Lightning Network

[NODEhaven]

Does anyone else see the Lightning Network as a way for large BTC holders to become like banks and get the fees that were designed to go to the miners?  The layers sure sound like the intermediaries that Satoshi invented Bitcoin to thwart.  Long term, miners are needed to continue to secure the system and if there is no incentive or fees then it will be very easy for someone to 51%.

Edit: After doing some soul searching, the Lightning Network may not be an overt attempt to take fees from miners, but it does raise serious concerns.  Keep in mind that fees are paid by $/kB not by transaction amount.

There are many layers or intermediary already in place, but this seems to be implemented by the core team itself.  This is what concerns me.

The more I think about it, this may be one of the reasons why large institutions and family offices are making very very large purchases of BTC.  I have had requests for 100k - 500k BTC from credible sources.

Edit: I do think that it favors the large BTC holders over the miners.  Miners have to pay operating costs of mining and have to churn the BTC to keep the system going.  If you build a layer on top that receives fees for holding BTC, is this fair to the miners?

I do realize this competition of interests was built into the Bitcoin design.  Early adopters would have the advantage and miner reward diminishes.  This is when fees of the system are supposed to support mining.  If the core implements an automatic way for large BTC owners to essentially POS then it will be self defeating.  They may lower security for the entire system even though they may have good intentions.

There is also a regulatory issue. Why do you think ETH is dragging their feet on POS?  If the core team implements a system that provides a reward for payment channels they have now, most likely, pushed BTC into security terroritory.  And that is right where the Institutions would want it.  It would limit access. Thoughts?

Edit: this isn’t a plug for BCH.  I am just thinking long term about the viability of mining which is the backbone of Bitcoin.

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[gta3uzi]

I'm not sure what you mean, "automatic way to POS."

From a miner's perspective - I like LN. There will be always be some level of channel churn, and if LN means 1,000 tx's fit into the space of 30tx's previous - then that really increases the potential tx fees I collect per block.

As a miner it is my dream for the coinbase incentive / tx payouts to flip. I.e. 12.5btc coinbase + 20btc tx (for illustrative purposes.)

[QWeB]

I think, it is right idea.

Additionally achievement is that all full lightning nodes need full bitcoin node. If nothing changes, it will be very good for increasing decentralisation of main bitcoin network. I hope so.

The main present time problem of LN is that very few amount of transactions are pass now (statistics of my own node "LENINGRAD"). The second problem is that more then half channels lower than 2$ and can't be used for real payment transactions.

I hope, situation will change after LN release.

[Xester]

One of the reason why the lightning network is being implemented is because it wanted bitcoin to realize its main purpose which is a medium of exchange. But because of slow confirmation speed and high transaction fees it is possible somehow to mainstream bitcoin and use it in our daily lives. Thus lightning network is the answer to mainstream bitcoin into all walks of life wherein we can buy coffee in the streets and many more. Also the POS algorithm will attract more users since this time the fees from transactions will go back to the users.

[hugeblack]

I do not think, Lightning Network is an option to pay

In fact, you are not forced to use channels to make payments, especially if the amounts are large and the transmission periods are sporadic or away. In that case, using the Bitcoin addresses is more comfortable than creating a channel.

Note that the lightning network is useful only in the case of small and frequent payments so it will not affect the fees of miners.

[jseverson]

On-chain transactions are still going to be necessary, so it's not like miners won't be getting fees anymore. If we were to assume that Bitcoin will reach mainstream adoption with the Lightning Network, while there would be less on-chain transactions, there shouldn't be any shortage.

As far as monetizing the Lightning Network fees go though, I've heard it would be difficult because everyone can run their own. It would be a race to the bottom, basically, though I haven't really gone in-depth as to how it would work in practice.

Either way, considering the fact that miners will still be receiving rewards for the next century or so, it may be too soon to worry about this problem lol. It may be wiser to see how things are going to turn out with the Lightning Network first.

[MiF]

On-chain transactions are still going to be necessary, so it's not like miners won't be getting fees anymore. If we were to assume that Bitcoin will reach mainstream adoption with the Lightning Network, while there would be less on-chain transactions, there shouldn't be any shortage.

As far as monetizing the Lightning Network fees go though, I've heard it would be difficult because everyone can run their own. It would be a race to the bottom, basically, though I haven't really gone in-depth as to how it would work in practice.

Either way, considering the fact that miners will still be receiving rewards for the next century or so, it may be too soon to worry about this problem lol. It may be wiser to see how things are going to turn out with the Lightning Network first.

If that lightning network will run smoothly, then it isn't a problem for those who can afford to invest with that on chain transactions. The miners will still be getting those fees, but not like with those previous time that miners fee was having huge amount of transaction fees. Hopefully this can be implemented and could really help the blockchain network transactions to be running successfully in the future, with minimal delays compared of what everybody was experiencing  in the recent years.

[squatz1]

While this is a way to 'take the fees' from the miners, you must also look at it as a wakeup call to try to shake miners to change with the supporters of the LN. If the LN supporters show that they could easily leave them, and most people support them in this endeavor, then they're going to change quickly to keep the people happy so they're able to keep a portion of the fees they're getting now. Cause some fees are a LOT better then nothing. As the LN is pretty cheap as the only payment is going to the nodes.

So yes it is, but it is also a way to make the miners change for the better of bitcoin.

[JesusCryptos]

The Lightning Network is just a way to have the Bitcoin system working - if you still had transaction that cost 30$ like it happened in December Bitcoin would be already dead.

[Zin-Zang]

I'm not sure what you mean, "automatic way to POS."

From a miner's perspective - I like LN. There will be always be some level of channel churn, and if LN means 1,000 tx's fit into the space of 30tx's previous - then that really increases the potential tx fees I collect per block.

As a miner it is my dream for the coinbase incentive / tx payouts to flip. I.e. 12.5btc coinbase + 20btc tx (for illustrative purposes.)

And you are clueless to how LN works.

Those 1000txs Offchain will not pay you a penny unless someone cashes out at the end onchain.
But up that number to millions/billions of transactions offchain that you never see a penny for.

The Fact is LN Goal is to Eventually Lock ALL bitcoins in place and only use the LN network, the same way our crappy fiat system works.

If you are really a miner , then you are a fool to support LN as it's primary objective is to put you out of work.

Just letting you know you are going to need a new job if LN succeeds, so better start looking now.  

Oh, and if you actually think you are going to run a giant LN Hub,  you better have the resources to buy a banking license and submit to all KYC regulations , because the US Gov. is going to be so far up your butt, you will be a hand puppet.  So much for the freedom satoshi hoped for.  

Start thinking now, if all transactions occur offchain for even 6 months at a time, how long can you afford to keep buying new asics and keep the electricity running.
Not Long,  I wager.

[fuer44]

more details, the lightnign network ready settled over the blockchain network. so it will happen automatically when a transaction occurs, but i not know for the miners.

[pooya87]

No. instead Lightning Network will increase the revenue of miners even more!

basically for two simple reasons. first is as others said above, the on-chain transactions will still happen. in fact LN requires on-chain transactions and on-chain scaling to work best.
and second is because there is nothing stopping miners who already process transactions to run a LN node on top of their setup and gather small LN fees on top of what they are earning from mining! (the increased revenue part).

p.s. it is NOT PoS so stop comparing LN with it.

[gta3uzi]

And you are clueless to how LN works.

Those 1000txs Offchain will not pay you a penny unless someone cashes out at the end onchain.
But up that number to millions/billions of transactions offchain that you never see a penny for.

How will people avoid channel churn?

[Zin-Zang]

And you are clueless to how LN works.

Those 1000txs Offchain will not pay you a penny unless someone cashes out at the end onchain.
But up that number to millions/billions of transactions offchain that you never see a penny for.

How will people avoid channel churn?

Do you mean?
The Churn Rate is the annual percentage rate at which customers stop subscribing to a service.

In Answer to your question read the post right below this one.
But Basically once the Banking Cartels have run the Bitcoin Core Miners out of business and they are the only ones running asics to keep the chain barely moving.
They Will Jack up the ONCHAIN Fees to the point , you can't afford to move the coins and they will seize it as dust or you spend it all in their LN network to avoid the onchain fee.
Since they can move it for free, they will continue consolidating their dominance of Bitcoin Core.  

[Zin-Zang]

No. instead Lightning Network will increase the revenue of miners even more!

basically for two simple reasons. first is as others said above, the on-chain transactions will still happen. in fact LN requires on-chain transactions and on-chain scaling to work best.
and second is because there is nothing stopping miners who already process transactions to run a LN node on top of their setup and gather small LN fees on top of what they are earning from mining! (the increased revenue part).

Ok,
Lets remove the bitcoin reward since it is dropping every 4 years anyway.

Bitcoin Core Miner makes $1 per transaction , lets say he has 2000 transactions per block , so he make $2000 per block.

LN activates and 1500 of those transactions are lost to LN. Cutting the Bitcoin Miner down to $500 per block.

LN Hub require additional resources especially extra bandwidth and DDOS protections, so that adds to the miner monthly costs.

But here is a little tidbit, LN hubs will require additional licenses at the low end a money transmitter license at the high end and most likely a Bank License,
either way LN Hubs will be forced to comply with the US AML/KYC regulations.
So lets say the miner was actually able to satisfy those requirements at no additional costs (which to be honest, they won't be able to afford a banking license).

They activate their LN Hub, but none of the other hubs will make channels with them, so they don't make any money from LN fees.
The Reason is the Big Players like Banking Cartels have purchased a large % of Bitcoin Core's coins, and are creating channels with other banks owned LN hubs.  
(Centralization at work)

So the Bitcoin Core Miner is no longer able to afford to run his warehouse full of energy sucking asics and goes out of business.

The Banking Cartels open a small asics operation, which they run at a loss, but using their profits from LN fees, it is essentially free for them to run it.

The above is the basic plan of how the Banking Cartels will Dominate Bitcoin Core using LN.

[qiwoman2]

I wish all Bitcoin h0lders could earn from network transactions and fees to be honest. Miners and big whales are the ones that benefit most from holding Bitcoin. Can you imagine if there was this idea that if we held Bitcoin we would earn a portion of the network transactions we would all benefit from the fees. So many new holders would invest in Bitcoin, but of course Bitcoin now has lost it's currency for the people feel.

[JoshuaBlack1]

Does anyone else see the Lightning Network as a way for large BTC holders to become like banks and get the fees that were designed to go to the miners?  The layers sure sound like the intermediaries that Satoshi invented Bitcoin to thwart.  Long term, miners are needed to continue to secure the system and if there is no incentive or fees then it will be very easy for someone to 51%.

There are many layers or intermediary already in place, but this seems to be implemented by the core team itself.  This is what concerns me.

The more I think about it, this may be one of the reasons why large institutions and family offices are making very very large purchases of BTC.  I have had requests for 100k - 500k BTC from credible sources.

I do realize this competition of interests was built into the Bitcoin design.  Early adopters would have the advantage and miner reward diminishes.  This is when fees of the system are supposed to support mining.  If the core implements an automatic way for large BTC owners to essentially POS then it will be self defeating.  They may lower security for the entire system even though they may have good intentions.

There is also a regulatory issue. Why do you think ETH is dragging their feet on POS?  If the core team implements a system that provides a reward for payment channels they have now, most likely, pushed BTC into security terroritory.  And that is right where the Institutions would want it.  It would limit access. Thoughts?

Edit: this isn’t a plug for BCH.  I am just thinking long term about the viability of mining which is the backbone of Bitcoin.

I think without the updates the fees would have just killed off bitcoin. Especially when you are paying $60 dollars to send a dollar which is how bad it got at some points in summer. This is a very interesting perspective I have to admit. Wasn't satoshi original idea to have bitcoin as a means of payment though?

[Pursuer]

I wish all Bitcoin h0lders could earn from network transactions and fees to be honest. Miners and big whales are the ones that benefit most from holding Bitcoin. Can you imagine if there was this idea that if we held Bitcoin we would earn a portion of the network transactions we would all benefit from the fees. So many new holders would invest in Bitcoin, but of course Bitcoin now has lost it's currency for the people feel.

it already exists and it is called Proof of Stake and it is a flawed way of distributing coins in my opinion because it is basically saying the rich should get richer and do that by performing nothing. basically sitting around and increasing their wealth.
with bitcoin and it s Proof of Work they have to invest and work to get paid! that is a much better design.

I think without the updates the fees would have just killed off bitcoin. Especially when you are paying $60 dollars to send a dollar which is how bad it got at some points in summer. This is a very interesting perspective I have to admit. Wasn't satoshi original idea to have bitcoin as a means of payment though?

yes but you can never prevent attackers from attacking you. it is like owning a website and getting DDoS'ed. you can't prevent people from DDoSing you, all you can do is fight it. and fighting spam attacks against bitcoin (which caused the huge fee rise) is done by having a limited block size and a fee market.
it is a war, no matter what you do, they will find a way to attack you. so you always need to continue fighting.

[fargoway]

I disagree that LN is an attempt to take the fees from miners, as from my point of view LN will increase the total number of transactions, so miners could even have more profit.

[Zin-Zang]

I wish all Bitcoin h0lders could earn from network transactions and fees to be honest. Miners and big whales are the ones that benefit most from holding Bitcoin. Can you imagine if there was this idea that if we held Bitcoin we would earn a portion of the network transactions we would all benefit from the fees. So many new holders would invest in Bitcoin, but of course Bitcoin now has lost it's currency for the people feel.

it already exists and it is called Proof of Stake and it is a flawed way of distributing coins in my opinion because it is basically saying the rich should get richer and do that by performing nothing. basically sitting around and increasing their wealth.
with bitcoin and it s Proof of Work they have to invest and work to get paid! that is a much better design.

Proof of Stake Flaw was fixed by zeitcoin, by moving to an Ultra Low Inflation rate of .0005% per year.
This removed your rich getting richer flaw.  
All Proof of Stake Coins, act as Full Nodes distributing the ledger and processing transactions by staking.

Bitcoin has yet to fix the ever increasing Proof of Work input costs require to run the network.
At some point, if the price of the coin decreases below production cost, the miners shut down and the network freezes.

Proof of Stake Energy Efficiently protects it from that scenario.