Lightning Network Developer Says Promoting BTC’s LN as a Lower-Cost Solution is Unfair
The Lightning network [LN] has been garnering accolades for its elegant solution to some of the biggest problems that are holding back Bitcoin and, by extension, the blockchain industry. LN is positioning itself as a scalable, instant blockchain transaction solution. Building itself on the four pillars of instant payments, scalability, cost-effectiveness and cross blockchain. However, this seems to have backfired a bit as there has been an increasing focus, by the community, on the cost aspect.
There's a bit too much emphasis placed on the idea that LN is all about low fees. Fees on the network are charged at a market rate. We cannot control this market therefore we can’t guarantee low fees all the time. We can remove reasons for high fees, but we can't control the fees
— Alex Bosworth ☇ (@alexbosworth) January 14, 2019
So much so that the Infrastructure lead at LN, Alex Bosworth came out with “There’s a bit too much emphasis placed on the idea that LN is all about low fees.” Discussing how charges work, he clarified that the “Fees on the network are charged at a market rate. We cannot control this market, therefore, we can’t guarantee low fees all the time. We can remove reasons for high fees, but we can’t control the fees.”
Scalability Vs Cost-Effectiveness
Many questioned the cost aspect of this layer 2 protocol, which led to the above announcement. However, some commentators were puzzled by the community focus on saving on fees when, they reasoned, LN was primarily driven towards offering scalability.
Many news sources and blogs have pointed to the homepage of Lightning Network itself. Their site, lightning. network discusses the benefits of using this protocol. One of the advantages listed is low cost. They go on to detail how this is achieved, “By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees, which allows for emerging use cases such as instant micropayments.”
It seems slightly hypocritical that while the site boasts of this as a feature, albeit one that is third in a four feature list, their dev lead is unhappy that this is gaining too much spotlight.
The Fast And The Curious
It would be remiss to not mention that LN is undoubtedly a massive upgrade. With each added channel LN is increasing the number and speed of transactions. This is a major benefit towards addressing the scalability issue of bitcoin.
The opportunities afforded by Bitcoin piqued the interest of Twitter founder and CEO of Square, Jack Dorsey. He began exploring the options to implement bitcoin payments into the Square platform. Square, for the uninitiated, is a financial services, merchant services aggregator, and mobile payment company. The end goal is to see if simple transactions can be carried out in a seamless manner. This is where the Bitcoin scalability problem comes in, and it is hoped that it will be resolved by LN.
Bitcoin: Solid Asset Vs Liquid Asset
Most would like bitcoin to take over from today's paper currencies, something akin to a global currency. That is undeniably an attractive proposition, as it would make commerce infinitely easy. However, even with all the improvements in the network, it is a long way away from addressing the issue of scalability to take on this massive undertaking.
Thus, some have suggested that rather than trying to replace money for daily use it should focus, instead, on becoming a reliable store of value. An idea espoused by Paypal founder, Peter Thiel, who thinks Bitcoin will not be used much for daily transactions, instead work well as a digital commodity.
In an interview, he said,
“While I’m skeptical of most of them, I do think people are a little bit underestimating bitcoin, specifically, because it is like a reserve form of money.”
He said he wouldn't be surprised if
” bitcoin ends up being the cyber equivalent of gold, it has great potential.”
Making it clear he doesn't see it as a new payment system, he undoubtedly has great hopes for this online gold, something further highlighted by the fact that he has directly bought bitcoin rather than invest in companies.
While Bitcoin could still rise and become a reliable store of value or a daily use currency, or both; it first needs to address the issues of scalability. This is where the Lightning Network will undoubtedly make great strides, with or without the low-cost element.