Lightning Network Question: Cost to open / close a channel

[Avz]

As far as I understood a LN Channel is open and closed by their participants by broadcasting and confirming transactions on the chain, so they only pay those transactions fees and not all the other they may do while the channel is open. If that is right, the LN would work only for recurrent payments and not occasional transactions, right?

If I go everyday to the same coffee shop it would be worthy to open the channel with them, but not if I'm passing by one and decide to make a one time purchase. It seems that we are putting to much hope on the LN, but it wont solve a lot of problems. Is there anything I'm not getting right?

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[achow101]

As far as I understood a LN Channel is open and closed by their participants by broadcasting and confirming transactions on the chain, so they only pay those transactions fees and not all the other they may do while the channel is open.

Yes.

If that is right, the LN would work only for recurrent payments and not occasional transactions, right?

Kind of. Having an open payment channel with one party is really only good for recurring payments. However the lightning network expands beyond the one channel. You can have a channel open with someone who has a channel open with other people, and they have channels open with other people and so on. One of the main ideas of LN is that you can send occasional transactions by routing a payment through multiple payment channels that people have open with each other.

Suppose Person A has a channel open with B, and B has one with C. If A wanted to pay C, they could send money to B and B sends money to C via their respective open payment channels. The transactions used for this sending are special and make it so that the money will only actually move under specific circumstances. These transactions are called Hashed Timelocked Contracts. They make it so that B can only get the money from A if they have forwarded the money to C.

[nicosey]

Isn't that just a standard transaction fee?  Is there any reason why it could be different?

[Carlton Banks]

Isn't that just a standard transaction fee?  Is there any reason why it could be different?

The 2-2 multisig will increase the size of the transaction compared to standard P2WPKH transactions.

The signature will be larger in proportion to the actual transaction information, so I think that will mean the fee increase is calculated differently than for regular P2SH multisig.... cannot fully remember how though (this is the implications of Segwit in operation, to explain)

[Avz]

As far as I understood a LN Channel is open and closed by their participants by broadcasting and confirming transactions on the chain, so they only pay those transactions fees and not all the other they may do while the channel is open.

Yes.

If that is right, the LN would work only for recurrent payments and not occasional transactions, right?

Kind of. Having an open payment channel with one party is really only good for recurring payments. However the lightning network expands beyond the one channel. You can have a channel open with someone who has a channel open with other people, and they have channels open with other people and so on. One of the main ideas of LN is that you can send occasional transactions by routing a payment through multiple payment channels that people have open with each other.

Suppose Person A has a channel open with B, and B has one with C. If A wanted to pay C, they could send money to B and B sends money to C via their respective open payment channels. The transactions used for this sending are special and make it so that the money will only actually move under specific circumstances. These transactions are called Hashed Timelocked Contracts. They make it so that B can only get the money from A if they have forwarded the money to C.

that was very enlightening. Thank you very much!
It seems just a question of it being properly developed and largely adopted, so there is liquidity in the system

[Kprawn]

As far as I understood a LN Channel is open and closed by their participants by broadcasting and confirming transactions on the chain, so they only pay those transactions fees and not all the other they may do while the channel is open.

Yes.

If that is right, the LN would work only for recurrent payments and not occasional transactions, right?

Kind of. Having an open payment channel with one party is really only good for recurring payments. However the lightning network expands beyond the one channel. You can have a channel open with someone who has a channel open with other people, and they have channels open with other people and so on. One of the main ideas of LN is that you can send occasional transactions by routing a payment through multiple payment channels that people have open with each other.

Suppose Person A has a channel open with B, and B has one with C. If A wanted to pay C, they could send money to B and B sends money to C via their respective open payment channels. The transactions used for this sending are special and make it so that the money will only actually move under specific circumstances. These transactions are called Hashed Timelocked Contracts. They make it so that B can only get the money from A if they have forwarded the money to C.

How long can these channels stay open? What happens if I send a tx to C and B closed his/her channel? Will it automatically

resend the tx to C? I am still trying to get my head around the whole concept and how this will impact the Blockchain. Will

the LN still generate enough tx's to sustain miners fees for miners to continue mining or will they have to switch to running

LN hubs to complement their income? .... Lots and lots of open questions. 

[achow101]

How long can these channels stay open?

Indefinitely.

What happens if I send a tx to C and B closed his/her channel?

Then the transaction fails. C does not get his money from B and B does not get money from A.

Will the LN still generate enough tx's to sustain miners fees for miners to continue mining or will they have to switch to running LN hubs to complement their income?

No one knows; that requires predicting the future.

[dadrdalk]

What happens if I send a tx to C and B closed his/her channel?

Then the transaction fails. C does not get his money from B and B does not get money from A.

So if you use such chain for multiple payments and one participant in the chain closes prematurely, it is as if no payment has happened? Or is anything preventing this scenario?

[achow101]

So if you use such chain for multiple payments and one participant in the chain closes prematurely, it is as if no payment has happened? Or is anything preventing this scenario?

No. Each send acts individually. If you make 3 payments and are in the middle of a fourth when one party in the chain closes a channel used in the payment, then only the fourth payment does not go through. The rest remain untouched. Note that this scenario can only happen if the preimages for the HTLCs are not available to everyone which means that the payment is not yet complete.