Quote from: Wind_FURY on March 29, 2019, 05:34:26 AM

Ok, explain it like I'm stupid. Without the propaganda, what are watchtowers and channel factories? How do they work technically?

Listen Stupid.
Read here and learn to use google sometime,
https://blockonomi.com/watchtowers-bitcoin-lightning-network/
(Watch Towers will be able to seize funds.)
https://eprint.iacr.org/2018/918.pdf
https://blockonomi.com/channel-factories-bitcoin-lightning-network/

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The requirement for on-chain open/close transactions does not scale well with LN adoption because of the limitations in Bitcoins on-chain capacity.

https://medium.com/@akumaigorodski/instant-channels-enable-safe-lightning-payments-with-unconfirmed-funding-8d640defa183

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When channel is funded in a special way an amount present in it can be spent immediately, without waiting for a funding transaction to become confirmed.

Also one of the LN dev proposals even admits it can be a fractional reserve.
https://www.rene-pickhardt.de/index.html%3Fp=2131.html

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I suggest to add another feature to the lightning network which I call a virtual payment channel (or in short VPC) to be described in this article.
Such a virtual payment channel will NOT be backed by the blockchain and thus cannot operate in a trustless manner

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The main one is that to some degree VPCs resembles the fractional reserve banking system

Most clueless LN fanatics like to say LN is still in beta,
well by the time they finally do claim to be out of beta,
it will be a fully functional undeniable fractional reserve system, ie crypo banking 2.0
which has been the intention since day one.

Because if you truly look at LN , it becomes apparent it will not fix the scaling issues,
unless LN Banks form and do the majority of the offchain transactions, and banks always create a fractional reserve scam.