LN may kill BTC and mining in 7-8 more ½ ings
This statement always boggles me.
LN may indeed begin to pay it's nodes more than a miner will make from the SUBSIDY. But LN nodes along with every other form of L2+ will have to eventually settle on the chain. And very large transactions will settle on chain.
Current Subsidy =
6.25BTC = $250,000Number of transactions in a full block ~
2500 (This may improve, but lets assume it does not)
Fee per base chain transaction to equal current block reward =
0.0025BTC = $100Will fees be able to support the above? Of course they will! And the system will drive the technology of wasting the ABSOLUTE LEAST amount of base chain space possible, Profitable businesses that use the base layer will consolidate as many meaningful transactions into a single BTC movement as they can. And if not? They will pay the going rate anyway.
Those numbers up there? Pretty solid! But let do some math with the butt pencil.
Let's say the lightning network starts doing 1 million transactions a second worldwide at a SINGLE SAT per transaction (basically the worst case scenario for note operators). Every second a million Sats would be charged for transactions on the network. That means that in 100 seconds a WHOLE BITCOIN worth of fees would have been payed to the nodes. And in the space of the average bitcoin block (600sec/100sec) we would see SIX bitcoins of fees be paid.
Then those nodes will have to compete for block space to settle on the base chain. So a certain percentage of that earned income will go DIRECTLY TO THE MINERS. And conveniently our butt pencil math has us at pretty much the current block reward! 6BTC/block. And if we only pass half of that to the miners then they will make basically the amount of bitcoin they will earn after the next halving in fees!
Like I said these are not real numbers. And the lightning network will not be the only source for competition for space on the base chain. But i can most certainly imagine a world in which the miners would never want to go back to a paltry 6.25BTC Subsidy.
But cAPSLOCK now only the banks can transact on the base chain!!!
Nope. That is wrong. ANYONE can. Anyone willing to pay the fees. Or anyone with a miner willing to include their transaction in a block regardless of fees. But in a free market the payment has to come from SOMEWHERE. And it has to be fees eventually. But did you ever think that miners might include their own transactions for nothing? Think about that for a moment. You own a huge mining farm, AND you have a lot of LN payment processors. Next block you find? The first 400 transactions are all yours.
And those fees will have to go up by two methods. Value, or quantity. Or both. Either we increase the number of transaction a block can hold, or we increase the amount each transaction pays. Or both. And that balance will also be determined by the huge sea of nodes that validate transactions. As tech gets stronger and the blockchain can remain decentralized but add blockspace? We might just see increases to the block size. But if not we will certainly see increases to the fees.
The lightning network will not kill mining. And it might just end up being the biggest customer.
