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Author Topic: Bitcoin lightning nodes, 240% per year? What am I missing  (Read 110 times)
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July 01, 2018, 11:56:39 PM
 #1

I recently came across this article regarding setting up a bitcoin lightning network node which was highly up voted on Reddit by this guy presumably from lightning labs which you can see here. What struck me is the following claims;

1.
Quote
There are theoretical models out there that predict a return of 60-80% returns for well connected nodes.

Where are these theoretical models? Surely the low barrier of entry to creating a node would prevent running one from being so profitable?

2.
Quote
You can become the 6th most connected node with an investment on only $2,000

What is the barrier to becoming the 1st most connected node if the cost is only $2,000? Is it extremely time intensive to set up channels? Marketing?

3.
Quote
This persons real life returns are at a rate of approximately 20% per month.

Why isn't everyone doing this and driving the returns down at rates like that?



I know that genuine gold rush opportunities exist as I have had the opportunity to exploit a couple in the past and risk is not always proportional to return but I feel like this guy would not be posting this article if the opportunity was really as good as he makes it sounds. Thoughts?

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July 02, 2018, 02:35:15 AM
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I recently came across this article regarding setting up a bitcoin lightning network node which was highly up voted on Reddit
107 upvotes is hardly "highly upvoted"
https://www.reddit.com/r/Bitcoin/comments/8toaze/the_lightning_network_a_huge_opportunity_to_learn

Quote
by this guy presumably from lightning labs
i can not find any affiliation between the author (Marc van der Chijs) and Lightning Labs. if i am missing it please give me the link.

unfortunately i can't answer your questions but i feel like he is exaggerating some stuff for some reason and people on reddit are also skeptical about it.
the thing about LN is that it is like a competition for lower fees. so if a node is asking for a high fee it will be ignored and the other nodes will be used with a lower fee. (the cheapest route will be chosen). so i don't think the returns he is promising are possible, at least not now with low number of transactions on LN. maybe in a year when there are millions tx/day we can see higher returns.

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July 03, 2018, 01:44:40 AM
 #3

I recently came across this article regarding setting up a bitcoin lightning network node which was highly up voted on Reddit
107 upvotes is hardly "highly upvoted"
https://www.reddit.com/r/Bitcoin/comments/8toaze/the_lightning_network_a_huge_opportunity_to_learn

Quote
by this guy presumably from lightning labs
i can not find any affiliation between the author (Marc van der Chijs) and Lightning Labs. if i am missing it please give me the link.

unfortunately i can't answer your questions but i feel like he is exaggerating some stuff for some reason and people on reddit are also skeptical about it.
the thing about LN is that it is like a competition for lower fees. so if a node is asking for a high fee it will be ignored and the other nodes will be used with a lower fee. (the cheapest route will be chosen). so i don't think the returns he is promising are possible, at least not now with low number of transactions on LN. maybe in a year when there are millions tx/day we can see higher returns.

Yeah you're right, it's not that highly upvoted I just remembered it from the top at one point. I don't get what this guys motive is blowing his returns out of proportion or why he totally made up the "theoretical models" of 80% returns per annum. Very weird.

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July 03, 2018, 07:43:24 PM
Merited by mu_enrico (1)
 #4

1.
Quote
There are theoretical models out there that predict a return of 60-80% returns for well connected nodes.

Where are these theoretical models? Surely the low barrier of entry to creating a node would prevent running one from being so profitable?

No idea about theoretical models, but surely that means you could have more income by charge fees when people route transaction through your channel/nodes

2.
Quote
You can become the 6th most connected node with an investment on only $2,000

What is the barrier to becoming the 1st most connected node if the cost is only $2,000? Is it extremely time intensive to set up channels? Marketing?

If you have more Bitcoin on your LN channel/nodes, that means you can route transaction with big value and you even can even charge small fees.
The fastest way to become most connected nodes is by becoming merchants or services, that way customer would connect to your channel/nodes if they couldn't find any route to your channel/nodes

3.
Quote
This persons real life returns are at a rate of approximately 20% per month.

Why isn't everyone doing this and driving the returns down at rates like that?

Because LN isn't ready for mainstream users and even LN developer don't encourage user to use LN on mainnet.

I know that genuine gold rush opportunities exist as I have had the opportunity to exploit a couple in the past and risk is not always proportional to return but I feel like this guy would not be posting this article if the opportunity was really as good as he makes it sounds. Thoughts?

My thought is you shouldn't use run LN channel/nodes solely for profit by charge fees when people route transaction through your channel/nodes since LN supposed to have low/zero fees and i doubt it's worth your time unless lots of people connect to your channel/nodes.

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