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A Lightning Network response to a Reddit user and for everyone else too.
I am just a regular Joe that is tired of paying high fees, and that understand the game th...
3 months ago
Lighting network is not cheap because you have to pay the opening and closing of the channel plus routing fees, and they are not cheap especially if your node is not well connected or if you are using a mobile node with private channels. And even if you don't close your channel the transaction fee gets reserve and that amount is equal to whatever rate the market has if one-day on-chain fees reach $100 and your channel only has $100 in liquidity your channel will become unusable which is equal to useless. And the routing fees will be even higher by that time as well because on-chain fees will justify routing fees being much expensive, after all, Bitcoin has become a racketeering scheme. Today transaction fees on-chain are cheap but that may change at any moment and even when on-chain fees are cheap routing fees are not, look at my pictures to see those routing fees were 545 satoshis even when on-chain fees are less than that for a regular on-chain transaction.
LN means three times the fees, on-chain fees to open and close channels, and if you don't close you must always reserve the closing fee, otherwise called commit fee or reservation fee which eats money from your total liquidity, and if the liquidity of your channel equals the closing on-chain fees the result is your channel is useless and you can use it until on-chain fees come down. High on-chain fees will mean node operators will have another excuse to charge more routing fees, making LN not feasible for payments either.
Many Bitcoin maximalists are trying to pass custodian services as wallets when in reality those services are just bank-like services, and now are promoting even whole nations into that, case and point El Salvador where the government will sponsor its own bank service account that will offer citizens the possibility to receive LN payments as well as on-chain payments, but those services will be a bank account sponsored service by the government of El Salvador.
Not only Salvadorians will lose privacy now if enough of them use that service instead of other custodian services, but they will also have to truth their government not to print Bitcoin in the future. Custodians can add either fractional reserve practices or outright print Bitcoin. And many Salvadorians will use Chivo only because they will get $30 as a welcome bonus and the government will create material to educate people on how to use their custodian Bitcoin application.
In El Salvador you will be able to use other services if you want to, you will be able to use other services and other wallets and you won't be forced to use just the government-sponsored application, but the government won't teach you how to use those other wallets, nor you will get your $30 bonus by signing up to other services if you want your $30 you must sign up with Chivo first after you have claimed your bonus you will be able to move your funds somewhere, but you must first use them to claim it, and many will not bother to learn to use other wallets or services. And once enough people use Chivo as their default wallet not only the government will know how much money you have, but also from where is coming from, say good buy to privacy, and once most Salvadorians use Chivo the government could start the process of fractional reserve practices or just print bitcoin. Even a Bitcoin believer knows such truth that with custodians you can print Bitcoin. Watch minute 12 to hear from the devil mouth's. LN means double the on-chain fees plus routing, if you are poor you will be forced into custodians LN services, and as such Bitcoin printing is a possibility.
Custodian LN services.
Wallet of Satoshi is not a wallet that is the name of a service that only with the name you should know they are trying to deceive you because they are not a wallet just another bank account service, that uses Bitcoin LN as its token or currency, but as long as you don't control your own channels you are using a custodian.
Services like BlueWallet, Wallet of Satoshi, Strike, Chivo, and many others are just custodians. LN custodial services are just services like your fiat exchange, Coinbase, Binance, Gemini Exchange and any other custodian exchange is just a service that is like a bank, they hold your funds for you and you have to trust them that they don't run away with your money before you withdraw.
Not your keys, not your coins, applies not only to exchanges but also to LN custodians. If you hold your coins on an LN custodian account your coins are at risk of theft from the custodian itself or a hacker. You shouldn't trust your exchange nor your custodian Lightning Network service either.
LN account services are good for a transition purpose meaning you are parking your coins with them only for a short while because that custodian is better connected or because you want to move funds to a node that your own channel can reach, you should only park your coins on custodians for a short limited time, to be sent later to either your own channel, settled on-chain using third parties, and even exchanging into other altcoins like Bitcoin Cash the real Bitcoin.
lnbits is a service that lets you withdraw LN payments and that's how I got my tip from a Reddit user, I don't know if funds sit on a custodian account while you claim the link or if it is connected to your own channel, but I know one thing the only way for me to withdraw it was by using a custodian service like WoS, Bluewallet and other custodians, but I was not able to collect the tip using Eclair Mobile or BLW because those mobile LN private nodes don't support URLs just yet.
There is no cheap way to receive Bitcoin unless you first put up the on-chain fee or use custodians like any other centralized exchange-like service. I don't have to open or close channels, I just have to be willing to expose myself to coin theft by hackers hacking my custodian or the custodian running away with my money. Or I could pay the high on-chain transaction fee and eat it up the cost and tell everyone I know that Bitcoin is awesome and that is a peer to peer currency even when I know that the moment they actually use it, they will pay an arm and leg, and I will lie to my friends that LN works just hoping they never use it otherwise they may discover that Bitcoin is broken and it doesn't work, just so that my bags inflate high enough on fiat value so that I can sell for fiat and retired with a nice bag of fiat.
Well, I am not that person I will tell everyone that I know that Bitcoin Core does not work and that LN is just a big fat lie that doesn't work either, and that it will have higher routing fees in the future as well, and that they should hold the real Bitcoin which is Bitcoin Cash. And I will exchange any custodian token my might hands can get on for the real deal Bitcoin Cash BCH.