Reading Assignment: Lightning Details

It’s time for another reading assignment on the lightning network. Read through the this blog post and answer the following questions. Make sure to post your answers in this forum thread before you continue.

  1. How do two parties start a payment channel?
  2. How are you punished if you try to do an invalid transaction?
  3. What is the purpose of “watchtowers”?
  1. How do two parties start a payment channel?
  2. How are you punished if you try to do an invalid transaction?
    breach transaction remedy; the victim of the transaction gets the perpetrators balance. So there is a financial incentive or punishment not to cheat.
  3. What is the purpose of “watchtowers”?
    Police network as a node and ensure the correct reward or over sea the share of profits and ensure any breaches in TXN are correctly awarded to good party in that transaction.

draft to return too

  1. Both parties open a payment channel buy a multi-signature transaction on the blockchain.
  2. Breach remedy transaction: When trying to broadcast an invalid transaction, a secret is exposed, and the other party can use the secret to sign a transaction to get all funds, therefore counter attacking the bad actor.
  3. In case of a fraudulent transaction, the victim has to be online to counter the fraud. But watchtowers can keep an eye on fraudulent transaction instead and sign the breach remedy transaction, and also get a share of the reward.
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How do two parties start a payment channel?
By creating a multi-signature transaction on the blockchain.

How are you punished if you try to do an invalid transaction?
By locking the funds for the instigator and allowing the other party to execute a Breach Remedy Transaction.

What is the purpose of “watchtowers”?
Watchtowers enable third parties to detect fraudulant transansactions and then collect a fee for executing a Breach REmedy Transaction on behalf of the injured party.

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