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The Lightning Network: Turning Bitcoin into Money

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Re: The Lightning Network: Turning Bitcoin into Money

#301

Post by notriddle »

dieortin wrote: post #269
notriddle wrote: post #180

Earlier quoted context omitted.

> Second, since fewer transactions need to be recorded on the blockchain, less memory and energy are needed to run a Bitcoin node. The vast majority of energy consumed by the bitcoin network is in mining, and that's not impacted by any of this.

And what do you think mining does? Less transactions in the blockchain means less money to be made mining, and therefor less energy used.

> Less transactions in the blockchain means less money to be made mining

I don't think that's actually true. Mining earns money through transaction fees and the mining block reward.

The block reward is directly set by an algorithm which lowers the amount over time. Transaction volume is totally irrelevant.

Miners and users set the transaction fee by choosing what they'll accept, so it should respond directly to supply and demand. If the Jevons Paradox [1] holds, making transactions cheaper means that there will be more of them, so even though on-chain Bitcoin transactions now account for less than 100% of transactions denominated in BTC, that doesn't necessarily mean that there will be fewer total on-chain Bitcoin transactions. So transaction fees paid to miners might not actually go down, either.

[1]: https://en.wikipedia.org/wiki/Jevons_paradox

Re: The Lightning Network: Turning Bitcoin into Money

#302

Post by notpushkin »

olalonde wrote: post #281
cortesoft wrote: post #251

Earlier quoted context omitted.

You can set up a stripe account to accept payments very easily. You can buy a prepaid Visa with cash in just a few minutes.

> You can set up a stripe account to accept payments very easily. Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categorie…

Stripe is not worldwide, but works pretty much everywhere in EU at least. You can open a company in Estonia in a couple hours (once you have a digital signature key, which they offer to everybody now, not just Estonian citizens [1]). Getting a bank account might be a bit trickier, but still doable (hint: Wise [2], while not a bank, might be an easier option).

That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-)

[1]: https://e-resident.gov.ee/ [2]: https://wise.com/

Re: The Lightning Network: Turning Bitcoin into Money

#303

Post by tfbkggjjji »

freeAgent wrote: post #286
once_inc wrote: post #110

Earlier quoted context omitted.

This argument usually comes down to the "Bitcoin: a peer-to-peer electronic cash" quote from the title. I'd like to point out that the word "cash" is used differently in the cyberpunk community from before 2008. BCH and BSV both interpret it as "money used for every transaction" and thus advocate bigger blocks, while cypherpunks back in the day used it for "permissionless value tokens" (my phrasing here).

How do you explain this: https://twitter.com/gavinandresen/status/929377620000681984 ? You don't get much more "cyberpunk OG," especially in the realm of Bitcoin than Gavin Andresen. It's one thing to disagree, but it's another to ascribe beliefs to people that they don't hold.

No post body was provided.

Re: The Lightning Network: Turning Bitcoin into Money

#304

Post by ska »

samatman wrote: post #271
ska wrote: post #227

Earlier quoted context omitted.

sales tax, not income tax. someone has to calculate, report, and remit it for all these micro transactions somehow. I thought that is what GP was referring to , may be mistaken. In that context cap gains vs other sorts of income is irrelevant.

In this case it's definitely income, see https://support.patreon.com/hc/en-us/articles/207477063-US-C... , the scenario is directly analogous to Patreon or tipping a Twitch streamer. They may also owe sales tax! https://support.patreon.com/hc/en-us/articles/360043054911-P... Which, yikes, no wonder running your own business is such a drag, that feels like double-dipping to me. I didn't owe sales tax when I was freela…

I didn't mean it wasn't income (it is, and they owe income tax) I meant that wasn't the issue that was being pointed out. With microtransactions the sales tax accounting etc. overhead is fixed, but the amounts are tiny...

I may have misread GP.

re: " if you buy 0.1 BTC at 7K and 0.1 BTC at 45K, then spend $1000 worth at 20K, what capital gains do you owe? Does it depend on which wallet you reached into?"

These are not new problems, stock works the same way. You may feel like you shouldn't have to have an idea, but that's not how any of this works in practice.

Re: The Lightning Network: Turning Bitcoin into Money

#305

Post by bananarchist »

kkielhofner wrote: post #289

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 the…

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.

Re: The Lightning Network: Turning Bitcoin into Money

#306

Post by waoush »

hnthrow1010 wrote: post #226
waoush wrote: post #181

Earlier quoted context omitted.

(note: I didn't downvote, but have been working with blockchain and thought I would answer since you haven't gotten any yet) https://www.hyperledger.org/learn/case-studies Hyperledger is a set of open-source distributed ledger related technologies, the most well-known being Fabric, which is a framework for creating blockchain networks. The most interesting cases are S&P Global and Walmart, who use it to keep track of…

I've seen those and I wouldn't describe them as "blockchains" in the same sense that cryptocurrencies use it. The word seems to only be used for marketing purposes. Those are just an ordinary ledger with some sharding/mirroring.

Blockchain itself just refers to a linked list (the chain) of cryptographically hashed items such as a timestamp and the data it is time-stamping (the block), which is based on previous elements in the chain. This is also how how it is also described in the original Bitcoin paper.

Blockchain doesn't rely on crypto, crypto was implemented using blockchain. Blockchain was invented long before crypto in the early 90s at Bellcore. Crypto may emphasize transactions and combating double-spending (due to nodes being on a public network), but no one is held to crypto's use of blockchain to be blockchain. The Bitcoin paper cites both the original Bellcore paper and its follow-up discussing the use of Merkle Trees, and the Bellcore paper cites patent documents as a potential use-case. So I think what S&P Global and Walmart are doing are valid use of the technology.

Now whether or not cryptocurrency itself or the networks they run on have value is a different story. For what it's worth, one of the use-cases for Corda that I found basically advertised itself as "we are better than transacting with paper" lol.

Re: The Lightning Network: Turning Bitcoin into Money

#307

Post by silverlake »

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.

Re: The Lightning Network: Turning Bitcoin into Money

#308

Post by hamter »

skinnyasianboi wrote: post #293
kkielhofner wrote: post #289

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 the…

I don't know if it falls in the tech category but people play games without knowing there is a blockchain behind it.

which ones

Re: The Lightning Network: Turning Bitcoin into Money

#309

Post by hamter »

eldenwrong wrote: post #290
kkielhofner wrote: post #289

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 the…

Yeah sending value through the internet without an intermediary that can't be stopped, confiscated or censored is whatever Maybe the problem is that you lack an understanding of what money should be and what problems banking and fiat have?

you still need to do kyc to convert to real money, which is essentially the same as transferwise for example

Re: The Lightning Network: Turning Bitcoin into Money

#310

Post by cesarb »

kordlessagain wrote: post #261
JofArnold wrote: post #118

Earlier quoted context omitted.

Correct. If you're going to build something like this, why on top of Bitcoin which - as I say - is rotten to its core. With Ethereum and its L2s instant, practically-free micropayments are already a thing. With Solana even... and others I'm not particularly in to but I hear work to various degrees. To be clear, the tech itself is interesting and broadly I remain fascinated in blockchain technologies and engaged with…

The authors of the Lightning paper were well aware of the cost of Bitcoin mining to the environment. We (the authors and myself) speculated at the time that energy usage of Bitcoin mining could one day exceed the current output in the energy markets. I was the one that made the joke about forcing us to wrap the sun in a Dyson sphere one day to satisfy the need for power. It concerned us and they (Joseph and Tadge) en…

> This is why I called out the attack on Lightning by association to Bitcoin. Would it, if used widely, contribute to Bitcoin's power usage problem? No, it wouldn't. Bitcoin's power usage problem is unique to the mining strategy for the chain, not the use of the transactions it enables, off chain.

The contribution to Bitcoin's power usage is a bit more indirect. The power usage of Bitcoin mining is capped by how much electric power miners can buy with the block rewards and fees (otherwise, the miners would lose money). The block rewards and fees are measured in Bitcoins, while the cost of electric power is measured in dollars (or whatever is the currency where the miner is located). To convert from Bitcoins to dollars, you multiply by the price of a Bitcoin. Therefore, whenever the Bitcoin price increases, the cap on how much power Bitcoin mining can use also increases.

By making Bitcoin more useful, Lightning Network can increase the demand for Bitcoins. As we all know, increasing demand while keeping the supply the same (and Bitcoin's supply is fixed by its algorithm, it doesn't change to track the demand) tends to increase the price. And that means miners have more money they can use to buy more power to mine Bitcoin.

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