Self-custodial Lightning gets pretty expensive to use in high fee environments.
We will need alternative L2s that are independent of L1 fee market. Imo
Discussion
What do you think that will look like? Any examples?
Lightning is a routing payments network so it requires everyone to be online 24/7 and a huge amount of liquidity is required to balance channels which makes it very difficult to have a good UX. As well as paying L1 fees to open/close channels. So I find it very complex and difficult network to use for the layman bitcoiner.
Saying that Custodial Lightning Wallets have great UX and work well in 99% of cases. The issue with Custodial Lightning wallets is that you have to trust middle men with your funds like how you trust your fiat in a bank account so you dont truly own your funds.
I believe the best way to scale bitcoin is via sidechains. Advantages include: No liquidity constraints as 1 pegged BTC always equals 1 BTC. You can have a chain used purely for private traceless transactions. You can have instant payments. You can have self-custodial wallets. All the sidechains would be interopable with each other via atomic swaps and payment channels. So thats why I am big fan of BIP300 proposal (drivechain.xyz).
But theres definitely of cool ideas for scaling like Ark, BitVM, Surfchains and State chains. Alternative Bitcoin scaling solutions to Lightning⚡️:
-Fedimint (http://fedimint.org)
-Federated sidechains Rootstock (http://rootstock.io) and Liquid (http://liquid.net)
-Spiderchain (http://botanixlabs.xyz)
-RGB (http://rgb.tech)
-Enigma Network (https://blog.bitfinex.com/education/what-is-the-enigma-network/)
-Validity rollups (http://Bitcoinrollups.org)
-Ark (http://arkpill.me)
-Mercury Layer (http://mercurywallet.com)
-BitVM (http://bitVM.org)
-Drivechain (http://drivechain.xyz)
DYOR
Thank you so much for sharing all that
Need to get my zaps working to send you some sats!
I always like to see the innovation atop BTC
Where will it go? We don’t know. But the key is the ability to build
The market will let us know!
No problem. We all at different levels of bitcoin rabbit hole. I been in the space for 4 years full time so I follow all this stuff quite closely out of my own curiosity. Bitcoin being scalable to 8 billion people is really important to me. I would hate to see it just become a safe haven asset for the top 1%.
Even if BTC didn’t “scale” I believe it would be useful as a savings tech for the 99% & the 1%
I am not in the 1% & use it primarily for that feature (my guess you are as well?)
Saying that its network effect with the layers built atop improve the capital growth potential
So I am absolutely not complaining
My fear is bitcoin L1 fees keep on rising due to organic increasing adoption and the poor plebs are priced out of using bitcoin. I want to see plebs with no life savings able to adopt bitcoin and have super cheap fees as possible to use as money.
Yes you can save and move to cold storage. But it may cost people $hundreds or even $thousands worth of bitcoin to move their btc if they wished to do so. This is all based on the assumption blockspace demand continues to increase exponentially forcing fees to keep rising.
A very reasonable concern no doubt
What’s the point of a store of value that costs more to move than store value over time?
None
But we’re not there yet. Not even close.
I am not concerned
Why?
BTC is now the best way to store value across space & time
Use any traditional asset (gold / equities / bonds etc)
& you won’t retain as much purchasing power as with BTC
Whilst all those tradfi assets have a “friction cost” ie liquidity cost
BTC even with high fees as a %age is still order of magnitude better
So your avatar with no savings, is still better off buying a little BTC
Then HODL as long as possible vs the status quo
Where am I wrong?
Again. Don’t get me wrong. I welcome all scaling tech built atop BTC
For precisely the use case you mention & more
I think you will be surprised how fast exponential growth works.
It can easily within two years under the right conditions imo.
But most likely will take several years to rise to insane levels.
Blockspace is scarce. But people want the security of L1.
To multmillionaire paying $500 to securely store their bitcoin is nothing. But to 90% of the world they are price out.
Anyways, the future may play out differently. Just going from my experience and observations.
Time will tell! Again thanks so much for sharing
But I agree mostly with what you’re saying.