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So in summary, to my earlier question about Lightning scalability:

Using back of the napkin calculations, you probably couldn’t onboard 1 billion users to Lightning within a 5 year period because each new user requires an on chain transaction to open a new channel and it would take Bitcoin 5 years to process those transactions.

But there are possible future solutions that could reduce the number/size of onchain transactions to onboard users, or a different blockchain-based layer 2 could be used with bigger blocks which Lightning rides on top of as layer 3 which would allow a greater capacity for new user onboarding.

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Discussion

Marius 2y ago

And people will earn lightning sats or buy them directly for fiat.

_ 2y ago

Would that require a new channel?

Marius 2y ago

🤔 - I get your point ...

daniele 2y ago

You can onboard users with custodial channels and a LN transaction. There are several custodial wallets that work fine for that but I suggest OBW because it offers both hosted/private channels and permits to full manage an onchain wallet too. So the user can start, learn and move to self custody as soon is possible/desiderable..

https://github.com/nbd-wtf/obw

nobody 2y ago

One billion people are not going to open channels. It's too geeky and complicated. There are custody solutions like LNDHub which allow people to open wallets within channels of custodial. Look at #[2] browser extension and Ln.Tips bot on Telegram.

_ 2y ago

My concern is people won’t have a choice except to use custodial because the block capacity isn’t there.

To be fair a lot of Bitcoin is held in custody too, but people aren’t forced to use custody.

Let’s say the network handles the first 500m but not the next. Then custodial lightning providers will become centralised and we are back to the old banking system. Custody should be an option not the only option.

nobody 2y ago

Bitcoin is a money layer. Lightning is a payment layer. It's ok for payment services to be custodial.

I know how to run a lightning node and open channels, but I do use custodial solutions in Lightning because there is more chances I lose money in self custody.

_ 2y ago

Okay so you are saying money is stored on Bitcoin. But Bitcoin can’t handle 1 billion transactions in the next 5 years. Or you are saying people use fiat for larger amounts instead of Bitcoin?

nobody 2y ago

A Bitcoin transaction has multiple ins and outs. Look at exchanges: they are sending money to a hundreds people in on transaction.

_ 2y ago

Good point. But if people move bitcoin into a wallet they later might want to move it (surely it won’t be there forever). That will be a single tx per user.

_ 2y ago

Also the ins and outs are a large component of the tx size and there is a tx size limit.

nobody 2y ago

Oh I see you familiar with bitcoin :)

Question was about lightning and how lightning custody brings us back to modern banking system.

My point here: the difference is in lightning you can't do a fractional reserve.

_ 2y ago

(I wrote some code about 3 years ago but I’m rusty)

Yes no doubt there are benefits to even custodial lightning.

I just don’t like the fact people are forced to use it as their only option (if BTC blocks fill up).