Join 78,587 users and earn money for participation

A Lightning Network response to a Reddit user and for everyone else too.

10 122 exc boost
Avatar for francis105d1
Written by   166
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.

Enter custodians.

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.

Especial message.

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.

6
$ 9.42
$ 8.68 from @TheRandomRewarder
$ 0.55 from @molecular
$ 0.14 from Anonymous user(s)
A
+ 1
Sponsors of francis105d1
empty
empty
Avatar for francis105d1
Written by   166
3 months ago
Enjoyed this article?  Earn Bitcoin Cash by sharing it! Explain
...and you will also help the author collect more tips.

Comments

Great article! Thanks.

I just sent you .55 usd in bch non-custodially on-chain without even thinking about fees or anything technical. Did you have any trouble receiving it?

$ 0.00
3 months ago

Nope, as long as you use the tip option payment will be sent, and even with qr codes payment will always arrive

$ 0.00
3 months ago

I understand fees are not acceptable even if they are 0.5% as you showed on your screenshot (which i'm pretty sure you cherry picked).

here an example were I only paid 11 sats. https://imgur.com/a/uE2ObEh

but what about losing value over time vs Bitcoin? that doesn't count for you? I mean, at some point in time BCH had almost 1/3 of the value of one BTC. now its almost 1/98.

It doesn't make any sense to hold BCH long term and only save 0.5% or less on transfer fees.

$ 0.00
3 months ago

That will change in the future once transaction fees reach again $50 or more, people will realize that they can't use their money regardless if it has gone up or not. In the meantime, the real Bitcoin BCH will continue to make transactions as low as $0.002 for regular transactions, and transactions with many inputs will continue to be cheap as well, like a 100 inputs transaction will not cost more than $1. Which in BTC will be $100k just in fees.

$ 0.00
3 months ago

First of all, the transactions fees on the LN never been more than a few sats. then...

we are on 2021 four years after the blockchain war, BTC has 43k price at this moment and a whole country just accepted bitcoin as legal tender and the transactions fees on chain still cost few cents.

the LN will keep growing, taproot will bring better efficiency to the network (small scripting, multisig agregation, LN channel factory, etc).

more and better sidechais are in the development.

so, your dystopian future were bitcoin will have transactions fees of 100k is just the result of fantasies in your head.

I can create today a 1k $ lightning channel for 5c in fee and use it forever. here another example. https://imgur.com/a/sUefjrD

Meanwhile who can guarantee me that BCH will not continue lose value against Bitcoin?

$ 0.00
3 months ago

Meanwhile who can guarantee me that BCH will not continue lose value against Bitcoin?

An anyhedge contract.

$ 0.00
3 months ago

No one can guarantee you that Bitcoin will be number one in 10 years, Nokia was number one at some point look at them now.

$ 0.00
3 months ago

I don't know if BCH will lose value against BTC or if it will gain and take its place, but I do know that LN routing fees are going up no matter what, one because node operator want more fees for their trap liquidity and two because once on-chain fees increase LN node operator will have yet another excuse to ask for higher fees and when I say ask I mean force high fees.

Some nodes are even asking for 0.004 minimum to open channels that only means they know that eventually reserve or commit fee will be at least 0.001 BTC if not more commit fee is the reservation fee you need in order to close the channel.

If you can't see it, it is because you are holding BTC and want more fiat value before you get out and leave the fees problems to someone else or because you are blind.

$ 0.00
3 months ago

you know that value of BCH will keep dropping, its a trend, you don't have to be very smart. you don't know LN routing fees are going up. at the end, you have BCH bags hoping to have some return, thats all.

$ 0.00
3 months ago

The market will do what it does, but at least I am not trying to tell people to buy Bitcoin BTC and that they should be using a custodians like Chivo in El Salvador

$ 0.00
3 months ago