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Liquid > Lightning, a rant.

I have run several lightning nodes, the first in 2018. I have also used several custodial lightning wallets. Every time my conclusion has been the same: lightning is a facinating idea which will never triumph as bitcoin's payment layer.

The situation with lightning:

- concepts too complex for even intelligent people to grasp

- on-chain transactions are regularly required

- routing often fails

The reality is that:

- complexity leads to the dominance of custodial lightning solutions

- channel management destroys any potential savings on fees

- lightning often just-doesn't-work, particularly over tor

Whilie lightning works well enough under controlled circumstances to make a compelling demonstration, in practice it is more expensive, less reliable, less private and more centralized than on-chain transactions.

High speed micro-transactions between enthusiastic peers are really neat. After 5 years I have yet to see any other practical use case for lightning.

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Discussion

Huey 2y ago

The liquid network is quite different than lightning:

- functions almost the same as bitcoin

- does not require an always-on hot wallet

- funds can be held in a non-custodial wallet

The end user experience is that transactions are fast, cheap and reliable.

This is made possible by liquid's security model which reduces the counterparty risk associated with centralized services but retains the associated speed benefits:

- instead of proof-of-work blocks are mined by the consent of the members of the federation

- consent (or manipulation) requires the collusion 11 of 17 federated peers

- the federated peers are held to a high standard of performance and security

In practice liquid works every time. It is easy to understand, hard to screw up, and it scales better than on-chain bitcoin transactions.