Read on Twitter
I critique the #LightningNetwork as substitute for regular payments, but what is it actually good at? 🤔
Answer: interconnected closed-loop ecosystems 🌐
Quick 🧵on some ideal uses cases for Lightning
1/8
Answer: interconnected closed-loop ecosystems 🌐
Quick 🧵on some ideal uses cases for Lightning
1/8
First, what ia Lightning LESS efficient at?
-P2P payments to new parties
-Capital-efficient routing (only need $5 to send $5)
Where is it MORE efficient?
-Repeat payments to known parties
-Many small payments (the more and smaller the better)
-Fast confirmations
2/8
-P2P payments to new parties
-Capital-efficient routing (only need $5 to send $5)
Where is it MORE efficient?
-Repeat payments to known parties
-Many small payments (the more and smaller the better)
-Fast confirmations
2/8
Funny enough, this makes it bad at digital cash. 😯
The more people you have to pay for one-off purchases, the worse it performs.
The more distributed it is, the more total capital in channels you need to make it work, and the higher your risk of payment failure!
3/8
The more people you have to pay for one-off purchases, the worse it performs.
The more distributed it is, the more total capital in channels you need to make it work, and the higher your risk of payment failure!
3/8
But this makes it good at instances where everyone is making a lot of small payments in a relatively closed ecosystem.
With a consistent group of people frequently transacting when routed through a single large hub, they can save on fees and transaction times.
4/8
With a consistent group of people frequently transacting when routed through a single large hub, they can save on fees and transaction times.
4/8
What are some use cases where hub-and-spoke makes sense? Social networks!
If Twitter opens a giant Lightning hub, everyone can send tiny tips to each other instead of likes, and Twitter can earn routing fees.
Everyone routes through the same node, only one hop.
5/8
If Twitter opens a giant Lightning hub, everyone can send tiny tips to each other instead of likes, and Twitter can earn routing fees.
Everyone routes through the same node, only one hop.
5/8
Instead of a closed custodial ecosystem, Twitter users can endlessly tip without giving up control over their money.
And if Twitter opens a channel with Facebook, users can easily tip from one network to another, just one extra hop.
Interoperable cross-platform tipping!
6/8
And if Twitter opens a channel with Facebook, users can easily tip from one network to another, just one extra hop.
Interoperable cross-platform tipping!
6/8
The problem is Bitcoiners have tried to shoehorn Lightning into the everyday payments use case. This has led to bad user experience or centralization into custodial, bank-like platforms.
We should use Lightning properly, and use on-chain for regular payments.
7/8
We should use Lightning properly, and use on-chain for regular payments.
7/8
I did a good video on Lightning's capital limitations, go watch that if you haven't already:
Also check out the one I did on Bitcoin's sustainability time bomb:
Have a good week!
8/8
Also check out the one I did on Bitcoin's sustainability time bomb:
Have a good week!
8/8
@threadreaderapp unroll please
• • •
Missing some Tweet in this thread? You can try to
force a refresh
