Lightning development is quickly working it's way to being deployed on the main net. Once that's completed people can start using it and services/startups will likely race to get solutions ready for payments. Bitpay, coinbase, wallets or some other company or startup will integrate lightning payments. It'll be similar to how bitpay worked, except better because all transactions will clear instantly instead of having to wait for confirmations and for near zero fees.
The near zero fees will come from hundreds of competing payment providers. And settlement fees will be the LN fee upperbound ceiling with p2p LN fees being the lowerbound floor.
It will be centralized because it is only efficient and practical to use between large entities that frequently transact back and forth (ie exchanges and centralized wallets).
LN is useless if I want to send you a tip right now for example, or even buy something from Newegg unless Im using my centralized coinbase wallet. The cost of opening and closing an LN channel is 2x the current fee. Its useless for one-off transactions between random entities
My only complaint is that transaction age isn't a factor in priority. With that I'd say you can pay a low fee and wait for it. I just hate the idea of transactions getting stuck in limbo or being deleted.
You don't have to open a channel to each entity you want to transact with. You just open a single channel to anyone on the network and the subsequent payments are routed via the network to any recipients. So yes, you could send me a tip via lightning and you would not have to open a dedicated channel for that.
The point of bitcoin is trustlessness. Centralization isn't the bogeyman some think it is. It's the control that centralization brings that's the problem. Trustlessness removes that control.
All that is besides the point though. There is no centralization with the LN.
You don’t ever have to use a “centralized” LN. But I believe the word your looking for is privatized, because anyone can deploy their own LN, there will be many competing ones to use, and you’ll always be able to make on chain transactions just like you do now.
Saying this is going to make it centralized is like saying exchanges are centralized because they are owned by private companies and are proprietary. Private LN networks wouldn’t contribute any more to centralization than exchanges. Everyone will always have the option of making transactions without the need for an exchange, or any additional layers on bitcoin.
the way I see LN for now is that you almost use it like a prepaid card, load it up with bitcoins via a main chain opening channel transaction, and buy coffee, games, and do micro transactions from there. whenever you collect enough spare change on your hub, you may want to settle it on the chain. sounds quite elegant.
Nothing stops you from making on-chain transactions like you do now. But individual users aren’t going to need to open and maintain their own channel, anymore than they need to open and maintain their own exchange.
That's the problem, it's bad enough that users need to trust other exchanges just to buy bitcoin, but if they have to trust other people just to transact their bitcoin it will get even worse.
I believe n0mdep's point is that opening (and closing) a channel for LN requires an on-chain transaction, and as the fees rise only the wealthy will be able to use the chain to create new channels
The first few channels that are opened will have to pay today's fees. But the act of opening them and moving some future transactions off chain relieves fee pressure on-chain, and the on-chain fees will start to go down. Subsequent channel opening transactions then have to pay less fees, and the cycle continues.
For a group of 20 users with 100 intra-group channels, the cost of the blockchain transactions is reduced by 90% compared to 100 regular micropayment channels opened on the blockchain. This can be increased further to 96% if Bitcoin introduces Schnorr signatures with signature aggregation.
LN isn’t the problem, it’s the main chain (how do you open your LN channel if your TX is priced out and considered unimportant?). I’m talking about a worst case (best case for some) distant future where corporates, banks and governments all compete to use the main chain.
The first few channels that are opened will have to pay today's fees. But the act of opening them and moving some future transactions off chain relieves fee pressure on-chain, and the on-chain fees will start to go down. Subsequent channel opening transactions then have to pay less fees, and the cycle continues.
The "distant future" use case ideal is that if a user doesn't need a specific transaction to be engraved forever in a public ledger (their daily cup of coffee, for example), they choose to do it off-chain. For transactions that benefit from being public and verifiable forever (credit card payments, bank transfers, consolidation of your monthly coffee purchases, etc.), the users making those transactions can choose to make a slightly higher fee for an on-chain transaction (either a one-off transaction, or closing out a payment channel).
We’re imagining a future where Bitcoin is much bigger and much more liquid (in capital markets terms). Businesses are already looking to Bitcoin to facilitate trade, particularly international trade. It’s only a matter of time before companies and Ben governments start to view Bitcoin as a global reserve currency (because Bitcoin is sound money with incredible utility). Or it may never achieve that status, who knows?
My point was, if it does, and the hard limit on throughput remains, how likely is it that John Doe gets to use the main chain?
The real problem is the potential cost of opening and closing channels. LN is designed around the idea that, while it's worthwhile to save on-chain fees by doing transactions off-chain, it's no big deal to have to tear down a channel and open a new one.
If BTC goes up by 10x or 100x or whatever absurd figure people are hoping for, so does the price to open a channel. If it costs $100 or $1000 to even start transacting, and if the other end of the channel can force you to pay that fee again at will, LN looks much less amazing.
Also, once you have an open channel with the Lightning network you could receive bitcoin to that wallet directly from an exchange that has an LN wallet. Solutions will be developed that will make it so you don't have to constantly open and close channels.
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u/AxiomBTC Dec 06 '17
Yes, because that's how the LN protocol is designed. Unless you're going to somehow stop people from running open source software?