{"id":"VJgPuylMPxA","title":"Whiteboard Series with NEAR | Ep: 7 Daniel Robinson talks about Interledger  |","description":"In the 7th Episode of our 'Whiteboard Series with NEAR' we had  Daniel Robinson (  / danrobinson  ) from Paradigm (  / paradigm  ) speaking with our Co-Founder Alex Skidanov (  / alexskidanov  ) \n \nLearn more about Interledger here: https://interledger.org/\n\nDownload the video here: https://near.ai/52553\n\n------ About Whiteboard Series --------\n\nThe Whiteboard Series with NEAR is a set of video interviews with Founders who are building scalable solutions for Blockchain.  We deep dive into their story, what they're developing and how it is helping the ecosystem. \n\n\nFollow the latest from NEAR Protocol on, \n\nDiscord: https://near.ai/discord\nMedium: https://near.ai/medium\nTwitter: https://near.ai/twitter\nGitHub: https://near.ai/github\n\n#WhiteboardSeries #FutureIsNEAR #Interledger","channel_name":"NEAR Protocol","published_at":"2019-02-27T00:00:00.000Z","thumbnail_url":"https://img.youtube.com/vi/VJgPuylMPxA/hqdefault.jpg","transcript_text":"hi everyone this is Alex from near and with me today is Dan Robinson from paradigm and we will talk to the about inter ledger and then would you introduce yourself and yeah sure so I am a research partner at paradigm I work on sort of research and keeping up with developments in the space and one of the projects that I've been excited about not affiliated with it anyway it was called inner ledger and the yeah I mean I've been going around specifically talking about some components of it but I think figure will give a high-level talk about what integer is and how it works and then get in some of the details about how it differs specifically from for example the Lightning Network and yeah let's get that high-level overview right yeah so indeed loads you can think of any ledger as a peer network as a solution for payments where one party can send a payment to another party when they don't individually have a particular credit relationship with himself so chronically if we want Alice to make a payment let's say to Charlie um so this is because you know Charlie's a vendor or Alice just wants to sort of transfer money to to him but Charlie doesn't trust Alice so Charlie isn't willing to say extend credit to Alice so suppose we have another party Bob and Bob and Alice have a a relationship credit relationship say and Bob and Charlie have a credit relationship and again we're good we'll get into what this relationship is and it may be a credit relationship or maybe something like a payment channel and that's where you got this a similarity slighting but this is so far a very abstract generalized view of that this is just that Alice has the capability to pay Bob so again that could be over venmo that could be in cash that could be over a payment channel it could be an amount of ledger and bob has the ability to pay Charlie so what we're what we do here to have Alice pay Charlie is that Alice makes a payment to Bob in exchange for Bob making a payment to Charlie and so in ur ledger is a protocol that allows these peering relationships which can be again like if it can be sort of on top of a lot of different possible things and we'll get to that but allows these individual peering relationships to be routed to eval payments we've routed across them and so you can imagine having many more parties in this in this ecosystem and here you know if you have a major player like coin based over here and cracking over here that could be you know it's unlikely that maybe Alice and Charlie both have relationships with with some random person Bob but it's very plausible that Alice may have an account say a Krakken or a payment channel with Kraken Charlie may have a payment channel with coinbase and Kraken and coinbase may have a payment channel or a relationship with each other that allows then Alice to make payments of Charlie so this you know the the inspiration behind the analogous protocol is largely based on the Internet and sort of the development of these of these packet-switched data networks and so anybody just as an internet where instead of Alice sending just data to Charlie going across a series of ISPs alice is sending a payment to charlie and it's being routed across these intermediate nodes and those intermediate nodes they called connectors right yep that's right so each of these each of these nodes in the in the integer protocol is a connector and they can have these peering relationships with one or more users and so Alice here is a user who can send to another user by routing over these connectors and so assuming that on every step that's some sort of cryptic currency then we can have some sort of proofs that the payment goes through but if we talk about venmo or like right so so we're and that's a great question and actually and we'll get to that is how do we make this totally agnostic as to what this payment is so so and what this relationship is and what the and what the currency is and so if you do something like lightning Network does it really has to be a cryptocurrency and it really has to be a cryptocurrency that supports this primitive call down hash time-lock contracts and also supports payment channels and embedding hash Toronto my contracts HDL sees within those and we'll get to what those are but in inter ledger you can really think of it's like completely abstractly so this is you know this could be just like a 3 USD payment and this could be then let's take out a little fee so like you know $2.99 and then this is 298 you know so here the the payment could be done in dollars over a over again like it could be over venmo it could be just a trust relationship like this is Alice changing your cracking balance and there's ways to make this atomic or as atomic as we need it to be that prevent for example if Alice makes his payment to Kraken that prevents cracking from just keeping the money rather than sending it on and so we'll get to that but just so you know I wanted whatever is it really is it a interreligious starts at a very high level of abstraction I usually use payment channels when I'm explaining the it because in part that sort of makes the analogy to lightning Network clear but it really is much more sort of general than that and I think you'll sort of see why when we talk about how they accomplished atom SAT right and yes I would be interested to know how we make it so that we don't need to trust any to purchase on the on the way right so let's talk a little about its Chelsea's first so if she'll C stands for hashed time lock hashed time lock contracts at least that's at what it is in the lighting network paper people use different things and the idea of an HDL C is that it's a contract which means you can put some money into it and it can be unlocked in one of two ways so it can either be unlocked by the recipient so there's two parties involved so like you know hey this might be here like charlie the recipient by revealing a hash preimage so that's a secret that the recipient knows that the that the sender doesn't know the sender is able to reveal and in exchange the hdl-c will just give them the money and this is when you do one on chain for example and the alternative way it can be spent is it can be unlocked is the sender can unlock it after a timeout and so the principle of an HDL see when you do it on chain and I think the simplest way to think about it when you're learning it - just imagine this being a Bitcoin address which you can do this entirely on chain on Bitcoin and actually let me just plug a project of mine that I worked on while I was at chain called IV an IV is a smart contract language for Bitcoin script that compiles to Bitcoin script and if you go to this site you can IV link eyes another way I think we have both and if you go to the site you can actually see an example of an hdl-c contract that really sort of shows this logic and that can be compiled into a Bitcoin script address that does this so if you imagine is a Bitcoin script address someone typically the sender put who puts the this information into the sorry puts a Bitcoin into an hdl-c on chain and then the recipient can unlock that when they by revealing this preimage that they know and if they don't unlock it within a certain set period of time so typically it's like 24 hours or so after after they create this they don't unlock it then the sender is able to cancel it and just pull the money back and so what this is used in on chain most famously is for a cross chain atomic transaction protocol and the way that works is if you have if you want to trade Bitcoin for like coin what happens is you know if Alice Alice has you know like like 1 BTC and Charlie has 100 LTC I'm not sure the current price and as we all know Charlie Lee the found of light coin famously dumped his all his light coin at the height of the bubble so let's imagine here Charlie's trying to get entirely out of light coin and get into Bitcoin Alice the way the protocol works is first Alice creates an HDL see that locks up this Bitcoin and this is she uses a hash preimage that she knows in and Charlie doesn't yet know so Charlie isn't able to to open this unless he gets the preimage Alice is able to get it after like 48 hours then Charlie sees that this has happened goes and creates a matching hdl-c with a shorter time out on the light coin chain is this just involved sending this light coin to an address and this is a shorter time out but uses the same hash that he saw on this that was that was used in this H Chelsey so in this one charlie is the sender and Alice is the recipient Alice used this now she can unlock this within that 24 hours and she gets the light coin poor Alice and then Bob sorry Charlie now knows this preimage so charlie by seeing this transaction on the chain learns the preimage and can spend and can can unlock this it she'll see and receive it so that is a protocol that's very old protocol for atomic cross chain swaps and it works on chain the innovation of the Lightning Network was to embed these within payment channels so this isn't just a cross chain atomic swap protocol it really allows you to do it across any two Ledger's and a payment channel can be considered just an off chain bilateral ledger between two parties so if the if you familiar the payment channel the idea is that two parties lock up some some assets on the main chain into a contract they transact off of it by signing messages back and forth to each other off chain and update the state of that ledger and then are able to exit it to the to the main chain I mean this is going to talk about payment channels whether they play a very important role in both lightning and in a ledger and they're very it's very important protocol generally but you can just think of it being an off chain ledger that can be settled after a delay period to the main chain and it's only between two parties so in this case supposing we're doing this we're doing this as a lightning Network payment you do sort of similar principles with hgl seas but you do it in payment channels so here this is a payment channel tree now is in crack and this is a payment channel between crack in a coin base this is a payment channel between coin base and Charlie and so here what happens is Alice I'm sorry in this case would be Charlie generates a pre-image hashes that gives that hash to Alice Alice creates a three Bitcoin payment she'll see in her payment channel with Kraken so Alice has some money in her payment channel with Kraken she has some balance practice in balance she has to have at least three BTC she reduces that balance and gives that money that would be it was previously hers puts it into a contract and this means that if you settle the payment channel to the main chain you'll get an H TLC like this so you need to add a little time delay just to allow the payment channel to be settled but if everything goes sideways Alice would be able to settle this to the main chain and hopefully settle the HT LC within time within the mount of time so only in the worst case that would you actually have to settle to the safe you'll see to the main chain so alia Alice Alice locks us up with Kraken and then Kraken creates the same hdl-c a they see they see that they've had this they've received this a PLC in this payment channel they can create one with coinbase with the same hash and so this one let's say has you know the 72 hours this one has 48 hours this one so they put it in a hdl-c here with a 48 hour timeout and this one with a 24 hour time out and so these timeouts because remember here they have to be staggered and then sort of because if something goes goes wrong over here then coinbase needs enough time to actually claim I'm sorry then the Kraken if coinbase claims this is you'll see at the last second Kraken needs enough time to use that free image to go settle this one on the main chain so these numbers don't take into account the payment channel difference but it isn't again it isn't really that important for the were sitting here I and yeah so the really yeah this really should really should be like 4870 right math Olympiad what's 72 plus 24 and 96 all right so they create these these HDL C's Charlie remember has the preimage he reveals that preimage and each of these payments can complete so the analogy I use is that you know how lightning strikes it doesn't straight lightning doesn't strike from the lightning trick that you see doesn't come from the sky to the ground that's like there's a very sort of faint lightning strike and you can see and the talk I gave at Stanford I have a video video of this previous Google lightning slow-motion you can see this the path that as it sort of goes down it's there's sort of a very light trail it finds a path down and lightning strikes up so here you see these sort of like these ions being you know charged here you see these H he's being locked the actual payment happens after charlie reveals their pre image so Charlie gets paid first before alice has really sent any money she's locked up some money but she doesn't send anything until Charlie receive his money there for telling by telling coinbase in their payment channel saying here's but here's the preimage please settle this you'll see in the payment channel of coinbase doesn't comply they just settle to the main chain coinbase so then yeah it's a coinbase reveal reveals it to Kraken Kraken feels to Alice and each along each of these steps they complete it if at any point something goes wrong they can settle it to the main chain so again what I've just explained here is how lightening how the Lightning Network works because in lightning network you're embedding these agencies within the payment channels right but obviously then you can only use cryptocurrencies that's right so one one problem with this protocol is that these relationships have to really have to be either on chain just like I'm on a blockchain with you when I can send you an HDL see on chain which tends to be tends to be a little slow and expensive or inside a payment channel that supports a Chelsey's you could conceivably imagine that venmo could add support for htl sea based payments or something like that it's it's a little fanciful you know banks benches have talked about you know part of their blockchain research like who should recently supporting an HPLC based payments I think it's kind of a non-starter and one of the reasons is that I think there's a much better way to do atomicity than this um so yeah so that's one downside that you've identified there is that it has to be on something substrate this payment this payment relationship has to be on some substrate that supports HDL series for this to work another downside is this reefing problem the risk that what happens remember in the happy case all this money is locked up so this is a total of of almost nine Bitcoin locked up what happens if they're all waiting for Charlie to reveal as preimage and this is information that's uniquely in Charlie's possession what happens if Charlie doesn't reveal that preimage this money just stays locked up for at least 48 hours because if coinbase just just cancels this it's just cancels we're willing to cancel the if you'll see with Kraken and try to free up this Bitcoin there's always a possibility that at the last second Charlie will come in and settle the payment channel and settle the hdl-c so this month the money all along these these hops is locked up for at least 48 hours if just if Charlie doesn't it doesn't reveal a pre-image and here in like you can you can cancel it after 48 hours but it's still there's three Bitcoin in this like major payment Thruway here between corn B's and crack and imagine they've got a big payment channel with each other and lightning Network liquidity is a little expensive any old user receiving a payment can just grief anyone any intermediary the entire chain of hops by just withholding this preimage and this you know right now we have this like lightning they talked about supporting 20 hot payments but realistically I mean it's it's debatable whether that will be the best architecture but one reason is that the longer this payment is the more people Charlie can grief so if this goes to a lot of other nodes in between each of these steps is three Bitcoin that gets locked up so it's linear in the number of hops that were but also each one is 24 hours longer right yes by it and this was on the Lightning Network people pointed out to me if you if once Charlie doesn't reveal this preimage after 48 hours coinbase can safely cancel the hdl-c with cracking because they know Charlie won't claim it so that as long if Charlie's in everyone then the problem is only it's only 48 hours if coinbase or whoever's in this position decides to creep everybody then everyone before them is locked up for 72 hours so it's still a linear briefing attack because they're but they actually lose is the value of this Bitcoin for that for that 72 hours so they lose you know I guess it's like nine Bitcoin days of capital lockup and they cause some multiple of that to be lost along you to do something like the coop now let's say it's 20 oops yeah this person can give a lease for 20 days absolutely yes Alice and whoever yes this this this person can give this person in Alice and lock up this money in this channel which again you know that's it's a pretty bad attack you can be done by anybody along the chain and the thing is that you know you're just routing a payment here you don't actually know charlie you thought you were just routed being friendly and routing routing network payment for a small fee when Charlie does this to you you don't even receive a fee if Charlie decides just cancel the payment charlie doesn't complete it and this party the user gets cancelled and you actually get nothing for that having that that lock up so that's a problem the final problem this is one that's gone a little more mainstream is people used to talk about a multi asset lightning network and this would be more similar to what inter ledger actually potentially provides and that's where you have one of the hops being a hop and some other currency or have multiple hops here so the use case here and this is one thing that's part of the broaden or ledger vision is if I make a payment to you I shouldn't care what where you your money is where your who your account is with who your payment channels are with their networks are just find a path to you and I shouldn't even care what currency you want to receive it should the parity I want to send in the currency you want to receive don't don't necessarily have to be the same one all I care about is getting you the money that you want in the currency that you want and we can imagine just finding a path here part of that would be finding a path that includes an exchange rate so here coinbase is acting as a as an exchange essentially where they're receiving bitcoin along this hop but they are paying out like coin here so it's potentially very powerful because this gives you a kind of off chain exchange the downside when you try to do this with HDL sees that are in force on chain like this has is that the coinbase so Charlie here let's suppose maliciously you know this is or not even religiously this is very potential useful use case for for lightning if you want to treat it just as in exchange is that charlie is the one who's just trading his Bitcoin for like coin remember he's dumping when he actually creates this chain of HCL sees he locks in a particular price for Bitcoin litecoin and then he has 48 hours to decide whether to complete that or not and what that gives him is effectively a free option a american-style call option where he has the right but not the obligation over those 48 hours to buy like coin for bitcoins so if the price moves against him then he might decide to cancel that trade and just and just not let it complete and so you know coinbase thought they were just routing this payment but actually they end up with this liquidity a with this acquittal he locked up for a very long time and also you know do executing this trade at what turns out to be a bad exchange rate for them so it gives charlie this free option mm-hmm so how does inter ledger address all of those great questions so and also assuming to ledger doesn't have those like 100 hours that's right and the reason that it doesn't I was saying second so the inner ledger does use HT LCS but it uses them at a slightly higher layer that isn't enforced by the payment channel or whatever this payment mechanism is so all of this inner ledger all of this needs to support is just a the ability for coinbase to pay charlie so here's here's how I render ledger supports this I let's talk first just about imagine we just have a because this is a gem that sort of just a general more general insight suppose we have just alice and Charlie remember let's go back to trading and we want to trade one BTC for 100 LTC right so Charlie wants to send this to Alice and Alice won't send it to Charlie the problem with just Alice sends it first to Charlie and then he sends it next to Alice is what's the pond with that alright well Charlie will keep the BGC right Charlie Charlie could could cheat Alice by just aborting the protocol at that point and keeping everything there's a problem because right now bitcoin is kind of expensive but what if this payment was much smaller what if it was just point o 1 BTC and this was just well one bit went out Lisa is still a little expensive let's add some more zeros you know 0.01 LT see if this happened the truck if Alice sends this to Charlie and Charlie doesn't send the payment back Alice is only out plain l1 BBC may be still expensive but you can make this as small as you want you can make this one Satoshi so for a sufficiently small trade Alice doesn't really have to worry about Adam issah T because if Charlie cheats her she can just close her channel with Charlie or end her relationship with Charlie and she's only lost a relatively small amount so that's the basic insight and what you do here because we have this protocol for doing this you just do this over and over again so you make these this tiny payment charlie makes his payment back this tit-for-tat payment back and then Alice just repeats the protocol over and over again until she sent the entire B BT city so that's roughly how you could see this this happening that's how and this happening like on the graph like I said this is Alice again Ellis will sent through the entire path one point like once Atocha to Charlie that's right and Charlie will send one Satoshi worth of light coins back not exactly so here because you're doing the way that the trade actually works isn't that the payment goes both ways along these channels it's that it goes only one way but at some point in the middle it gets turned into like coin so with you complete the path here by having coin base turn this payment into LTC so like so this is so there's a payment you can think of it as a payment from Charlie - Charlie you know this address this being is like coin address like payment channel over here and this being his bitcoin one where the outgoing thing is Bitcoin and then by the time it makes it back to him it's turning to light coin but the natural concern here is that each of those links has a latency right yes so let's say the superfast like point zero five seconds that's pretty slow problem that sounds like about right right if I'm sending one Satoshi waiting until they receive my light coin I guess if it's Charlie's the other way around then then in order to send like 1 BTC that's going to take me years that's absolutely true and so that's the that's maybe the biggest downside of this is that a large payment if you're very small now to trust along this takes time proportional to the size of the payment um I think I think that isn't it isn't necessarily that that you're concerned and well I'll talk about that in a second but just to just to sort of explain how the how the mechanism of this works we still do in hdl-c because we still want people along the way to know it's not we don't just optimistically send this like this Satoshi because then we don't know someone along the way steals it we're not we're not sure who so we still do this do an hdl-c but we do it that's it's not enforced by the inside the payment channel or whatever the payment is because in fact even if it was a payment channel it wouldn't be worth enforcing it with an hdl-c because just like the gas cost or the or the fees of actually creating that hdl-c output and settling that cost around like it's run like 50 cents I think and so any payment below 50 cents on the Lightning Network by the way is not enforced by the by these payment channel so if you're making payments that small you are trusting your immediate counterparty that they won't sort of bought the protocol and have you lose that money um so that's that's you know the sort of the dirty secret of that lightning doesn't actually use these agencies in this way but they still you still do it on the higher layer so you create a nice shell scene this is for you know yeah let's say this one Satoshi for now and because it's not enforced by the base chain we can have this be a very short time out so this you know this could just be like I don't know 15 seconds or something and then this time app could be 10 seconds once toshi annoying fuse here and this one could just be like 5 seconds I'm not sure what the exact times they want to use one saturation and each of these is they call it saving a hash time locked agreement it's something enforced between crack and coin base that they can detect that their immediate county party has cheated them because they haven't you know they haven't received a message from them but they they claim that they did and that's a problem between them it's not enforced by the ledger and it doesn't matter to anybody else so if if you know if you lock up all these Toshi's and then Charlie completes this payment charlie receives a Satoshi and it's just you know up to what happens as coinbase reveals the preimage to Kraken and then Kraken potentially cheats coinbase here by not actually making this payment without getting their payment channel to pay this one Satoshi but in that case coinbase knows that enable to close the payment channel with crack and it would it be sort of a silly thing for them to do so that's that's sort of how that how the protocol is built on top of on top of just these vanilla payments usually she'll sees at a higher layer so you asked a great question which is about the the latency so reasonably I think we could say like at minimum around 50 cents is a reasonable trust limit because that's what it costs to settle in hdl-c on the main chain in fact we should probably be hired because at that price all the money that you put in that htl see if you try to settle it with an ELC just like gets paid into fees so it's so we just sort of its lost so really you honestly have to go like significantly higher for something be worth actually settling within hdl-c on the main chain so if you're doing lightning and then the other thing that you're you're trusting the funder of a channel trusts their counterparty in some sense because the funder is paying some fees for this to open this channel and so if the counterparty just closes it or forces them to close it the funder ends up losing the amount of these fees and that can be you know if it's tens more or more a couple dollars so there is this counterpart you trust remember this is only a very local form of trust it doesn't global trust where I have to trust everybody who's downstream of me in a payment the so I reasonably think this doesn't have to be one Satoshi um it could be it has immune sort of at least fifty cents maybe let's say it can be a dollar and that this is the amount that you have in flight at any particular time so there could be a lot of payments going from the point base to Charlie and you don't actually have to update the payment channel until the their net amount is is more than $1 from where their last state of the payment channel was and then you have to actually update the payment channel so the way that integer is working to search either sort of optimize this is that you have all these packets and payments going back and forth and your sort of constant every every you know 0.1 seconds or something updating your payment channel to reflect the latest balance so that you don't said you know you don't actually end up going over the your total in-flight limit the amount that charlie is willing to trust coinbase here or a corn base is gonna trust charlie but if so you're saying I don't need to trust everyone on the way right but if I'm yeah sending money through a Multi multi hope like like sequence of connectors and and someone very late in the sequence doesn't send money yeah then effectively I just lost my my one dollar but I'm not closing my channel no it's what you haven't lost it because remember we're doing this with this hash time-locked agreements you haven't even updated your channel yet all you've done is entered into an agreement with Kraken and here it was like you know that immediate there's gonna be cracking who loses money in this case no one loses money actually if it does if it doesn't complete because I've locked up this Satoshi for 15 seconds and I say we say ok this one Satoshi's you know reserved for this particular payment and if I get this premature this hash I will pay the Satoshi from Charlie to Kraken Kraken says to Charlie I will pay this one Satoshi for a for a for this for this preimage but they haven't actually made any payments yet so if coinbase doesn't complete it then they just time those out and it's very similar but wasn't that the way then it's another when it goes backwards right so charlie yeah closes so now we're in the way someone can choose not to send that one $1 now it's not one Satoshi that's right so so who in that case someone does lose money right well it's Knossos right so let's think about what happens the actual protocol for doing this this completion here is that first coinbase reveals the preimage that they learned from charlie to kraken and then they update the payment channel so that this payment goes through and cornices balance is $1 higher so what could happen here is coinbase reveals that preimage and then crack and uses it to complete this payment from an Alice or from you know from Charlie so Kraken gets this money but Kraken doesn't update this payment channel with coinbase the only person who's been cheated here is coinbase and going by steal face charlie coin miss has already paid charlie when that Mineta having happens so that's the key idea here is that the last game the recipient receives the money before the sender has even sent it and allowing each step your only you can only be cheated by your immediate county party and so Charlie can cheat coinbase corn-based can cheat crackin and cracking can cheat god the way around right I think it's the other way around yep surrounds right Charlie reveals the preimage and then claim its yep so corn we can shoot Charlie kraggen can cheat coinbase and Charlie can cheat crackin by the way you could flip that so there's no there's no particular reason why it this protocol for updating this couldn't be coinbase makes the payment and then Charlie provides the preimage so yeah so you can sort of have that have that cheat go either way and so the question is do we know the the structure of the network or so when I'm again it's easier for me to think that this is Alice it's a separate entity right but let's say Alice wants to pick charlie and she happens to be connected to Kraken that's you need to know how kraken is gonna send it to charlie or let's just say kraken if you have any path to Charlie please complete this payment in the lightly Network they use source routing which means that Alice tells Kraken exactly the path to go and I believe they have Onion Routing in fact which means that Alice can tell Kraken just the next path to take and give it blah blah unencrypted blob of data the coinbase will then be able to unencrypted to find out the next path to go in inter ledger they use something more similar to what the how the Internet Protocol does routing where Alice just tells Kraken the final inter ledger I address the ILP address and the LP address oh my god I don't wanna get too much into the details about that but it's sort of like an IP address in that it includes in it some information about how to route the power that sort of default way to route this payment um because it's sort of network you imagine destruction in this hierarchical way so just by telling Kraken this address Kraken then knows the best path to sort of continue that that packets path to that Charlie so yeah so we call in energy we call these packets because again that is very small economically relatively insignificant amounts of payments that are just made in you know quick succession I'm in order to complete this large payment so you asked about the size of payments again we can do one dollar if optimistically you say we could do you imagine we could do 10 updates so first of all it's not a limit on I want to say it's not a limit on you don't have to Allison have to wait for Charlie to receive this payment it really is just Alice and crack and have to update their payment channel balance this frequently and if the amount that they have in flight ever goes above or above that amount then they have to they have to cancel um but yeah I guess I mean yeah I guess yeah so the the question here is you know if you can do like if you knew maybe we can do ten of these per second so that's like ten dollars a second even at this minimal one dollar quite realistically coinbase and cracking can have a higher in flight amount than that but but the bottom I could be the slowest of all of them right um yes that's right but although if Alice has multiple paths she can send packets along all those paths they can all go through maybe this massive two part between crack and coinbase serve Alice's multiple parties with uncorrelated failure probabilities then she could conceivably just send packets across all those and he had like you know they could maybe even I'll find their way along this one sort of like a superhighway here but yeah I think it's important so if I understand correctly importantly Charlie would only lose money specifically the the his neighbor that's right so it's all local trust it's all trust with your immediate counterparties you know Charlie's I have to trust anything about the system and this is what makes it I think superior to the lightening the ledger and forest hdl-c model where you can be grieved for a very long time here Alice can only be grieved for like 15 seconds of one satoshi which is nothing or one dollar which is very little I in the in the griefing model yes it doesn't necessarily mean that Charlie can steal any money but the griefing of losing like the whole three Bitcoin for a for 72 hours potentially it's just like catastrophic compared to the cost of losing the dollar and it's it's not localized so coin bees didn't do anything wrong and Kraken is still grieved for this amount so that's the that's that's sort of the problem with that and I why I think it's much harder to solve the reputations and then something where here when you open your channel with something really has to be local reputation so yeah so I said you know I think kwame's and cracking the very well-known party's only one of the parties in the payment channel needs to be semi trusted by the other I said one of them can be anonymous sorry I thought I thought you're saying that the Sanders has to be it can be but it could be you could switch it so like you could say again that Alice makes the payment first and then crack and shows to the preimage you've just changed the protocol in that way or just along each of these steps you could have the burden of cheating fall on which other party you want so if you imagine like not for example very well-known party but a pseudonymous party even the one that has reputation or like a like a gray area you know something like people were willing to trust Silk Road with a lot of their money certainly for a short period of time I think like shape-shift is a good example here of a party where people are willing to take the counter part we're willing to take the counter party risk that shape-shift would seal it would steal some of their money when they sent it because it was only for a few seconds so there's no custody that's going on for a long time there and shape-shift has been around and has a lot of reputation that they would lose if they if they fail to complete these payments so each of these parties kind of thought of is like shape-shift when they were a team is payments because they're receiving one you know kind of payment in the pain another I'm taking fees and so yeah so imagine again even in a totally pseudonymous Network even in a decentralized network it's quite possible people would be willing to trust a relatively high amount to parties that are at least you know someone well known and have a good reputation but how do you say I want to send a payment I never use them to ledger B so I need to find someone who will trust me even though I'm completely unknown ain't it that's not necessary true you could you could find somebody who you trust and open a channel with them and just give them the burden so one way to do would be you could do it even where you're receiving this but you just make an upfront deposit and say like you know if week when we close the channel I will lose this amount Alice will lose amount of crack and and then you can do these payments and crack and we'll know that they are the most you know the most they can lose in any by Alice aborting the protocol at any point is less than the deposit that Alice the Alice has with Kraken one more point that I want to make about that because I think it's interesting is over time so when this when this initially happens maybe Alice makes a deposit that is that covers whatever she would she'd be able to steal and over time we can grow this limit because alice has been paying fees to Kraken over the lifetime of this channel and so if kraken is collecting just like you know 5% fees and kraken wants to limit their loss to alice to being just like 50% of the total lifetime value that kraken has has received from alice over the course of the channel that ori no matter what whether you set those percentages - that's actually exponential growth in what the size of the of the trust limit is because as each payment gets made alice is paying more fees to Kraken and Kraken is able to to raise the trust limit for the next payment because they've received some fees and thus if Alice cheats eventually you know Alice will still have paid cracking a lot over the lifetime in that relationship and so if Alice's maybe tries to make a very large payment over this network in so doing she could be just exponentially raising the value of her this the trust limit on her channel I say exponentially it is it's sort of a small exponent but it's a small or small base but over time you know again that that still can grow to potentially be a very large amount of money over the lifetime of this channel and so you're saying let's say the fee is 5% right if Kraken themselves take 5% T and we have T hopes that's yes so right so you wouldn't it wouldn't yeah it's true it wouldn't be a 5% fee I'm not sure with the fees right now in the Lightning Network our I feel like maybe it's 1% or less I guess yes probably I think it's less than 1% so it's true I think and I think the fee model and this generally hasn't really been figured out for either in our ledger or or 4 or 4 litening III wonder actually if and a lot of these cases it'll turn out to be a kind of loss leader where you'll provide routing for very cheap may be free and just monetize the user in other ways and you're gonna I think there's bad ways to do that where you're where you're monetizing their their data and there's other ways to do it where it's just you know like this is this a service that coinbase are crack and provide to their customers and they make money on like exchange fees or something else and when Alice sends to Charlie does she up Francis the the max fee that she's willing to pay and then it just distributed yeah so when Alice so within an inner Ledger I'm a little more familiar with her an alleged does this a packet is very simple it just has I believe the destination address which includes in it the this sort of hierarchical ILP address which also covers I believe what currency Charlie wants to receive it and so if Charlie has multiple different currencies that can receive things and in different channels that's covered by this address and I believe the amount and what this amount is is actually the amount that's being sent and so what happens is as this amount so if this is this will just be like so Alice will send this and it'll be you know one dollar crack and take their fee out and now that packet this pack of a Centon says like ninety nine cents and then here the pack at the base end on sounds like ninety eight cents and yes okay maybe I'm worried about misrepresenting this but the basic it isn't Charlie receives this and if this is less money than they expect it to receive in this payment they can just cancel it if they if they need to but the idea is that you know they they take into account okay some fees got lost along the way got taken about taking out along the way and they say okay is this a reasonable amount to receive based on what someone Alice sent so they can and that all is handle the higher levels of the protocol sweitzer to the basis packet format I believe it's just a LP address and the destination IP address not the source address and the amount that is in this particular hop oh yeah you can look at if you look at in alleged org you can see the the latest spec for ILP v4 which tells a little more about things like packet format and so for example it's a somewhere in the way we have someone who converts it to like US dollars they would still exchange some sort of hdl-c between them that's right so the because the HLC is the HDL a the hash time mark agreement is happening at a higher layer than the payment layer on the payments level it's it really is just simple payments back and forth between coinbase and charlie and so you could do this with anything you could do it with with dollars if you may like to do with wire transfers although they may not be highlighted a low latency enough you could do it with tossing pennies across the Grand Canyon and anything that supports making small relatively small payments mount variants relatively quickly can support this so one thing notice that this protocol is not particularly good at least in my opinion if the channel if his payment relationship is something that's just settled on chain so this is was something that it was sort of originally part of the vision manner ledger I think it's it's still it's still something that they they talk about in support I think they they have maybe slightly different views on it than me but the idea is Alice you know we could we could have these relationships be that they make these payments you know this payment relation is just we're on the same block chain right so I guess coinbase and Charlie are on the same block chain and coinbase is making just Bitcoin payments on the ledger to Charlie and Kraken is making you know like like like coin payments on the ledger maybe the coin base and this is so this is not as good a protocol for that because the cost of doing and latency of doing an on chain payment is much higher so in this case you're saying like each link will be on chain right so if each link is settling on chain rather than just by sending signed messages to each other in a payment channel which is practically free if they're settling on chain it's sort of hard to do these many tiny payments and that's where maybe like the idea of using it it she'll see on chain gets more attractive my opinion though is if you if you've got us if you're using like instead of using HDL sees on chain you can just open a payment channel on chain and do the micro payments protocol over that so I really don't see much of a use actually for these ledger and for say PLC's I think the micro payments protocols is superior and so feasibly again let's say that that at some point we're converting it to fiat and then from here let's say it's a venmo payments right so these two entities they are unlikely to be sending like one dollar to each other over any sort of because that also costs money right so so physical so the expectation is that they will have like a significantly higher limit and they will just accumulate yeah and then settle it within like 10 days right yeah and you know in the settlement we're and what doesn't have the event mode if this is coinbase you can imagine this settlement just being coinbase updating Charlie's USD balance which is already a trust with the very high exactly so because Charlie because Charlie's willing to say like I believe that coinbase you know I can I can hold this credit relationship essentially and this was one of the what I think in an alleged they called the Enlightenment at one point was realizing it was originally a protocol for these cross ledger atomic transactions where these entities like coinbase that were Ledger's where somebody would be or Bitcoin into the Bitcoin ledger was treated as like this is a ledger and with settling on that the the realization is that you know coinbase here maybe they're running a ledger of venimos running a ledger but in some sense they are just another connector it's it's a credit relationship that Charlie has like with venmo so again like this isn't because memos in the cell really exactly participate in the protocol but you can kind of imagine this being a venmo being another hop on this where alice is made vows makes a payment to Kraken by updating the venmo balances and again like that's really just a payments of rippling through another semi trusted counterparty they're actually a very trusted counterparty in that case yeah interesting back cool give you a cover everything or these something else that is yes so I mean I think that's that's most of what I know about I hope you talk about IOP I'm very focused on like this is the this hdl-c issue and and why I think so if you wanna learn more about that you can see my my talk on at the Stanford blockchain conference if she's considered harmful and that's online the video and slides from that are online yeah I mean I if that's I think that's basically inter legend again I think it's it's a protocol where potentially could it could be a prima Channel protocol across every blockchain network it's a channel network that could go across every budget ledger allowing payments from from anyone you know who has any any cryptocurrency to anyone else without them having to worry about what their what their the currency that they're sending being the same as the currency to the receiving and yeah I mean I think I think it has it really does at the potential to sort of connect at least on a payments layer on payments layer connect a lot of different BOC chains and then the ledger is live right inner ledger is live you have like good idea of like how many are like big big links we have such as like crack into coinbase it's it's a good question I think so there isn't yeah there aren't major hubs on it it's it's I think it's not it's not as developed right now I believe as the as a lightning Network coil is is has a company that that was founded by Stephane Thomas who's one of the inventors of the inner logic protocol along with Evans was the other inventor so Stephane Thomas Tobin started this company coil which uses in your ledger for web payments for monetizing content I'm a sort of butchering the description of it there but you can check out coil as a project there using your ledger live right now I think it is it is live on on ripple right now there is a beta of a convey of plugin that allows you to make payments to the Lightning Network where somebody is receiving payments on lightning again I think it's still very early on on actually being deployed in production and so what would it mean in the context of winter Ledger to be live on people so there you can open a connection you can peer with an inner ledger connector by opening a ripple payment channel with them an extra payment channel with them and making payments to them over that make sense cool awesome well that was great overview and let's wrap up here and thanks for watching thanks for having me on","transcript_synced_at":"2026-11-04T04:32:27.055Z","segments":[{"start_seconds":2,"text":"hi everyone this is Alex from near and with me today is Dan Robinson from paradigm and we will talk to the about","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2s"},{"start_seconds":10,"text":"inter ledger and then would you introduce yourself and yeah sure so I am a research partner at paradigm I work on","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=10s"},{"start_seconds":18,"text":"sort of research and keeping up with developments in the space and one of the projects that I've been excited about not affiliated with it anyway it was","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=18s"},{"start_seconds":27,"text":"called inner ledger and the yeah I mean I've been going around specifically talking about some components of it but I think figure will give a high-level","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=27s"},{"start_seconds":36,"text":"talk about what integer is and how it works and then get in some of the details about how it differs specifically from for example the Lightning Network and yeah let's get","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=36s"},{"start_seconds":45,"text":"that high-level overview right yeah so indeed loads you can think of any ledger as a peer network as a solution for payments where one party can send a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=45s"},{"start_seconds":53,"text":"payment to another party when they don't individually have a particular credit relationship with himself so chronically","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=53s"},{"start_seconds":59,"text":"if we want Alice to make a payment let's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=59s"},{"start_seconds":65,"text":"say to Charlie um so this is because you know Charlie's a vendor or Alice just","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=65s"},{"start_seconds":72,"text":"wants to sort of transfer money to to him but Charlie doesn't trust Alice so Charlie isn't willing to say extend credit to Alice so suppose we have","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=72s"},{"start_seconds":82,"text":"another party Bob and Bob and Alice have a a relationship credit relationship say","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=82s"},{"start_seconds":90,"text":"and Bob and Charlie have a credit relationship and again we're good we'll get into what this relationship is and it may be a credit relationship or maybe something like a payment channel and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=90s"},{"start_seconds":98,"text":"that's where you got this a similarity slighting but this is so far a very abstract generalized view of that this is just that Alice has the capability to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=98s"},{"start_seconds":105,"text":"pay Bob so again that could be over venmo that could be in cash that could be over a payment channel it could be an amount of ledger and bob has the ability","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=105s"},{"start_seconds":112,"text":"to pay Charlie so what we're what we do here to have Alice pay Charlie is that Alice makes a payment to Bob in exchange","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=112s"},{"start_seconds":121,"text":"for Bob making a payment to Charlie and so in ur ledger is a protocol that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=121s"},{"start_seconds":127,"text":"allows these peering relationships which can be again like if it can be sort of on top of a lot of different possible","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=127s"},{"start_seconds":135,"text":"things and we'll get to that but allows these individual peering relationships to be routed to eval payments we've","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=135s"},{"start_seconds":143,"text":"routed across them and so you can imagine having many more parties in this in this ecosystem and here you know if","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=143s"},{"start_seconds":150,"text":"you have a major player like coin based over here and cracking over here that could be you know it's unlikely that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=150s"},{"start_seconds":158,"text":"maybe Alice and Charlie both have relationships with with some random person Bob but it's very plausible that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=158s"},{"start_seconds":167,"text":"Alice may have an account say a Krakken or a payment channel with Kraken Charlie may have a payment channel with coinbase and Kraken and coinbase may","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=167s"},{"start_seconds":176,"text":"have a payment channel or a relationship with each other that allows then Alice to make payments of Charlie so this you know the the inspiration behind the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=176s"},{"start_seconds":185,"text":"analogous protocol is largely based on the Internet and sort of the development of these of these packet-switched data networks and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=185s"},{"start_seconds":193,"text":"so anybody just as an internet where instead of Alice sending just data to Charlie going across a series of ISPs alice is sending a payment to charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=193s"},{"start_seconds":201,"text":"and it's being routed across these intermediate nodes and those intermediate nodes they called connectors right yep that's right","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=201s"},{"start_seconds":207,"text":"so each of these each of these nodes in the in the integer protocol is a connector and they can have these","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=207s"},{"start_seconds":216,"text":"peering relationships with one or more users and so Alice here is a user who can send to another user by routing over","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=216s"},{"start_seconds":224,"text":"these connectors and so assuming that on every step that's some sort of cryptic currency then we can have some sort of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=224s"},{"start_seconds":233,"text":"proofs that the payment goes through but if we talk about venmo or like right so so we're and that's a great question and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=233s"},{"start_seconds":241,"text":"actually and we'll get to that is how do we make this totally agnostic as to what this payment is so so and what this relationship is and what the and what","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=241s"},{"start_seconds":250,"text":"the currency is and so if you do something like lightning Network does it really has to be a cryptocurrency and it really has to be a cryptocurrency that supports this primitive call down hash","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=250s"},{"start_seconds":259,"text":"time-lock contracts and also supports payment channels and embedding hash Toronto my contracts HDL sees within those and we'll get to what those are but in inter ledger you can really think","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=259s"},{"start_seconds":267,"text":"of it's like completely abstractly so this is you know this could be just like a 3 USD payment and this could be then let's take out a little fee so like you know","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=267s"},{"start_seconds":275,"text":"$2.99 and then this is 298 you know so here the the payment could be done in","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=275s"},{"start_seconds":285,"text":"dollars over a over again like it could be over venmo it could be just a trust relationship like this is Alice changing your cracking balance and there's ways","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=285s"},{"start_seconds":294,"text":"to make this atomic or as atomic as we need it to be that prevent for example if Alice makes his payment to Kraken that prevents cracking from just keeping","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=294s"},{"start_seconds":302,"text":"the money rather than sending it on and so we'll get to that but just so you know I wanted whatever is it really is it a interreligious starts at a very","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=302s"},{"start_seconds":310,"text":"high level of abstraction I usually use payment channels when I'm explaining the it because in part that sort of makes the analogy to lightning Network clear","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=310s"},{"start_seconds":317,"text":"but it really is much more sort of general than that and I think you'll sort of see why when we talk about how they accomplished atom SAT right and yes","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=317s"},{"start_seconds":326,"text":"I would be interested to know how we make it so that we don't need to trust any to purchase on the on the way right","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=326s"},{"start_seconds":333,"text":"so let's talk a little about its Chelsea's first so if she'll C stands for hashed time","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=333s"},{"start_seconds":342,"text":"lock hashed time lock contracts at least that's at what it is in the lighting network paper people use different things and the idea of an HDL C is that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=342s"},{"start_seconds":352,"text":"it's a contract which means you can put some money into it and it can be unlocked in one of two ways so it can","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=352s"},{"start_seconds":357,"text":"either be unlocked by the recipient so there's two parties involved so like you know hey this might be here like charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=357s"},{"start_seconds":365,"text":"the recipient by revealing a hash preimage so that's a secret that the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=365s"},{"start_seconds":375,"text":"recipient knows that the that the sender doesn't know the sender is able to reveal and in exchange the hdl-c will","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=375s"},{"start_seconds":382,"text":"just give them the money and this is when you do one on chain for example and the alternative way it can be spent is","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=382s"},{"start_seconds":390,"text":"it can be unlocked is the sender can unlock it after a timeout and so the principle of an HDL see when you do it on chain and I think the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=390s"},{"start_seconds":399,"text":"simplest way to think about it when you're learning it - just imagine this being a Bitcoin address which you can do this entirely","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=399s"},{"start_seconds":405,"text":"on chain on Bitcoin and actually let me just plug a project of mine that I","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=405s"},{"start_seconds":411,"text":"worked on while I was at chain called IV an IV is a smart contract language for","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=411s"},{"start_seconds":421,"text":"Bitcoin script that compiles to Bitcoin script and if you go to this site you can IV link eyes another way I think we","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=421s"},{"start_seconds":429,"text":"have both and if you go to the site you can actually see an example of an hdl-c","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=429s"},{"start_seconds":436,"text":"contract that really sort of shows this logic and that can be compiled into a Bitcoin script address that does this so if you imagine is a Bitcoin script","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=436s"},{"start_seconds":442,"text":"address someone typically the sender put who puts the this information into the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=442s"},{"start_seconds":450,"text":"sorry puts a Bitcoin into an hdl-c on chain and then the recipient can unlock","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=450s"},{"start_seconds":458,"text":"that when they by revealing this preimage that they know and if they don't unlock it within a certain set period of time so typically it's like 24","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=458s"},{"start_seconds":467,"text":"hours or so after after they create this they don't unlock it then the sender is able to cancel it and just pull the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=467s"},{"start_seconds":474,"text":"money back and so what this is used in on chain most famously is for a cross chain atomic transaction protocol and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=474s"},{"start_seconds":482,"text":"the way that works is if you have if you want to trade Bitcoin for like coin what","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=482s"},{"start_seconds":492,"text":"happens is you know if Alice Alice has","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=492s"},{"start_seconds":496,"text":"you know like like 1 BTC and Charlie has","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=496s"},{"start_seconds":505,"text":"100 LTC I'm not sure the current price and as we all know Charlie Lee the found of light coin famously dumped his all his light coin at the height of the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=505s"},{"start_seconds":513,"text":"bubble so let's imagine here Charlie's trying to get entirely out of light coin and get into Bitcoin Alice the way the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=513s"},{"start_seconds":522,"text":"protocol works is first Alice creates an HDL see that locks up this Bitcoin and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=522s"},{"start_seconds":529,"text":"this is she uses a hash preimage that she knows in and Charlie doesn't yet know so Charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=529s"},{"start_seconds":538,"text":"isn't able to to open this unless he gets the preimage Alice is able to get","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=538s"},{"start_seconds":543,"text":"it after like 48 hours then Charlie sees","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=543s"},{"start_seconds":551,"text":"that this has happened goes and creates a matching hdl-c with a shorter time out on the light coin chain is this just involved sending this light coin to an","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=551s"},{"start_seconds":559,"text":"address and this is a shorter time out but uses the same hash that he saw on","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=559s"},{"start_seconds":566,"text":"this that was that was used in this H Chelsey so in this one charlie is the sender and Alice is the recipient Alice","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=566s"},{"start_seconds":574,"text":"used this now she can unlock this within that 24 hours and she gets the light","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=574s"},{"start_seconds":578,"text":"coin poor Alice and then Bob","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=578s"},{"start_seconds":587,"text":"sorry Charlie now knows this preimage so charlie by seeing this transaction on the chain learns the preimage and can","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=587s"},{"start_seconds":595,"text":"spend and can can unlock this it she'll see and receive it so that is a protocol","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=595s"},{"start_seconds":603,"text":"that's very old protocol for atomic cross chain swaps and it works on chain the innovation of the Lightning Network was to embed these within payment","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=603s"},{"start_seconds":612,"text":"channels so this isn't just a cross chain atomic swap protocol it really allows you to do it across any two Ledger's and a payment channel can be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=612s"},{"start_seconds":620,"text":"considered just an off chain bilateral ledger between two parties so if the if you familiar the payment channel the idea is that two parties lock up some","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=620s"},{"start_seconds":628,"text":"some assets on the main chain into a contract they transact off of it by signing messages back and forth to each other off chain and update the state of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=628s"},{"start_seconds":636,"text":"that ledger and then are able to exit it to the to the main chain I mean this is going to talk about payment channels whether they play a very important role","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=636s"},{"start_seconds":643,"text":"in both lightning and in a ledger and they're very it's very important protocol generally but you can just think of it being an off chain ledger that can be settled after a delay period","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=643s"},{"start_seconds":652,"text":"to the main chain and it's only between two parties so in this case supposing","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=652s"},{"start_seconds":658,"text":"we're doing this we're doing this as a lightning Network payment you do sort of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=658s"},{"start_seconds":665,"text":"similar principles with hgl seas but you do it in payment channels so here this is a payment channel tree now","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=665s"},{"start_seconds":673,"text":"is in crack and this is a payment channel between crack in a coin base this is a payment channel between coin","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=673s"},{"start_seconds":677,"text":"base and Charlie and so here what","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=677s"},{"start_seconds":686,"text":"happens is Alice I'm sorry in this case would be Charlie generates a pre-image","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=686s"},{"start_seconds":692,"text":"hashes that gives that hash to Alice Alice creates a three Bitcoin payment she'll see in her payment channel with","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=692s"},{"start_seconds":701,"text":"Kraken so Alice has some money in her payment channel with Kraken she has some balance practice in balance she has to have at least three BTC she reduces that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=701s"},{"start_seconds":708,"text":"balance and gives that money that would be it was previously hers puts it into a contract and this means that if you settle the payment channel to the main","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=708s"},{"start_seconds":717,"text":"chain you'll get an H TLC like this so you need to add a little time delay just to allow the payment channel to be settled but if everything goes sideways","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=717s"},{"start_seconds":725,"text":"Alice would be able to settle this to the main chain and hopefully settle the HT LC within time within the mount of time so only in the worst case that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=725s"},{"start_seconds":733,"text":"would you actually have to settle to the safe you'll see to the main chain so alia Alice Alice locks us up with Kraken","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=733s"},{"start_seconds":741,"text":"and then Kraken creates the same hdl-c a they see they see that they've had this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=741s"},{"start_seconds":748,"text":"they've received this a PLC in this payment channel they can create one with coinbase with the same hash and so this one let's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=748s"},{"start_seconds":757,"text":"say has you know the 72 hours this one","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=757s"},{"start_seconds":765,"text":"has 48 hours this one so they put it in a hdl-c here with a 48 hour timeout and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=765s"},{"start_seconds":773,"text":"this one with a 24 hour time out and so these timeouts because remember here they have to be staggered and then sort","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=773s"},{"start_seconds":782,"text":"of because if something goes goes wrong over here then coinbase needs enough","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=782s"},{"start_seconds":788,"text":"time to actually claim I'm sorry then the Kraken if coinbase claims this is you'll see at the last second Kraken needs enough time to use that free image","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=788s"},{"start_seconds":796,"text":"to go settle this one on the main chain so these numbers don't take into account the payment channel difference but it isn't again it isn't","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=796s"},{"start_seconds":803,"text":"really that important for the were sitting here I and yeah so the really yeah this really should really should be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=803s"},{"start_seconds":810,"text":"like 4870 right math Olympiad what's 72","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=810s"},{"start_seconds":815,"text":"plus 24 and 96 all right so they create these these HDL C's Charlie remember has","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=815s"},{"start_seconds":824,"text":"the preimage he reveals that preimage and each of these payments can complete so the analogy I use is that you know how lightning strikes","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=824s"},{"start_seconds":832,"text":"it doesn't straight lightning doesn't strike from the lightning trick that you see doesn't come from the sky to the ground that's like there's a very sort","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=832s"},{"start_seconds":840,"text":"of faint lightning strike and you can see and the talk I gave at Stanford I have a video video of this previous Google lightning slow-motion you can see","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=840s"},{"start_seconds":846,"text":"this the path that as it sort of goes down it's there's sort of a very light trail it finds a path down and lightning","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=846s"},{"start_seconds":853,"text":"strikes up so here you see these sort of like these ions being you know charged here you see these H he's being locked","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=853s"},{"start_seconds":861,"text":"the actual payment happens after charlie reveals their pre image so Charlie gets paid first before alice has really sent","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=861s"},{"start_seconds":870,"text":"any money she's locked up some money but she doesn't send anything until Charlie receive his money there for telling by telling coinbase in their payment","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=870s"},{"start_seconds":877,"text":"channel saying here's but here's the preimage please settle this you'll see in the payment channel of coinbase doesn't comply they just settle to the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=877s"},{"start_seconds":885,"text":"main chain coinbase so then yeah it's a coinbase reveal reveals it to Kraken Kraken feels to Alice and each along each of these steps they complete it if","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=885s"},{"start_seconds":893,"text":"at any point something goes wrong they can settle it to the main chain so again what I've just explained here is how lightening how the Lightning Network works because in lightning network","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=893s"},{"start_seconds":901,"text":"you're embedding these agencies within the payment channels right but obviously then you can only use cryptocurrencies that's right so one one problem with","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=901s"},{"start_seconds":910,"text":"this protocol is that these relationships have to really have to be either on chain just like I'm on a blockchain with you when I can send you","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=910s"},{"start_seconds":917,"text":"an HDL see on chain which tends to be tends to be a little slow and expensive or inside a payment channel that supports a Chelsey's you could","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=917s"},{"start_seconds":925,"text":"conceivably imagine that venmo could add support for htl sea based payments or something like that it's it's a little fanciful","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=925s"},{"start_seconds":933,"text":"you know banks benches have talked about you know part of their blockchain research like who should recently supporting an HPLC based payments I think it's kind of a non-starter and one of the reasons is that I think there's a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=933s"},{"start_seconds":941,"text":"much better way to do atomicity than this um so yeah so that's one downside that you've identified there is that it has to be on something substrate this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=941s"},{"start_seconds":948,"text":"payment this payment relationship has to be on some substrate that supports HDL series for this to work another downside","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=948s"},{"start_seconds":954,"text":"is this reefing problem the risk that what happens remember in the happy case all this money is locked up so this is a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=954s"},{"start_seconds":963,"text":"total of of almost nine Bitcoin locked up what happens if they're all waiting for Charlie to reveal as preimage and this is information that's uniquely in","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=963s"},{"start_seconds":971,"text":"Charlie's possession what happens if Charlie doesn't reveal that preimage this money just stays locked up for at least 48 hours because if coinbase just","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=971s"},{"start_seconds":981,"text":"just cancels this it's just cancels we're willing to cancel the if you'll see with Kraken and try to free up this Bitcoin there's always a possibility that at the last second Charlie will","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=981s"},{"start_seconds":989,"text":"come in and settle the payment channel and settle the hdl-c so this month the money all along these these hops is locked up for at least 48 hours if just","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=989s"},{"start_seconds":997,"text":"if Charlie doesn't it doesn't reveal a pre-image and here in like you can you can cancel","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=997s"},{"start_seconds":1004,"text":"it after 48 hours but it's still there's three Bitcoin in this like major payment Thruway here between corn B's and crack","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1004s"},{"start_seconds":1012,"text":"and imagine they've got a big payment channel with each other and lightning Network liquidity is a little expensive any old user receiving a payment can","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1012s"},{"start_seconds":1019,"text":"just grief anyone any intermediary the entire chain of hops by just withholding this preimage and this you know right","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1019s"},{"start_seconds":1027,"text":"now we have this like lightning they talked about supporting 20 hot payments but realistically I mean it's it's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1027s"},{"start_seconds":1034,"text":"debatable whether that will be the best architecture but one reason is that the longer this payment is the more people Charlie can grief so if this goes to a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1034s"},{"start_seconds":1041,"text":"lot of other nodes in between each of these steps is three Bitcoin that gets","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1041s"},{"start_seconds":1050,"text":"locked up so it's linear in the number of hops that were but also each one is 24 hours longer right yes by it and this was on the Lightning Network people","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1050s"},{"start_seconds":1056,"text":"pointed out to me if you if once Charlie doesn't reveal this preimage after 48 hours coinbase can safely cancel the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1056s"},{"start_seconds":1065,"text":"hdl-c with cracking because they know Charlie won't claim it so that as long if Charlie's in everyone then the problem is only it's only 48 hours if coinbase or","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1065s"},{"start_seconds":1073,"text":"whoever's in this position decides to creep everybody then everyone before them is locked up for 72 hours so it's still a linear briefing attack because","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1073s"},{"start_seconds":1082,"text":"they're but they actually lose is the value of this Bitcoin for that for that 72 hours so they lose you know I guess","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1082s"},{"start_seconds":1089,"text":"it's like nine Bitcoin days of capital lockup and they cause some multiple of that to be lost along you to do","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1089s"},{"start_seconds":1097,"text":"something like the coop now let's say it's 20 oops yeah this person can give a lease for 20 days absolutely yes Alice","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1097s"},{"start_seconds":1105,"text":"and whoever yes this this this person can give this person in Alice and lock up this money in this channel which again you know that's it's a pretty bad attack you can be done by anybody along","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1105s"},{"start_seconds":1114,"text":"the chain and the thing is that you know you're just routing a payment here you don't actually know charlie you thought you were just routed being friendly and routing routing network payment for a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1114s"},{"start_seconds":1122,"text":"small fee when Charlie does this to you you don't even receive a fee if Charlie decides just cancel the payment charlie doesn't complete it and this party the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1122s"},{"start_seconds":1130,"text":"user gets cancelled and you actually get nothing for that having that that lock up so that's a problem the final problem this is one that's gone a little more","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1130s"},{"start_seconds":1136,"text":"mainstream is people used to talk about a multi asset lightning network and this would be more similar to what inter","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1136s"},{"start_seconds":1144,"text":"ledger actually potentially provides and that's where you have one of the hops being a hop and some other currency or","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1144s"},{"start_seconds":1153,"text":"have multiple hops here so the use case here and this is one thing that's part of the broaden or ledger vision is if I make a payment to you I shouldn't care","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1153s"},{"start_seconds":1160,"text":"what where you your money is where your who your account is with who your payment channels are with their networks are just find a path to you and I shouldn't even care what currency you","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1160s"},{"start_seconds":1169,"text":"want to receive it should the parity I want to send in the currency you want to receive don't don't necessarily have to be the same one all I care about is getting you the money that you want in","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1169s"},{"start_seconds":1177,"text":"the currency that you want and we can imagine just finding a path here part of that would be finding a path that includes an exchange rate","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1177s"},{"start_seconds":1185,"text":"so here coinbase is acting as a as an exchange essentially where they're receiving bitcoin along this hop but","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1185s"},{"start_seconds":1192,"text":"they are paying out like coin here so it's potentially very powerful because this gives you a kind of off chain exchange the downside when you try to do","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1192s"},{"start_seconds":1201,"text":"this with HDL sees that are in force on chain like this has is that the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1201s"},{"start_seconds":1208,"text":"coinbase so Charlie here let's suppose maliciously you know this is or not even","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1208s"},{"start_seconds":1215,"text":"religiously this is very potential useful use case for for lightning if you want to treat it just as in exchange is that charlie is the one who's just","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1215s"},{"start_seconds":1223,"text":"trading his Bitcoin for like coin remember he's dumping when he actually creates this chain of HCL sees he locks","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1223s"},{"start_seconds":1231,"text":"in a particular price for Bitcoin litecoin and then he has 48 hours to decide whether to complete that or not and what","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1231s"},{"start_seconds":1240,"text":"that gives him is effectively a free option a american-style call option where he has the right but not the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1240s"},{"start_seconds":1247,"text":"obligation over those 48 hours to buy like coin for bitcoins so if the price moves against him then he might decide","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1247s"},{"start_seconds":1256,"text":"to cancel that trade and just and just not let it complete and so you know coinbase thought they were just routing this payment but actually they end up with this liquidity a with this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1256s"},{"start_seconds":1264,"text":"acquittal he locked up for a very long time and also you know do executing this trade at what turns out to be a bad exchange rate for them so it gives","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1264s"},{"start_seconds":1271,"text":"charlie this free option mm-hmm so how does inter ledger address all of those great questions so and also assuming to ledger doesn't have those like 100 hours","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1271s"},{"start_seconds":1279,"text":"that's right and the reason that it doesn't I was saying second so the inner ledger does use HT LCS but it uses them","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1279s"},{"start_seconds":1287,"text":"at a slightly higher layer that isn't enforced by the payment channel or whatever this payment mechanism is so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1287s"},{"start_seconds":1295,"text":"all of this inner ledger all of this needs to support is just a the ability for coinbase to pay charlie so here's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1295s"},{"start_seconds":1304,"text":"here's how I render ledger supports this I let's talk first just about imagine we","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1304s"},{"start_seconds":1311,"text":"just have a because this is a gem that sort of just a general more general insight suppose we have just alice and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1311s"},{"start_seconds":1318,"text":"Charlie remember let's go back to trading and we want to trade one BTC for","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1318s"},{"start_seconds":1325,"text":"100 LTC right so Charlie wants to send this to Alice and Alice won't send it to Charlie the problem with just Alice","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1325s"},{"start_seconds":1334,"text":"sends it first to Charlie and then he sends it next to Alice is what's the pond with that alright well Charlie will","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1334s"},{"start_seconds":1342,"text":"keep the BGC right Charlie Charlie could could cheat Alice by just aborting the protocol at that point and keeping everything there's a problem because right now bitcoin is kind of expensive","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1342s"},{"start_seconds":1350,"text":"but what if this payment was much smaller what if it was just point o 1 BTC and this was just well one bit went","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1350s"},{"start_seconds":1359,"text":"out Lisa is still a little expensive let's add some more zeros you know 0.01 LT see if this happened the truck if","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1359s"},{"start_seconds":1368,"text":"Alice sends this to Charlie and Charlie doesn't send the payment back Alice is only out plain l1 BBC may be still expensive but you can make this as small","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1368s"},{"start_seconds":1376,"text":"as you want you can make this one Satoshi so for a sufficiently small trade Alice doesn't really have to worry about Adam issah T because if Charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1376s"},{"start_seconds":1385,"text":"cheats her she can just close her channel with Charlie or end her relationship with Charlie and she's only lost a relatively small amount so that's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1385s"},{"start_seconds":1394,"text":"the basic insight and what you do here because we have this protocol for doing this you just do this over and over again so you make these this tiny","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1394s"},{"start_seconds":1402,"text":"payment charlie makes his payment back this tit-for-tat payment back and then Alice just repeats the protocol over and over again until she sent the entire B","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1402s"},{"start_seconds":1409,"text":"BT city so that's roughly how you could see this this happening that's how and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1409s"},{"start_seconds":1415,"text":"this happening like on the graph like I said this is Alice again Ellis will sent through the entire path one point like","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1415s"},{"start_seconds":1424,"text":"once Atocha to Charlie that's right and Charlie will send one Satoshi worth of light coins back not exactly so here because you're doing","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1424s"},{"start_seconds":1432,"text":"the way that the trade actually works isn't that the payment goes both ways along these channels it's that it goes only one way but at some point in the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1432s"},{"start_seconds":1440,"text":"middle it gets turned into like coin so with you complete the path here by having coin base turn this payment into","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1440s"},{"start_seconds":1447,"text":"LTC so like so this is so there's a payment you can think of it as a payment from Charlie - Charlie you know this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1447s"},{"start_seconds":1455,"text":"address this being is like coin address like payment channel over here and this being his bitcoin one where the outgoing thing is Bitcoin and then by the time it makes it back to him it's turning to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1455s"},{"start_seconds":1463,"text":"light coin but the natural concern here is that each of those links has a latency right yes so let's say the superfast","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1463s"},{"start_seconds":1471,"text":"like point zero five seconds that's pretty slow problem that sounds like about right right if I'm sending one","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1471s"},{"start_seconds":1478,"text":"Satoshi waiting until they receive my light coin I guess if it's Charlie's the other way around then then in order to send like 1 BTC","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1478s"},{"start_seconds":1486,"text":"that's going to take me years that's absolutely true and so that's the that's maybe the biggest downside of this is that a large payment if you're very small now to trust along this takes time","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1486s"},{"start_seconds":1495,"text":"proportional to the size of the payment um I think I think that isn't it isn't necessarily that that you're concerned and well I'll talk about that in a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1495s"},{"start_seconds":1502,"text":"second but just to just to sort of explain how the how the mechanism of this works we still do in hdl-c because we still want people along the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1502s"},{"start_seconds":1511,"text":"way to know it's not we don't just optimistically send this like this Satoshi because then we don't know someone along the way steals it we're","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1511s"},{"start_seconds":1518,"text":"not we're not sure who so we still do this do an hdl-c but we do it that's it's not enforced by the inside the payment channel or whatever the payment","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1518s"},{"start_seconds":1526,"text":"is because in fact even if it was a payment channel it wouldn't be worth enforcing it with an hdl-c because just like the gas cost or the or the fees of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1526s"},{"start_seconds":1534,"text":"actually creating that hdl-c output and settling that cost around like it's run like 50 cents I think and so any payment below 50 cents on the Lightning Network","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1534s"},{"start_seconds":1542,"text":"by the way is not enforced by the by these payment channel so if you're making payments that small you are trusting your immediate counterparty","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1542s"},{"start_seconds":1550,"text":"that they won't sort of bought the protocol and have you lose that money um so that's that's you know the sort of the dirty secret of that lightning doesn't actually use these agencies in","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1550s"},{"start_seconds":1559,"text":"this way but they still you still do it on the higher layer so you create a nice shell scene this is for you know yeah let's say this one Satoshi for now and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1559s"},{"start_seconds":1568,"text":"because it's not enforced by the base chain we can have this be a very short time out so this you know this could just be like I don't know 15 seconds or","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1568s"},{"start_seconds":1576,"text":"something and then this time app could be 10 seconds once toshi annoying fuse","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1576s"},{"start_seconds":1583,"text":"here and this one could just be like 5 seconds I'm not sure what the exact times they want to use one saturation","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1583s"},{"start_seconds":1590,"text":"and each of these is they call it saving a hash time locked agreement it's something enforced between crack and coin base that they can detect that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1590s"},{"start_seconds":1599,"text":"their immediate county party has cheated them because they haven't you know they haven't received a message from them but they they claim that they did and that's a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1599s"},{"start_seconds":1606,"text":"problem between them it's not enforced by the ledger and it doesn't matter to anybody else so if if you know if you","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1606s"},{"start_seconds":1615,"text":"lock up all these Toshi's and then Charlie completes this payment charlie receives a Satoshi and it's just you know up to what happens as coinbase","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1615s"},{"start_seconds":1622,"text":"reveals the preimage to Kraken and then Kraken potentially cheats coinbase here by not actually making this payment without getting their payment channel to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1622s"},{"start_seconds":1629,"text":"pay this one Satoshi but in that case coinbase knows that enable to close the payment channel with crack and it would it be sort of a silly thing for them to do so that's that's sort of how that how","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1629s"},{"start_seconds":1637,"text":"the protocol is built on top of on top of just these vanilla payments usually she'll sees at a higher layer so you asked a great question which is about","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1637s"},{"start_seconds":1645,"text":"the the latency so reasonably I think we could say like at minimum around 50","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1645s"},{"start_seconds":1653,"text":"cents is a reasonable trust limit because that's what it costs to settle in hdl-c on the main chain in fact we should probably be hired because at that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1653s"},{"start_seconds":1661,"text":"price all the money that you put in that htl see if you try to settle it with an ELC just like gets paid into fees so it's so we just sort of its lost so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1661s"},{"start_seconds":1668,"text":"really you honestly have to go like significantly higher for something be worth actually settling within hdl-c on the main chain so if you're doing lightning and then the other thing that you're you're trusting the funder of a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1668s"},{"start_seconds":1677,"text":"channel trusts their counterparty in some sense because the funder is paying some fees for this to open this channel and so if the counterparty just closes","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1677s"},{"start_seconds":1685,"text":"it or forces them to close it the funder ends up losing the amount of these fees and that can be you know if it's tens more or more a couple dollars so there","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1685s"},{"start_seconds":1695,"text":"is this counterpart you trust remember this is only a very local form of trust it doesn't global trust where I have to trust everybody who's downstream of me","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1695s"},{"start_seconds":1701,"text":"in a payment the so I reasonably think this doesn't have to be one Satoshi um it could be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1701s"},{"start_seconds":1709,"text":"it has immune sort of at least fifty cents maybe let's say it can be a dollar and that this is the amount that you have in flight at any particular time so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1709s"},{"start_seconds":1717,"text":"there could be a lot of payments going from the point base to Charlie and you don't actually have to update the payment channel until the their net amount is is more than $1 from where","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1717s"},{"start_seconds":1727,"text":"their last state of the payment channel was and then you have to actually update the payment channel so the way that integer is working to search either sort of optimize this is that you have all these packets and payments going back","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1727s"},{"start_seconds":1735,"text":"and forth and your sort of constant every every you know 0.1 seconds or something updating your payment channel to reflect the latest balance so that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1735s"},{"start_seconds":1744,"text":"you don't said you know you don't actually end up going over the your total in-flight limit the amount that charlie is willing to trust coinbase here or a corn base is gonna trust charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1744s"},{"start_seconds":1751,"text":"but if so you're saying I don't need to trust everyone on the way right but if I'm yeah sending money through a Multi multi hope like like sequence of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1751s"},{"start_seconds":1761,"text":"connectors and and someone very late in the sequence doesn't send money yeah then effectively I just lost my my one dollar but I'm not","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1761s"},{"start_seconds":1769,"text":"closing my channel no it's what you haven't lost it because remember we're doing this with this hash time-locked agreements you haven't even updated your channel yet all you've done is entered","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1769s"},{"start_seconds":1778,"text":"into an agreement with Kraken and here it was like you know that immediate there's gonna be cracking who loses money in this case no one loses money","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1778s"},{"start_seconds":1786,"text":"actually if it does if it doesn't complete because I've locked up this Satoshi for 15 seconds and I say we say ok this one Satoshi's you know reserved","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1786s"},{"start_seconds":1794,"text":"for this particular payment and if I get this premature this hash I will pay the Satoshi from Charlie to Kraken Kraken","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1794s"},{"start_seconds":1801,"text":"says to Charlie I will pay this one Satoshi for a for a for this for this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1801s"},{"start_seconds":1809,"text":"preimage but they haven't actually made any payments yet so if coinbase doesn't complete it then they just time those out and it's very similar but wasn't that the way then it's another when it","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1809s"},{"start_seconds":1818,"text":"goes backwards right so charlie yeah closes so now we're in the way someone can choose not to send that one $1 now it's not one Satoshi that's right so so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1818s"},{"start_seconds":1826,"text":"who in that case someone does lose money right well it's Knossos right so let's think about what happens the actual protocol for doing this this completion","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1826s"},{"start_seconds":1834,"text":"here is that first coinbase reveals the preimage that they learned from charlie to kraken and then they update the payment channel so that this payment","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1834s"},{"start_seconds":1843,"text":"goes through and cornices balance is $1 higher so what could happen here is coinbase reveals that preimage and then crack and uses it to complete this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1843s"},{"start_seconds":1851,"text":"payment from an Alice or from you know from Charlie so Kraken gets this money but Kraken doesn't update this payment channel with coinbase","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1851s"},{"start_seconds":1858,"text":"the only person who's been cheated here is coinbase and going by steal face charlie coin miss has already paid charlie when that Mineta having happens","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1858s"},{"start_seconds":1866,"text":"so that's the key idea here is that the last game the recipient receives the money before the sender has even sent it and allowing each step your only","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1866s"},{"start_seconds":1875,"text":"you can only be cheated by your immediate county party and so Charlie can cheat coinbase corn-based can cheat crackin and cracking can cheat god the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1875s"},{"start_seconds":1884,"text":"way around right I think it's the other way around yep surrounds right Charlie reveals the preimage and then claim its yep so corn we can shoot Charlie kraggen can cheat","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1884s"},{"start_seconds":1892,"text":"coinbase and Charlie can cheat crackin by the way you could flip that so there's no there's no particular reason why it this protocol for updating this couldn't be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1892s"},{"start_seconds":1900,"text":"coinbase makes the payment and then Charlie provides the preimage so yeah so you can sort of have that have that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1900s"},{"start_seconds":1908,"text":"cheat go either way and so the question is do we know the the structure of the network or so when","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1908s"},{"start_seconds":1916,"text":"I'm again it's easier for me to think that this is Alice it's a separate entity right but let's say Alice wants to pick charlie and she happens to be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1916s"},{"start_seconds":1923,"text":"connected to Kraken that's you need to know how kraken is gonna send it to charlie or let's just say kraken if you have any path to Charlie please complete","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1923s"},{"start_seconds":1931,"text":"this payment in the lightly Network they use source routing which means that Alice tells Kraken exactly the path to go and I believe they have Onion Routing","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1931s"},{"start_seconds":1939,"text":"in fact which means that Alice can tell Kraken just the next path to take and give it blah blah unencrypted blob of data the coinbase will then be able to unencrypted to find out the next path to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1939s"},{"start_seconds":1948,"text":"go in inter ledger they use something more similar to what the how the Internet Protocol does routing where","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1948s"},{"start_seconds":1955,"text":"Alice just tells Kraken the final inter ledger I address the ILP address and the LP address oh my god I don't wanna get","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1955s"},{"start_seconds":1962,"text":"too much into the details about that but it's sort of like an IP address in that it includes in it some information about how to route the power that sort of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1962s"},{"start_seconds":1970,"text":"default way to route this payment um because it's sort of network you imagine destruction in this hierarchical way so just by telling Kraken this address Kraken then knows the best path to sort","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1970s"},{"start_seconds":1979,"text":"of continue that that packets path to that Charlie so yeah so we call in energy we call these packets because again that is very small economically","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1979s"},{"start_seconds":1988,"text":"relatively insignificant amounts of payments that are just made in you know quick succession I'm in order to complete this large payment so you asked","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1988s"},{"start_seconds":1997,"text":"about the size of payments again we can do one dollar if optimistically you say we could do you imagine we could do 10","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=1997s"},{"start_seconds":2004,"text":"updates so first of all it's not a limit on I want to say it's not a limit on you don't have to Allison have to wait for Charlie to receive this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2004s"},{"start_seconds":2012,"text":"payment it really is just Alice and crack and have to update their payment channel balance this frequently and if","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2012s"},{"start_seconds":2020,"text":"the amount that they have in flight ever goes above or above that amount then they have to they have to cancel um but","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2020s"},{"start_seconds":2027,"text":"yeah I guess I mean yeah I guess yeah so the the question here is you know if you can do like if you knew maybe we can do ten of these per second so that's like","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2027s"},{"start_seconds":2035,"text":"ten dollars a second even at this minimal one dollar quite realistically coinbase and cracking can have a higher in flight amount than that but but the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2035s"},{"start_seconds":2044,"text":"bottom I could be the slowest of all of them right um yes that's right but although if Alice has multiple paths she","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2044s"},{"start_seconds":2053,"text":"can send packets along all those paths they can all go through maybe this massive two part between crack and coinbase serve Alice's multiple parties with uncorrelated failure probabilities","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2053s"},{"start_seconds":2063,"text":"then she could conceivably just send packets across all those and he had like you know they could maybe even I'll find their way along this one sort of like a superhighway here but yeah I think it's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2063s"},{"start_seconds":2072,"text":"important so if I understand correctly importantly Charlie would only lose money","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2072s"},{"start_seconds":2078,"text":"specifically the the his neighbor that's right so it's all local trust it's all trust","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2078s"},{"start_seconds":2086,"text":"with your immediate counterparties you know Charlie's I have to trust anything about the system and this is what makes it I think superior to the lightening","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2086s"},{"start_seconds":2093,"text":"the ledger and forest hdl-c model where you can be grieved for a very long time here Alice can only be grieved for like 15 seconds of one satoshi which is","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2093s"},{"start_seconds":2101,"text":"nothing or one dollar which is very little I in the in the griefing model yes it doesn't necessarily mean that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2101s"},{"start_seconds":2108,"text":"Charlie can steal any money but the griefing of losing like the whole three Bitcoin for a for 72 hours potentially","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2108s"},{"start_seconds":2118,"text":"it's just like catastrophic compared to the cost of losing the dollar and it's it's not localized so coin bees didn't","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2118s"},{"start_seconds":2126,"text":"do anything wrong and Kraken is still grieved for this amount so that's the that's that's sort of the problem with","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2126s"},{"start_seconds":2133,"text":"that and I why I think it's much harder to solve the reputations and then something where here when you open your channel with something really has to be local reputation so yeah so I","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2133s"},{"start_seconds":2141,"text":"said you know I think kwame's and cracking the very well-known party's only one of the parties in the payment channel needs to be semi trusted by the other I said one of them can be","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2141s"},{"start_seconds":2148,"text":"anonymous sorry I thought I thought you're saying that the Sanders has to be it can be but it could be you could switch it so like you could say again","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2148s"},{"start_seconds":2155,"text":"that Alice makes the payment first and then crack and shows to the preimage you've just changed the protocol in that way or just along each of these steps","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2155s"},{"start_seconds":2162,"text":"you could have the burden of cheating fall on which other party you want so if you imagine like not for example very","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2162s"},{"start_seconds":2169,"text":"well-known party but a pseudonymous party even the one that has reputation or like a like a gray area you know","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2169s"},{"start_seconds":2177,"text":"something like people were willing to trust Silk Road with a lot of their money certainly for a short period of time I think like shape-shift is a good example here of a party where people are","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2177s"},{"start_seconds":2185,"text":"willing to take the counter part we're willing to take the counter party risk that shape-shift would seal it would steal some of their money when they sent it because it was only for a few seconds so there's no custody that's going on","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2185s"},{"start_seconds":2194,"text":"for a long time there and shape-shift has been around and has a lot of reputation that they would lose if they if they fail to complete these payments so each of these parties kind of thought","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2194s"},{"start_seconds":2202,"text":"of is like shape-shift when they were a team is payments because they're receiving one you know kind of payment in the pain another I'm taking fees and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2202s"},{"start_seconds":2210,"text":"so yeah so imagine again even in a totally pseudonymous Network even in a decentralized network it's quite possible people would be willing to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2210s"},{"start_seconds":2218,"text":"trust a relatively high amount to parties that are at least you know someone well known and have a good reputation but how do you say I want to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2218s"},{"start_seconds":2226,"text":"send a payment I never use them to ledger B so I need to find someone who will trust me even though I'm completely unknown ain't it that's not necessary","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2226s"},{"start_seconds":2234,"text":"true you could you could find somebody who you trust and open a channel with them and just give them the burden so one way to do would be you could do it","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2234s"},{"start_seconds":2241,"text":"even where you're receiving this but you just make an upfront deposit and say like you know if week when we close the channel I will lose this amount Alice will lose amount of crack and and then","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2241s"},{"start_seconds":2249,"text":"you can do these payments and crack and we'll know that they are the most you know the most they can lose in any by Alice aborting the protocol at any point","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2249s"},{"start_seconds":2256,"text":"is less than the deposit that Alice the Alice has with Kraken one more point that I want to make about that because I think it's interesting is over time so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2256s"},{"start_seconds":2265,"text":"when this when this initially happens maybe Alice makes a deposit that is that covers whatever she would she'd be able to steal and over time","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2265s"},{"start_seconds":2273,"text":"we can grow this limit because alice has been paying fees to Kraken over the lifetime of this channel and so if kraken is collecting just like you know","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2273s"},{"start_seconds":2281,"text":"5% fees and kraken wants to limit their loss to alice to being just like 50% of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2281s"},{"start_seconds":2288,"text":"the total lifetime value that kraken has has received from alice over the course of the channel that ori no matter what whether you set those percentages -","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2288s"},{"start_seconds":2296,"text":"that's actually exponential growth in what the size of the of the trust limit is because as each payment gets made","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2296s"},{"start_seconds":2304,"text":"alice is paying more fees to Kraken and Kraken is able to to raise the trust limit for the next payment because","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2304s"},{"start_seconds":2311,"text":"they've received some fees and thus if Alice cheats eventually you know Alice will still have paid cracking a lot over the lifetime in that relationship and so if Alice's maybe tries to make a very","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2311s"},{"start_seconds":2318,"text":"large payment over this network in so doing she could be just exponentially raising the value of her this the trust","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2318s"},{"start_seconds":2326,"text":"limit on her channel I say exponentially it is it's sort of a small exponent but it's a small or small base but over time you know again that that still can grow","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2326s"},{"start_seconds":2335,"text":"to potentially be a very large amount of money over the lifetime of this channel and so you're saying let's say the fee is 5% right if Kraken themselves take 5%","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2335s"},{"start_seconds":2343,"text":"T and we have T hopes that's yes so right so you wouldn't it wouldn't yeah it's true it wouldn't be a 5% fee I'm","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2343s"},{"start_seconds":2351,"text":"not sure with the fees right now in the Lightning Network our I feel like maybe it's 1% or less I guess yes probably I think it's less than 1% so it's true I think and I think the fee model and this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2351s"},{"start_seconds":2360,"text":"generally hasn't really been figured out for either in our ledger or or 4 or 4 litening III wonder actually if and a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2360s"},{"start_seconds":2368,"text":"lot of these cases it'll turn out to be a kind of loss leader where you'll provide routing for very cheap may be free and just monetize the user in other","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2368s"},{"start_seconds":2376,"text":"ways and you're gonna I think there's bad ways to do that where you're where you're monetizing their their data and there's other ways to do it where it's","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2376s"},{"start_seconds":2384,"text":"just you know like this is this a service that coinbase are crack and provide to their customers and they make money on like exchange fees or something else and when Alice sends to Charlie","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2384s"},{"start_seconds":2392,"text":"does she up Francis the the max fee that she's willing to pay and then it just distributed yeah so when Alice so within","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2392s"},{"start_seconds":2401,"text":"an inner Ledger I'm a little more familiar with her an alleged does this a packet is very simple it just has I believe the destination address which includes in it","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2401s"},{"start_seconds":2409,"text":"the this sort of hierarchical ILP address which also covers I believe what currency Charlie wants to receive it and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2409s"},{"start_seconds":2417,"text":"so if Charlie has multiple different currencies that can receive things and in different channels that's covered by","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2417s"},{"start_seconds":2422,"text":"this address and I believe the amount","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2422s"},{"start_seconds":2429,"text":"and what this amount is is actually the amount that's being sent and so what happens is as this amount so if this is","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2429s"},{"start_seconds":2437,"text":"this will just be like so Alice will send this and it'll be you know one dollar crack and take their fee out and now that packet this pack of a Centon","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2437s"},{"start_seconds":2445,"text":"says like ninety nine cents and then here the pack at the base end on sounds like ninety eight cents and yes okay","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2445s"},{"start_seconds":2454,"text":"maybe I'm worried about misrepresenting this but the basic it isn't Charlie receives this and if this is less money than they expect it to receive in this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2454s"},{"start_seconds":2461,"text":"payment they can just cancel it if they if they need to but the idea is that you know they they take into account okay some fees got lost along the way got","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2461s"},{"start_seconds":2468,"text":"taken about taking out along the way and they say okay is this a reasonable amount to receive based on what someone Alice sent so they can and that all is handle the higher levels of the protocol","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2468s"},{"start_seconds":2476,"text":"sweitzer to the basis packet format I believe it's just a LP address and the destination IP address not the source","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2476s"},{"start_seconds":2483,"text":"address and the amount that is in this particular hop oh yeah you can look at if you look at in alleged org you can","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2483s"},{"start_seconds":2491,"text":"see the the latest spec for ILP v4 which tells a little more about things like packet format and so for example it's a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2491s"},{"start_seconds":2499,"text":"somewhere in the way we have someone who converts it to like US dollars they would still exchange some sort of hdl-c","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2499s"},{"start_seconds":2508,"text":"between them that's right so the because the HLC is the HDL a the hash time mark agreement is happening at a higher layer than the payment layer on the payments","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2508s"},{"start_seconds":2517,"text":"level it's it really is just simple payments back and forth between coinbase and charlie and so you could do this with anything you could do it with with","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2517s"},{"start_seconds":2526,"text":"dollars if you may like to do with wire transfers although they may not be highlighted a low latency enough you could do it with tossing pennies across the Grand Canyon and anything that","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2526s"},{"start_seconds":2534,"text":"supports making small relatively small payments mount variants relatively quickly can support this so one thing notice that this protocol is not","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2534s"},{"start_seconds":2542,"text":"particularly good at least in my opinion if the channel if his payment relationship is something that's just settled on chain so this is was something that it was sort of originally","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2542s"},{"start_seconds":2550,"text":"part of the vision manner ledger I think it's it's still it's still something that they they talk about in support I think they they have maybe slightly different views on it than me but the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2550s"},{"start_seconds":2557,"text":"idea is Alice you know we could we could have these relationships be that they make these payments you know this","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2557s"},{"start_seconds":2566,"text":"payment relation is just we're on the same block chain right so I guess coinbase and Charlie are on the same block chain and coinbase is making just Bitcoin payments on the ledger to","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2566s"},{"start_seconds":2574,"text":"Charlie and Kraken is making you know like like like coin payments on the ledger maybe the coin base and this is so this is not as good a protocol for","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2574s"},{"start_seconds":2583,"text":"that because the cost of doing and latency of doing an on chain payment is much higher so in this case you're saying like each link will be on chain","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2583s"},{"start_seconds":2591,"text":"right so if each link is settling on chain rather than just by sending signed messages to each other in a payment channel which is practically free if they're settling on chain it's sort of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2591s"},{"start_seconds":2600,"text":"hard to do these many tiny payments and that's where maybe like the idea of using it it she'll see on chain gets more attractive my opinion though is if","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2600s"},{"start_seconds":2609,"text":"you if you've got us if you're using like instead of using HDL sees on chain you can just open a payment channel on chain and do the micro payments protocol over that so I really don't see much of","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2609s"},{"start_seconds":2618,"text":"a use actually for these ledger and for say PLC's I think the micro payments protocols is superior and so feasibly","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2618s"},{"start_seconds":2625,"text":"again let's say that that at some point we're converting it to fiat and then from here let's say it's a venmo payments right so these two entities","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2625s"},{"start_seconds":2633,"text":"they are unlikely to be sending like one dollar to each other over any sort of because that also costs money right so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2633s"},{"start_seconds":2641,"text":"so physical so the expectation is that they will have like a significantly higher limit and they will just accumulate yeah and then settle it within like 10 days right yeah and you","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2641s"},{"start_seconds":2650,"text":"know in the settlement we're and what doesn't have the event mode if this is coinbase you can imagine this settlement just being coinbase updating Charlie's USD balance which is already a trust","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2650s"},{"start_seconds":2658,"text":"with the very high exactly so because Charlie because Charlie's willing to say like I believe that coinbase you know I can I can hold this credit relationship essentially and this was","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2658s"},{"start_seconds":2667,"text":"one of the what I think in an alleged they called the Enlightenment at one point was realizing it was originally a protocol for these cross ledger atomic transactions","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2667s"},{"start_seconds":2674,"text":"where these entities like coinbase that were Ledger's where somebody would be or Bitcoin into the Bitcoin ledger was treated as like this is a ledger and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2674s"},{"start_seconds":2681,"text":"with settling on that the the realization is that you know coinbase here maybe they're running a ledger of venimos running a ledger but in some","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2681s"},{"start_seconds":2689,"text":"sense they are just another connector it's it's a credit relationship that Charlie has like with venmo so again like this isn't because memos in the","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2689s"},{"start_seconds":2698,"text":"cell really exactly participate in the protocol but you can kind of imagine this being a venmo being another hop on this where alice is made vows makes a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2698s"},{"start_seconds":2707,"text":"payment to Kraken by updating the venmo balances and again like that's really just a payments of rippling through another semi trusted counterparty they're actually a very trusted","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2707s"},{"start_seconds":2714,"text":"counterparty in that case yeah interesting back cool give you a cover everything or these something else that is yes so I mean I","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2714s"},{"start_seconds":2722,"text":"think that's that's most of what I know about I hope you talk about IOP I'm very focused on like this is the this hdl-c","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2722s"},{"start_seconds":2729,"text":"issue and and why I think so if you wanna learn more about that you can see my my talk on at the Stanford blockchain","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2729s"},{"start_seconds":2736,"text":"conference if she's considered harmful and that's online the video and slides from that are online yeah I mean I if that's I think that's basically inter","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2736s"},{"start_seconds":2745,"text":"legend again I think it's it's a protocol where potentially could it could be a prima Channel protocol across","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2745s"},{"start_seconds":2751,"text":"every blockchain network it's a channel network that could go across every budget ledger allowing payments from","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2751s"},{"start_seconds":2759,"text":"from anyone you know who has any any cryptocurrency to anyone else without them having to worry about what their what their the currency that they're","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2759s"},{"start_seconds":2767,"text":"sending being the same as the currency to the receiving and yeah I mean I think I think it has it really does at the potential to sort of connect at least on","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2767s"},{"start_seconds":2775,"text":"a payments layer on payments layer connect a lot of different BOC chains and then the ledger is live right inner ledger is live you have like good idea","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2775s"},{"start_seconds":2784,"text":"of like how many are like big big links we have such as like crack into coinbase it's it's a good question I think so","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2784s"},{"start_seconds":2791,"text":"there isn't yeah there aren't major hubs on it it's it's I think it's not it's not as developed right now I believe as the as a lightning Network coil is is","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2791s"},{"start_seconds":2799,"text":"has a company that that was founded by Stephane Thomas who's one of the inventors of the inner logic protocol","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2799s"},{"start_seconds":2806,"text":"along with Evans was the other inventor so Stephane Thomas Tobin started this company coil which uses in your ledger for web","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2806s"},{"start_seconds":2815,"text":"payments for monetizing content I'm a sort of butchering the description of it there but you can check out coil as a project there using your ledger live","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2815s"},{"start_seconds":2824,"text":"right now I think it is it is live on on ripple right now there is a beta of a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2824s"},{"start_seconds":2830,"text":"convey of plugin that allows you to make payments to the Lightning Network where somebody is receiving payments on lightning again I think it's still very","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2830s"},{"start_seconds":2840,"text":"early on on actually being deployed in production and so what would it mean in the context of winter Ledger to be live on people so there you can open a","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2840s"},{"start_seconds":2849,"text":"connection you can peer with an inner ledger connector by opening a ripple payment channel with them an extra payment channel with them and making","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2849s"},{"start_seconds":2857,"text":"payments to them over that make sense cool awesome well that was great overview and let's wrap up here and","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2857s"},{"start_seconds":2866,"text":"thanks for watching thanks for having me on","url":"https://www.youtube.com/watch?v=VJgPuylMPxA&t=2866s"}],"youtube_url":"https://youtube.com/watch?v=VJgPuylMPxA","url":"https://near-pedia.xyz/videos/VJgPuylMPxA"}