Quote from: franky1 on February 01, 2018, 04:48:00 PM

A's hope would be that B would be offline for the timelock period and hope he can spend the 10btc before B realises that B should send tx2
because if A does not act.. B could still transmit tx2 anyway and all is lost. so A might aswell send out tx1 and hope B dosnt notice. (no guarantee it will work but its his only chance)

You pinpoint an issue with the LN, of which people, of course, have to be aware: as long as you have an open channel on the LN, you have to remain on-line. And this for two reasons:

1) if you're offline, you make life difficult for your channel partner, because at any moment, he might want to transact through the channel you both have, eventually to transmit it further over the LN network. If you are off-line, you've frozen his channel coins (and yours as well, but that's of course evident). That's not very nice to your partner, who has now no access to his coins, whatever he does, for at least the lock-out time. So your partner, seeing that you are offline and wanting to do a payment with the coins he has locked up in his channel, has now the dilemma: should he wait for you to come on-line again (maybe you've just rebooted your machine, maybe you have a network issue, or maybe you're on a world trip, maybe you just dropped dead ?) ; or should he settle one-sided, but then he's sure he cannot access his coins for the lock out time ? So, being offline when you have an open LN channel is not nice to your partner. As you have a stake in that channel, he might become less nice too.

2) if you're offline, you cannot continuously check whether your partner didn't send a previous settlement: you have to be online all the time in order to be able to send a punishment transaction.

There's an exception to this: if your channel is completely exhausted in the direction of your partner, you would like to settle, but you're not in a hurry, and you want to test your partner's nerves so that he takes the fee on him. He has now a big stash in the channel, you, zero. If you're not interested in keeping that channel or remaining online for that, just go offline. He will have to settle and pay the fee. It doesn't matter what he does, you don't risk anything any more (apart from a slightly less nice relationship with that partner). Note that this is only if you want to stop that channel: you could keep it open to allow your partner to pay through you again.

If you remain online, and if the block chain is not saturated, however, the LN is quite safe to use.

It is a different story when the block chain is saturated, and broadcast transactions do not necessarily get in the chain quickly. That's a dangerous situation because you have no guarantee that you will be able to get your punishment transaction in on time if you see that your partner got a previous settlement transaction in. It is my critique of the LN on a limited-block size block chain: the potential danger of not being able to transact on time. Most probably, unless there's a kind of "bank run" on the block chain, with high enough fee you can always do this - but as the LN was meant for micro-transactions, needing to pay a very high fee to punish your scamming partner is maybe strange. The real danger is however, a "bank run" on the block chain. Suppose that the LN has an immense success, and that there are BIG LN hubs, that have many, many channels open. Let us assume that the lock out time is one day. At a certain point in time, it may become very attractive for a big hub to:
1) settle with scammy previous transactions massively (preferentially near-exhausted channels towards the customer)
2) spam the block chain with relatively-high-fee transactions during a day

This will avoid the punishment transactions mostly to get in, and the LN hub runs with most of the full channel contents. The price to pay is the spam campaign and the losses due to those punishment transactions that got in (that's why it is best to only do this with near-exhausted channels, where most of the risk is on the side of the customer).