A cool use of the Lightning network is the podcast 2.0 initative. Currently, as I listen to podcasts, I stream back satoshis (sats), value for value (I use Castamatic on iOS, fountain.fm is also an option on Android). You can also send messages with sats attached, called “boosts”. Creators can transparantly split the sats they receive over various goals (i.e. FOSS projects [opensats], or guests on shows). There are no transaction fees afaik, that is just when your lightning node syncs with the main blockchain, and then you can bundle a lot of transactions.
I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there).
The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”.
Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.
I really dislike this whole initiative and much prefer the patreon model.
One reason of course might be that i am listening to Jupiter Broadcast and Chris pushes this stuff hard, really annoying me with the constant talk about lightning and especially the boosts, which seem to take over half the show, because somehow he seems not to realize that the problem he has in getting regular supporters is the insane price he asks (last i looked about $2,50 per episode), but likes to give everyone several minutes of the show who sent him 20 cents.
But I think my misgivings go further than that and i am especially concerned about this taking over podcasts or even open source, because while I do understand that people need to eat, I think these two ecosystems especially thrive because so many people contribute to them without profit being their first motive. I would not ask people to do work for free, but I often find that that when profit comes into it, quality starts to suffer and ideals get lost.
Sure, lightning is in some ways similar to patreon etc. because it might still be user financed, but I feel the unpredictability of getting funds, the more attention focused model, will have similar effects on creators than other platforms with similar models do and I am mostly not fond of this.
Chris indeed pushes it hard, I think indeed too hard, I agree. But it's reducing and moving to other shows (like OfficeHours.hair). To him this is the response to centralization of podcasting and I see that. As a member (I do 8$ a month, supporting 1 show but listen to all) I also see the imbalance in the attention that 2ct boosts get. It will go 1 of 2 ways I guess: 1) Boosts become the main income and keep getting attention (but at some cutoff like with NoAgenda donations. 2) Boosts remain a minor part and the attention decreases. If I were you I'd sit it out and let Chris try.
I do like putting 100$ every (half?) year or so in my podcast app and letting the app distribute it over everything I listen to. But that's also because I'm at an age where I have disposable income. I pay for the membership to get the ads out of my fav podcast.
I'd put open source in a different category. Most people who make a reasonable living doing open source do so because a company is paying them to do so as their day job. There are certainly exceptions but, for most, writing (non-custom) software, writing books/articles/podcasts/video mostly works as either strictly a hobby or as something a company is paying them a salary to work on--at least in part.
why should content creators have to go through a centralized website like Patreon in order to get value from their consumers, giving Patreon a cut in the process? sure it's (for now) more straightforward for end-users, but as a content creator you're locking yourself into the Patreon Platform, you're building (at least some subset of) your content and your business around it being specifically "Patreon content". I'm generally wary of anything cryptocurrency but Podcasting 2.0 seems like an absolutely solid use-case of Bitcoin and Lightning—anything that helps to prevent centralized platform lock-in for content creators should be applauded!
I pay for 5 podcasts, I do it via Patreon, Memberful, and a custom (stripe-based) solution. I'm not really sure what problem needs to be solved in this space. I pay for 2 podcasts that I haven't listened to in months, I do it because I pay to support these creators. I don't need/want my listen history to directly correlate to sending money to hosts I like (nor do they, they'd much rather have the constant stream instead of peaks and valleys). Also, I actually hate the idea of "boosts", it just encourages bad behavior (just like IAP's that aren't one-time/DLC/remove-ads).
Patreon bans podcasters sometimes, you also have to be in one of the lucky countries to be able to use it - other people are excluded. There are annoying fees that Patreon (and credit card providers) take on each transaction (afaik around 10%), so the actual podcasters get quite smaller amount compared to what you send...
all those websites take their cut. and visa takes their cut. and still the podcaster can't "cash out" immediately, depending on settlement times and policies of the corporations. Essentially, the middlemen have the creators by the balls, lightning solves that.
I'm consistently surprised by HN's lack of vision in this area. The idea of a Network State / Internet-native economy is a cyberpunk dream, and crypto enables that. The constant doubt, rejection, and preference for SV-startup solutions is the opposite of what I would expect from a "Hacker Community" but I suppose HN is literally full of VCs (particularly FinTech) that don't want the competition from open crypto solutions.
Meanwhile, devs in crypto are able to build without limits and are having an absolute blast larping as anime cats on Twitter while cranking on bleeding edge ZK tech and other exciting projects.
Not exactly. Lightning means they receiver gets 100% what I send. This is particularly interesting for micropayments. I can tip someone 1 cent, or less with no middle man.
How do you handle the tax implications of streaming sats?
As far as I know, every payment with Bitcoin triggers a taxable event?
Do you record a gazillion log entrys "Paid $0.0000145 for listening podcasts, Paid $0.000142 for listening podcasts ...", crunch all the numbers and then at the end of the year put that gigantic list into your tax declaration?
Not a lawyer or accountant here but I think it would be reasonable to only treat the eventual on-chain withdraw as a taxable event.
Until then, you have deposited some value in a number of lightening network nodes and have been negotiating a set of pairwise IOUs with them for later.
DeFi/staking has a similar problem and I believe waiting until gains and losses are realized will be the way it goes down.
For now, make a good faith effort to pay taxes or expect some friction later.
I'm of the opinion that the rules are behind the law when it comes to BTC. I am deeply uninterested in being anywhere near the legal case that challenges this!
But currency exchange for 'ordinary purposes' is not taxed, if my company bought some Euros to pay for foreign goods and the Euro rallied against the dollar before the purchase, no tax is owed.
Well, BTC is legal tender in El Salvador, and there's no rule that the (in the above) Euros in question have to be paid to a country where the Euro is legal tender: perhaps they're a Singaporean business which mostly exports to Europe, so their prices are in Euros and it shouldn't matter.
The US might not like that El Salvator made BTC official, but that shouldn't matter either.
Better keep your books very carefully though, because buying currency with the intention of selling it later (aka exchanging it for another currency) is investment purposes.
I'm not on the receiving end, but to me this seems like the law is behind reality. Micropayments are coming, perhaps using blockchain, perhaps not, probably in a number of different ways.
I guess this is a good question for the hosts of the podcasts that use these features (Like Linux Unplugged, and other shows from Jupiter Broadcasting or the No Agenda show by Adam Curry and John Dvorak.) Perhaps this is not answered yet.
In the Netherlands this only becomes relevant over a certain amount, and I think you can then just bundle all amounts. But I'm also not sure.
> As far as I know, every payment with Bitcoin triggers a taxable event?
tl:dr Unlikely
Unsure what the regime in your area does, but...
Here (Aotearoa) the tax authorities are not interested in rats and mice. I play in a rock band as a hobby. Occasionally we get paid ($300 is the most ever).
We had a promoter not pay us because we had "not given him the tax forms".
I contacted our tax authorities and was told, in no uncertain terms, if it is a hobby, if you are not making serious money, do not tell us about it. Please do not tell us.
We have a transaction tax here that merchants have to charge and pay, but only when their revenues top $50,000
So there are two data points that indicate that not every transaction incurs tax
Tax does indeed tend to be a hard problem in these kinds of systems, but I think you (and most responses so far to your comment) are looking at it from the wrong end. It's the seller, not the buyer, that has to deal with taxes in most jurisdictions. For podcasts I'd expect the podcaster to be the seller and the listener to be the buyer.
Simplest example is the EU. When you sell a digital good to someone in the EU VAT is owed on that in the country in which the buyer resides, but the seller is responsible for collecting that VAT and then reporting and remitting it to the buyer's country.
The EU makes this simple. You can register with any EU country, and then report and remit you VAT for all EU countries to that one country's tax agency. That country's tax agency will then settle with the others. Ireland is a good EU country for this if you are a seller in a non-EU English speaking place. It takes about 10 minutes to register with Ireland online for this, and the quarterly tax filings with them are a simple CSV upload that you can also do in a few minutes.
Note that this means the seller has to know how much they sold to buyers in each EU country each quarter. That necessitates some form of tracking.
The situation is similar, but more work to deal with, in the US with sales tax and use tax. For sake of this discussion I'm just going to call both of those sales taxes [1].
It's more work in the US because (1) thresholds for taxability are often of the form "N transaction or $X in sales" usually with N = 200 so you can get above the threshold on a very tiny sales amount as opposed to EU where thresholds are based just on amount of sales, (2) sales tax is often the sum of statewide, countywide, citywide, and special taxing district sales taxes, so to actually figure out the tax on any given sale you need to know the full physical address of the buyer, and (3) while there is some cooperation among about half the states to do a system conceptually like the EU's, for the other half of the states if you meet their thresholds you need to register with, file with, and remit to each of them separately.
There is a way around this (besides just ignoring taxes). You can go through an intermediary that takes on legally the role of the seller. It is that intermediary that then needs to track how much is sold in each state and country and how much tax is owed.
That's how it works for app developers selling through the Apple app store for example. Until tax laws are changed to be more friendly to micropayments directly to content creators, going through some kind of store that aggregates content from multiple creators is probably the best we can legally do.
[1] A sales tax is a tax on the sale of something. A use tax is a tax on having something. The big difference is that a state makes the seller collect sales tax, but use tax is suppose to be dealt with be the person who owns the thing. It used to be that states could not force sellers to collect sales tax unless the seller had a presence in the state. So states would impose both a sales tax and a use tax, and the use tax was the exact same rate as the sales tax and had a deduction for the amount of sales tax paid. The net result was that if you bought something from an in-state seller they collected sales tax and you owed no use tax. If you bought something from an out-of-state seller, no sales tax was collected and you owed use tax on the full purchase price. If you travelled to another state, bought an item and paid sales tax to that state then brought the item home, and that other state's sales tax rate was lower than your state's use tax rate, you owed the difference in use tax.
The use tax exactly equalling the sales tax and being discounted by any sales tax already paid is because the Constitution restricts the states from regulating interstate commerce. Applying a higher tax to goods from out out of state than you do to domestic goods would run afoul of that. By making it so that the total sales + use tax was the same for imported and domestic item the state was not interfering with interstate commerce.
But a few years ago the Supreme Court overturned the cases that had said that states could not force sellers with no in-state presence to collect taxes. Now states can make out-of-state sellers collect the sales/use tax so for most purposes there is not much point in distinguishing between sales and use taxes.
Let's ignore the Lightning Network for a moment, and dig into the meat of what you're suggesting: that people—in some meaningnful number—would prefer to spend money to get a thing they currently get for free (with the caveat that they occasionally they have to listen to / watch advertisements). Maybe you're right! But: 1. I doubt it. And 2. Lightning Network isn't the only technological solution to such an idea. This concept isn't particularly common, probably, because most people will put up with a lot to avoid spending actual money.
are there cool applications using Taproot and Schnorr? are lightning network openings and closings looking identical as any other transaction or script, improving confidentiality?
where are the current communities that talk about whats going on there? I don't visit bitcoin reddits anymore and the cryptocurrency communities are about pretty much everything else
When will the blockchain ecosystem provide something with that "WOW I need this in my life right now" factor to the average user?
Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today.
We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations.
I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange.
Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale.
I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed).
Broadly I agree with the argument that crypto is taking an awful long time to come up with the killer app, but this is not a fair analysis.
Let's be clear: when Google exploded, that was the growth of the Internet in the driver's seat, not demand for Google specifically. Google's growth was a side effect of the exponential growth of the internet because it solved a need where there was no adequate incumbent solution, and where demand for that solution was growing exponentially for reasons basically unrelated to the quality of the solution.
This isn't the case for crypto, because there's an incumbent solution that works fine. More specifically, in our analogy, money is the counterpart of the Internet. Crypto is in the position of needing to slowly sap market share from an incumbent (government fiat) in the same way that, for example, DuckDuckGo does even if you feel it's a superior product.
If Bitcoin was the first-ever instance of money, I assure you its growth profile would look like Google's did.
I think this is less about growth factor and more about "killer app". The killer application of Google is that it actually finds what you are searching for really well (well, it did). That's what set Google apart from other search engines. The killer feature of crypto is...?
DAOs, NFTs, smart contracts, random tokens all seem less like good features and more like transparent scams or terrible ideas that don't work. It's fine if adoption is slow - but there should actually be something beyond Ponzi schemers and hackers stealing from each other. Drugs and tax evasion, sure, but how far does that take you?
The DuckDuckGo comparison is a perfect one. The average user has demonstrated they do not care about whatever creepy/evil thing Google is doing that we talk about here. They just want to lookup the hours of a restaurant as quickly, reliably, and easily as possible so they can eat and move on with their lives. Ditto use cases for Twitter, Facebook, etc, etc.
Why (and when) will average users suddenly care "because blockchain"? They don't and won't (the usage numbers reflect this). They just want to get an answer to a question in seconds, Tweet their musings, endlessly scroll pictures on Facebook/Instagram/etc, or watch Youtube videos of cats, glitter bombs, or whatever. For free. As ridiculous as it is to me and most of HN the average person is even willing to have their TV and streaming services show them endless ads. They just like that they bought that 60" TV for $400 on Black Friday.
Even the censorship/de-platforming argument falls flat. It's been demonstrated that people (as a whole), going back to our tribal roots, prefer to engage with like-minded others. It is fundamental human nature and there have been multiple studies conducted that show it's wired in to our reward circuitry.
Trump gets booted off Twitter? Enter Truth, Parler, whatever where many millions of users moved in near record time. When it comes down to it people like echo chambers and they like free. Platform for free speech? Create a Truth account and start wandering in to flame wars that go against the political leanings there. You will get booted just as Trump got booted from Twitter.
This is where I think blockchain and lack of censorship is also fundamentally flawed. They don't want to pay XYZ in some random coin to make a social media post. They also don't want to bump in to child pornography or some other universally objectionable content (in the case of true to the mantra decentralized blockchain platforms without any form of "censorship").
The same argument goes for money. Almost no one cares - they want to swipe their credit card a few times a day and move on with their lives. They do not care about transaction fees, final settlement times, etc. It's invisible. Other than credit cards and cash the average person interacts with more complicated levels of the financial and banking systems a few times in their lives. They do not care if a lifetime of home ownership (as one example) cost them $50 in wire fees. They likely have no idea (and again don't care) how the 401(k) their employer set them up with actually works.
They also don't want to discover that their wallet has been hacked, their exchange collapsed, the value of their money dropped 20% overnight, or any of the other number of ways funds go "poof" with blockchain.
No user has ever said "WOW I need Google search engine in my life right now" they said "WOW I need some gotdang funny cat pics" and google proved a means to resolve that desire.
Similarly, no one will ever say "WOW I need blockchain in my life right now" but they might say "WOW I need to send some money" or "WOW some of my friends are making their money work for them maybe I too should do some speculating" or "WOW I distrust the government's control over the financial system" and blockchain will occasionally prove to scratch that itch.
Correct - no one asked for Google but it provided instant value and utility to anyone walking down the street inside of two years with $2mm.
"WOW I need to send some money". Enter: PayPal, Venmo, Trust Wise, and any number of others.
There are plenty of ways to gamble and speculate without touching blockchain if that's your thing. What's amazing is even a mafia bookie or the shadiest of casinos won't pull a Celsius on you.
Don't trust the government? With blockchain you're expected to completely trust yourself and any number of shady characters in the blockchain space. Clicked the wrong link and your wallet got hacked? Sorry. Forget your seed/passphrase? Sorry. Some defi exchange with a buggy smart contract (as if there are any that don't have bugs)? Sorry. Picked the wrong exchange and the people behind it faked their own death and disappeared with your money? Sorry. The list goes on and on.
Other than the absolute worst and shadiest governments in the world do you trust these factors and actors more? Does anyone else?
> No user has ever said "WOW I need Google search engine in my life right now"
I sure did, and I wasn't alone. I remember thinking the existing search engines were trash long before google came around. The market was starving for a search engine that was user-focused and not 200% bought and paid for by marketers.
Bitcoin is not a concrete product like Google Search or a smartphone. It's more of an idea, like free speech. The idea being money without a central authority, something that has never really existed before (digitally, at least). No one woke up one day and thought "WOW I need democracy" or "WOW I need free speech". It's abstract and doesn't gratify immediately. The average person does not even have a conception that money could be something entirely different.
Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
Needless to say, I don't expect adoption to be comparable to that of a web search engine.
I use these examples in layers (I have a networking background so my mind more or less thinks in OSI layers).
For actual products bitcoin (and blockchains like Ethereum with EVM) are the fundamental enabling layer. I like to think of them somewhat akin to TCP/IP or even HTTP. Where are the higher layer applications and use cases built on blockchain with instant and obvious utility to the average person walking down the street? This is what I was getting at with the decade plus of development and billions of dollars of investment.
The internet was a fundamental threat to all kinds of institutions - governments with censorship, big media (including state run), and even financial institutions. The internet provided instant untold value for democracy and free speech. Just widespread and instantly available encryption itself was a HUGE problem and threat to governments, law enforcement, militaries, intelligence agencies, etc. Remember the Clipper Chip "debate" and 40 bit encryption export controls? I do.
Yet the obvious value and utility was so clear even governments like China (with the Great Firewall) knew it was of such incredible value to the economy and clamored for by the citizenry they figured out a way to make it work within their system of government. Inside of a decade billions of people were using the internet to further democracy, free speech, and the dissemination of information.
>The idea being money without a central authority, something that has never really existed before (digitally, at least).
But you still have distributed authorities, the owners of Bitcoin. The idea that one should be controlled by the interests of financial capital is anthitetical to free speech, freedom and self determination.
>Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
It doesn't, it entrenches the status quo. That is quite literally what deflation is, a reward for people who dominated the economy in the past.
> When will the blockchain ecosystem provide something [...] to the average user?
> Google went from a research project to incorporated and usable on the internet in roughly two years
I don't think this is a fair comparison. Google is a late bloomer, being preceded by lukewarm online services AltaVista, Yahoo!, and AOL. Just like how Facebook became successful when MySpace did not, the latecomer can have a substantial advantage in speed and scale.
Moreover, Google is an application. The Internet is a platform. Google was founded several decades after the Internet. The first few decades of the Internet were clunky, slow, and expensive.
I would compare Bitcoin to the Internet. It is the raw, unsightly engine room that most people should not directly tinker with. Where are the killer applications that will run on top of Bitcoin? We're still figuring that out.
Even if Google is a late bloomer, 13 years didn’t pass since Altavista began. In Bitcoin timeline it was a baby, which seems pretty weird and like a problem.
I don’t see why Bitcoin should be compared to the internet and why Google’s timeline should be compared to the internet vs world wide web.
Aren’t the vast majority of people using corporate email or one of the big handful of email providers? Being mostly a status quo and corporate prop doesn’t seem like an advantage
> The "WOW I need this in my life right now" factor is making money through the price of the assets going up. Which you may say is ponzi but the majority of the UK economy seems people making money through assets (housing mostly) going up. I can see younger people saying I can't afford a house but maybe I'll buy some bitcoin or similar maybe that will go up.
I do understand that use case and it has value. Question is - what portion of the 5 billion internet users see that as enough value to enter the space?
I have friends that have fled war torn countries, dictatorships, etc and I'm glad blockchain now exists for that scenario but again - can that use case (fortunately very rare) justify tens if not hundreds of billions of dollars of investment and over 10 years of work?
This is what I don't understand.
I understand banking has problems (fiat is a much longer debate). What needs to be understood is how many of the 5 billion internet users think the benefit of blockchain justifies throwing out the entire financial (and often legal) system and operating in a parallel one? Not to mention the willingness of average people to essentially be their own bank. For this reason alone I think blockchain is a non-starter for the overwhelming majority of internet users.
How many people care? Answer is: a tiny portion. A very optimistic estimate of total blockchain "users" worldwide is in the range of 100m. 13 years and untold billions of dollars of investment to reach 2% adoption of the internet population isn't exactly a success story that speaks well to the utility of the solutions provided and the real world problems they solve.
I would argue the negatives outweigh the positives here:
Tax evasion, money laundering, trafficking, drugs, sanctions evasion etc.
Since the introduction of KYC it's very hard to do any of these in the traditional finance system. And each of them has very serious implications for people's lives.
>Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?
I don't believe people are capable of grasping the nature of money. Money is supposed to be a medium of exchange yet everyone wants to turn it into a forced store of value with no consent, that is basically the equivalent of slavery.
BTC and a lot of other chains are Level 1 (L1). Final settlement layers for transactions. To compare that to normal banking, your credit card is like an L5. Tons of things go on in-between your CC transactions before its actually settled even if it appears to be instant and final to the end user.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?
I assume the implication is that doing off-chain transactions defeats the purpose of Bitcoin? It does not.
Did you know that fiat doesn't even have a blockchain to withdraw to when you want to exit or switch payment network/provider?[0] Did you know that with fiat, the money supply can be changed arbitrarily?
Those are problems that Bitcoin still solves when you use an off-chain transaction network (at least for the many people who believe those are problems worth solving). Also, it's worth noting that the Lightning network is hardly centralized. It's a bit more centralized than Bitcoin but we're light years away from say, Paypal.
[0] The closest that comes to this is SWIFT, but it's not an open network. Even large payment systems like Paypal aren't connected to it. It's also not censorship resistant and you can't use it p2p.
>Did you know that with fiat, the money supply can be changed arbitrarily?
Let me tell you a little story. A boy creates wealth, the government creates money in proportion to the wealth. The alternative is to succumb to incumbents, the wealthy, the aristocracy and ask them for permission whether you are allowed to create the wealth or not.
For the last 8-10 years it's been the same thing. Bitcoiners believe you can't sacrifice its finality, but can scale at a different layer. Other "blockchain" people believe something different.
It is a weird line in the sand to me that something must either happen on a blockchain or not be the right solution, pretty much regardless of whether that blockchain's finality guarantees are worse if understood at all.
That’s not any normal definition of sharing. In the most flattering portrayal this is the equivalent of store accounts where you can make periodic large deposits to reduce transaction fees. Personally it seems more like an admission that the first decade of saying Bitcoin was suitable for use as a currency was in fact just as obviously wrong as critics said.
>The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)).
>While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance.
very cool to see this coming from the Federal Reserve Bank of Cleveland
> by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power
That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
> The views stated herein are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.
One drawback of Lightning is that if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online. It's an interactive protocol, you can't just publish an address and check it later. Since most people don't run their own servers, LN is pretty much going to be a custodial system.
There is actually a solution for that, called Lightning Rod.[0] It should allow asynchronous payment flows when running LN nodes on a mobile device, which are offline most of the time. I'm not sure if it has been implemented yet (probably not).
If you have a lightning channel to the custodial service you use, you can transfer the funds to yourself any time though.
So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour.
And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
running an actual server on your phone would absolutely execute your battery life.
if we hadn't had NAT and reverse tunneling then things might have evolved differently. maybe a way to push data to phones over UDP or low power servers that could wake up to handle single requests. but it didn't play out like that.
>LN is pretty much going to be a custodial system.
like Chivo? take out the middleman(Banks) and put governments back in control of the funds.
bingo :)
Think about it...
Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.
This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC.
The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.
Market Cap and volume don't need to correlate. Your line of reasoning is a red herring.
BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are.
With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.
>>and those LN could be responsible for an inordinant amount of volume
Theoretically yes, in practice no.
Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases.
Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral.
For these reasons, low collateral reliably maps to low usage.
It’s worth pointing out that you can only see public channels on these trackers. Large players probably have large private channels open with each other to guarantee better payment flows and less fees.
Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.
In Guatemala at Lake Atitlan! I have a lightning node running BTCPay Server on a raspberry pi, and then also a web app that interfaces with it. I can show you the web site, although I'm hesitant to post it here cause i don't know how much traffic it can handle with the internet speeds here haha
i think this post is old enough that i can post the page without worrying about the hug of death. if you wanna buy me a coffee you can go to https://emporium.atitlan.io :D in the comments just write "solo una prueba, no hagas este pedido"
Lightning is a solution that does not do what it says on the tin. It requires an on-chain transaction to open a channel, which at current block size limits requires about 75 years for everyone on earth to have one, and somewhere in the trillion dollar range in fees and the entire outstanding block reward. Factor in quadratic routing complexity, and even if you did onboard everyone it wouldn't work anyways. This is assuming that channels never close and of course that the blockchain doesn't do anything else at all except open channels.
Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's.
It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset.
The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was.
Some interesting points. IMHO, LN is far from THE solution. But it will help merchant adoption, more than end-user though.
The fact is, most people would/will probably use custodial LN wallets, which is against some "crypto" postulates, and comes down to well known MySQL argument.
The difference is MySQL on Bitcoin vs MySQL on USD (Paypal). As we will see in the coming months, fiat itself is a lot like a MySQL.
So I would argue that there is nothing wrong with MySQL on Bitcoin, and in fact, is an upgrade on fiat.
Not everyone needs to open a Channel. There are custodial solutions already. You just need some Satoshis and are good to go.
Likewise, not everyone needs to create their own Visa or MasterCard.
They may have their MySQL/PostgreSQL implementation where they scale and allow for many TX/s. But they don't settle all these transactions in real time. That's also done on a different, slower layer.
Custodial solutions offer zero benefits over putting your money in a bank - and have a ton of drawbacks associated with Bitcoin people only overlook because of those benefits - and the L1 is so slow that any subset that wants to open a channel brings it to its knees.
It's not a real solution. It's something coiners distract people with whenever someone points out the obvious and glaring flaws of the L1.
[edit] To me it's pretty telling that critics offer specific quantifications (X people requires Y time) and proponents say "only some people need it!" - how many, exactly? How full do you anticipate blocks being with other things? How long is too long to open a channel? Currently it sounds like a Soviet phone line - better put in a request now otherwise you might be in your 80s before it gets installed.
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I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there).
The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”.
Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.
One reason of course might be that i am listening to Jupiter Broadcast and Chris pushes this stuff hard, really annoying me with the constant talk about lightning and especially the boosts, which seem to take over half the show, because somehow he seems not to realize that the problem he has in getting regular supporters is the insane price he asks (last i looked about $2,50 per episode), but likes to give everyone several minutes of the show who sent him 20 cents.
But I think my misgivings go further than that and i am especially concerned about this taking over podcasts or even open source, because while I do understand that people need to eat, I think these two ecosystems especially thrive because so many people contribute to them without profit being their first motive. I would not ask people to do work for free, but I often find that that when profit comes into it, quality starts to suffer and ideals get lost.
Sure, lightning is in some ways similar to patreon etc. because it might still be user financed, but I feel the unpredictability of getting funds, the more attention focused model, will have similar effects on creators than other platforms with similar models do and I am mostly not fond of this.
I do like putting 100$ every (half?) year or so in my podcast app and letting the app distribute it over everything I listen to. But that's also because I'm at an age where I have disposable income. I pay for the membership to get the ads out of my fav podcast.
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Meanwhile, devs in crypto are able to build without limits and are having an absolute blast larping as anime cats on Twitter while cranking on bleeding edge ZK tech and other exciting projects.
What if you wanted to support 200 open source developers by sending $0.25 every month?
As far as I know, every payment with Bitcoin triggers a taxable event?
Do you record a gazillion log entrys "Paid $0.0000145 for listening podcasts, Paid $0.000142 for listening podcasts ...", crunch all the numbers and then at the end of the year put that gigantic list into your tax declaration?
Until then, you have deposited some value in a number of lightening network nodes and have been negotiating a set of pairwise IOUs with them for later.
DeFi/staking has a similar problem and I believe waiting until gains and losses are realized will be the way it goes down.
For now, make a good faith effort to pay taxes or expect some friction later.
But currency exchange for 'ordinary purposes' is not taxed, if my company bought some Euros to pay for foreign goods and the Euro rallied against the dollar before the purchase, no tax is owed.
Well, BTC is legal tender in El Salvador, and there's no rule that the (in the above) Euros in question have to be paid to a country where the Euro is legal tender: perhaps they're a Singaporean business which mostly exports to Europe, so their prices are in Euros and it shouldn't matter.
The US might not like that El Salvator made BTC official, but that shouldn't matter either.
Better keep your books very carefully though, because buying currency with the intention of selling it later (aka exchanging it for another currency) is investment purposes.
I guess this is a good question for the hosts of the podcasts that use these features (Like Linux Unplugged, and other shows from Jupiter Broadcasting or the No Agenda show by Adam Curry and John Dvorak.) Perhaps this is not answered yet.
In the Netherlands this only becomes relevant over a certain amount, and I think you can then just bundle all amounts. But I'm also not sure.
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tl:dr Unlikely
Unsure what the regime in your area does, but...
Here (Aotearoa) the tax authorities are not interested in rats and mice. I play in a rock band as a hobby. Occasionally we get paid ($300 is the most ever).
We had a promoter not pay us because we had "not given him the tax forms".
I contacted our tax authorities and was told, in no uncertain terms, if it is a hobby, if you are not making serious money, do not tell us about it. Please do not tell us.
We have a transaction tax here that merchants have to charge and pay, but only when their revenues top $50,000
So there are two data points that indicate that not every transaction incurs tax
Simplest example is the EU. When you sell a digital good to someone in the EU VAT is owed on that in the country in which the buyer resides, but the seller is responsible for collecting that VAT and then reporting and remitting it to the buyer's country.
The EU makes this simple. You can register with any EU country, and then report and remit you VAT for all EU countries to that one country's tax agency. That country's tax agency will then settle with the others. Ireland is a good EU country for this if you are a seller in a non-EU English speaking place. It takes about 10 minutes to register with Ireland online for this, and the quarterly tax filings with them are a simple CSV upload that you can also do in a few minutes.
Note that this means the seller has to know how much they sold to buyers in each EU country each quarter. That necessitates some form of tracking.
The situation is similar, but more work to deal with, in the US with sales tax and use tax. For sake of this discussion I'm just going to call both of those sales taxes [1].
It's more work in the US because (1) thresholds for taxability are often of the form "N transaction or $X in sales" usually with N = 200 so you can get above the threshold on a very tiny sales amount as opposed to EU where thresholds are based just on amount of sales, (2) sales tax is often the sum of statewide, countywide, citywide, and special taxing district sales taxes, so to actually figure out the tax on any given sale you need to know the full physical address of the buyer, and (3) while there is some cooperation among about half the states to do a system conceptually like the EU's, for the other half of the states if you meet their thresholds you need to register with, file with, and remit to each of them separately.
There is a way around this (besides just ignoring taxes). You can go through an intermediary that takes on legally the role of the seller. It is that intermediary that then needs to track how much is sold in each state and country and how much tax is owed.
That's how it works for app developers selling through the Apple app store for example. Until tax laws are changed to be more friendly to micropayments directly to content creators, going through some kind of store that aggregates content from multiple creators is probably the best we can legally do.
[1] A sales tax is a tax on the sale of something. A use tax is a tax on having something. The big difference is that a state makes the seller collect sales tax, but use tax is suppose to be dealt with be the person who owns the thing. It used to be that states could not force sellers to collect sales tax unless the seller had a presence in the state. So states would impose both a sales tax and a use tax, and the use tax was the exact same rate as the sales tax and had a deduction for the amount of sales tax paid. The net result was that if you bought something from an in-state seller they collected sales tax and you owed no use tax. If you bought something from an out-of-state seller, no sales tax was collected and you owed use tax on the full purchase price. If you travelled to another state, bought an item and paid sales tax to that state then brought the item home, and that other state's sales tax rate was lower than your state's use tax rate, you owed the difference in use tax.
The use tax exactly equalling the sales tax and being discounted by any sales tax already paid is because the Constitution restricts the states from regulating interstate commerce. Applying a higher tax to goods from out out of state than you do to domestic goods would run afoul of that. By making it so that the total sales + use tax was the same for imported and domestic item the state was not interfering with interstate commerce.
But a few years ago the Supreme Court overturned the cases that had said that states could not force sellers with no in-state presence to collect taxes. Now states can make out-of-state sellers collect the sales/use tax so for most purposes there is not much point in distinguishing between sales and use taxes.
are there cool applications using Taproot and Schnorr? are lightning network openings and closings looking identical as any other transaction or script, improving confidentiality?
where are the current communities that talk about whats going on there? I don't visit bitcoin reddits anymore and the cryptocurrency communities are about pretty much everything else
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Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today.
We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations.
I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange.
Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale.
I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed).
I don't get it.
Let's be clear: when Google exploded, that was the growth of the Internet in the driver's seat, not demand for Google specifically. Google's growth was a side effect of the exponential growth of the internet because it solved a need where there was no adequate incumbent solution, and where demand for that solution was growing exponentially for reasons basically unrelated to the quality of the solution.
This isn't the case for crypto, because there's an incumbent solution that works fine. More specifically, in our analogy, money is the counterpart of the Internet. Crypto is in the position of needing to slowly sap market share from an incumbent (government fiat) in the same way that, for example, DuckDuckGo does even if you feel it's a superior product.
If Bitcoin was the first-ever instance of money, I assure you its growth profile would look like Google's did.
DAOs, NFTs, smart contracts, random tokens all seem less like good features and more like transparent scams or terrible ideas that don't work. It's fine if adoption is slow - but there should actually be something beyond Ponzi schemers and hackers stealing from each other. Drugs and tax evasion, sure, but how far does that take you?
Why (and when) will average users suddenly care "because blockchain"? They don't and won't (the usage numbers reflect this). They just want to get an answer to a question in seconds, Tweet their musings, endlessly scroll pictures on Facebook/Instagram/etc, or watch Youtube videos of cats, glitter bombs, or whatever. For free. As ridiculous as it is to me and most of HN the average person is even willing to have their TV and streaming services show them endless ads. They just like that they bought that 60" TV for $400 on Black Friday.
Even the censorship/de-platforming argument falls flat. It's been demonstrated that people (as a whole), going back to our tribal roots, prefer to engage with like-minded others. It is fundamental human nature and there have been multiple studies conducted that show it's wired in to our reward circuitry.
Trump gets booted off Twitter? Enter Truth, Parler, whatever where many millions of users moved in near record time. When it comes down to it people like echo chambers and they like free. Platform for free speech? Create a Truth account and start wandering in to flame wars that go against the political leanings there. You will get booted just as Trump got booted from Twitter.
This is where I think blockchain and lack of censorship is also fundamentally flawed. They don't want to pay XYZ in some random coin to make a social media post. They also don't want to bump in to child pornography or some other universally objectionable content (in the case of true to the mantra decentralized blockchain platforms without any form of "censorship").
The same argument goes for money. Almost no one cares - they want to swipe their credit card a few times a day and move on with their lives. They do not care about transaction fees, final settlement times, etc. It's invisible. Other than credit cards and cash the average person interacts with more complicated levels of the financial and banking systems a few times in their lives. They do not care if a lifetime of home ownership (as one example) cost them $50 in wire fees. They likely have no idea (and again don't care) how the 401(k) their employer set them up with actually works.
They also don't want to discover that their wallet has been hacked, their exchange collapsed, the value of their money dropped 20% overnight, or any of the other number of ways funds go "poof" with blockchain.
Similarly, no one will ever say "WOW I need blockchain in my life right now" but they might say "WOW I need to send some money" or "WOW some of my friends are making their money work for them maybe I too should do some speculating" or "WOW I distrust the government's control over the financial system" and blockchain will occasionally prove to scratch that itch.
"WOW I need to send some money". Enter: PayPal, Venmo, Trust Wise, and any number of others.
There are plenty of ways to gamble and speculate without touching blockchain if that's your thing. What's amazing is even a mafia bookie or the shadiest of casinos won't pull a Celsius on you.
Don't trust the government? With blockchain you're expected to completely trust yourself and any number of shady characters in the blockchain space. Clicked the wrong link and your wallet got hacked? Sorry. Forget your seed/passphrase? Sorry. Some defi exchange with a buggy smart contract (as if there are any that don't have bugs)? Sorry. Picked the wrong exchange and the people behind it faked their own death and disappeared with your money? Sorry. The list goes on and on.
Other than the absolute worst and shadiest governments in the world do you trust these factors and actors more? Does anyone else?
I sure did, and I wasn't alone. I remember thinking the existing search engines were trash long before google came around. The market was starving for a search engine that was user-focused and not 200% bought and paid for by marketers.
Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
Needless to say, I don't expect adoption to be comparable to that of a web search engine.
For actual products bitcoin (and blockchains like Ethereum with EVM) are the fundamental enabling layer. I like to think of them somewhat akin to TCP/IP or even HTTP. Where are the higher layer applications and use cases built on blockchain with instant and obvious utility to the average person walking down the street? This is what I was getting at with the decade plus of development and billions of dollars of investment.
The internet was a fundamental threat to all kinds of institutions - governments with censorship, big media (including state run), and even financial institutions. The internet provided instant untold value for democracy and free speech. Just widespread and instantly available encryption itself was a HUGE problem and threat to governments, law enforcement, militaries, intelligence agencies, etc. Remember the Clipper Chip "debate" and 40 bit encryption export controls? I do.
Yet the obvious value and utility was so clear even governments like China (with the Great Firewall) knew it was of such incredible value to the economy and clamored for by the citizenry they figured out a way to make it work within their system of government. Inside of a decade billions of people were using the internet to further democracy, free speech, and the dissemination of information.
But you still have distributed authorities, the owners of Bitcoin. The idea that one should be controlled by the interests of financial capital is anthitetical to free speech, freedom and self determination.
>Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
It doesn't, it entrenches the status quo. That is quite literally what deflation is, a reward for people who dominated the economy in the past.
> Google went from a research project to incorporated and usable on the internet in roughly two years
I don't think this is a fair comparison. Google is a late bloomer, being preceded by lukewarm online services AltaVista, Yahoo!, and AOL. Just like how Facebook became successful when MySpace did not, the latecomer can have a substantial advantage in speed and scale.
Moreover, Google is an application. The Internet is a platform. Google was founded several decades after the Internet. The first few decades of the Internet were clunky, slow, and expensive.
I would compare Bitcoin to the Internet. It is the raw, unsightly engine room that most people should not directly tinker with. Where are the killer applications that will run on top of Bitcoin? We're still figuring that out.
I don’t see why Bitcoin should be compared to the internet and why Google’s timeline should be compared to the internet vs world wide web.
They also tend to last forever once established: see e-mail.
Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?
I have friends that have fled war torn countries, dictatorships, etc and I'm glad blockchain now exists for that scenario but again - can that use case (fortunately very rare) justify tens if not hundreds of billions of dollars of investment and over 10 years of work?
This is what I don't understand.
I understand banking has problems (fiat is a much longer debate). What needs to be understood is how many of the 5 billion internet users think the benefit of blockchain justifies throwing out the entire financial (and often legal) system and operating in a parallel one? Not to mention the willingness of average people to essentially be their own bank. For this reason alone I think blockchain is a non-starter for the overwhelming majority of internet users.
How many people care? Answer is: a tiny portion. A very optimistic estimate of total blockchain "users" worldwide is in the range of 100m. 13 years and untold billions of dollars of investment to reach 2% adoption of the internet population isn't exactly a success story that speaks well to the utility of the solutions provided and the real world problems they solve.
Tax evasion, money laundering, trafficking, drugs, sanctions evasion etc.
Since the introduction of KYC it's very hard to do any of these in the traditional finance system. And each of them has very serious implications for people's lives.
I don't believe people are capable of grasping the nature of money. Money is supposed to be a medium of exchange yet everyone wants to turn it into a forced store of value with no consent, that is basically the equivalent of slavery.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?
Could you tell us what L1, L2, L3, L4 are in a credit card example?
Did you know that fiat doesn't even have a blockchain to withdraw to when you want to exit or switch payment network/provider?[0] Did you know that with fiat, the money supply can be changed arbitrarily?
Those are problems that Bitcoin still solves when you use an off-chain transaction network (at least for the many people who believe those are problems worth solving). Also, it's worth noting that the Lightning network is hardly centralized. It's a bit more centralized than Bitcoin but we're light years away from say, Paypal.
[0] The closest that comes to this is SWIFT, but it's not an open network. Even large payment systems like Paypal aren't connected to it. It's also not censorship resistant and you can't use it p2p.
Let me tell you a little story. A boy creates wealth, the government creates money in proportion to the wealth. The alternative is to succumb to incumbents, the wealthy, the aristocracy and ask them for permission whether you are allowed to create the wealth or not.
It is a weird line in the sand to me that something must either happen on a blockchain or not be the right solution, pretty much regardless of whether that blockchain's finality guarantees are worse if understood at all.
>The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)).
>While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance.
very cool to see this coming from the Federal Reserve Bank of Cleveland
The vast majority of energy consumed by the bitcoin network is in mining, and that's not impacted by any of this.
That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
So, LN does not reduce the incentive for Bitcoin miners in any meaningful way, unless I'm mistaken.
[0] https://github.com/breez/LightningRod
So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour.
And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
if we hadn't had NAT and reverse tunneling then things might have evolved differently. maybe a way to push data to phones over UDP or low power servers that could wake up to handle single requests. but it didn't play out like that.
Receiver of funds are normally merchants, and merchants normally already have payment systems that require some kind of connection anyway.
like Chivo? take out the middleman(Banks) and put governments back in control of the funds.
bingo :)
Think about it...
Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.
At its peak, there was only $200 million worth of BTC as collateral in LN channels:
https://www.defipulse.com/address-tag/lightning-network
This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC.
The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.
BTC as a store of value can have a very low volume and those LN could be responsible for an inordinant amount of volume, with low collateral depending on how fast the trades are.
With OTC, Wrapped versions, and leverage through sythetix its also an impossible task to be able to claim for certainty anyways.
Theoretically yes, in practice no.
Routing complexity increases as usage increases without a commensurate increase in channel collateral, because increased usage leads to more channels using up the collateral for one direction of transmissions, which eliminates the transmissibility of one of the two routes in the channel. The network would thus naturally see rising collateral - either in existing channels or in new ones - to maintain routing efficiency, as usage increases.
Beyond that, more individuals joining the LN would naturally lead to more collateral being added to it, as individuals create new channels with new stashes of respective collateral.
For these reasons, low collateral reliably maps to low usage.
Expedia, Steam and Microsoft not a likely reason cobnest ion got lowered. More likely exchanges and large players got better at handling their wallets.
The collateral in these channels is therefore a fair proxy for the overall size and usage of the LN.
Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's.
It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset.
The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was.
Can we move on already?
The fact is, most people would/will probably use custodial LN wallets, which is against some "crypto" postulates, and comes down to well known MySQL argument.
The difference is MySQL on Bitcoin vs MySQL on USD (Paypal). As we will see in the coming months, fiat itself is a lot like a MySQL.
So I would argue that there is nothing wrong with MySQL on Bitcoin, and in fact, is an upgrade on fiat.
So, merchants will adopt it but users won't? So why would merchants want to adopt it?
The fact that the USD didn't lose ~50% of its value in the last few months suggests the pro vs con is more mixed.
Channel-based scaling is hard, sure. But optimistic and ZK rollups on other chains have both proven to be strong scaling alternatives.
Likewise, not everyone needs to create their own Visa or MasterCard. They may have their MySQL/PostgreSQL implementation where they scale and allow for many TX/s. But they don't settle all these transactions in real time. That's also done on a different, slower layer.
It's not a real solution. It's something coiners distract people with whenever someone points out the obvious and glaring flaws of the L1.
[edit] To me it's pretty telling that critics offer specific quantifications (X people requires Y time) and proponents say "only some people need it!" - how many, exactly? How full do you anticipate blocks being with other things? How long is too long to open a channel? Currently it sounds like a Soviet phone line - better put in a request now otherwise you might be in your 80s before it gets installed.
I don't know why the internet thinks they can convince the world to use a new/better currency when they can't even make anyone switch off MySQL.