attack they can perform a history rewrite attacks, rewriting the blockchain.)
(A few years ago at the prompting of the BTC devs, a group (with over 51%) REWROTE the Last 12 Hours of the Blockchain to fix a fork, cause by a programming error.)
(So that was 76 Blocks that were rewritten.)
(We also know the Miners can choose which transactions are included in their blocks.)
So now back to the Title of this OP, Exactly how do you Counterfeit BTC on LN.
Option 1 :
Form a group of collusion between the Miners that control 51%,
Send 50 BTC to an address. Now follow the steps on LN to Lock up that 50 BTC on the Blockchain.
Whether LN requires 1 or 3 confirmations , as soon as LN confirms the representation of LN notes match your amount.
You and your colluding friends, rewrite the blockchain and include a transaction moving that 50 BTC to another address before the lock took place.
You now still have your 50 BTC Free & Clear Onchain, and a representation value of 50 BTC Offchain on LN .(Which you can use for LN transactions forever.)
BTC Onchain Transactions ended Counterfeiting , LN Offchain Transactions will bring Counterfeiting into Crypto.
LN isn't a separate blockchain. LN BTC are real, same BTC as BTC you are transacting today. Say Alice and Bob have a bidirectional channel. For outside world the channel looks like a 2 of 2 multisignature output. Both participants of the channel, as well as other interested parties, can very easily check existence of that output. If the output is gone, so is the channel with all it's funds.LN Devs have continuously implied that BTC will be placed on LN and very rarely if ever be returned / unlocked on the real BTC Blockchain.
Combined the Chinese Mining Pools have over 51% necessary for an attack, (~68% at last count).
(With a 51% attack they can perform a history rewrite attacks, rewriting the blockchain.)
(A few years ago at the prompting of the BTC devs, a group (with over 51%) REWROTE the Last 12 Hours of the Blockchain to fix a fork, cause by a programming error.)
(So that was 76 Blocks that were rewritten.)
(We also know the Miners can choose which transactions are included in their blocks.)
So now back to the Title of this OP, Exactly how do you Counterfeit BTC on LN.
Option 1 :
Form a group of collusion between the Miners that control 51%,
Send 50 BTC to an address. Now follow the steps on LN to Lock up that 50 BTC on the Blockchain.
Whether LN requires 1 or 3 confirmations , as soon as LN confirms the representation of LN notes match your amount.
You and your colluding friends, rewrite the blockchain and include a transaction moving that 50 BTC to another address before the lock took place.
You now still have your 50 BTC Free & Clear Onchain, and a representation value of 50 BTC Offchain on LN .(Which you can use for LN transactions forever.)
BTC Onchain Transactions ended Counterfeiting , LN Offchain Transactions will bring Counterfeiting into Crypto.