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I was specifically talking about the Lightning Network, a second layer that facilitates Bitcoin's smart contract capabilities to enable off-chain payments via s

I was specifically talking about the Lightning Network, a second layer that facilitates Bitcoin's smart contract capabilities to enable off-chain payments via so called payment channels. There's no mining involved during transactions in the channel - only for opening and closing a channel, making the transactions almost instant. Thanks to proper routing you can reach most of the peers even with a single channel. It even adds some privacy because it uses onion routing, and the payments are not less secure because each off-chain transaction can be used as valid on-chain transaction should either party wish to do so, closing the channel. There's much more to it, many smart people have put a lot of thought into LN, so I recommend reading the whitepaper and other documentation about it.

arcticbull 8y ago
Not enough thought. With 7tx/sec it will take 35 years to open a channel for everyone on earth and another 35 years to close it assuming nobody is born. I believe that's in the white paper, actually. Either way you'll be paying $1.26 to open a channel and another $1.26 to close it, so paying Stripe 2.9% + $0.30 makes the fee break-even point vs having a wallet on your micropayments server funding with $76, any less, Stripe wins.
- PhilippGille 8y ago
  Search for "channel factories" - it allows multiple channels to be opened with a single on-chain tx. And looking at how many people use a custodial Bitcoin wallet today (e.g. Coinbase), many will probably use custodial LN wallets as well, with only the wallet service requiring a channel. Not recommending this of course. Also, my use case was regarding micropayments (e.g. for reading a news article) and nanopayments (e.g. for an API call). That's below $0.30. If you're now going to say that you could top up some balance (like $20) and just deduct a cent from that for every payment, that was exactly the other point of my use case: No accounts required, neither in the DB of the news or API service, nor in the DB of some payment processor that must keep your credit card data. So it's not just about fees, it's also about privacy.
  - arcticbull 8y ago
    To your point, micropayments aren't a limitation of the existing financial system. People just don't want them. The issue is that people have a limited capacity to make decisions [1], and having to decide if every single site they visit or article they want to read is "worth" the $0.005 just sucks. It's the reason that Netflix and Apple Music is so successful while buying individual songs and videos via the iTunes store is cheaper in the long run, and probably even in the short run. The real value is being able to roll up the content into a monthly pass model and handling the payouts not as micropayments but what they are -- accounting. Has there ever been a successful micropayments system? The reason we don't have micropayments isn't an accounting issue, fee-related or a technical issue -- or even a privacy issue -- it's a human biology issue. IMO hooking it up directly to a wallet without topping off isn't going to change that, especially since you still have to top off the BTC wallet regularly as you get paid in real currency. Boat-anchoring two things that are complex and people don't really want (crypto + micropayments) isn't going to make the two work all of a sudden. The only way to really solve the news business model with something other than ads is a Netflix-for-news. I hope that Apple News becomes that because newspapers deserve to exist. [1] https://en.wikipedia.org/wiki/Decision_fatigue https://en.wikipedia.org/wiki/Decision_fatigue

arcticbull 8y ago

Not enough thought. With 7tx/sec it will take 35 years to open a channel for everyone on earth and another 35 years to close it assuming nobody is born. I believe that's in the white paper, actually. Either way you'll be paying $1.26 to open a channel and another $1.26 to close it, so paying Stripe 2.9% + $0.30 makes the fee break-even point vs having a wallet on your micropayments server funding with $76, any less, Stripe wins.

PhilippGille 8y ago
Search for "channel factories" - it allows multiple channels to be opened with a single on-chain tx. And looking at how many people use a custodial Bitcoin wallet today (e.g. Coinbase), many will probably use custodial LN wallets as well, with only the wallet service requiring a channel. Not recommending this of course. Also, my use case was regarding micropayments (e.g. for reading a news article) and nanopayments (e.g. for an API call). That's below $0.30. If you're now going to say that you could top up some balance (like $20) and just deduct a cent from that for every payment, that was exactly the other point of my use case: No accounts required, neither in the DB of the news or API service, nor in the DB of some payment processor that must keep your credit card data. So it's not just about fees, it's also about privacy.
- arcticbull 8y ago
  To your point, micropayments aren't a limitation of the existing financial system. People just don't want them. The issue is that people have a limited capacity to make decisions [1], and having to decide if every single site they visit or article they want to read is "worth" the $0.005 just sucks. It's the reason that Netflix and Apple Music is so successful while buying individual songs and videos via the iTunes store is cheaper in the long run, and probably even in the short run. The real value is being able to roll up the content into a monthly pass model and handling the payouts not as micropayments but what they are -- accounting. Has there ever been a successful micropayments system? The reason we don't have micropayments isn't an accounting issue, fee-related or a technical issue -- or even a privacy issue -- it's a human biology issue. IMO hooking it up directly to a wallet without topping off isn't going to change that, especially since you still have to top off the BTC wallet regularly as you get paid in real currency. Boat-anchoring two things that are complex and people don't really want (crypto + micropayments) isn't going to make the two work all of a sudden. The only way to really solve the news business model with something other than ads is a Netflix-for-news. I hope that Apple News becomes that because newspapers deserve to exist. [1] https://en.wikipedia.org/wiki/Decision_fatigue https://en.wikipedia.org/wiki/Decision_fatigue