BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Tons of things go on in-between your CC transactions before its actually settled even if it appears to be instant and final to the end user.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?
Spoken like someone who doesn't know the steps involved in opening a bank account (hint: many people can't), accepting online payments using a bank account (hint: hope you have deep pockets), using a bank for sending interbank/international payments (hint: might need to collect a page worth of information from your recipient. second hint: their bank might refuse to receive the payment), etc. Bonus steps: do all the above programmatically using an API (hint: you might have a billion-dollar startup in your hands).
Now do all the above using Bitcoin/lightning network. You'll be done in 15 mins.
That question is highly dependent on jurisdiction. The prevailing opinion right now is that Lightning nodes are not subject to KYC regulations in the US.
No, you are not supposed to. KYC is a legal requirement for money transmitters[0]. It does not apply to Bitcoin users.
[0] Money transmission is the act of receiving currency from one party and transferring it to another party. Basically, middlemen in a transaction (e.g. banks).
If you are processing financial transactions (including something of “value that substitutes for currency”) between other people at their direction, you are a money transmitter. The whole point of both Bitcoin is decentralizing this function from banks to a network of miners, and a similar thing is done in Lightning with its nodes.
That's correct. In the case of Bitcoin, the thing that most closely resembles a "money transmitter" are miners but FinCEN ruled that they are not[0]. A sensible decision because otherwise, Bitcoin would have effectively been banned from the United States (or Bitcoin miners, at least).
Ignoring the fact it isn't tax evasion - just because it's against the law, doesn't mean it's unethical. Further, obeying laws can be (and often is) unethical. Not everything is on the level of requiring people to turn in jews, but there's plenty of room to argue that companies that are ill-equipped to protect your personal data should not be allowed, much less required, to collect your identifying information.
> You can set up a stripe account to accept payments very easily.
Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categories of businesses. Multiply that by 10 if you are not a citizen/resident. I also don't believe Stripe allows sending money. Furthermore, receiving payments on Stripe effectively takes a week due to the waiting period. Finally, if Stripe decides to freeze or terminate your account, you are f'ed.
Stripe is not worldwide, but works pretty much everywhere in EU at least. You can open a company in Estonia in a couple hours (once you have a digital signature key, which they offer to everybody now, not just Estonian citizens [1]). Getting a bank account might be a bit trickier, but still doable (hint: Wise [2], while not a bank, might be an easier option).
That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-)
A business or business bank account isn’t needed, so it doesn’t matter. It’s the same with many payment providers. I linked to references for Stripe on this here: https://news.ycombinator.com/edit?id=32102762
PayPal etc don’t require any business stuff. Being a traditional bank is unimportant for getting paid for online stuff.
There’s a lot of ways to get access to something that qualifies as a bank account. For example, Cash App got big because it provides what a bank account does and qualifies as one, even if it is not a traditional bank at all.
Once multiple apps are available worldwide as well as multiple ways to have a bank account or a bank account equivalent, why would cryptocurrency be the future?
Multiple apps are already available for the majority of the population. The west, India, and China alone are close to half the world population.
Not sure about the U.S., but in at least in Russia and Estonia sole proprietorship is a form of business – in a sense that you have to register it, do annual reports (or more often), calculate taxes etc.
In Russia, it is a bit easier than running an LLC, so many entrepreneurs choose to start as an SP. In Estonia I've seen zero sole proprietors – the burden is the same, but LLC taxes are more favourable (0% income tax until you pay out dividiends) and limited liability (which you don't get as an SP).
I've done some research (which in this case is a fancy way of saying “opened up Wikipedia” [1]) and looks like in the U.S. you can just run a sole proprietorship without filing anything. Neat!
This is confusing. Are people legally allowed to get a lot of income from Bitcoin without a SP or more in these countries? Will Stripe automatically deny people without a sole proprietorship in these countries? What happens if people are able to get on Stripe without an SP in these countries? I assume no one is going to jail over this.
I don’t expect you to know the answers to these questions, but the focus was on the difference between Bitcoin and Stripe/PayPal, etc. The thing I replied to specifically said there was an onus of several hundred dollars which I was disputing as well and which is not correct for the US.
> Are people legally allowed to get a lot of income
In Russia, they aren't if it's systematic [1] (and if you get caught, which is usually not a concern for many unregistered one-man businesses). Stripe isn't available in Russia but most local payment gateways check your paperwork thoroughly, so if you're not a registered SP, card payments are mostly off the limits and the main payment method is card to card transfer there. (There's a few options, but those aren't widely popular because who cares)
I don't really have any experience with SPs in Estonia, but I think it's pretty similar. Let me try and sign up for Stripe and see what happens :-)
Update: I've just signed up as a “sole proprietor” and charged myself 1 EUR. I've only had to fill in my name and home address. Not even I had to submit any documents, perhaps because I already have an LLC registered with Stripe. Still not sure if it's legal, but from the technical standpoint yeah, you probably can use Stripe without any paperwork here in Europe.
That creates opprotunities for other Level 1 chains. Solana for example charges $0.00025 per transaction (however this is still denominated in the SOL currency so it will fluctuate). Hedera network is $0.0001 per transaction and is fixed in USD.
They have other problems. Solana's entire supply is said to be 5% of the current world population. I'll let you do the math on the rich/poor inequality this entails.
Each problem that's dismissed out of hand by crypto proponents is compounded by the endless streams of bigger and worse problems.
I'm very confused by both of your points. The supply of a cryptocurrency is equal to a person? A crypto token is not a person so I'm guessing you missed a few words there?
How is building a competing chain to more efficiently solve a problem (high transaction fees) in a competitive market in any way "dismissing" that problem? That seems the exact opposite of dismissing a problem.
Do those new solutions come with new problems? Sure, that's true of any technology. Dynamo-based databases solved high availability and network partitionability of data but come with several trade-offs. That doesn't mean you shouldn't use Cassandra for anything.
That said, Solana is not the hill I'm willing to die on and it's hot garbage. Hedera seems good though.
Same. Lightning gets around them by bunching a bunch of transactions into one bitcoin transaction. Which is exactly what people have been doing with card processing for ages now.
And of course there other payment systems around the world that don't rely on card transactions.
And don't forget that the entire lightning thing is dependent on banks aka nodes with large sums of money to provide liquidity in the system.
Visa and MC could be L5 networks for Bitcoin, why not? Lightning is lower level and more decentralized, but it doesn't solve issues like dispute arbitration which credit cards do.
Settlement is among the least interesting problems that Visa and Mastercard solve for merchants and customers.
Yes, being able to settle across currencies pretty efficiently is nice, but the real value is just what you mention: Dispute arbitration and managing liability in case of fraud.
The incentive structure of Lightning to me seems to heavily incentivize the formation of a few centralized nodes affiliated with wallet providers – a structure which would forfeit many, if not all, of these properties.
Imagine a world where the web is controlled by a single entity, say Facebook. They get to decide who is allowed to create a website. They get to decide how much it cost. If they're not happy with the site's content, they can take it offline. Do you believe that would be a better world to live in?
- trustless: I trust the companies I use, it works
That's because there's usually no alternative. But when there's a trustless alternative, you may find that it is less risky or costly. Many people chose e2e encrypted messengers because they don't trust a third party with their private messages.
- censure resistance: OK, fringe case for most
"[...] Then they came for me—and there was no one left to speak for me."
It may be fringe but it's a massive issue for those who are censored. It's also not that uncommon. It is estimated that there are over 1 billion unbanked people worldwide. Also, try "PayPal horror stories" on Google.
- pseudonymous: why do I want anyone to be able to see my transaction history?
What parent meant is you can transact with people without knowing their real identity. I could send you a BTC tip on HN without knowing your name or address. Regarding your concern about privacy, no one can really determine your transaction history by looking at the blockchain. It's possible to do some guessing but all you really see are transactions going from opaque addresses to other opaque addresses with no attached identity information. Also, this can be further solved with CoinJoin[0].
> you may find that it is less risky or costly. Many people chose e2e encrypted messengers because they don't trust a third party with their private messages
Private messages are not money. Example: you ordered some goods and those arrived in bad shape. What's your recourse in the trustless world?
What do you mean by that? I don't see why there couldn't be a centralized service offering payment dispute arbitration on top of Bitcoin (this is what I meant by building "trustful" systems being built on top of trustless foundations).
> why there couldn't be a centralized service offering payment dispute arbitration on top of Bitcoin
What exactly does Bitcoin provide in this case?
> this is what I meant by building "trustful" systems being built on top of trustless foundations
So, a service that exists outside bitcoin, has a trust system built entirely outside bitcoin and only doing something with bitcoin because reasons... is "building trustful systems on top of trustless systems".
I don't think you know what "building on top" means.
There are many centralized services that do dispute arbitration on top of USD. Those systems are built entirely outside of USD. PayPal for example doesn't have an account at the Federal reserve nor does it handle physical cash. They are effectively "off-chain" payment systems for USD.
So I guess your question is, what are the advantages of BTC over a fiat currency like USD. The answer is two folds:
1) BTC has an open network (the Bitcoin blockchain) allowing users to exit payment systems for the purpose of self-custody or for interconnecting with other payment systems. There's no equivalent system with fiat. Self-custody of USD literally requires transporting and storing pieces of paper. You also can't directly transfer USD from PayPal to say, CashApp.
2) BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
In addition to the above, Bitcoin enables the creation of payment systems that are more tightly built on top of it, like the Lightning network, which preserves many of the properties of Bitcoin (e.g. trustless). You could also build a dispute arbitration system where the arbiter just needs to be semi-trusted (e.g. there are schemes that can cryptographically prevent the arbiter from stealing escrowed funds, etc.).
> So I guess your question is, what are the advantages of BTC over a fiat currency like USD.
No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
> BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
> You could also build a dispute
Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I was asking about fiat because many of your criticisms equally apply to fiat.
> No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
I answered that multiple times already.
> Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
That's, unfortunately, the case for almost anything of value.
> Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I'm not sure I would consider myself a crypto proponent, I was trying my best to answer your questions as objectively as possible.
But it seems you are very emotionally invested in this for some reason... Did you have a bad experience with crypto?
> I was asking about fiat because many of your criticisms equally apply to fiat.
They... don't.
> I answered that multiple times already.
You haven't. All you're saying "o let's have this centralised trusted entity that does something with blockchain because blockchain".
> That's, unfortunately, the case for almost anything of value.
If bitcoin is a currency as you would have us believe, then this is not what a currency should be.
> But it seems you are very emotionally invested in this for some reason...
Ah yes. There are only a few ways crypto discussions go: problems are dismissed out of hand and/or "have you had bad experience with crypto" (often in the form "you're just sad that you didn't get in on it early").
I didn't dismiss anything out of hand, I replied to all your questions as objectively as possible, but you just pretend that I didn't. I also would not have you believe anything, I am not trying to sell you anything here. I just answered your questions because I believed they were genuine questions. I am now starting to question that...
My question to you: what is your alternative? USD has many of the problems you mentioned and more. Transactions happen "off-chain", monetary inflation largely benefits the wealthy, etc.
Pretending you’re not a crypto proponent is funny while trying to imply the other person isn’t genuine.
They already said fiat doesn’t have close to the same issues as crypto. The monetary inflation benefits to the wealthy are nowhere near the same for Bitcoin or any crypto. It’s a fraction of how bad Bitcoin is. They also basically said that multiple times too.
They have answered the rest too. Being on chain isn’t an issue for fiat because they aren’t trying to be on chain. They aren’t trying to shoehorn in blockchain.
Now they have turned to acting like you aren’t genuine in their next reply, haha. When they actually tried to pull a “I don’t know if I’m a crypto proponent”
> The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
> Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
Right, which is why we have regulations on reserve requirements for banks, as well as things like FDIC insurance that guarantees your money in a bank account.
>The root problem with conventional currency is all the trust that's required to make it work.
Surely this is a joke? Most currencies enjoy a high degree of trust until they collapse due to structural reasons that have nothing to do with trust whatsoever.
The euro zone and the dollar show that there is practically no shortage of trust whatsoever.
Seriously, this dude is supposed to liberate us from the evils of money?
How did it come to this? The root problem with currency is the zero lower bound of interest and liquidity preference which both combined result in permanently positive interest rates. When you refuse to pay interest, the economy stagnates and it can result in mass unemployment. This has nothing to do with trust. The Bitcoin economy is plagued with mass unemployment. The insanity of unemployment is a consequence of the insanity of non neutral money.
Alternatively, you can pay interest, however this means you must perpetually borrow more money, e.g. Keynesian fiscal stimulus, notice that the insanity originates in money itself, not in the political response, the political response must be at least as insane as the money system, no less and it collapses. Now, there is a third way, QE aka not bothering to ask people whether they want to lend their money out, however, due to liquidity preference, the additionally created money will stagnate somewhere, meaning you can't ever stop QE. Again, in this case the insanity is a structural property of the currency, the monetary intervention has to be as insane as the money system and no less.
The apparent untrustworthiness of politicians is the result of the insanity of money, not the other way around. If money worked properly, you wouldn't need politicians to mess with it, you wouldn't even consider trust to be the problem because the amount needed would be so miniscule as to never matter in the grand scheme of things.
It is really strange to me, that people notice a constant problem with money and yet they still come up with the same conclusion "you're holding it wrong", what if it is impossible to hold it properly? What if permanent money is irreparably broken and forces its own debasement and all the other problems?
What's your definition of L2 that include centralised entities?
There is no central authority in LN. There may be "hubs" which are more or less important, but that's not centralisation because there are several of them, it can also work without them, and also they can't steal your money.
Would you say that email is centralised because there area few big server (Gmail, Microsoft)? But even if it may more convenient to use one of the big server, you still have the choice not to use them.
With LN you can have a private channel with your friend and do unlimited number of transactions with (literally!) 0 fees. Thanks to recent developments it's also much easier (and cheaper) to then swap those BTC to onchain - sometimes even cheaper than a comparable single onchain BTC transactions.
I assume the implication is that doing off-chain transactions defeats the purpose of Bitcoin? It does not.
Did you know that fiat doesn't even have a blockchain to withdraw to when you want to exit or switch payment network/provider?[0] Did you know that with fiat, the money supply can be changed arbitrarily?
Those are problems that Bitcoin still solves when you use an off-chain transaction network (at least for the many people who believe those are problems worth solving). Also, it's worth noting that the Lightning network is hardly centralized. It's a bit more centralized than Bitcoin but we're light years away from say, Paypal.
[0] The closest that comes to this is SWIFT, but it's not an open network. Even large payment systems like Paypal aren't connected to it. It's also not censorship resistant and you can't use it p2p.
That's almost the opposite of what I said. My whole point was that it's possible to use non-blockchain payment systems (e.g. Lightning) to transact in Bitcoin while still reaping many of its benefits. I guess if you wanted to sarcastically quote me, you should have gone with "Bitcoin is better because fiat currencies don’t even have a blockchain." (a statement I agree with).
Why is blockchain better than a centralized database for the end user? What specific advantages does it offer to me when I go to 7-11 and buy a Slurpee with my watch, which is how I do it now?
Third attempt: it's not! The Bitcoin blockchain is not suitable for day-to-day transactions like buying a Slurpee. You should use your watch and a centralized database to do "offchain" BTC transactions instead[0]. The real question is: why is BTC better than fiat (e.g. USD)? This is what I attempted to answer in my topmost comment.
[0] Or better, use the lightning network. As an end user, its benefit over more centralized alternatives like Paypal or credit cards is that it's an open network. You don't have to ask permission and open an account to start using it. Also, low fees. Also, your account can't be frozen or confiscated. Also, it works everywhere in the world and there are no extra fees for international payments. Also, you can do peer-to-peer transactions.
I am asking why I would open an account in the first place when the current system works great for me. I am sorry you find it so frustrating that I would like to know why I should switch to using Lightning. The only answer seems to be “because blockchain,” and that explains exactly nothing.
Ah, I see. I didn't mean that you could literally buy a Slurpee with BTC on your watch today. It was just a hypothetical example for how it could work in the future.
There aren't many use cases for the "average Joe" for now. It's still the early days and not many merchants support it. So if you aren't particularly interested in the technology/philosophy nor have a use case for it, there's probably no compelling reason for you to use it. Right now, it is of most utility to unbanked/underbanked people, for remittances, and p2p payments. It is also used for payments by merchants but only in some niches (e.g. online porn, gambling, cannabis industry, etc.).
Of course, it's also appealing to speculators who believe in its long-term potential. They are probably the largest class of Bitcoin holders, but Lightning doesn't really target that use case.
Yeah, a metaphorical "early days". What I meant was that adoption level is still relatively low and there are still many infrastructure components and services that are lacking or incomplete.
Yes, the lightning network is built on top of Bitcoin and depends on it but the transactions happen "off-chain". I was just making a generic claim about payment processors that enable "off-chain" BTC transactions, from the decentralized ones like Lightning to the completely centralized ones like Paypal.
>Did you know that with fiat, the money supply can be changed arbitrarily?
Let me tell you a little story. A boy creates wealth, the government creates money in proportion to the wealth. The alternative is to succumb to incumbents, the wealthy, the aristocracy and ask them for permission whether you are allowed to create the wealth or not.
For the last 8-10 years it's been the same thing. Bitcoiners believe you can't sacrifice its finality, but can scale at a different layer. Other "blockchain" people believe something different.
It is a weird line in the sand to me that something must either happen on a blockchain or not be the right solution, pretty much regardless of whether that blockchain's finality guarantees are worse if understood at all.
That’s not any normal definition of sharing. In the most flattering portrayal this is the equivalent of store accounts where you can make periodic large deposits to reduce transaction fees. Personally it seems more like an admission that the first decade of saying Bitcoin was suitable for use as a currency was in fact just as obviously wrong as critics said.
for one, the base currency in question is uncensorable. e.g. I for one find it detestable that fruits and nuts sellers in Iran suffer immensely because of US sanctions. The idea that innocent citizens are being made to suffer for their governments policy (especially in more authoritarian countries) is gross. I see it akin to punishing a child for their parents behavior.
It was illegal to protect jews from being enslaved and murdered not too long ago. Evading the law is exactly why it's important and it is the ethically superior position to support tools that enable people to bypass unethical laws.
if you sanction Iran, limiting their fruit sellers, you have to have means to track the trades in order to enforce those sanctions - lightening network is effectively untraceable at the moment (and tools built on top of bitcoin can make tracing payments provably impossible) which means the sanctions can't be easily enforced - no country is going to spend resources proving their businesses aren't doing fruit trades with sanctioned countries, so if you can't trace the money, you're going to have an incredibly hard time enforcing sanctions - which I would suggest means Iranian fruit sellers aren't going to be nearly as limited in their trade. Iran certainly isn't going to limit them and the sanctioning country (US in this example) isn't going to have the resources to audit every single import to every other country.
I don't think it's as hard as you think to track ships. They're all tracked already
Government will adapt and just ban shipping vessels from visiting sanctioned countries, or create a vast make work agency to inspect cargo on ships that visited sanctioned countries.
and who is going to track those ships? The sanctioning country doesn't have the jurisdiction and likely doesn't have the resources to logistically stop it. The countries benefiting from the trade (both sanctioned and allied nations) have every incentive to allow the trade to happen if it can happen without detection - so who is going to stop it?
The physical fruits and nuts still have to be smuggled out of Iran and into a country supporting the sanctions for this to make sense. And the physical smuggling seems way more difficult than figuring out the payments.
They have to be smuggled INTO another country. One that has applied sanctions and doesn’t want Iran’s fruits and nuts. Violating import laws especially for agricultural products is a big deal.
no country _wants_ to reduce trade - they simply accept that sanctions are necessary. Reducing trade necessarily hurts both countries, and there aren't likely to be any functioning developed countries that want to act against their own interests. As such, it's not at all hard to imagine the receivers having a hard time enforcing sanctions. After all, with all the problems a country has - why would they dedicate time and resources to purposefully hurt their own?
If the countries wanted to accept the fruits and nuts, they wouldn’t need bitcoin for payments. They would do the usual trade processes. They have outlawed imports from Iran and bitcoin doesn’t change the fact that circumventing agricultural import laws is a massive crime.
incorrect, those imports paid in fiat are traceable - that's how we enforce sanctions today - we fine companies like banks for violating sanctions all the time - you know how they're caught? Financial audits, every time.
Companies use proxy countries to bypass sanctions all the time. You know how they're caught? Financial audits.
> change the fact that circumventing agricultural import laws is a massive crime
I'm not sure how people so easily forget that it was a massive crime to protect jews from being murdered. That same thing still happens today with various minority groups around the world.
If you pay attention to non-developed world problems, you become painfully aware that bypassing laws that are a "massive crime" is extremely important for solving some of the worst problems in humanity today.
Humans make mistakes. Systems that intend to serve humans have to accommodate that flaw in order to be viable. Fixing mistakes means rewriting history. That means censorship. And so censorship isn't a bad thing. It's actually a core requirement for any system designed for broad usage.
Flawed logic, censorship can be a mistake just like anything else. Adding the ability to fix mistakes with censorship also adds the ability to make mistakes with censorship. Censorship, however is centralized power and therefore trades fixing small scale mistakes with the centralized power to make big mistakes. This is why western society and individual liberties have been so dominant in modern history. Authoritarian societies have fallen one after another, further evidence that it is incorrect to treat centralization as something other than a bad tradeoff.
limiting peoples ability to trade isn't justice anymore than limiting their ability to speak. Sure you could conveniently stop many crimes if you could just monitor and censor everyone's ability to speak - but I think the consequences are quite obvious.
There isn't a crime in the world that can't be stopped in more appropriate ways than giving an authority presence the ability to stop me or anyone else from spending resources that they own. Nowhere on the list of top crimes against humanity have there been situations where it would've been better if centralized powers had more authority.
Authority is a fundamental and underlying requirement of essentially all aspects of civil society, including but not limited to justice. There is actually no way to define even the concept of crime without an appeal to a supervisory authority.
Authority, and specifically "centralized" authority, is a necessary component of any system that can effectively serve more than a nominal quantity of human beings.
> Authority, and specifically "centralized" authority, is a necessary component of any system that can effectively serve more than a nominal quantity of human beings.
It would seem bitcoin, a global, massively successful cryptocurrency with no centralized authority, serving as a sovereign nations national currency, serving markets all over the world to the order of trillions of dollars would be one of many direct contradictions to your claim.
Neither the fact that the failed state of Venezuela has made some moves towards Bitcoin, nor the amount of nonproductive/wash volume that crypto does per day or whatever, serve as counterpoints to my claim.
Currency had an actual definition, expressed in terms of other actual things. It's not just whatever you say it is, or whatever someone might use to perform an economic activity.
Additionally, Bitcoin is plainly not "massive successful". It is at best "marginally utilized".
The internet does not scale in layers. This sounds more like Bitcoin is not scalable, so we're introducing abstractions to work around its limitations.
Scaling is not a goal of the OSI model, and TCP/IP predates (and does not adhere to) the OSI model anyway. For insight into how and why this came about, I recommend Padlipsky's "The Elements of Networking Style."
Those layers are different levels of abstraction that actually sit on top of one another, but encompass the lower layers.
e.g. HTTP, SMTP, POP3, etc., all sit on top of TCP — that is to say: all of those protocols actually use TCP, they are TCP, they are all made from TCP packets/communications.
TCP sits on top of IP, that is to say: all TCP packets are in fact IP packets.
They are layers of abstraction, and each layer of abstraction is not just 'related' to the lower layer(s), or 'referencing' the lower layer(s) once in a while, each of those upper layers is in fact an instance of the lower layer.
At the bottom, it's all IP. The higher layers aren't substitutes for IP that get turned into IP when necessary, they are all IP.
If your comparison was valid, then protocols such as e.g. HTTP wouldn't actually be valid TCP packets and valid IP packets, instead HTTP would be completely separate to the lower levels it is built upon, and at some point it would be converted back and forth to the other protocols. Which is not what happens.
If your comparison was valid, then all L2 cryptotoken transactions would actually simultaneously /be/ blockchain transactions — and not just written back to it periodically.
Edit:
Here's an analogy: it's like IP protocol is letters, those letters can be grouped into words, which is the next layer up, e.g. TCP, UDP, etc., and those words can be grouped into sentences, which are like the higher level protocols, such as HTTP, SMTP, POP3, etc.
Granted, the OSI model also includes lower levels, and I'm only discussing three higher layers, but the principle is the same. The higher levels /encompass/ the lower ones, they are actually built /with/ or /from/ the lower-level components. This isn't how Lighting works. It's a separate distinct network to the main blockchain, and it then writes back to blockchain.
To be quite frank, based upon the fact you think the layers of OSI and TCP/IP are to help it scale, you clearly appear to have little (or no) understanding as to how that actually works — so your direct comparison to LN scaling here isn't just weak, it's meaningless and just plain factually wrong. And this is particularly obvious to folk who /do/ actually understand both.
— Good day to you, your bad logic and your poor argument.
"A really vicious critique of the misguided ISO networking standards attempt, written when the 'OSI model' was trendy & lots of people were babbling about the sacred seven layers."
"The Book": The Elements of Networking Style: And Other Essays & Animadversions of the Art of Intercomputer Networking, by M. A. Padlipsky (1985)
The World's Only Know Constructively Snotty Computer Science Book: historically, its polemics for TCP/IP and against the international standardsmongers' "OSI" helped the Internet happen; currently, its principles of technoaesthetic criticism are still eminently applicable to the States of most (probably all) technical Arts-all this and Cover Cartoons, too but it's not for those who can't deal with real sentences.
Standards: Threat or Menace, p. 193
A final preliminary: Because ISORM is more widely touted than TCP/IP, and hence the clearer present danger, it seems only fair that it should be the target of the nastier of the questions. This is in the spirit of our title, for in my humble but dogmatic opinion even a good proposed Standard is a prima facie threat to further advance in the state of the art, but a sufficiently flawed standard is a menace even to maintaining the art in its present state, so if the ISORM school is wrong and isn't exposed the consequences could be extremely unfortunate. At least, the threat / menace paradigm applies, I submit in all seriousness, to protocol standards; that is, I wouldn't think of being gratuitously snotty to the developers of physical standards -- I like to be able to use the same cap to reclose sodapop bottles and beer bottles (though I suspect somebody as it were screwed up when it came to those damn "twist off" caps) -- but I find it difficult to be civil to advocates of "final," "ultimate" standards when they're dealing with logical constructs rather than physical ones. After all, as I understand it, a fundamental property of the stored program computer is its ability to be reprogrammed. Yes, I understand that to do so costs money and yes, I've heard of ROM, and no I'm not saying that I insist on some idealistic notion of optimality, but definitely I don't think it makes much sense to keep trudging to an outhouse if I can get indoor plumbing . . . even if the moon in the door is exactly like the one in my neighbor's.
Appendix 3, The Self-Framed Slogans Suitable for Mounting
On the occasion of The Book's reissuance, Peter Salus wrote a review in Cisco's Internet Protocol Journal which included the following observations:
Padlipsky brought together several strands that managed to result in the perfect chord for me over 15 years ago. I reread this slim volume (made up of a Foreword, 11 chapters (each a separate arrow from Padlipsky's quiver) and three appendixes (made up of half a dozen darts of various lengths and a sheaf of cartoons and slogans) several months ago, and have concluded that it is as acerbic and as important now as it was 15 years ago. [Emphasis added] The instruments Padlipsky employs are a sharp wit (and a deep admiration for François Marie Arouet), a sincere detestation for the ISO Reference Model, a deep knowledge of the Advanced Research Projects Agency Network (ARPANET)/Internet, and wide reading in classic science fiction.
In a lighter vein, The Book has been called "... beyond doubt the funniest technical book ever written."
TCP has stronger consistency guarantees, and worse performance, than the underlying IP network. Doing it the other way around is usually considered an anti-pattern [1].
