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ch12.asciidoc

@@ -279,7 +279,7 @@ In the end, only two transactions are recorded on the blockchain: the funding tr
 
 ==== Making Trustless Channels
 
-The channel we just described works, but only if both parties cooperate, without any failures or attempts to cheat. Let's look at some of the scenarios that break this channel and see what is needed to fix those:
+((("payment (state) channels", "making trustless channels", id="PSCtrust12")))The channel we just described works, but only if both parties cooperate, without any failures or attempts to cheat. Let's look at some of the scenarios that break this channel and see what is needed to fix those:
 
 * Once the funding transaction happens, Emma needs Fabian's signature to get any money back. If Fabian disappears, Emma's funds are locked in a 2-of-2 and effectively lost. This channel, as constructed, leads to a loss of funds if one of the parties disconnects before there is at least one commitment transaction signed by both parties.
 
@@ -313,7 +313,7 @@ Timelocks are not the only way to invalidate prior commitment transactions. In t
 
 The second problem is that since each subsequent commitment transaction must decrement the timelock, there is an explicit limit on the number of commitment transactions that can be exchanged between the parties. For example, a 30 day channel, setting a timelock of 4320 blocks into the future, can only accommodate 4320 intermediate commitment transactions before it must be closed. There is a danger in setting the timelock commitment transaction interval at 1 block. By setting the timelock interval between commitment transactions to 1 block, a developer is creating a very high burden for the channel participants who have to be vigilant, remain online and watching, and be ready to transmit the right commitment transaction at anytime.
 
-Now that we understand how timelocks can be used to invalidate prior commitments, we can see the difference between closing the channel cooperatively and closing it unilaterally by broadcasting a commitment transaction. All commitment transactions are timelocked, therefore broadcasting a commitment transaction will always involve waiting until the timelock has expired. But if the two parties agree on what the final balance is and know they both hold commitment transactions that will eventually make that balance a reality, they can construct a settlement transaction without a timelock representing that same balance. In a cooperative close, either party takes the most recent commitment transaction, and builds a settlement transaction that is identical in every way except it omits the timelock. Both parties can sign this settlement transaction knowing there is no way to cheat and get a more favorable balance. By cooperatively signing and transmitting the settlement transaction they can close the channel and redeem their balance immediately. Worst case, one of the parties can be petty, refuse to cooperate, and force the other party to do a unilateral close with the most recent commitment transaction. But if they do that, they have to wait for their funds too.
+Now that we understand how timelocks can be used to invalidate prior commitments, we can see the difference between closing the channel cooperatively and closing it unilaterally by broadcasting a commitment transaction. All commitment transactions are timelocked, therefore broadcasting a commitment transaction will always involve waiting until the timelock has expired. But if the two parties agree on what the final balance is and know they both hold commitment transactions that will eventually make that balance a reality, they can construct a settlement transaction without a timelock representing that same balance. In a cooperative close, either party takes the most recent commitment transaction, and builds a settlement transaction that is identical in every way except it omits the timelock. Both parties can sign this settlement transaction knowing there is no way to cheat and get a more favorable balance. By cooperatively signing and transmitting the settlement transaction they can close the channel and redeem their balance immediately. Worst case, one of the parties can be petty, refuse to cooperate, and force the other party to do a unilateral close with the most recent commitment transaction. But if they do that, they have to wait for their funds too.((("", startref="PSCtrust12")))
 
 ==== Asymmetric Revocable Commitments