Banks bought out bitcoin?

Hey Ivan, what do you think about this video. Is it true?

Interesting share!

but don’t want to hit like button because there is no dislike button to balance.

I think this video is a little sensationalist in the way it describes the lightning network.

Even though there’s a place for big payment hubs, to say that those will be subjected to the same regulations as a bank and will be the only solution is simply making a logical leap, as in the video it does not explain how that regulation would even be enforced. It also states the necessity for these hubs as a solution for doing big transactions, even though if you wanted to make a larger transaction you wouldn’t mind paying the fees for the added security of making it on-chain.

The video also points at a block size increase as a magical solution to high fees, but it doe not mention that this increases dramatically the requirements to run a full node, leads to miner centralization and to miner geographic concentration. Since the blocks are bigger, nodes need more processing power, storage and a better connection to stay up to speed with the network.

This is also true for miners, but there’s also the fact that due to higher propagation time of a block, when a miner finds a new block, he also gains some time in mining the next one before other miners even know to mine the new block. This gives the biggest miners a bigger advantage, because they already have a higher chance of naturally finding a block, but now they also gain a little bit of a head-start, which is also more valuable to miners with more hashing power. This in turn leads to more geographic concentration - miners want to be closer to each other in order to have little latency in new blocks.

Bitcoin, the way it is now, requires every single node to process all transactions made in the network, similar to how the internet broadcasted information in the early days. Lightning is Bitcoin’s TCP/IP.

1 Like

https://www.google.com/search?q=Fyookball+Lightning

I’ll assume you’re refering to this article :

To which I suggest you also read this:

https://medium.com/@david_moser/economic-bootstrapping-of-the-lightning-network-aef8208b7e8d seems to confirm the “Banks bought out bitcoin” video points.

IN the comments of this article there are some interesting points regarding a few points to be considered :

  1. It’s probably wallets, not exchanges, that will start setting up these lightning hubs, and they won’t comply with AML and KYC regulations.

  2. Lightning is an overlay protocol meant to be used in small transactions, it’s another tool for bitcoin, not a replacement. If most of the transactions are done via LN, it will also become cheaper to transact on-chain.

  3. Even if banks build LN hubs, it’s really not the same thing as having a bank account. In LN they can’t freeze your money - even if they don’t relay your transactions you can still exit the channel and transact on-chain. These regualtions are also not part of LN base protocol, so one can expect some more permissive channels appearing if the situation aproachs centralization.