The Lightning Network: Turning Bitcoin into Money
papers.ssrn.com
The Lightning Network: Turning Bitcoin into Money
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Re: The Lightning Network: Turning Bitcoin into Money
#2Interesting paper, surely the LN is miking the Bitcoin more useful as a payment/money system.
Re: The Lightning Network: Turning Bitcoin into Money
#3Interesting paper, surely the LN is miking the Bitcoin more useful as a payment/money system.
It seems really useful for people who are already making Bitcoin transactions.
I'm not sure I see it function as a tool for increasing adoption, though.
Anyone can send someone Bitcoin by asking them to install a wallet (or giving them a paper wallet).
The story seems less simple if those were sent with Lightning. Maybe that's just a question of wallet support not being pervasive.
One nice property of money is that you don't need to have read extensively about money for someone to give you money.
Re: The Lightning Network: Turning Bitcoin into Money
#4from the introduction:
>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
Re: The Lightning Network: Turning Bitcoin into Money
#5A 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.
Re: The Lightning Network: Turning Bitcoin into Money
#6Is lightning just another layer 2 scaling solution? Or am I missing something?
Re: The Lightning Network: Turning Bitcoin into Money
#7Interesting paper, surely the LN is miking the Bitcoin more useful as a payment/money system.
It seems really useful for people who are already making Bitcoin transactions. I'm not sure I see it function as a tool for increasing adoption, though. Anyone can send someone Bitcoin by asking them to install a wallet (or giving them a paper wallet). The story seems less simple if those were sent with Lightning. Maybe that's just a question of wallet support not being pervasive. One nice property of money is that y…
> One nice property of money is that you don't need to have read extensively about money for someone to give you money.
This is true of cash, but not true of debit cards. It is actually quite rate for ordinary people to be able to accept a debit card payment, but that doesn't make debit cards not useful.
Re: The Lightning Network: Turning Bitcoin into Money
#8Is lightning just another layer 2 scaling solution? Or am I missing something?
Isn't lightning the layer 2 scaling solution? What other promising options are there?
Re: The Lightning Network: Turning Bitcoin into Money
#9Lightning 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.
Can we move on already?