A cool use of the Lightning network is the podcast 2.0 initative. Currently, as I listen to podcasts, I stream back satoshis (sats), value for value (I use Castamatic on iOS, fountain.fm is also an option on Android). You can also send messages with sats attached, called “boosts”. Creators can transparantly split the sats they receive over various goals (i.e. FOSS projects [opensats], or guests on shows). There are no transaction fees afaik, that is just when your lightning node syncs with the main blockchain, and then you can bundle a lot of transactions.
I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there).
The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”.
Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.
When will the blockchain ecosystem provide something with that "WOW I need this in my life right now" factor to the average user?
Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today.
We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations.
I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange.
Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale.
I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed).
Broadly I agree with the argument that crypto is taking an awful long time to come up with the killer app, but this is not a fair analysis.
Let's be clear: when Google exploded, that was the growth of the Internet in the driver's seat, not demand for Google specifically. Google's growth was a side effect of the exponential growth of the internet because it solved a need where there was no adequate incumbent solution, and where demand for that solution was growing exponentially for reasons basically unrelated to the quality of the solution.
This isn't the case for crypto, because there's an incumbent solution that works fine. More specifically, in our analogy, money is the counterpart of the Internet. Crypto is in the position of needing to slowly sap market share from an incumbent (government fiat) in the same way that, for example, DuckDuckGo does even if you feel it's a superior product.
If Bitcoin was the first-ever instance of money, I assure you its growth profile would look like Google's did.
No user has ever said "WOW I need Google search engine in my life right now" they said "WOW I need some gotdang funny cat pics" and google proved a means to resolve that desire.
Similarly, no one will ever say "WOW I need blockchain in my life right now" but they might say "WOW I need to send some money" or "WOW some of my friends are making their money work for them maybe I too should do some speculating" or "WOW I distrust the government's control over the financial system" and blockchain will occasionally prove to scratch that itch.
Bitcoin is not a concrete product like Google Search or a smartphone. It's more of an idea, like free speech. The idea being money without a central authority, something that has never really existed before (digitally, at least). No one woke up one day and thought "WOW I need democracy" or "WOW I need free speech". It's abstract and doesn't gratify immediately. The average person does not even have a conception that money could be something entirely different.
Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
Needless to say, I don't expect adoption to be comparable to that of a web search engine.
> When will the blockchain ecosystem provide something [...] to the average user?
> Google went from a research project to incorporated and usable on the internet in roughly two years
I don't think this is a fair comparison. Google is a late bloomer, being preceded by lukewarm online services AltaVista, Yahoo!, and AOL. Just like how Facebook became successful when MySpace did not, the latecomer can have a substantial advantage in speed and scale.
Moreover, Google is an application. The Internet is a platform. Google was founded several decades after the Internet. The first few decades of the Internet were clunky, slow, and expensive.
I would compare Bitcoin to the Internet. It is the raw, unsightly engine room that most people should not directly tinker with. Where are the killer applications that will run on top of Bitcoin? We're still figuring that out.
> The "WOW I need this in my life right now" factor is making money through the price of the assets going up. Which you may say is ponzi but the majority of the UK economy seems people making money through assets (housing mostly) going up. I can see younger people saying I can't afford a house but maybe I'll buy some bitcoin or similar maybe that will go up.
>The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)).
>While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance.
very cool to see this coming from the Federal Reserve Bank of Cleveland
> by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power
That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
> The views stated herein are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System.
One drawback of Lightning is that if you want to receive funds, and you don't have a direct channel to the payer, then you have to be online. It's an interactive protocol, you can't just publish an address and check it later. Since most people don't run their own servers, LN is pretty much going to be a custodial system.
There is actually a solution for that, called Lightning Rod.[0] It should allow asynchronous payment flows when running LN nodes on a mobile device, which are offline most of the time. I'm not sure if it has been implemented yet (probably not).
If you have a lightning channel to the custodial service you use, you can transfer the funds to yourself any time though.
So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour.
And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
>LN is pretty much going to be a custodial system.
like Chivo? take out the middleman(Banks) and put governments back in control of the funds.
bingo :)
Think about it...
Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.
This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC.
The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.
Lightning is a solution that does not do what it says on the tin. It requires an on-chain transaction to open a channel, which at current block size limits requires about 75 years for everyone on earth to have one, and somewhere in the trillion dollar range in fees and the entire outstanding block reward. Factor in quadratic routing complexity, and even if you did onboard everyone it wouldn't work anyways. This is assuming that channels never close and of course that the blockchain doesn't do anything else at all except open channels.
Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's.
It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset.
The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was.
Why use LN when other simple L1 solutions already work great as money.
Litecoin (LTC) has cheap fees and lots of room.
Bitcoin Cash (BCH) is constantly improving and has a ton of transaction room to grow, with increases if/when demand grows.
Dogecoin (DOGE) not my favorite, but does work fine for the money use-case, but development, from what I can see is a bit stale.
With these existing simple solutions, I don't see why Bitcoin (BTC) has to be anything more than the unit of account other crypto projects value themselves against.
Way i understand lightning is that you need a hot wallet that is connected most of the time to the internet. So you have to move money from your hardware wallet to your software based wallet and you're still constrained by the blockchain limitations between these transfers.
Many are taken with the idea that blockchain can be trusted in a world without trust. Governments can't mutate it. No one owns it. My sense is that this inspires an almost religious faith in some people. Google's ability to find just what I was looking for inspired a similar sense of wonder in me.
Unfortunately, SEO scam artists began to game Google and now they are corrupting the blockchain idea, but I don't think we should underestimate the power of people who keep the faith over the long haul to eventually make something legitimate out of it
What do you think is being exchanged on the Lightning Network?
LN transactions are simply 2-of-2 multisig transactions made on-chain, where both parties can change the balance amongst themselves, and where settlement is possible at any moment.
Bitcoin isn't being used as money on-chain. Why is this controversial? Bitcoin is the equivalent of gold, which was the hardest form of money that is accepted worldwide, before bitcoin was invented. Using it as a settlement layer for higher layers is the obvious scaling solution if you wish to remain decentralised.
See also "public ledger". PUBLIC LEDGER. Craziness. No wonder the US government is getting interested in it. Visibility into every single transaction. And they won't be the only one able to see everything.
I've stopped following bitcoin at a deep level for some time. Could someone summarize for me what changes/problems led current bitcoin to need lightning?
Some years ago bitcoin started running into scaling issues. The period between blocks is fixed at 10 minutes and the maximum size of each block is also fixed at 1Mb so the network transaction throughput was quite limited. Because of the limited transaction throughput the fees per transaction increased significantly because miners prioritize the high-fee transactions for inclusion in blocks. Low fee transactions would sit in the mempool until they were stale or dropped.
This limited throughput led to a massive debate amongst the community about how best to scale bitcoin. One side wanted to change the blocksize (either a step-up in size or to use dynamic scaling), and the other main side wanted to keep the block size at 1Mb and implement off-chain scaling (Lightning Network). I won't recount their arguments for/against, or even tell the story of the debate because it would be very long and there was so much shenanigans involved that I would probably struggle to remain neutral. The long and short of it though is that the side that wanted to keep the block size fixed at 1Mb won out and got to keep the Bitcoin (BTC) name while the other side spun out into a fork called Bitcoin Cash (BCH).
Lightning Network has been going on for years, I at least recall reading about it in 2017 when I started looking into bitcoin
The idea of the Lightning Network is to allow transactions to exist on a separate layer where in theory transaction fees don't have to exist. & transactions don't have to wait for the next block. This allows for microtransactions etc. There are some blockchain transaction fees involved in creating channels & resolving disputes
Lightning is a remix of the correspondent banking network. If it grows it will devolve into a small set of large centralized nodes that act as gateway for most transactions. Think JPMorgan and Citi as nodes. The reason is funding channels is expensive: you can’t leave $10M sitting there doing nothing. It’s got to earn it’s cost of capital. This is why Western Union charges so much for transfers.
You're right, it's a hack. Doesn't mean it's wrong and doesn't work though.
BTC stopped being practical for small payments when it got expensive. This is a way to make small, everyday payments cheap again. I'm not going to use LN to transfer large payments. "just DoS the watchtowers" is impracticle for a cup of coffee. Your second point is just plain false and there are many ways around those.
[+] [-] teekert|3 years ago|reply
I find this a very healthy counter movement to the current centralization that is going on in Podcasting where indie creators are being sucked into Spotify and YouTube (and sometimes are being censored there).
The podcast 2.0 movement is not all about value for value, there are also cool features like artwork per chapter, sharing of snippets, a way to specify different formats (like opus) for the same podcast/episode, and many more modern things. It’s a cool community and if you ask me, the first really useful thing to come out of “blockchain”.
Edit: Yeah I want to add some references but my company uses Cisco Umbrella and some things are blocked. Moreover, I can see it also MITMs my own websites (like my NextCloud instance), because those are not my certs!... But I digress.
[+] [-] kkielhofner|3 years ago|reply
Google went from a research project to incorporated and usable on the internet in roughly two years with a total investment of about $2mm in 2022 money. Let's just say the pace of innovation had some serious roadblocks at the time (they literally had to build their own servers and host them in a garage). Not to mention the status of dev tools, frameworks/libraries, developer availability, etc in 1998 vs today.
We are four years in to A16z alone raising roughly $16 BILLION dollars with their crypto funds. For at least half a decade it's been routine to see announcements of various blockchain companies with $5mm seed rounds (and beyond). Follow-up Series A and beyond in the hundreds of millions with multi-billion dollar valuations.
I've been following the space extremely closely for over five years and I have yet to see an application or solution with that "WOW I need this in my life right now" factor. I still don't know a single person outside of the tech scene that uses anything blockchain related other than trading on an exchange.
Bitcoin is 13 years old with an ecosystem that has had an incredible amount of investment and man hours thrown at it yet we're still getting research papers on how to make the original premise of bitcoin (Peer to peer digital cash) actually usable at any practical scale.
I know LN has been live for some time yet looking at the best available numbers I can find it's only being used by an absolutely insignificant number of the world's five billion internet users (this goes for all other chains and L2+ that can be analyzed).
I don't get it.
[+] [-] nwiswell|3 years ago|reply
Let's be clear: when Google exploded, that was the growth of the Internet in the driver's seat, not demand for Google specifically. Google's growth was a side effect of the exponential growth of the internet because it solved a need where there was no adequate incumbent solution, and where demand for that solution was growing exponentially for reasons basically unrelated to the quality of the solution.
This isn't the case for crypto, because there's an incumbent solution that works fine. More specifically, in our analogy, money is the counterpart of the Internet. Crypto is in the position of needing to slowly sap market share from an incumbent (government fiat) in the same way that, for example, DuckDuckGo does even if you feel it's a superior product.
If Bitcoin was the first-ever instance of money, I assure you its growth profile would look like Google's did.
[+] [-] bananarchist|3 years ago|reply
Similarly, no one will ever say "WOW I need blockchain in my life right now" but they might say "WOW I need to send some money" or "WOW some of my friends are making their money work for them maybe I too should do some speculating" or "WOW I distrust the government's control over the financial system" and blockchain will occasionally prove to scratch that itch.
[+] [-] olalonde|3 years ago|reply
Also, Bitcoin threatens the status quo in a massive way. Not only private businesses like banks but also powerful entities like governments and intergovernmental organizations.
Needless to say, I don't expect adoption to be comparable to that of a web search engine.
[+] [-] nayuki|3 years ago|reply
> Google went from a research project to incorporated and usable on the internet in roughly two years
I don't think this is a fair comparison. Google is a late bloomer, being preceded by lukewarm online services AltaVista, Yahoo!, and AOL. Just like how Facebook became successful when MySpace did not, the latecomer can have a substantial advantage in speed and scale.
Moreover, Google is an application. The Internet is a platform. Google was founded several decades after the Internet. The first few decades of the Internet were clunky, slow, and expensive.
I would compare Bitcoin to the Internet. It is the raw, unsightly engine room that most people should not directly tinker with. Where are the killer applications that will run on top of Bitcoin? We're still figuring that out.
[+] [-] lrvick|3 years ago|reply
They also tend to last forever once established: see e-mail.
[+] [-] tim333|3 years ago|reply
[+] [-] skinnyasianboi|3 years ago|reply
[+] [-] eldenwrong|3 years ago|reply
Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?
[+] [-] TradingPlaces|3 years ago|reply
[+] [-] plankers|3 years ago|reply
>The development of the Lightning Network may have consequences for welfare. First, as Bitcoin becomes a more efficient payments system, users are better off. Their transactions settle more quickly and more cheaply (Zimmerman (2020)). Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. This saving lowers the cost of maintaining the blockchain, allowing more nodes to participate and making the system more secure against a double-spending attack (Budish (2018)). Third, by reducing fees, the LN reduces the incentive for Bitcoin miners to use large amounts of computing power, meaning less energy use and positive consequences for the environment.5 Fourth, less blockchain congestion may mean lower barriers to arbitrage across cryptocurrency exchanges, thereby improving market liquidity (see Hautsch, Scheuch, and Voigt (2018)).
>While this paper focuses on Bitcoin, the same technology can allow other cryptocurrencies to be widely used, secure, and decentralized. For example, the Raiden Network is a similar netting solution for Ethereum. Other solutions to the scalability problem have been proposed, including sharding, and batching at exchange level.6 If the scalability problem can be successfully addressed, it may be possible for a currency based on a permissionless blockchain to obtain wide acceptance.
very cool to see this coming from the Federal Reserve Bank of Cleveland
[+] [-] notriddle|3 years ago|reply
The vast majority of energy consumed by the bitcoin network is in mining, and that's not impacted by any of this.
[+] [-] tromp|3 years ago|reply
That's great for the environment, but in the long term of vanishing block subsidies, not so great for Bitcoin's security, as the costs of 51% or censorship attacks also decrease.
[+] [-] FabHK|3 years ago|reply
[+] [-] DennisP|3 years ago|reply
[+] [-] Geee|3 years ago|reply
[0] https://github.com/breez/LightningRod
[+] [-] TekMol|3 years ago|reply
So in contrast to a fiat bank, where you keep your funds permanently, you could use a "lightning bank" just to hold last nights payments and transfer them to yourself every morning. Or you automate the withdrawl to take place every hour.
And: Couldn't your phone be your server? The way I understand LN, receiving funds just means to exchange a few bytes of data. Can't phone apps receive push messages?
[+] [-] rmac|3 years ago|reply
[+] [-] knocte|3 years ago|reply
Receiver of funds are normally merchants, and merchants normally already have payment systems that require some kind of connection anyway.
[+] [-] TrapLord_Rhodo|3 years ago|reply
like Chivo? take out the middleman(Banks) and put governments back in control of the funds.
bingo :)
Think about it...
Imagine if you could have complete custodial access, control and oversight of the details of your citizens financial info? No bank accounts, no stash of gold. It all through the US-backed custodial wallet "Trump's Coin purse". Everyone download it now and get $30 free! Also, it's a requirement for all employeers now so, deal with it banks.
[+] [-] ETH_start|3 years ago|reply
At its peak, there was only $200 million worth of BTC as collateral in LN channels:
https://www.defipulse.com/address-tag/lightning-network
This is against an ATH market cap of $1.25 trillion. LN collateral isn't even a rounding error relative to outstanding BTC.
The much more likely explanation for reduced congestion is that people stopped using BTC as money, as major merchants like Expedia, Microsoft and Steam stopped accepting it.
[+] [-] exabyte|3 years ago|reply
[+] [-] ponyous|3 years ago|reply
[+] [-] bubersson|3 years ago|reply
[+] [-] arcticbull|3 years ago|reply
Even opening a channel for everyone in Bay Area requires the better part of a full month of the entire chain capacity's.
It also has roughly speaking none of the guarantees of Bitcoin, and could really be used with any underlying asset.
The only scaling solution is MySQL, just like the Bastion of Bitcoin, El Salvador is doing. Always was.
Can we move on already?
[+] [-] giuliomagnifico|3 years ago|reply
[+] [-] petefromnorth|3 years ago|reply
Litecoin (LTC) has cheap fees and lots of room. Bitcoin Cash (BCH) is constantly improving and has a ton of transaction room to grow, with increases if/when demand grows. Dogecoin (DOGE) not my favorite, but does work fine for the money use-case, but development, from what I can see is a bit stale.
With these existing simple solutions, I don't see why Bitcoin (BTC) has to be anything more than the unit of account other crypto projects value themselves against.
[+] [-] adrr|3 years ago|reply
[+] [-] boxmonster|3 years ago|reply
Unfortunately, SEO scam artists began to game Google and now they are corrupting the blockchain idea, but I don't think we should underestimate the power of people who keep the faith over the long haul to eventually make something legitimate out of it
[+] [-] nailer|3 years ago|reply
[+] [-] jstanley|3 years ago|reply
[+] [-] once_inc|3 years ago|reply
[+] [-] blueflow|3 years ago|reply
[+] [-] once_inc|3 years ago|reply
LN transactions are simply 2-of-2 multisig transactions made on-chain, where both parties can change the balance amongst themselves, and where settlement is possible at any moment.
Bitcoin isn't being used as money on-chain. Why is this controversial? Bitcoin is the equivalent of gold, which was the hardest form of money that is accepted worldwide, before bitcoin was invented. Using it as a settlement layer for higher layers is the obvious scaling solution if you wish to remain decentralised.
[+] [-] 42e6e8c8-f7b8-4|3 years ago|reply
[+] [-] pibechorro|3 years ago|reply
[+] [-] TheDudeMan|3 years ago|reply
[+] [-] kag0|3 years ago|reply
[+] [-] null0pointer|3 years ago|reply
This limited throughput led to a massive debate amongst the community about how best to scale bitcoin. One side wanted to change the blocksize (either a step-up in size or to use dynamic scaling), and the other main side wanted to keep the block size at 1Mb and implement off-chain scaling (Lightning Network). I won't recount their arguments for/against, or even tell the story of the debate because it would be very long and there was so much shenanigans involved that I would probably struggle to remain neutral. The long and short of it though is that the side that wanted to keep the block size fixed at 1Mb won out and got to keep the Bitcoin (BTC) name while the other side spun out into a fork called Bitcoin Cash (BCH).
[+] [-] __s|3 years ago|reply
The idea of the Lightning Network is to allow transactions to exist on a separate layer where in theory transaction fees don't have to exist. & transactions don't have to wait for the next block. This allows for microtransactions etc. There are some blockchain transaction fees involved in creating channels & resolving disputes
[+] [-] 4kimov|3 years ago|reply
Possibility of stablecoins on Bitcoin via the Lightning Network.
[+] [-] silverlake|3 years ago|reply
[+] [-] janandonly|3 years ago|reply
Doesn't even include the explosive growth we've seen starting in 2020.
[+] [-] cryptica|3 years ago|reply
- There are many ways for a malicious entity to rollback a payment and prevent it from being detected (just DoS the watchtowers).
- You still need to make an on-chain transaction to open a new channel which incurs on-chain fees and limits the scalability of LN.
It's incredible how money can corrupt large groups of people into convincing themselves that a solution works when it simply doesn't.
[+] [-] TrapLord_Rhodo|3 years ago|reply
BTC stopped being practical for small payments when it got expensive. This is a way to make small, everyday payments cheap again. I'm not going to use LN to transfer large payments. "just DoS the watchtowers" is impracticle for a cup of coffee. Your second point is just plain false and there are many ways around those.
[+] [-] snapcaster|3 years ago|reply
edit: not rhetorical question, actually curious since it appears to be working already
[+] [-] shp0ngle|3 years ago|reply