Will SegWit be enough to reduce fees?

[ahmad21]

Yes Segwit can reduce fees upto a great extent for many next upcoming bull runs. But it has some of its limitations while reducing transaction fees and times because it is not created to solve these problems. While LN on the other hand which is made to solve such problems is in itself a very complex concept of taking many transactions off chain. I think we need more solutions to reduce the traffic by increasing block size on the main chain. We need things which can be implemented using soft forks. Hard forks in today's times will be useless.

[bob123]

But it has some of its limitations while reducing transaction fees and times because it is not created to solve these problems.

SegWit has two big pros:
1) SegWit transactions are way smaller in size compared to legacy transactions
2) SegWit was the first step towards HTLC's (https://en.bitcoin.it/wiki/Hashed_Timelock_Contracts)

While LN on the other hand which is made to solve such problems is in itself a very complex concept of taking many transactions off chain.
I think we need more solutions to reduce the traffic by increasing block size on the main chain.

LN does only exist because of SegWit. The lightning network is just one (of many possible) implementations of HTLC's.
If the LN gets developed further and finally adopted and used, there won't be any reason to increase the block size anymore.
Additionally basically 'increased' the amount of TX's which can fit into a block x4.

We need things which can be implemented using soft forks. Hard forks in today's times will be useless.

You can't increase the blocksize in a soft fork. That would result in a hard fork.
And to be exactly.. in a pretty shitty one (look at bcash).

[FrueGreads]

I guess it all depends on the use the network will have. Right now we have low fees again, because there are no spam attacks going, and most users don't really do anything with their coins. The fees problem was greatly caused by exchanges like coinbase and gemini, but they seem to be finally correcting the problem by adoptiing segwit and batching their transactions.

I don’t think the current fee decrease is due to exchanges adopting Segwit and batching transactions.

1) Segwit adoption has not increased.
http://segwit.party/charts/

2) Num transactions has been going down but transaction value is also going down.
https://blockchain.info/charts/estimated-transaction-volume
If more transactions were batches shouldn’ t transaction value being going up?

I believe it’s just lower transaction volume.

But isn't transaction batching basically lowering the amount of transactions? so this could be part of that too.

Segwit penetration is still slow, and will remain slow until we have Core 0.16 and all major exchanges are supporting it. We are closer to that. So I would give a year after Coinbase finally accepts segwit to estimate if segwit adoption is being a failure or not.

We'll have to evaluate impact of LN now that it's on the mainnet.

And like Andreas A said... scaling is a never ending battle. And sometimes not scaling is a better move than rushing things and fucking things up.

What do you mean, that LN will hold back segwit adoption?

How could that be possible, if one of segiwt main reasons, if not the mot important, was to allow for the lightning network to be implemented with no issues. Not an expert, but it was something related to the network malleability. So I think that the LN will never hold back segwit adoption. Anyway, since segwit is implemented by default on the latest core wallet release, I think it's adoption will only grow from now. As for the question in this thread, "is it capable of solving the fees problems alone"? I don't think so, since that's the reason LN is being implemented.

I do have some doubts regarding the LN and segwit. Will exchanges use the LN for trading transactions? Wouldn't they need to run very "large" channels, and be the target of hacks? I know the channel needs to be funded, so where does the coins stay? Will they be able to hold the majority of their funds on cold storage, as they should?

[Spendulus]

I guess it all depends on the use the network will have. Right now we have low fees again, because there are no spam attacks going, and most users don't really do anything with their coins. The fees problem was greatly caused by exchanges like coinbase and gemini, but they seem to be finally correcting the problem by adoptiing segwit and batching their transactions.

I don’t think the current fee decrease is due to exchanges adopting Segwit and batching transactions.

1) Segwit adoption has not increased.
http://segwit.party/charts/

2) Num transactions has been going down but transaction value is also going down.
https://blockchain.info/charts/estimated-transaction-volume
If more transactions were batches shouldn’ t transaction value being going up?

I believe it’s just lower transaction volume.

But isn't transaction batching basically lowering the amount of transactions? so this could be part of that too.

Segwit penetration is still slow, and will remain slow until we have Core 0.16 and all major exchanges are supporting it. We are closer to that. So I would give a year after Coinbase finally accepts segwit to estimate if segwit adoption is being a failure or not.

We'll have to evaluate impact of LN now that it's on the mainnet.

And like Andreas A said... scaling is a never ending battle. And sometimes not scaling is a better move than rushing things and fucking things up.

What do you mean, that LN will hold back segwit adoption?

How could that be possible, if one of segiwt main reasons, if not the mot important, was to allow for the lightning network to be implemented with no issues. Not an expert, but it was something related to the network malleability. So I think that the LN will never hold back segwit adoption. Anyway, since segwit is not implemented by default on the latest core wallet release, I think it's adoption will only grow from now. As for the question in this thread, "is it capable of solving the fees problems alone"? I don't think so, since that's the reason LN is being implemented.

I do have some doubts regarding the LN and segwit. Will exchanges use the LN for trading transactions? Wouldn't they need to run very "large" channels, and be the target of hacks? I know the channel needs to be funded, so where does the coins stay? Will they be able to hold the majority of their funds on cold storage, as they should?

There are and should be doubts. There will be adversaries again probing for weakness and faults in the bitcoin, and now the LN protocols.

Meanwhile there is a huge and increasing lack of education and understanding on the protocol and the LN layer. In spite of the apparent slowness that we see in the implementation of LN, it seems that public understanding is not tracking with our technology but falls further behind.

Thus while we discuss issues with LN, BTC has just barely became something most or some people have heard of. Something that's vaguely like a stock. Maybe it's some magical internet money.

Is that gap between common understanding, and these technologies, increasing? Where does that lead?

Does it lead to some moment in which the common guy realizes there's a way he uses that bitcoin stuff to buy things with?

If so where is the technology by then?

[FrueGreads]

There are and should be doubts. There will be adversaries again probing for weakness and faults in the bitcoin, and now the LN protocols.

Meanwhile there is a huge and increasing lack of education and understanding on the protocol and the LN layer. In spite of the apparent slowness that we see in the implementation of LN, it seems that public understanding is not tracking with our technology but falls further behind.

Thus while we discuss issues with LN, BTC has just barely became something most or some people have heard of. Something that's vaguely like a stock. Maybe it's some magical internet money.

Is that gap between common understanding, and these technologies, increasing? Where does that lead?

Does it lead to some moment in which the common guy realizes there's a way he uses that bitcoin stuff to buy things with?

If so where is the technology by then?

Although I think that investors should have some decent knowledge about bitcoin technology, and this of course leads to some knowledge about segwit and LN (otherwise how will they decide to invest in bitcoin). I completely understand that it's users (and I'm separating users from investors here), won't have a great understanding on how it all works, and just want to be able to use BTC as a payment method it in a simple and easy manner.

I actually think that some of the bitcoins greatest problems to be solved, in order to get global adoption, will be related to how "common people", with no interest from tech stuff, will be able to use bitcoin. I mean, some people don't even know how to use windows well, and that's very user friendly. I know some old people that don't enjoy using debit cards, because they think it's to hard. Of course these might be extreme cases, but the gap you were mentioning will always exist, and it's perfectly normal.

[jhache]

Currently, segwit is enough to reduce the fees. The fees for segwit transactions is going as low as 1sat/byte and I think its reasonably fair to say that we won't have to get into the topic of looking for a solution to reduce the transaction fees for a long time. Also, with lightning network coming there isn't much need for fees to get lower as LN fixes that issue.

[Thirdspace]

segwit would be enough for the time being
you can set fee less than 10s/B and still get confirmation relatively fast now
but LN and other improvements still needed for the never ending scaling problems

[bob123]

Will exchanges use the LN for trading transactions?

What do you mean with 'trading transactions' ?
The moment you are trading coins on an exchange no transaction happens.
The coins are owned by the exchange at that moment. The next TX happens when people withdraw.

An exchanges uses transaction to 1) pay withdrawals 2) move funds from/to cold wallet 3) batching/consolidating.

Wouldn't they need to run very "large" channels, and be the target of hacks?

Just like they need to have 'large' amounts in a hot wallet to let people withdraw. They are the prior target of hacks regarding crypto currencies, regardeless of LN.

I know the channel needs to be funded, so where does the coins stay?

You might want to read the LN whitepaper: https://lightning.network/lightning-network-paper.pdf

Will they be able to hold the majority of their funds on cold storage, as they should?

Yes. Just like they have their hot and cold wallet now, they will have their cold wallet and fund their channel (LN hot wallet) with it.

[Shenzou]

Bitcoin fees have been quite a problem and even though it's not that bad at the moment. However, the bitcoin network gets overloaded again during next bull run, fees will rise again. If bitcoin truly becomes mainstream will SegWit be enough to keep fees down? I know the lightning network is coming, but that only fixes payments after you have funded a channel. If bitcoin truly becomes mainstream all over the world, an obscure amount of new channels will have to be funded through the bitcoin network all the time. Thoughts?

Segwit have never promised for transactions to have lower fees, its whole pourpose is to get faster confirmation time, but it may have an affect on it some way or another, segwit promises that transactions will have their size decreased wich means it will take less space in the block making room for more transactions, so less transaction to be stuck and be unconfirmed, which is the reason behiend the fees going up.

[bob123]

Segwit have never promised for transactions to have lower fees, its whole pourpose is to get faster confirmation time

SegWit's purpose is not to get 'faster confirmation time'. The confirmation time (aka timeframe between 2 blocks) conforms ~10 minutes (on average).
This is hardcoded into the bitcoin protocol. Only a hardfork could change this value (which would create a new coin).

segwit promises that transactions will have their size decreased wich means it will take less space in the block making room for more transactions

SegWit doesn't 'promise' anything. SegWit basically, among other things, reduces redundant data from transactions, making them smaller in size.