Excellent point.
On the other hand I'm not sure if, in the long run, a fully anonymous cryptocurrency would not simply get banned from (KYC/AML compliant) exchanges altogether. Especially since transparent alternatives exist. So far privacy-focused cryptocurrencies have been left alone, but who knows if it stays that way once they grow big enough.
If the majority of people use LN for their everyday transactions the question of "taint" may become moot either way, since it would affect most of the available money supply.
On the other hand I'm not sure if, in the long run, a fully anonymous cryptocurrency would not simply get banned from (KYC/AML compliant) exchanges altogether. Especially since transparent alternatives exist. So far privacy-focused cryptocurrencies have been left alone, but who knows if it stays that way once they grow big enough.
If the majority of people use LN for their everyday transactions the question of "taint" may become moot either way, since it would affect most of the available money supply.
There are already exchanges that are starting (?) to gain some popularity that are completely decentralized and somewhat anonymous there self either by the software or method of payments. Localbitcoins (not decentralized) uses P2P means of exchange (meetup with cash, cash in mail, cash deposits, etc.) which allows more anonymity in the eyes of the government. ... Also you have bisq.io which uses Tor and run through your own nodes (decentralized) and allows paying through somewhat similar means to localbitcoins.
Point being I wouldn't necessarily be holding up the white flag in hopes of a truly anonymous currency being able to thrive in a massive KYC/governmental regulatory overhaul of the cryptocurrency markets. The game is still early, who knows what will happen
LocalBitcoins already had to close shop in some jurisdications (eg. Germany) due to regulatory problems. In the US there have been arrests of LocalBitcoins traders for illegal money transmitting services.
On the other hand we are seeing the first decentralized exchanges coming up, so I guess the game is on?
It is indeed too early to tell. And Bitcoin development is edging towards increased privacy either way (Schnorr Signatures + CoinJoin, Bulletproofs) so who knows what we'll end up with.
Having any form of centralization, which would be the bartender in this case, that needs to verify settlement of the ledger then I have issues...
I'm sorry, honestly I'm not really that read up on how LN works because whenever I read about this part that seems to be a form of centralization, my mind doesn't find it interesting anymore. Who would be the "bartender"?
I'm sorry, honestly I'm not really that read up on how LN works because whenever I read about this part that seems to be a form of centralization, my mind doesn't find it interesting anymore. Who would be the "bartender"?
Ooooh but that's the beauty of LN! The bartender is... the Bitcoin blockchain.
You open your tab with the Bitcoin blockchain, you close your tab with the Bitcoin blockchain. That's it. Just some bits of smart-contract magic and PoW as we know and love.
The only difference between the Bitcoin blockchain and your usual bartender is that the Bitcoin blockchain is incredibly distrustful and asks you for an advance deposit. But hey, being distrustful is part of a blockchain's job. And you can still use your money any way you like.
That's pretty cool... I'm not that knowledgeable of the hash function and cryptography of how that would work, but look forward to reading more about it.
Bitcoin Magazine has a fairly comprehensive article series on the workings of the Lightning Network:
https://bitcoinmagazine.com/articles/understanding-the-lightning-network-part-building-a-bidirectional-payment-channel-1464710791/
It's a lot to take in at first but helps a lot with getting familiar with some of the concepts involved.