Issue #877: Counter-party risk, trust minimization, and the Lightning Network
Every bitcoin base layer involves three participants.
Here's a great thread from our friend Ryan Gentry in which he defines the counterparties that exist at Bitcoin's protocol level and on the Lightning Network that would be centralized in other systems, miners and routing nodes respectively, how these counterparties are trustless, and how Bitcoin's layered approach to introducing counterparty risk is preferable to the way counterparty risk has been introduced in other cryptocurrency projects. Mainly, DeFi on Ethereum. Definitely give the whole thread a peep when you get a chance.
Every #Bitcoin base layer tx involves 3 participants:
— Ryan Gentry (@RyanTheGentry) November 30, 2020
1) sender
2) receiver
3) miners
The miners are therefore the "3rd party", and if they were trusted, they would be a security hole.
Thankfully, minimizing miner counterparty risk has a huge part of #Bitcoin protocol design.
This particular aspect of Bitcoin's modular approach to scaling - limiting trusted 3rd parties and counterparty risk at every - is something that one needs to grasp to fully understand the pace of development and adoption at each layer. Approaching development with this mindset ensures that the network can be sufficiently decentralized and robust against State attacks and centralizing forces from large players. By limiting the amount of control counterparties have throughout the stack and allowing individuals to interact in a peer-to-peer fashion without interference, this development approach affords Bitcoin a chance at achieving its ultimate goal.
Slow and steady wins this particular race and Bitcoin seems to have an insurmountable lead when viewing success through this lens.
Final thought...
Flight number two with a toddler is about to commence. Wish me luck.
