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There are two sides, A and B.

You can see my example test scripts test-cli/scripts/setup.sh and test-cli/scripts/test.sh. As these utilities don't keep any state, and don't talk to bitcoind/alphad, the commandlines get ugly fast (and don't handle all cases). They're only for testing.

Opening a Generalized Channel

You will need a running alphad node in regtest mode (which will give you 10500000 coins once you generate a block):

$ alphad -regtest -testnet=0 &
$ alpha-cli -regtest -testnet=0 setgenerate true

You will also need two (non-confidential) transaction outputs (mined)

$ A1=`scripts/get-new-address.sh`
$ A2=`scripts/get-new-address.sh`
$ TX=`alpha-cli -regtest -testnet=0 sendmany "" "{ \"$A1\":10, \"$A2\":10 }"`
$ alpha-cli -regtest -testnet=0 setgenerate true

# Find the inputs numbers corresponding to those 10 btc outs
for i in $(seq 1 $(alpha-cli -regtest -testnet=0 listunspent | grep -c txid) ); do scripts/getinput.sh $i | grep -q "$TX.*/1000000000/" && echo $i; done

For each side A and B you need:

SEED: A secret 256-bit seed, in hex. Try 00112233445566778899aabbccddeeff00112233445566778899aabbccddeeff
CHANGEADDR: An anchor change address (unless amounts are exact). eg. scripts/get-new-address.sh
CHANGEPUBKEY: The public key for CHANGEADDR. eg. alpha-cli -regtest -testnet=0 validateaddress <CHANGEADDR> | grep pubkey
TMPADDR: An address for the anchor output to the commitment transaction. eg. scripts/get-new-address.sh
TMPKEY: The private key for TMPADDR eg. alpha-cli -regtest -testnet=0 dumpprivkey <TMPADDR>
FINALADDR: An output address for when channel is closed. eg. scripts/get-new-address.sh
FINALKEY: The private key for FINALADDR eg. alpha-cli -regtest -testnet=0 dumpprivkey <FINALADDR>
TXIN{1-n}: One or more unspent transaction outputs on testnet. These are in form "///". eg. scripts/getinput.sh (scripts/getinput.sh 2, etc).
TXINKEY{1-n}: The private keys to spend the TXINs. eg. scripts/getinput.sh --privkey can get these.

STEP 1

First each side needs to tell the other what it wants the channel to look like, including how many satoshis to put in the channel.

Note that the default anchor fee is 5000 satoshi each, (use --anchor-fee= to override), so your amount must be less than or equal to the total inputs plus this fee.

A: Create a channel open request packet:

test-cli/open-channel <A-SEED> <amount> <A-CHANGEPUBKEY> <A-TMPKEY> <A-FINALKEY> <txid>/<outnum>/<amount>/<scriptsig>... > A-open.pb

B: The same:

test-cli/open-channel <B-SEED> <amount> <B-CHANGEPUBKEY> <B-TMPKEY> <B-FINALKEY> <txid>/<outnum>/<amount>/<scriptsig>... > B-open.pb

STEP 2

Create the signatures for the anchor transaction: we don't send them until we have completed the commitment transaction though, so we're sure we can get our funds back. We need one TXINKEY for each TXIN:

test-cli/open-anchor-scriptsigs A-open.pb B-open.pb <A-TXINKEY>... > A-anchor-scriptsigs.pb

test-cli/open-anchor-scriptsigs B-open.pb A-open.pb <B-TXINKEY>... > B-anchor-scriptsigs.pb

STEP 3

Now both sides create the commitment transaction signatures which spend the transaction output:

test-cli/open-commit-sig A-open.pb B-open.pb <A-TMPKEY> > A-commit-sig.pb

test-cli/open-commit-sig B-open.pb A-open.ob <B-TMPKEY> > B-commit-sig.pb

STEP 4

Check the commitment signatures from the other side, and produce commit txs.

test-cli/check-commit-sig A-open.pb B-open.pb B-commit-sig.pb <A-TMPKEY> > A-commit-0.tx

test-cli/check-commit-sig B-open.pb A-open.pb A-commit-sig.pb <B-TMPKEY> > B-commit-0.tx

STEP 5

Check the anchor signatures from the other side, and use them to generate the anchor transaction (as a hex string, suitable for bitcoind).

test-cli/check-anchor-scriptsigs A-open.pb B-open.pb A-anchor-scriptsigs.pb B-anchor-scriptsigs.pb > A-anchor.tx

test-cli/check-anchor-scriptsigs B-open.pb A-open.pb B-anchor-scriptsigs.pb A-anchor-scriptsigs.pb > B-anchor.tx

They should be identical:

cmp A-anchor.tx B-anchor.tx || echo FAIL

STEP 6

Broadcast the anchor transaction:

Either one:

alpha-cli -regtest -testnet=0 sendrawtransaction `cat A-anchor.tx` > anchor.txid

Generate blocks until we have enough confirms (I don't do this, so I can reset the entire state by restarting bitcoind with -zapwallettxes=1):

while [ 0$(alpha-cli -regtest -testnet=0 getrawtransaction $(cat anchor.txid) 1 | sed -n 's/.*"confirmations" : \([0-9]*\),/\1/p') -lt $(test-cli/get-anchor-depth A-open.pb) ]; do scripts/generate-block.sh; done

while [ 0$(alpha-cli -regtest -testnet=0 getrawtransaction $(cat anchor.txid) 1 | sed -n 's/.*"confirmations" : \([0-9]*\),/\1/p') -lt $(test-cli/get-anchor-depth B-open.pb) ]; do scripts/generate-block.sh; done

Using a Generalized Channel

Let's make a payment now! Either end can propose a change to the latest commitment tx, like so:

test-cli/update-channel (--to-them=xxx or --from-them=xxx) <A-SEED> > A-update-1.pb

The other end accepts the update, and provides the signature for the new tx and revocation hash for the new tx:

test-cli/update-channel-accept <B-SEED> B-anchor.tx B-open.pb A-open.pb <B-TMPKEY> A-update-1.pb > B-update-accept-1.pb

A completes its side by signing the new tx, and revoking the old:

test-cli/update-channel-signature <A_SEED> A-anchor.tx A-open.pb B-open.pb <A-TMPKEY> A-update-1.pb B-update-accept-1.pb > A-update-sig-1.pb

B now revokes its old tx:

test-cli/update-channel-complete <B_SEED> B-anchor.tx B-open.pb A-open.pb A-update-1.pb A-update-sig-1.pb > B-update-complete-1.pb

B checks that the commit tx is indeed revoked.

./check-commit-complete A-open.pb A-commit-complete-1.pb

To update it again, simply re-run the commands with the previous updates appended, as shown in test-cli/test.sh.

(Optional) Generate new commitment txs, by including all the update proposals since the initial tx (here we just have one, A-update-1.pb):

test-cli/create-commit-tx A-anchor.tx A-open.pb B-open.pb A-update-1.pb B-update-accept-1.pb <A-TMPKEY> > A-commit-1.tx

Special Effects: Trying To Cheat

A now tries to spend an old (revoked) commitment tx:

test-cli/create-commit-tx A-anchor.tx A-open.pb B-open.pb <A-TMPKEY> B-commit-sig.pb > commit-0.tx

alpha-cli -regtest -testnet=0 sendrawtransaction `cat A-commit-0.tx`

B can steal the money, using the revocation hash from A-update-sig-1:

./create-steal-tx A-commit-0.tx A-update-sig-1.pb <A-FINALKEY> B-open.pb A-open.pb <SOME-PUBKEY-TO-PAYTO> > B-commit-steal.tx

alpha-cli -regtest -testnet=0 sendrawtransaction `cat B-commit-steal.tx`

Closing the Channel: Unilaterally

To close unilaterally, one side broadcasts its latest commitment tx:

alpha-cli -regtest -testnet=0 sendrawtransaction `cat A-commit-1.tx`

Now, we can create the transaction to spend the output:

./create-commit-spend-tx A-commit-1.tx <A-FINALKEY> <someaddress> > spend.tx

Normally A would have to wait 1 day, but because OP_CHECKSEQUENCEVERIFY is a nop, we can actually claim this immediately:

alpha-cli -regtest -testnet=0 sendrawtransaction `cat spend.tx`

This is the normal way to do it. Include all the update proposals at the end of the command line (eg. ?-update-?.pb), so the transaction outputs reflect the final commitment total:

./close-channel A-anchor.tx A-open.pb B-open.pb <A-TMPKEY> A-update-1.pb > A-close.pb

./close-channel --complete A-anchor.tx B-open.pb A-open.pb <B-TMPKEY> A-update-1.pb > B-close-accept.pb

Both ends have both signatures now, so either can create the close tx:

./create-close-tx A-anchor.tx A-open.pb B-open.pb A-close.pb B-close-accept.pb > A-close.tx

./create-close-tx A-anchor.tx B-open.pb A-open.pb A-close.pb B-close-accept.pb > B-close.tx