Professional Cypherpunk Jameson Lopp on the Lightning Network

Siamak Masnavi

"Professional cypherpunk" Jameson Loop was interviewed on the most recent episode of the Stephan Livera Podcast (SLP43, released on December 30th). In this article, we focus on Jameson's comments regarding the Lightning Network, something that he has become very familiar with since joining Casa, which sells a plug-and-plug Lightning node product called "Casa Node".

Although Stephan, who is an Australian Chartered Accountant with a podcast that is "primarily focused on Bitcoin and Austrian economics", covered a wide range of subjects with Jameson on this interview, for the purpose of this article, we focus exclusively on Jameson's comments on the Lightning Network:

  • "I have learned quite a bit about Lightning, and realized that it definitely still has a number of rough edges to be worked out. It's definitely still #reckless to be operating a Lightning node with real money behind it, but I definitely see a bright future ahead, and there's a lot of potential, and you just need to keep on building."
  • "There are security issues with regard to the fact that you're basically running a hot wallet. The stuff that we're running into more often with our users is trying to figure out how to make it as seamless as possible for a Lightning node operator to maximize the use of their node, and so that basically means giving them a better understanding of kind of their economic position within the network and how they might be able to tweak different things in order to maximize their connections or their routing of money flowing through the node that they are operating. These are some of the big unanswered questions more on the economic side of things. How will the liquidity of this network eventually be managed? And, of course, we hope that it will be managed by software, and done on a sort of autopilot basis, but the autopilot functionality that is out there right now is definitely very early stage, and from what we've been seeing, it has not yet reached the point where it can surpass what a dedicated human operator can do if they actually understand how to config their channels."
  • "There is actually a fair amount of inefficient use of capacity on the network right now. Probably, one of the best examples of that is actually the largest liquidity provider on the network, LNBIG, whoever they are, they have opened up... a hundred if not a thousand channels with various nodes on the network, and I'm pretty sure the vast majority of them are actually not geting used, and they seem to have just kind of gone with the "spray-and-pray" approach. But hopefully they will continue to refine their own logic."
  • "Also, just trying to take this to the next level... We don't want it to require someone to be technically proficient or a nerd who is going to be willing to spend up a lot of time to actually understand the protocol or how the network works. We are really trying to build plug-and-play solutions that are usable for your average millennial, and that's going to be one of the biggest challenges. It's just  continuing to build layers of abstraction to have a better user interface and user experience, to get as much of the complicated day to day stuff hidden under the hood so that we can just present some nice graphs and charts and maybe some buttons for people to click, but they shouldn't actually have to understand things like payment channel liquidity or like channel timeout configurations and all the various game theory that's actually going on behind the scenes."

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Chinese Court Rules Bitcoin Is Legally Protected Virtual Property

The Hangzhou Internet Court, in China, has recently ruled bitcoin is seen as virtual property in the country, and as such is legally protected.

The ruling came in a case in which the plaintiff, Mr. Wu, sued the Shanghai Technology Company, which allegedly operated the FXBTC cryptocurrency exchange on Taobao, a leading Chinese online marketplace, and sold bitcoin back in 2013.

Wu reportedly bought 2.675 BTC for 20,000 yuan, about $2,900, back in 2013 from the exchange. In 2017, during the cryptocurrency market’s bull run that saw bitcoin hit a near $20,000 all-time high, the buyer wanted to access the funds, but found out FXBTC closed and could no longer get to the BTC.

According to Beijing News, the plaintiff claims the Shanghai Technology Company didn’t warn it was closing the platform nor gave him a chance to access the funds afterwards. The store likely shut down as between 2013 and 2017, the Chinese government made it illegal to trade cryptocurrencies, which in turn forced Taobao to stop vendors from selling cryptos on its platform.

While the plaintiff failed to prove Shanghai Tech was the vendor that sold him the bitcoin and lost the case, the court did determine bitcoin is legally protected virtual property.

According to Dovey Wan, this was seen as a bullish signal in China and chatter on Weibo, a Chinese microblogging platform similar to Twitter, seemed to point to this as the reason behind bitcoin’s recent price surge.

According to CryptoCompare data, BTC rose 4.8% in the last 24-hour period, and is currently trading at $10,300. Earlier today, bitcoin jumped from a $9,400 low to as much as $10,500 before facing a small correction.

Notably, this isn’t the first time a Chinese court defends bitcoin. As CryptoGlobe covered late last year, an arbitration court ruled bitcoin should be protected as property by law, and clarified at the time Chinese law doesn’t forbid owning or transferring bitcoin. Earlier this year, a prominent Chinese lawyer argued owning and occasionally trading bitcoin is legal in the country.

On Twitter, Wan clarified that while holding bitcoin as private property is legal, trading the cryptocurrency “in a systematic way” isn’t.