Mind the payment-channel case:
Block the state of their balances,
S0, on the blockchain.
Amakes a transaction by updating the state to
S1, signing it and sending to
Bmakes a transaction by updating the state to
S2, signing it and sending to
That can go on and on indefinitely. Now, suppose, instead of payment-channel, we're trying to implement a chess game off-chain. They bet $50 on the outcome.
Binit a new game on the blockchain and lock the board state,
Aperforms a move by updating the board state to
S1, signing it, sending to
A's move was valid, performs a transaction the same way.
That, again, goes on for a while. As soon, though, as
A performs a move that is clearly advantageous to him - say, capturing
B's queen -
B will just not sign anything on top of
A's move, forcing him to continue on the blockchain.
Does that mean that state-channels only work for transactions that affect the sender negatively?