Reasons why Lightning Network will fail

[fabiorem]

Segwit got activated 6 months ago and only 10% of users use it.

That's because segwit was badly implemented. There's no buttom on QT to create segwit addresses, you have to use a console command.

You cant expect the average user to be writing console commands, specially when most of them dont even have patience to synch the entire blockchain, and prefer smartphone wallets instead.

Also, segwit only gave me a 15% discount when I tested it. To send 100k satoshis, you still need to pay approximately 80k satoshis in fees, sending from a segwit address.

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[podyx]

Isn't it possible to make lightning network work in an easier way so that the average user won't even know they are using it?

[The Scorpion]

To be honest, Lightning Network is too long and difficult to understand to become mainstream, it adds difficulty to understand cryptocurrencies. The LN is so complex

If you really know how to use it, i think that everybody would start using it in order to avoid having to pay more than $18 worth of fees.

I prefer to pull out my ass to pay $0,01 of fees, instead of doing it by the easy way to pay $18 for the SAME.

[poor-yorik]

Isn't it possible to make lightning network work in an easier way so that the average user won't even know they are using it?

It should come with time when it gets traction. And don't forget that in most cases it is not up to the users to deal with all the gory details of Lightning Network intricacies because most users don't even use desktop wallets in the first place. They use online wallets like }{apo and Coinbase or even exchange accounts as their wallets.

[murrayrothbard]

Isn't it possible to make lightning network work in an easier way so that the average user won't even know they are using it?

It should come with time when it gets traction. And don't forget that in most cases it is not up to the users to deal with all the gory details of Lightning Network intricacies because most users don't even use desktop wallets in the first place. They use online wallets like }{apo and Coinbase or even exchange accounts as their wallets.

In the meantime BCH gains mass adoption

uups i said jehovah(BCH) 

[Deeyoh]

Mass adoption? You been smoking to much of the Bhash stuff. LOL   Just look at the transactions on each. 10's of thousands on BTC and a few hundred at most on Bcash.  It's another useless altcoin but you can still believe what you like.

Here go admire the BCH ghost highway.  https://txhighway.com/

[penig]

Why is BCH coming up in this discussion?  They have exactly the same root problem as BTC, with no LN or equivalent (unless they intend to just copy it over).

Back to the matter and the original points raised, which ones are wrong?  Maybe not every detail is correct, seems to be a fair assessment overall.  LN is not going to solve much unless firstly its embedded into bitcoin clients as the default, and secondly people go through hubs.  Obvious candidates for this are the exhcnages that have large liquidity and most people will have used as some time.  Embrace this, or bitcoin will not succeed, because the alternative of no LN is bitcoin suffocates under the weight of its use.

[poor-yorik]

Why is BCH coming up in this discussion?  They have exactly the same root problem as BTC, with no LN or equivalent (unless they intend to just copy it over).

That would be a huge pile of hypocrisy when in the end they will have to copy LN from Bitcoin Core after it takes off big time with regular Bitcoin. Right now the only advantage that BCash enjoys is fast and cheap transactions. Well, it is actually two advantages but both will quickly disappear when LN takes root for real.

[murrayrothbard]

Why is BCH coming up in this discussion?

Because it is a fork of bitcoin and does not have these problems.

Embrace this, or bitcoin will not succeed, because the alternative of no LN is bitcoin suffocates under the weight of its use.

thats an argument by assertion and not true

[cellard]

Segwit got activated 6 months ago and only 10% of users use it.

That's because segwit was badly implemented. There's no buttom on QT to create segwit addresses, you have to use a console command.

You cant expect the average user to be writing console commands, specially when most of them dont even have patience to synch the entire blockchain, and prefer smartphone wallets instead.

Also, segwit only gave me a 15% discount when I tested it. To send 100k satoshis, you still need to pay approximately 80k satoshis in fees, sending from a segwit address.

Core has been delaying proper segwit function at the GUI level because they don't want to push it into the system prematurely so they only let experienced users to access segwit functionality with the command lines.

With 0.16 it will be on the GUI and anyone will be able to use it as usual just like legacy addresses.

Coinbase has said that they are working on segwit and also on lightning network, check their twitter. So soon enough we will see a massive increase in segwit usage and late on on lightning transactions.

Concerns explained by OP will be taken care off eventually by making user friendly GUI's.

Ultimately, we will find out if it's a failure or not once it's working at scale. What is clear that will be a failure is the "blocks-as-big-as-needed" route (BCH)

[d5000]

Some of the points the OP mentions (particularly point 1, 2, 6 and 7) have some truth in it. These points are the reason why I think that LN won't be used for very big payments.

But even then, it can be a huge success. Imagine it as the Bitcoin equivalent of a prepaid card which you can use to shop online and offline, pay your coffee, etc. etc. And with a channel to your exchange you will be able to "reload" your account at any time.

In my opinion, LN will not be the "second layer", but the third or even fourth layer of the "final" Bitcoin ecosystem. For me the most likely candidate for Layer 2 are sidechains (including slight variations of the concept like child-chains or extension blocks); their tokens would be pegged to BTC via mechanisms like "Drivechain" (or perhaps better ones) and would be easily tradeable for other sidechain tokens via atomic swaps.

There would be no need for a separate LN on top of each sidechain as LN is also capable to achieve connections between different blockchains (a concept TenX, for example, is exploring) and thus it would be a single third layer on top of all sidechains. While sidechains would be used for mid-to-large transactions, LN would be the micropayment layer.

[CryptoTesla]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel
* Users can defraud each other in a channel, so they have to continually check if somebody is defrauding them.
* Unless you have a direct channel to your target, there is NO guarantee AT ALL that you can pay the person you want to pay.
* Users need to be online 24/7 if they want to be part of a payment route. If a user is offline, this particular route is not possible which of course has huge impact on the possible routes.
* Insane amounts of data are being sent because the network needs to be aware of EVERYBODY's payment channel's state (otherwise it can't discover a route)
* You still have huge fees if you want to wire money into/outside the channel.
* It's not feasible at all for bigger payments. Let's say you have to pay $1500 rent/month, are you going to open a payment channel and deposit 3 years rent in it ? Most people have difficulties enough coughing up the next month. But if you have to wire every payment into the channel, then you could just as well pay on-chain because you're paying that exact same on-chain fee.
* It's also not feasible for very small payments/channels. If you open a $30 channel with your coffeeshop to buy a few cups of coffee per week, then the price of your coffee doubles because of the huge fees to open/close the channel.
* Who is going to lock up his money in several channels anyway ? Liquidity, needed for routing money, is going to be a problem
* Very difficult to use and explain to users. No way your mother let alone grandmother is going to understand all this.

1 - True, but LN is meant (in my opinion) for small transactions anyway, so this is less of a problem than you're claiming it to be. Also, at a certain adoption level there will be multiple payment routes.
2 - Correct, but why is this such an issue? Is this a manual thing you have to do all the time?
3 - Correct, but there are no guarantees in many things. If you care about all your intended payments being possible in the early stages you will make sure you are connected via multiple channels which will reduce this risk.
4 - I think a lot of people will run nodes 24/7 to earn fees and they will become (mini) hubs. I know hubs are bad for decentralization, but not if there are many of them.
5 - Not sure on how the amount of data would compare to for instance the data stream for huge blocks so we can all buy beer (why does it always have to be coffee?) with our BTC
6 - They don't have to be huge if LN is used and that reduces the load on the blockchain. I also think the blocks will eventually be increased, just not to the gigabyte blocks bcash is talking about, but to whatever is needed and doesn't lead to centralization (8mb? 32mb? who knows?)
7 - LN is not meant for these amounts in my opinion, but still you don't have to have a channel with everyone you interact with. Payment providers could solve this.
8 - You don't have to do it directly with the coffee shop, lowest level users will end up having a channel with a payment provider who will have a channel or routes to the shop.
9 - I have several bank accounts, I see no problem here. Why do you see the funds as 'locked up'? They are in a channel so they can be used. Do you consider your money at the bank as 'locked up'?
10 - I doubt your mother or grandmother know how a phone signal works or maybe even how a car engine works. Doesn't mean they can't call or drive.

[sjefdeklerk]

I'm happy that you agree with pretty much all of my points. The other ones:

9 - I have several bank accounts, I see no problem here. Why do you see the funds as 'locked up'? They are in a channel so they can be used. Do you consider your money at the bank as 'locked up'?

This really is something different. You can ALWAYS pay ANYBODY from each of your bank accounts. In LN this is not the case, in fact, you open the channel BECAUSE this is not the case. If it was the case why have several channels in the first place?

10 - I doubt your mother or grandmother know how a phone signal works or maybe even how a car engine works. Doesn't mean they can't call or drive.

A lot of functionality can be hidden behind the GUI. But still there are essential parts that can't be hidden and you really need to understand quite a bit of LN in order to operate. For example, when is it a good idea to open a channel ? How to do that? When to route? How long is the money locked up my channel? How can I get it out? Etc etc. This is way more complicated than regular banking. Of course in theory you can even hide all that to the user so that all that's left is a simple 'sendto' button. But this is highly uneconomical, which user wants to risk the high on-chain fees when he buys a simple cup of coffee?

[DooMAD]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel

So you'll end up taking a different route, most likely without you even noticing.  You aren't forced to route through people with insufficient funds.

* Users can defraud each other in a channel, so they have to continually check if somebody is defrauding them.

But if someone does attempt to defraud you and you catch them, you can take their funds.  That's a rather strong disincentive to try ripping people off.

* Unless you have a direct channel to your target, there is NO guarantee AT ALL that you can pay the person you want to pay.

Which is why Lightning is completely optional and you can still send regular payments to be confirmed directly on the blockchain, just like you always have done.

I don't see how any of these will result in LN "failing".  The more accurate thread title would have been "There are occasions when LN transactions will be less viable than normal transactions", but I guess that doesn't have the same kind of alarmist fearmongering tone you felt the desire to convey.

[sjefdeklerk]

So you'll end up taking a different route, most likely without you even noticing.  You aren't forced to route through people with insufficient funds.

My point is that there simply might not be a route with enough funding.

But if someone does attempt to defraud you and you catch them, you can take their funds.  That's a rather strong disincentive to try ripping people off.

It is. But you're never 100% sure, which means that you actively NEED to monitor all of your channels for fraud. That's really a big downside.

Which is why Lightning is completely optional and you can still send regular payments to be confirmed directly on the blockchain, just like you always have done.

This is no argument at all.

I don't see how any of these will result in LN "failing".  

These are some serious problems with LN which will most certainly ensure this will never become a big success.

[d5000]

So you'll end up taking a different route, most likely without you even noticing.  You aren't forced to route through people with insufficient funds.

My point is that there simply might not be a route with enough funding.

This may be a valid point. But I suppose that it could be possible to send the money in smaller packets, one after the other. Or sending a part of the amount on one route and the rest on another one - most likely this would be the easier method, because in this case both partial payments could be managed simultaneously.

But I think that would be an exceptional situation and should be treated as one. LN isn't really made for big payments anyway. Most likely, the higher the payment amount, the harder it would be to find a "decentralized" route which evades the big nodes like exchanges or specialized LN hubs. So if people started to use it massively for big payments a more centralized structure could emerge. I would prefer instead to use sidechains for mid-to-large payments.

[sjefdeklerk]

LN isn't really made for big payments anyway.

For micropayments it will probably work better. But for anything above, say, $200 it already might become unusable. And who is going to use bitcoin to pay $200 when they need to pay $70 on-chain fee?

[digaran]

LN isn't really made for big payments anyway.

For micropayments it will probably work better. But for anything above, say, $200 it already might become unusable. And who is going to use bitcoin to pay $200 when they need to pay $70 on-chain fee?

You don't need to pay $70 for $200 transfer, you are not forced to use Bitcoin if you are not limited by traditional system, you could use LN like people are using Electrum, normal users would connect to LN hubs. you could have $200 when you pay a hub $200, your money is always there for you to spend from, that hub has to be a centralized hub for you to leave your money with them, even if they close their channel, they would fund another one.

Hubs would never block your $200, nobody would trust them if they do. you could even give them another coin, if you don't want to pay a high fee sending your $200 to fund a channel.

Bitcoin or other coins are not fiat money to be used for beer, a nation of 80 Million terrorists could use them and pay the high fees if they could send and receive $200 Million without the thieves in the US blocking their funds.

[Samarkand]

... So if people started to use it massively for big payments a more centralized structure could emerge. I would prefer instead to use sidechains for mid-to-large payments.

Why wouldn´t you use the main blockchain for mid-to-large payments? After all the main blockchain
will work just fine after the Lightning Network is widely adopted and you can still decide to use it
instead of making a transaction using the Lightning Network.

Using a sidechain seems unnecessary if you can simply continue to use the main layer.
For mid-to-large payments the fees are negligible as a percentage anyway.

[hisslyness]

* The maximum amount you can pay in a certain route is determined by the guy with the LEAST amount of money in his channel
* Users can defraud each other in a channel, so they have to continually check if somebody is defrauding them.
* Unless you have a direct channel to your target, there is NO guarantee AT ALL that you can pay the person you want to pay.
* Users need to be online 24/7 if they want to be part of a payment route. If a user is offline, this particular route is not possible which of course has huge impact on the possible routes.
* Insane amounts of data are being sent because the network needs to be aware of EVERYBODY's payment channel's state (otherwise it can't discover a route)
* You still have huge fees if you want to wire money into/outside the channel.
* It's not feasible at all for bigger payments. Let's say you have to pay $1500 rent/month, are you going to open a payment channel and deposit 3 years rent in it ? Most people have difficulties enough coughing up the next month. But if you have to wire every payment into the channel, then you could just as well pay on-chain because you're paying that exact same on-chain fee.
* It's also not feasible for very small payments/channels. If you open a $30 channel with your coffeeshop to buy a few cups of coffee per week, then the price of your coffee doubles because of the huge fees to open/close the channel. Your only option is to route and HOPE there IS a route.
* Who is going to lock up his money in several channels anyway ? Liquidity, needed for routing money, is going to be a problem
* Very difficult to use and explain to users. No way your mother let alone grandmother is going to understand all this.

Lightning Network is just getting off it feet! Just like the Internet was in the 90's. IPv4 was the only main protocol to route, we now have IPv6 implemented. Did you know DNS Resolution was a text file that was updated and sent to other computers/nodes?

Who knows, once LN becomes main stream, they may find out ways to implement a "routing table" or "BGP" to help determine payment channels. Payment channels may become more dynamic and can be open and closes freely without incurring onchain cost.

In other words, you can not say "Lightning Network will fail" without understanding all the possibilities of what this concept/technology can do. You really need to think 5/10/15/20 years from now, not what is happening now, else you may as well say Bitcoin is a failure! In fact all Crypto are failures.