From luke at dashjr.org  Mon Jul 18 15:56:18 2016
From: luke at dashjr.org (Luke Dashjr)
Date: Mon, 18 Jul 2016 15:56:18 +0000
Subject: [Lightning-dev] LN question - real life transaction bundling
In-Reply-To: <578208C9.4090807@gmail.com>
References: <578208C9.4090807@gmail.com>
Message-ID: <201607181556.19559.luke@dashjr.org>

On Sunday, July 10, 2016 8:35:21 AM Ron OHara wrote:
> With Bitcoin it is NOT 'Alice transacting with Bob'.
> It is Address(1) transacting with Address(2) .... and if both parties
> are following the recommended practice of not re-using addresses, then
> their next interaction is Address(3) transacting with Address(4) -
> removing any possibility of optimization.

This is wrong. Addresses only receive, never send.

It'd make sense* (but only at a low level) if you used "Key" instead of 
"Address", but even that doesn't reflect on what is actually going on in 
Bitcoin. There is simply a database update that is consuming N tokens (all of 
which are authenticated by satisfying their respective scripts), and producing 
M new tokens with defined scripts to authenticate future attempts to spend 
them.

At a high level, you have two wallets transacting, but those wallets remain 
the same regardless of address reuse. That is, Wallet(1) is transacting with 
Wallet(2) for every interaction, there is no Wallet(3) or Wallet(4). And of 
course, the blockchain cannot see anything about these Wallets today.

Luke

* To be picky, note that the next interaction might be Key(2) with Key(3) if 
it is spending the output created by the initial interaction. But that's 
beside the point.