“Cheap” Lightning Network Fees Now $0.50 – Trustnodes

“Cheap” Lightning Network Fees Now $0.50

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The very cheap Lightning Network (LN), which is meant to be used for micropayments and things like buying coffees, now charges more than what would have bought you two cheeseburgers in the 70s.

“If you need more outbound liquidity quickly, it can currently cost $0.50+,” Alex Bosworth, an LN dev, publicly said before adding:

“Instead of paying $0.50 to add $10 you could pay $0.21 to refill an existing channel.”

The fees on Bitcoin Cash by comparison are basically zero, while in eth they’re around a penny for ordinary transactions.

On LN however there are quite a few services you have to pay for as this solves the double spending problem in a fairly centralized way whereby you need someone to extend you liquidity.

In simple terms that means someone has to kind of lock the same amount of coins you want to move if they are routing it around, so extending you “credit” in an IoU chain.

“Normal Lightning payments are trust-limited, but of course that is a bit inconvenient sometimes so some novel IOU modes of operation are popping up I don’t think it’s necessarily bad if done judiciously. If your peer wants a line of credit maybe set the limit at past fees earned,” Bosworth says.

Credit of course is not cheap. To perform this “lending” service, the lender is missing on opportunity costs, so you get to pay for it.

“Routing fees are primarily about selling your inbound liquidity since that is the scarce resource in the network,” Bosworth says.

So fees on the Lightning Network might be as expensive as they are currently on-chain, but those on-chain fees are meant to pay for security, fees which LN is kind of taking off miners.

In addition, there’s no network wide consensus on the Lightning Network so one can modify their own node to do whatever they want.

Plus, since you need all this liquidity and routings and watchtowers and whatever else, most would probably just use custodian wallets which can potentially exit scam or can engage in fractional banking with your coins.

“Some LN apps are going to make use of longer capital holds. They can because in a decentralized protocol people can do whatever they like,” Bosworth says.

Ostensibly all this is meant to be an improvement on the current bitcoin network, but Bosworth says “it’s possible that LN will not work out.”

Plenty have concluded it doesn’t work out, with the question being what happens then. For Blockstream, the answer would be to use their altcoin, LBTC, that runs on the centralized Liquid blockchain which pays Blockstream fees.

For the rest of the bitcoin ecosystem, the question is not if but when should on-chain capacity be increased, and how exactly.

Copyrights Trustnodes.com

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lightningpowered
January 18, 2020 4:35 pm

Whoever wrote this article is clueless.

The fees to transact are not 50 cents, on average are much much less than a Bitcoin Cash transaction. What is being considered a “network fee” here is actually paying someone to send you bitcoin in a channel…which at the moment there are many who do it free but you can also just do it yourself with your own Bitcoin. You can also refill an existing channel with the use of many swap services the one I use cost 1 penny. @lnswapbot on telegram.

This whole article is just nonsense.

Phil
April 16, 2020 7:32 pm

Exactly, whoever wrote this is a complete moron. Fees on lightning network are determined by you and the peers you transact through. Imagine writing an article on something you’ve never used.

Ferhat
January 18, 2020 3:41 pm

Please check Stakenet project. https://stakenet.io/

They build a Lightning Network DEX. The testing is ongoing and all critical functions are working properly with testing groups.

Samuel
January 19, 2020 6:57 am

I pay a fee of $ 0.05 for a transfer in a https://bitcoinofficial.org wallet.