Satoshi

2024

Bitcoin

Light

Phoenix

<h4><strong>As Bitcoin transaction fees continue to soar, this assumption is unraveling, threatening the very foundation of Lightning Network’s functionality. </strong></h4> 
<p>In this article, we try to summarize what is going on with the core problem related to scaling on-chain fees in Bitcoin’s Lightning Network.</p> 
<h5><strong>The Fee-Dependent Design in the Lightning Network</strong></h5> 
<p>The Lightning Network was conceived as a second-layer scaling solution. Its goal is to alleviate congestion on the Bitcoin mainchain by enabling off-chain transactions. But, it was designed assuming that the fees for on-chain transactions would be low, making it cheap to open and close channels. In the following thread, you will discover a critique that brings attention to the LN fees and existing Lightning channels.</p> 
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
 <p lang="en" dir="ltr">This is a really good post from <a href="https://twitter.com/benthecarman?ref_src=twsrc%5Etfw">@benthecarman</a> about Lightning. It's good to talk openly about the problems with LN, but it's not just channel liquidity. For new users, Lightning is barely usable.</p> 
 <p>Ultimately, Lightning may just become an interop gateway. <a href="https://t.co/nCC1OL0HcQ">https://t.co/nCC1OL0HcQ</a></p> 
 <p>— Samson Mow (@Excellion) <a href="https://twitter.com/Excellion/status/1743971559394705418?ref_src=twsrc%5Etfw">January 7, 2024</a></p>
</blockquote> 
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p> 
<p>Nowadays, Bitcoin transaction fees have been on an upward trajectory, challenging the feasibility of Lightning Network’s design. This can make existing LN channels useless due to the excessive reserves required for a single payment. As Bitcoin and dollar fees are sure to rise, we need to address this problem urgently.</p> 
<h5><strong>Real-World Experiments About Bitcoin’s Lightning Network )LN) Fees</strong></h5> 
<p>To prove how high the are fees in the LN, Samson made an experiment with three popular Lightning Network wallets: Breez, Phoenix, and Wallet of Satoshi (WoS). The results paint a vivid picture of the challenges users face in the current fee environment.</p> 
<h6><strong>1) Breez: High Setup Fee Hurdles</strong></h6> 
<p>In this option, the <a href="https://breez.technology/" target="_blank" rel="noopener">Brezz wallet</a> has a 1% setup fee. The fee is too high for bringing in new Bitcoin users, making us wonder if Lightning Network is scalable.</p> 
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
 <p lang="en" dir="ltr">I only wanted to test wallets that don't require KYC, so I tried new installs of Breez, Phoenix, and WoS. </p> 
 <p>Breez:</p> 
 <p>I had to pay a 1% setup fee of minimum 25k sats, which is about $11. That's not practical to onboard someone new to BTC. </p> 
 <p>For testing, I topped up 75k sats and… <a href="https://t.co/4BNRiABSo3">pic.twitter.com/4BNRiABSo3</a></p> 
 <p>— Samson Mow (@Excellion) <a href="https://twitter.com/Excellion/status/1743971570744496429?ref_src=twsrc%5Etfw">January 7, 2024</a></p>
</blockquote> 
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p> 
<h6><strong>2) Phoenix: Fee Configuration Quandary</strong></h6> 
<p><a href="https://phoenix.acinq.co/" target="_blank" rel="noopener">Phoenix</a> presented difficulties in sending funds, requiring users to set a maximum fee amount. So, despite attempts to exceed estimated fees, the experiment faced roadblocks. This underscores potential usability issues for new users and the risk of losing a significant portion of incoming payments.</p> 
<h6><strong>3) WoS: Stuck in Pending Limbo</strong></h6> 
<p>The <a href="https://www.walletofsatoshi.com/" target="_blank" rel="noopener">wallet of Satoshi</a> remains a preferred option for many due to its no-KYC feature. However, not everything is good for this tool. In this experiment, he attempts to remove all funds from the wallet resulting in a persistent “pending” status, raising concerns about the reliability of Lightning Network operations.</p> 
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
 <p lang="en" dir="ltr">WoS:</p> 
 <p>This is still likely the go-to option for most people as you don't need to KYC and it works fine where it's available. </p> 
 <p>I was able to top up WoS and make payments. The only issue was when trying to remove all funds from the wallet, it's just stuck on pending (2 hrs now) <a href="https://t.co/K5SNPjRuGW">pic.twitter.com/K5SNPjRuGW</a></p> 
 <p>— Samson Mow (@Excellion) <a href="https://twitter.com/Excellion/status/1743971579275669663?ref_src=twsrc%5Etfw">January 7, 2024</a></p>
</blockquote> 
<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p> 
<p>The core problem with Lightning Network lies in its fee-dependent design. Ben’s observations and real-world experiments with popular wallets underscore the pressing need for addressing these concerns.</p> 
<p>As Bitcoin transaction fees show no signs of abating, a critical reevaluation of Lightning Network’s design and functionality becomes critical to ensure its long-term viability as a scalable solution.</p> 
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<p>The post <a href="https://www.altcoinbuzz.io/cryptocurrency-news/why-bitcoins-lightning-network-faces-fee-challenges/">Why Bitcoin’s Lightning Network Faces Fee Challenges?</a> appeared first on <a href="https://www.altcoinbuzz.io">Altcoin Buzz</a>.</p>

Why Bitcoin’s Lightning Network Faces Fee Challenges?

Altcoin Buzz

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