Topic: [OUTDATED] The Lightning Network FAQ (Read 3266 times)

Here is a thought experiment for you.
Bitcoin Devs refused to increase blocksize because of the excuse non-mining nodes would fail to keep up,
even thru block time is only 10 minutes.

Now consider LN Hubs will be processing offchain transactions in microseconds ,
So LN hubs hardware requirements/cost will grow at a much higher rate, especially the Main Hubs.
Unlike Bitcoin, that only charges to include a transaction in a block,
LN will impose variable fees on you for each hub needed to complete a LN transaction plus the 2 onchain bitcoin fees.

So how in your mind do you see LN fees staying cheap,
when there hardware requirements/cost for nodes are greater, and they have the ability to set their own LN fees.  

Enjoy the answer to that, as you follow it thru it's natural evolution.  


FYI:
@Windfury, I know you are unable to think , so don't worry yourself with the thought experiment.
Just keep playing with your crayons.  

As LoyceV suggested, I am closing this thread. I will create a self-moderated thread due to growing number of off-topic posts in this FAQ. Feel free to create separate threads if you want to argue.

towel thought:
when was the last time someone went to a bank with a bank note(promise/iou) and exited the bank with gold
when was the last time someone went to a bank with a bank note(promise/iou) and exited the bank with less precious metals

if you say the 1950's
in the 1950's
how many went to a bank with a bank note(promise/iou) and exited the bank with gold
how many went to a bank with a bank note(promise/iou) and exited the bank with less precious metals

the answer is more people deposited gold in but ended up taking silly small coins out

big mega hint:
LN is not a sole bitcoin feature of only bitcoin design and function
LN REQUIRED bitcoin to change to give bitcoin an access method to use LN
LN is a separate network
LN is a network of independant/guaranteed payment. but a network of requiring users to be funded to join, online to be paid and requires another entities authorisation just to attempt to get funds moved

There are externality costs. Increase the block size, and the costs are transferred, and subsidized somewhere else. It would also sever the network of full nodes, centralizing it futher. It's best to overshoot security in my opinion.

Plus it would set a bad precedent. The best example, Bitcoin Cash ABC and SV.


Shower thought. I believe if Lightning is used in a massive scale, its fees will be higher than most altcoins because routing hubs are staking a valuable asset in Bitcoin to maintain their channels.

love it. i can just imagine that conversation

bitcoin dev salaried by corporation:
     'bitcoin cant scale because you cant receive, validate and broadcast 3000 tx in 10 minutes'
bitcoin dev salaried by corporation:
     'LN is where wveryone should be because you cant recieve, validate and broadcast thousands/unlimited tx in seconds'
community:
     'why cant bitcoin?'
bitcoin dev salaried by corporation:
     'coz hardware'
community:(in sarcastic tone)
     'ohhh the same hardware LN needs to receive, validate, sign, revoke old sig and broadcast thousands tx in seconds'

I haven't tried zigzag yet. I did try coinplaza.it, which has surprisingly low fees for a small transaction (even to onchain Bitcoin).
There's also fixedfloat.com, which I haven't tried yet.

I don't worry about this for the following reasons:
Bitcoin fees spiraled up because users have no choice. Miners only compete against each other for blocks, but that doesn't increase block space.
In LN, there will be many different routes, and hub owners compete against each other on fees. If fees are high and hub owners make large profits, new actors will join the hub-market until fees are lower again.
More transactions obviously increase hardware requirements, but more transactions also means there are more fees to be earned. At the moment I don't think hub owners make a profit from the few small fees. They actually need much more transactions to earn money. If there would be a million times more transactions, I don't think the hardware cost per transaction will be very high.

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Update on my little experiment: now that I have a second channel, a 5 sat transaction takes only 5 msat fee, instead of 1 sat. That makes sense, as the other channel has a lower fee.
However, a 100 sat transaction now takes over 3 sat fee! It uses the new channel, while the other channel would have charged only 1 sat. So I guess routing still needs some work.
For small transactions, 3% is not a problem. However, if I would send (say) 0.1 BTC, I would like to see the fee upfront if it's going to be around 3%. I'm not sure if LN even supports that before completing the channel.

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Another update: Despite having 2.5 mBTC "Total can send", I can't send 2 mBTC ("Your Lightning channels do not have enough balance"). When I try to send 1 mBTC, I get: "Payment failed, Route not found". After trying a few times, Coinplaza banned my IP for a few minutes.
I've read before that "larger" payments often can't be routed, now I found out by myself

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I made several smaller payments to my account at tippin.me, which all worked. The total was >1 mBTC now. But: fees were just over 3%, which is the maximum Eclair allows (and the only thing about it in settings). I've recently made cheaper on-chain payments!
From tippin.me, I sent 101010.10 sat to coinplaza.it. This got me 1 mBTC on-chain to my Bitcoin address. And although 1 sat/byte is enough, coinplaza.it paid 128 sat/byte, which is about 31 times more than the margin they had on this transaction.

I pay much less fee through tippin.me than through the last channel I opened in Eclair. I'll try opening a channel to tippin.me's node next time.

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After many transactions, Eclair doesn't show my full Payments history anymore. I can only see the last 5 days.
So far, I've lost less than 1 mBTC in total on fees. Not bad for a week and a half of LN-experimenting.

I think I picked a LN node without enough cheap connections.
I'm closing the "expensive" channel now, see how that works. It says "CLOSING  (cooperative"). It should be able to do this at very low fee. It looks like my 1.42 mBTC LN-balance turned into 1.32 mBTC on-chain. The total fee wasn't that high, but still 10-20 times higher than needed for a fast confirmation.

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Question
How do I choose which node to open a channel to?
And: I expected payments to use both channels when possible, but until now that hasn't happened.

Hey LoyceV , as far as swapping to alts there's zigzag.io  Dash,LTC and ETH are on the list
Fee's are high though.

I heard submarineswaps is doing LTC I have not used it yet though

The funds were indeed sent to my own address with a very high fee per byte (total 0.18 mBTC, slightly lower than the previous fee). After this, I consolidated my funds with a 50 times lower fee, and this took 100 minutes to confirm. I can't help but feel like LN is wasting a rediculous amount on fees. I assume it's set by the node, but I'm not sure what it's based on.

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Eclair doesn't allow coin control. Instead, it uses all available inputs (including dust) and consolidates them. That also leads to higher fees than needed. You can reduce the total fees by consolidating inputs with a low fee before funding a channel.

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I'm funding another channel now, with a bit higher fee this time (currently 9 times more than what Bitcoin Core thinks is needed to confirm within 2 hours).

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https://1ml.com gives an extensive overview of LN nodes, including an overview of the base fees. I'm not sure what everthing means though, there's a lot to take in for new LN users.
I'm now bookmarking the nodes on my laptop, so I can find them back on Android.

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What I really like about LN, is that many inputs no longer lead to a higher fee. "Bitcoin dust" isn't a problem anymore as long as it's within LN.
LN doesn't allow to send a payment without making a payment request, but I read this might be included in a future upgrade. I can imagine this will be great for advertising: send a fraction of a satoshi to all channels you can find, and add a message. Without some sort of spam protection this might become a problem in the future.

Yes they are. Read your posts.


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