Return-Path: Received: from smtp1.linuxfoundation.org (smtp1.linux-foundation.org [172.17.192.35]) by mail.linuxfoundation.org (Postfix) with ESMTPS id 400408D5 for ; Mon, 10 Aug 2015 05:01:19 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.7.6 Received: from mail-pa0-f53.google.com (mail-pa0-f53.google.com [209.85.220.53]) by smtp1.linuxfoundation.org (Postfix) with ESMTPS id 415ECEA for ; Mon, 10 Aug 2015 05:01:18 +0000 (UTC) Received: by pacrr5 with SMTP id rr5so95062253pac.3 for ; Sun, 09 Aug 2015 22:01:18 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=lightning.network; s=google; h=date:from:to:cc:subject:message-id:references:mime-version :content-type:content-disposition:in-reply-to; bh=ftFbjwNrmZsdPNg09tQFbS+oePQ4rdJ4Cq8uVJIdJGA=; b=Um/KiOCiNcC1YmggQyWJd6OUm/O7bk2DydFGV5yMuHpFCbL9rP4YEmMNAmaCKK5CTk 8u+junmMU2H3+6CMsbidr2j4YeZ4kluTu64dOmdg8wIjuJaS5/B34HXMSveiyK+1zeN1 qwFsygF8irlC2xmtPXOucqkDgZ+cXEXKBi9PY= X-Google-DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=1e100.net; s=20130820; h=x-gm-message-state:date:from:to:cc:subject:message-id:references :mime-version:content-type:content-disposition:in-reply-to; bh=ftFbjwNrmZsdPNg09tQFbS+oePQ4rdJ4Cq8uVJIdJGA=; b=E7AnI13CIukZkUPXPxYP98o3Dyzq5KV7iBHVwbItkUeQnvdcVCz+887v/qp9T2VHi/ aFKL+lUOyvwIbEm/n/cYNsmjkSfTh2KVm7RGOYuQbnmlbqmJnpZ3hj7ZEIXutrZNzCde vX5fkn4VugYhi6rqR/NT3VtVYL/T0oqrf3MuE9/XDHW3194PZLoKGmqQCs8RDfpdqk/T I2RIFLmUKkEzbJuF7K/JrPezYqjF9bvvPEUMUfOcHhJW/n68Y7FENBp4EDdaE1b8EGgM LUzK1UA/kv6CYyubQaibd+R8mIpzWCd6nMvyvQ7rJE4kXHgh+EfcJLbdGq3masxTo0aB q5BA== X-Gm-Message-State: ALoCoQklYtaW+evX2V7KI+7kt72uFtabmzyTjVDm52X2U+seUEu7ZE7jZXZcNVFpFF8jNloWsLLu X-Received: by 10.68.249.66 with SMTP id ys2mr41305085pbc.82.1439182877957; Sun, 09 Aug 2015 22:01:17 -0700 (PDT) Received: from localhost ([209.141.33.28]) by smtp.gmail.com with ESMTPSA id ex1sm18230883pdb.57.2015.08.09.22.01.17 (version=TLSv1.2 cipher=ECDHE-RSA-AES128-GCM-SHA256 bits=128/128); Sun, 09 Aug 2015 22:01:17 -0700 (PDT) Date: Sun, 9 Aug 2015 22:01:03 -0700 From: Joseph Poon To: "info@bitmarkets.net" Message-ID: <20150810050103.GD1758@lightning.network> References: <55C7D234.1040306@bitmarkets.net> MIME-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Disposition: inline In-Reply-To: <55C7D234.1040306@bitmarkets.net> X-Spam-Status: No, score=-2.7 required=5.0 tests=BAYES_00,DKIM_SIGNED, DKIM_VALID, DKIM_VALID_AU, LOTS_OF_MONEY, RCVD_IN_DNSWL_LOW autolearn=ham version=3.3.1 X-Spam-Checker-Version: SpamAssassin 3.3.1 (2010-03-16) on smtp1.linux-foundation.org Cc: bitcoin-dev@lists.linuxfoundation.org Subject: Re: [bitcoin-dev] Off-chain transactions and miner fees X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.12 Precedence: list List-Id: Bitcoin Development Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Mon, 10 Aug 2015 05:01:19 -0000 Hi, On Mon, Aug 10, 2015 at 12:20:36AM +0200, info--- via bitcoin-dev wrote: > Off-chain transactions, whether it's Lightning or something else, > potentially extract fees, which may otherwise be paid to miners, if the > transactions were actually on-chain. > > In this context, wouldn't it be contradictory, maybe even harmful, to > aim for an environment, where some/many/most transactions are off-chain? I think the fee market's long-term implications for mining rewards is very important as well! However, opening and closing channels will not be infrequent to the point that it will never happen with Lightning. Individuals that fill up their channel will need to accommodate accumulation (as well as those that do a lot of disbursement). These fund flows are not too rare, and huge payments (think the equivalent to wire transfers today) will probably be still on-chain. I think the payment size of micropayments to credit cards are Lightning-scale, what people use today for wire transfers (e.g. buying a house) will be on-chain. What Lightning does is it mitigates the advantages that doing an end-run around bitcoin entirely via centralized systems provides to a sufficient level, e.g. everyone transacting on Coinbase. Having everything on centralized services will have significantly lower on-chain transactions than Lightning and is one of the more viable alternative off-chain payments. Fundamentally, without off-chain transactions, there's a paradox within a viable fee market. If you presume that fees should be relatively competitive (i.e. not asymptotically close to zero), that implies that higher-value transactions *will* be prioritized over low-value transactions, as high-value transactions are willing to pay higher fees. Wire transfers are cheap when it's a million-dollar wire. In my view, different transaction values is the much larger risk for on-chain transaction fee markets, with high-value transactions crowding out low-value transactions on-chain. With lightning, it significantly mitigates this problem by aggregating the low-value transactions off-chain. -- Joseph Poon