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Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very ni

Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.

paulgb 5y ago
Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
- rawtxapp 5y ago
  If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
  - throwaaskjdfh 5y ago
    > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
    - rawtxapp 5y ago
      At those time scales, it's pretty difficult to predict anything imo. That said, Bitcoin has been declared many times before and it'll continue to be predicted, it always comes back stronger. 1: https://www.bitcoinisdead.org/ https://www.bitcoinisdead.org/
  - WanderPanda 5y ago
    It is also only 2140 if you believe that the market cap can double with the halvening schedule every four years. I see the upper bound (around gold market cap) in 3-5 halving cycles. After that the majority of the security has to be financed by tx fees
    - rawtxapp 5y ago
      I'm referring to block rewards, the miners will get block rewards until 2140, price of Bitcoin doesn't matter.
      - paulgb 5y ago
        Miners will get an exponentially decreasing amount of block rewards until 2140, but even 20 years from now the (BTC-denominated) size of the block rewards will be substantially lower than they are today. The price matters because they are BTC-denominated. If the price of Bitcoin doubles every 4 years, the security of the system can stay at parity with what it is today (assuming the real value of transaction fees stays roughly the same).
        madacol 5y ago
        Onchain fees constitute ~10% of current miners income, and that will probably increase, not decrease
        paulgb 5y ago
        As a percentage, it will certainly increase, but in real value? I’m not so sure, especially when on-chain transactions are competing with Lightning.
- ddtaylor 5y ago
  LN doesn't reduce on-chain Bitcoin transaction fees, but instead attempts to move most of the transactions off-chain. With LN you would open a channel using an on-chain transaction, conduct any number of off-chain transactions in that channel, then "settle" the channel by closing with another on-chain transaction. There basically are two different views currently on the future scalability and funding model of the network. The LN/small block view is to keep that layer limited and small and build on top of it and the idea is that with such limited transaction volume these "settlement" transactions will eventually cost a lot. I don't really see this working since to compete with block subsidy rewards you would need very costly transactions. The big block or "Bitcoin Cash" view is to scale the block size up and eventually you will have very high volume of on-chain transactions.
  - somebodythere 5y ago
    Why do you need to compete with block subsidy rewards? Block subsidies are in addition to transaction fees
  - anonporridge 5y ago
    > I don't really see this working since to compete with block subsidy rewards you would need very costly transactions. This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered. There's no required amount of energy used for mining and miners are offered 0 guarantee of reward. Mining difficulty automatically increases and decreases depending on how profitably miners can operate. If the reward drops to the point that a miner using expensive coal can't compete with a miner using cheap solar, then they simply go out of business and hope they can sell their equipment to someone who can still turn a profit.
    - ddtaylor 5y ago
      > This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered. Miners don't dictate the reward they get. The subsidy is the "block reward" that started at 50 BTC and halves every 4 years, which is currently at 6.25 BTC - it will be halved again in a few years to 3.125, etc. Blocks are as full as they can be right now and rarely get to the 1.0 BTC mark, so basically if you want the transaction fee market to pay for blocks without increasing the size you'll need to pay close to 6X to 10X higher fees than the current price. > There's no required amount of energy used for mining This is true and actually the difficulty can decrease, but none of that changes how many transactions can actually fit into a block. > Mining difficulty automatically increases and decreases depending on how profitably miners can operate. Mostly accurate. Mining difficulty decreases if a block took too long to mine. There are lots of scenarios where mining difficulty could get easier - most of which don't seem plausible right now though.
ChainOfFools 5y ago
this is centralization with extra steps.
- rawtxapp 5y ago
  How so?
  - ChainOfFools 5y ago
    the rise and consolidation of settlement channel aggregators is going to lead to another visa / Mastercard style duopoly, "but with blockchain."
    - minsc__and__boo 5y ago
      Yep, it's like lightning is moving closer and closer to credit cards, which was what blockchain was supposed to substitute.
    - rawtxapp 5y ago
      That doesn't make any sense, the channels are p2p, you can open and close channels with whoever you wish and your channel counterparties don't actually hold your funds, you hold them.
      - ChainOfFools 5y ago
        now you're making it sound like there's no need for channel aggregation at all. which is it?
        rawtxapp 5y ago
        I think we misunderstand each other, I'm talking about batching channel open/closes, I'm not talking about with whom you open channels.

paulgb 5y ago

Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?

rawtxapp 5y ago
If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
- throwaaskjdfh 5y ago
  > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
  - rawtxapp 5y ago
    At those time scales, it's pretty difficult to predict anything imo. That said, Bitcoin has been declared many times before and it'll continue to be predicted, it always comes back stronger. 1: https://www.bitcoinisdead.org/ https://www.bitcoinisdead.org/
- WanderPanda 5y ago
  It is also only 2140 if you believe that the market cap can double with the halvening schedule every four years. I see the upper bound (around gold market cap) in 3-5 halving cycles. After that the majority of the security has to be financed by tx fees
  - rawtxapp 5y ago
    I'm referring to block rewards, the miners will get block rewards until 2140, price of Bitcoin doesn't matter.
    - paulgb 5y ago
      Miners will get an exponentially decreasing amount of block rewards until 2140, but even 20 years from now the (BTC-denominated) size of the block rewards will be substantially lower than they are today. The price matters because they are BTC-denominated. If the price of Bitcoin doubles every 4 years, the security of the system can stay at parity with what it is today (assuming the real value of transaction fees stays roughly the same).
      - madacol 5y ago
        Onchain fees constitute ~10% of current miners income, and that will probably increase, not decrease
        paulgb 5y ago
        As a percentage, it will certainly increase, but in real value? I’m not so sure, especially when on-chain transactions are competing with Lightning.
ddtaylor 5y ago
LN doesn't reduce on-chain Bitcoin transaction fees, but instead attempts to move most of the transactions off-chain. With LN you would open a channel using an on-chain transaction, conduct any number of off-chain transactions in that channel, then "settle" the channel by closing with another on-chain transaction. There basically are two different views currently on the future scalability and funding model of the network. The LN/small block view is to keep that layer limited and small and build on top of it and the idea is that with such limited transaction volume these "settlement" transactions will eventually cost a lot. I don't really see this working since to compete with block subsidy rewards you would need very costly transactions. The big block or "Bitcoin Cash" view is to scale the block size up and eventually you will have very high volume of on-chain transactions.
- somebodythere 5y ago
  Why do you need to compete with block subsidy rewards? Block subsidies are in addition to transaction fees
- anonporridge 5y ago
  > I don't really see this working since to compete with block subsidy rewards you would need very costly transactions. This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered. There's no required amount of energy used for mining and miners are offered 0 guarantee of reward. Mining difficulty automatically increases and decreases depending on how profitably miners can operate. If the reward drops to the point that a miner using expensive coal can't compete with a miner using cheap solar, then they simply go out of business and hope they can sell their equipment to someone who can still turn a profit.
  - ddtaylor 5y ago
    > This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered. Miners don't dictate the reward they get. The subsidy is the "block reward" that started at 50 BTC and halves every 4 years, which is currently at 6.25 BTC - it will be halved again in a few years to 3.125, etc. Blocks are as full as they can be right now and rarely get to the 1.0 BTC mark, so basically if you want the transaction fee market to pay for blocks without increasing the size you'll need to pay close to 6X to 10X higher fees than the current price. > There's no required amount of energy used for mining This is true and actually the difficulty can decrease, but none of that changes how many transactions can actually fit into a block. > Mining difficulty automatically increases and decreases depending on how profitably miners can operate. Mostly accurate. Mining difficulty decreases if a block took too long to mine. There are lots of scenarios where mining difficulty could get easier - most of which don't seem plausible right now though.

ChainOfFools 5y ago

this is centralization with extra steps.

rawtxapp 5y ago
How so?
- ChainOfFools 5y ago
  the rise and consolidation of settlement channel aggregators is going to lead to another visa / Mastercard style duopoly, "but with blockchain."
  - minsc__and__boo 5y ago
    Yep, it's like lightning is moving closer and closer to credit cards, which was what blockchain was supposed to substitute.
  - rawtxapp 5y ago
    That doesn't make any sense, the channels are p2p, you can open and close channels with whoever you wish and your channel counterparties don't actually hold your funds, you hold them.
    - ChainOfFools 5y ago
      now you're making it sound like there's no need for channel aggregation at all. which is it?
      - rawtxapp 5y ago
        I think we misunderstand each other, I'm talking about batching channel open/closes, I'm not talking about with whom you open channels.