Are current lightning nodes killing new small nodes?

3443 sats \ 42 comments \ @Storyteller 28 Aug 2023 bitcoin

Yesterday I managed to get my new umbrel lightning node funded.

I got an umbrel node on raspberry pi.

But when I was looking for opening channels with other nodes I noticed that a lot of existing nodes want a minimum channel of 1000.000 sats or even 2000.000 sats.

This is not good.

You are allowed to ask whatever channel size as you want. But I guess these existing nodes also started small.

As a small node you want to test setting up channels. You still have to learn the technology. You are not going to put 5.000,000 sats on chain and lock it on a lightning wallet just to test. You want to start small. Test and grow.

Then there are the fees. I saw some existing nodes ask 1000 sats transaction fees. There are also some nodes that have no routing fees. But you have to open a channel of minimum 2.000.000 sats with them.

Then there is the buying of inbound liquidity. I started researching this. Once you open a channel you can send sats and that is outbound liquidity.

But there seems to be a business of selling inbound liquidity.So I have to pay to be able to receive sats.

Imagine I’m only wanting to try this out. I want to be able to send 100 sats from one lightning wallet on umbrel (the node) to a wallet on my phone. And I want to send 10 sats to a wallet on my lnbits on the umbrel.

Just playing around to test the system. Get educated about how this thing called Be your own bank works.

Do I need to lock 2.000.000 sats into a node and then buy inbound liquidity at a do I know how big a rate and then for just sending and receiving 100 sats I now need to pay transaction fees of 1000 sats minimum?

Really? I can’t believe this. There must be another way. There must be other small nodes that offer 1-2 sats fees and where I can open channels of say 100.000 sats and get inbound liquidity of 1000.000 sats!

Otherwise we will not be able to orange pill others to own and run their own nodes. Nobody will be able to be their own bank! Nobody will be able to be their own bank on an umbrel and running their own node.

At a certain point the existing nodes will keep other small nodes from starting. Just by keeping the transactions fees high and tge channel sizes high. No new small node can enter the system.

Imagine I want to orange pill a school to have their own raspberry pi and run umbrel.

Imagine I have a group of 15 small business owners with their restaurants, or consulting businesses, like website builders, graphic designers in a class room.

I want to teach them this lightning thing and running your own node. I simply cannot ger this up and running. Because when I tell them they got to buy a raspberry pi of 200 us dollars, an ssd card of 300 dollars and then invest 2.000.000 sats and also pay my fees in sats they will think this is a scam.

You cannot start small.

A kid of 15 should be able to learn how to set up her raspberry pi and run umbrel on ot and then opening channels. That is my goal.

Having 15 kids remotely and teaching them to play around. Sending sats to each other. Imagone 15 kids on different countries and islands in a webinar. Imagine this course starting for kids. Self paced. They can start as a group of 15 and they can build and learn during 1 month.

They can link and send sats to the kids that went before them.

They can do business with the businesses before them.

To do this the transaction fees need to be 1-2 sats. And the channels need to be 100.000 sats. Maybe even 10.000 sats for kids or for starters. Otherwise they won’t invest in this new lightning nodes technology.

So what are reliable lightning nodes who just ask 1-2 sats transaction fees and 10.000 - 100.000 sats for opening channels and where you can get 10.000-100.000 sats inbound liquidity?

What are a network of big lightning nodes that are well connected that still allow and welcome starters to connect?

Give me your views, I want to learn.

I understand that when you are a big established node with 9.000.0000 sats, hey you own 50 btc and you just spread 9.000.000 sats somewhere on a node, you don’t care about the little guys starting.

You just want the respected guys of minimum 2.000.000 sats.

But with that you are actually making the network less decentralized.

There will be a time that 1000.000 sats is a huge chunk of property. You are not going to pay 1000 sats for just a transaction.

Let me know your thoughts. And if you know reliable nodes with low transaction fees and smaller channel size requirements 10.000-100.000 sats, let me know.

view all related items

252 sats \ 1 reply \ @Wumbo 28 Aug 2023

Couple thoughts:

Stacker.news node might be a good first node to connect to https://amboss.space/node/03cc1d0932bb99b0697f5b5e5961b83ab7fd66f1efc4c9f5c7bad66c1bcbe78f02 Appears to have very small channels open.
I had a similar thought journey as you are having Many small channels sounds nice but does not work very well. Between on chain fees, nodes have minimal capacity threshold (which are always not visible till you try to open a channel), and closing channel in high fee environment. One can easily have a large percentage of the balance eaten up by fees.
You could Uncle Jim for the people you are setting up. Connect them to your node (which could be better connected and better founded). You could open a channel to them to provide inbound liquidity.
I am blanking on the name/BIP# but there is a movement out there to make LSP (Lighting Service Provider) funding more easier and open (visible to all not just users in a particular LSP)

0 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

Thanks for your thoughts.

243 sats \ 0 replies \ @TonyGiorgio 28 Aug 2023

Being a bank isn't cheap and smaller, poorly managed nodes on raspberry pi's harm the network more than help. If you want to learn, play with testnet. If you want merchant adoption, forget about telling them to run lightning nodes.

The ability to eject out of a managed solution is important but the reality is nobody is going from 0 to 100 with their own lightning node payment infrastructure unless they are highly technical and doing it for fun or to build out a product themselves.

Best to set them up with a mobile wallet that is a self custodial node attached to an LSP for assistance.

141 sats \ 3 replies \ @kepford 28 Aug 2023

I would recommend you narrow your focus. It takes time, effort, and sats to run a lightning node. It isn't for everyone. If you are looking to make easy sats forget it. If you are looking to learn then its great. If you want to have more sovereignty its great.

Don't kid yourself. You aren't gonna compete with the big boys.

Look at @darthcoin's posts Also check out PlebNet. There are plebs like us that run nodes. We aren't trying to compete with the big boys. It is possible but there is a minimum investment of time and sats. As the network usage grows it is going to become harder to start a node. This isn't crazy at all. Its the way free markets and competition work. Every node can make its own rules. Small nodes that don't have liquidity, uptime, and other reliability metrics make the experience worse for everyone. This is a new technology. Its gonna be hard. Its gonna take investment of time and sats.

Adjust your expectations. You can run your own node. There are small nodes out there but you have to do the work. There are people here and in plebnet that will help. Good luck.

10 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

Thank you for this advice. I don't take it lightly. I don't want to compete with the big guys. I want to experiment with "being your own bank" and I want to eventually teach others. Like the organizations, the schools and businesses.

But indeed it is going to be harder to run your own node and I know it is a professional business for some, especially the larger ones.

I also see that if the price of Bitcoin increases that it is going to be harder to start a node and the transaction costs will be higher so the investment is going to be bigger.

I find it fascinating that I can just use umbrel and start receiving sats and sending sats. Because I have seen in the past big corporations like Paypal and Stripe deny people access to their services on some locations.

That is my main focus, educate myself and then eventually educate others.

0 sats \ 0 replies \ @kepford 28 Aug 2023

My goals align with yours. Stick with it. I should have mentioned running a node on your phone with Breeze or Blixt. The tech still blows my mind and I've worked in tech for many years. You can indeed be your own bank and show others. You are on the right track. The time to learn these skills is now. If you are like me, you wanna know how things work even if you hire someone to do some things for you. That is how I view this. Good luck.

0 sats \ 0 replies \ @DarthCoin 28 Aug 2023

very good answer!

291 sats \ 0 replies \ @supratic 29 Aug 2023

just play with what you are willing to lose... and keep you sleeping at night.

If you want to play-to-learn about the lightning network without losing your precious sats, I suggest you download and install Polar app

112 sats \ 5 replies \ @nullcount 28 Aug 2023

Only banks and fortune 500 companies will run LN nodes if this thing catches on. Its impossible for every human to have their own UTXO. So UTXOs are going to price themselves out of reach of everyone except the largest players.

The little guy is destined to pay outrageous fees for sovereignty, there will be tech improvements along the way but this principal of scale isn't going anywhere.

Secretly, every bitcoiner "in the know" fantasizes about becoming the next cantillioniaire/banking class they can't wait to earn rent off their digital real estate.

10 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

@nullcount this is a bleak picture you are painting. I don't see no Light in that picture. Lol. And no Lightning either.

If the current lightning nodes are just the big banks of tomorrow then we are screwed again. And again. And again.

Looks like the plebs with no sats currently will need to bend over in two years time and take the orange pill from behind...

That is not sounding right... but you might be right.

I hope this doesn't happen.

10 sats \ 2 replies \ @nullcount 28 Aug 2023

Infrastructure providers in BTC love their KYC. Over 50% of hashrate is already mining in KYC'd pools. Expect LN liquidity to go KYC even faster. In a few years, getting a channel to a node is gonna require signing an SLA with KYC of the node operator.

0 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

That is gonna kill lightning man!! The moment there is centralization in the network, all those centralized lightning nodes will get a letter in their box from Uncle Sam telling them that their internet connection is gonna be shut down. That they now fall under a kind of broker of financial payment processor and they need to report to their central banks and we are fucked.

It needs to keep decentralized. But I'm already seeing it as a starter that this thing is not completely decentralized. And that nodes grow and then they become a target for Uncle Sam and the fiat system.

0 sats \ 0 replies \ @nullcount 28 Aug 2023

It probably won't "kill lightning". It just means that the kinds of markets that require confidentiality, trustlessness, etc. will just use something else. A network of KYC'd banking partners is highly efficient at processing your rent, grocery, tax and bill payments. It's even pretty good at large B2B trades and settlements. This centralized future of LN is just not the ideal for someone who by definition wants to avoid centralized networks of KYC'd banks. Perhaps because the trades they need to do aren't approved by their soverign state.

Sovereign states tend to make their own money. And this is true too of sovereign individuals. So there will likely always be a non-BTC trading pair which is well suited for non-state approved transactions.

I just think BTC could be a stronger currency if it was possible to make these transactions without worrying about how the state might react to your trade. And i believe its still early enough for BTC or some layer to achieve this property of "free market money".

I do take issue with people who call BTC "freedom money" or "f*** you money". If you spend BTC "the wrong way" you get to live the rest of your days in a cage. Clearly, its not freedom money yet.

1 sat \ 0 replies \ @badabing 28 Aug 2023

Your last point is so true. It's sometimes painful to watch how bitcoiners fantasize about "1 million dollar coins" (for instance Peter McCormack in several recent podcast episodes, feeling so pleased with himself).

I worry about this adoption issue, but hope that there will be innovations that remedy it (enough), and that we have enough time to build them. For instance, communities sharing one single UTXO, with virtual UTXOs or ecash in the frontend. You could move your coins onchain as a community, but not as a single person.

It would be best if Bitcoin adoption continues to slowly increase this decade, allowing us to build such solutions. The alternative is that Bitcoin adoption remains limited, e.g. to "black market" money like G. Zucco would say. If Bitcoin cannot offer sovereign-enough-solutions for every user, I guess it fails. But full sovereignty for every human seems like a pipe dream.

51 sats \ 2 replies \ @jk_14 28 Aug 2023

Imagine I’m only wanting to try this out. I want to be able to send 100 sats from one lightning wallet on umbrel (the node) to a wallet on my phone. And I want to send 10 sats to a wallet on my lnbits on the umbrel. Just playing around to test the system. Get educated about how this thing called Be your own bank works. (...) I want to teach them this lightning thing and running your own node. I simply cannot ger this up and running. Because when I tell them they got to buy a raspberry pi of 200 us dollars, an ssd card of 300 dollars

Just buy Optiplex $85: https://www.amazon.com/Dell-Optiplex-Business-Certified-Refurbished/dp/B07DR68B65 swap SSD for 1TB $38: https://www.amazon.com/Patriot-P210-SATA-1TB-Inch/dp/B087KBL5KS

install CLN on it
set Breez Wallet on your mobile phone
make small private channel between both nodes

This way you will be able to play with two different implementation at once (CLN and LND on Breez), with command line available also on your smartphone (!)

Cheap and perfect setup for educational purpose.

0 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

Thanks!!! Awesome! These are indeed cheaper than tge Raspberry pi and the SSD card I use.

0 sats \ 0 replies \ @jk_14 28 Aug 2023

I have it running Bitcoin Core + CLN and most of time it's almost idle so quite energy efficient solution yet:

https://imgprxy.stacker.news/ZfJjJzrwUBN0JWA-TOgex2VsN-EZplJ5tkXmU_yrtbE/rs:fit:600:500:0/g:no/aHR0cHM6Ly93d3cudGVjaGFkZHJlc3NlZC5jb20vd3AtY29udGVudC91cGxvYWRzLzIwMjMvMDEvaTMtY29tcGFyaXNvbi1wb3dlci11c2Uud2VicA

51 sats \ 2 replies \ @rkfg 28 Aug 2023

Inbound liquidity can't be too cheap because it's essentially dead sats if you're a leaf node that doesn't route. You want someone to lock some sats with you while those sats can be allocated better with another routing node and collect fees.

Next, opening and, most importantly, closing channels isn't free. If someone opens a channel to you, they pay the closing fee in all cases (both cooperative and force close). This fee is dynamic and can grow quite a bit during certain periods, I've seen 10k+ sat commitment fee at some point and if a channel had to be closed I'd have paid that amount whether I want it or not. For a 100k channel that'd mean losing at least 10% of its capacity (if the entire balance is on my side) and even more in % if it's partially on your side. I use economic fee estimation while the default is conservative and it's usually much higher to guarantee getting into the block ASAP and prevent cascading force closings.

There's zero reason to open public channels of <1M sats, they wouldn't route anything and mostly be a dead liquidity. If you simply want to test LN your best bet would be using an LSP that automatically opens a channel to you for a decent fee, such as Breez or Phoenix. To route you need orders of magnitude more sats. It's a job, and I can't say it's a profitable one unless you're really big and, most importantly, provide services, not just liquidity. I don't provide services and I think I work at a loss, force closes take more sats than I earn from fees. I don't complain because it's a long game, so just being around and getting acquainted with other peers is more important than making money.

I get about 10-15k sats a month but can easily spend the same amount on one force close because of a stuck HTLC or a bug, and this month only I already lost 6 channels to that. Then again, if you have stable income and buy bitcoin regularly it's not a big issue. The experience alone is worth it. But if you want to run it profitably and don't have at least 0.5 BTC to allocate for LN, I'd say rather play on testnet/signet or use a wallet to send/receive txs.

You can also easily obtain incoming liquidity by exchanging LN sats to on-chain via Boltz or FixedFloat. Open a channel to any node, send some amount to your own on-chain address, and you get your sats back (minus service fee) and also inbound liquidity. You still pay for it (no service would do this exchange for free), but it's easier because you can choose any node to open a channel to, not just the liquidity seller. Also, in this case you'd be the initiator and as such pay the closing fees.

Inbound liquidity costs money because it's someone else's sats they agree to lock up with you, effectively opening a "credit" for you to spend by receiving sats (it's not really a credit, just an analogy). They can't profit from it unless you explicitly receive and send money (through their node) and that can't be enforced. This liquidity also can't be spent elsewhere which creates an opportunity cost. And if you go offline forever they'd need to force close this channel and pay the fee. Or even if you close this channel cooperatively, they still have to pay the fee as the initiator.

So there's a lot of implicit and explicit expenses that have to be paid in hard money and can't be worked around. That's why you should pay for them as you need it, not them.

0 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

@rkfg thank you soo much for sharing your thoughts. I need to dive more into these Lightning node economics. It looks like a game where there is some chance that channels get closed, and also you need to estimate or be sure that transactions get routed so you earn transaction fees.

The way you explain it is clear. It doesn't make sense opening a lot of channels with small starters. I see it. You need to have some chance that people are going to use your channel. Otherwise indeed is is dead capital sitting there and nobody uses that "road".

So I'm starting to see how this thing works. If you need to invest and if you see a lightning node as an investment, then you will make calculated risks. And you would not open with every small guy just starting.

I think the more the price of Bitcoin increases the more these fundamentals will play out. Of course you will receive higher transactions. But as 1 sat becomes more valuable because the price of Bitcoin increased, the more calculated your bets will be.

Very interesting subject.

10 sats \ 0 replies \ @rkfg 29 Aug 2023

Yes, your understanding is correct. LN is indeed an investment, not very risky, not very profitable, but useful to learn the ropes, people and tech. The biggest risk is losing your node due to hardware failure so make channel backups regularly. Best to automate it with Restic for example, it's easy to setup with virtually any storage, SSH/FTP/S3/WebDAV/etc. and it's FOSS. In case your node dies you can use that small backup file to force close all your channels by asking your peers nicely to do that for you. It's the only supported way to recover your sats, NEVER backup the big channel database. If the state there is outdated even by 1 step you will get punished by your peers and they will take all money to themselves because you'd use a revoked state.

Nothing is guaranteed with LN (in terms of profitability and availability) except the fundamental principles and it's by design. If it weren't possible to unilaterally take your money back while making sure each participant can only get back what belongs to them and not more, LN would be just another trusted exchange of sorts. If you believe no one ever tries to cheat and everyone is always online, the protocol could be 100 times simpler, just update the balances internally, no revocation needed, no HTLCs etc.

Force close is what makes it work, and it's the nastiest thing at the same time. Probably my most love-hate feature, love that it exists, hate when it actually happens to me. If we were only able to close cooperatively it'd be a disaster, because your peer could disappear and you'd be left holding the unusable bag. Maybe they would do that deliberately to mess with you, especially if the balance is on your side mostly so their loss isn't significant.

Another aspect is that nodes can refuse to accept your channels no matter what (by public key or IP for example), and it's their right. Fortunately, you can connect to another node and as long as you have any access to LN and liquidity you can transact with any node, and they can't refuse your payment because they don't know where it comes from thanks to the onion routing protocol.

I think these features let everyone have agency over their decisions, and at the same time limit that agency only to their own channels and not the entire network.

62 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

I have to readjust my statement. Current Lightning Nodes are NOT killing the smaller ones.

I'm sorry to all the large nodes trying to run a business and seeing this post. And I'm thankful to all the large nodes that replied to my post and taught me some valuable lessons today.

I got a lot of insights with this post.

My understanding after just some hours of posting this post are as follows now:

it is a business running a lightning node.
the larger nodes are just businesses taking risk, deploying capital to make a living.
there are natural reasons why a larger node will not just open a channel with each new small starter node
if you open channels that are not used it is like investing a lot of dead capital on a road that is never going to be used. No normal person would ever build a road to a new city where no body is going to be living. If there is no activity or no activity expected for routing sats it makes no sense to just open a channel.
large nodes are no Santa Clause that just share goodies and presents with others.
there are risks involved, closing channels etc. If you have to close channels, because they are small, it just eats up your capital. So no large node would do this otherwise they go bankrupt.
There are some economics involved that when the bitcoin price increases that this will be more difficult for starting nodes to start. Because the existing nodes will have more incentives not to link to smaller ones.
you can use testnet. Better to use testnet to teach about lightning nodes, umbrel etc.
you can have private nodes. You can link private nodes with each other and teach people. You do not have to go the public node approach.
Running your own bank, hmmm is that possible for everyone? I don't think so. I will be a bank, but there will not be easily inbound and outbound transactions.

New questions come up

This is an exiting journey. It looks like running a node is kind of something that can be simulated or calculated in a spreadsheet.

You have capital to invest. You have some assumptions about the channel size. You have assumptions or some targets regarding your connections. And you expect this amount of liquidity to be routed and this amount of revenues (transaction costs). And there are this amount of channels to be closed (chances) and this amount of costs involved (onchain).

That sounds like a nice spreadsheet where you can calculate if you are going to make money or not. Hard money I mean.

I wonder now how much liquidity you need and how many nodes with what liquidity to build say a 10 million USD economy. If you have 1000 businesses spread around a country or globally and they all have 10 million USD liquidity. The money supply is 10 million USD. How many transactions do you need, at what level - how big per transaction - to be able to create a small economy between these 1000 businesses.

Imagine these businesses all sell a 100 dollar product. And they all have sales of 10.000 dollars per month. How many nodes do you need. What does the channel size needs to be?

This is another question. Has nothing to do with this post. But I just put my thoughts here. After reflecting on this post.

Thanks all for teaching me.

10 sats \ 0 replies \ @rkfg 29 Aug 2023

I can recommend using Polar (https://github.com/jamaljsr/polar) to roll out a local LN. It runs real daemons such as Bitcoin Core and LND and they connect to each other using real sockets. You can insta-mine btc and give it to all the nodes, open channels, create and pay invoices etc., the usual stuff. Everything is instant, free and as close to the real network as possible.

Imagine these businesses all sell a 100 dollar product. And they all have sales of 10.000 dollars per month. How many nodes do you need. What does the channel size needs to be?

No real way to answer that, just open some channels and see how it scales. Liquidity only limits payments in one direction, i.e. you can't send more than 1M sats through a 1M channel. But if you send and receive back, you can do that indefinitely long. So what actually matters is the balance between selling and buying goods&services between those businesses.

I think a good rule of thumb would be opening a channel with at least 3 times greater capacity than your monthly turnaround so you'd have some margin. It's possible to buy inbound with push, i.e. you buy a 3M sat channel and your balance will be 1.5M (of course, you pay that 1.5M on chain + the service fee for 1.5M inbound). Now you can both spend and receive which is ideal for a business because if all businesses open channels with no inbound they can't pay because no one can receive, and if they all buy inbound they also can't pay because no one can send, and if they somehow agree that some of them open channels by themselves and some buy inbound it becomes overcomplicated and messy.

Another cool feature is that LN doesn't need to be global or even public. Businesses, banks and communities (such as villages) can run their own segments that don't interact with the main LN, fully privately. They don't even need internet for that except for opening the initial channels and monitoring the chain for force closes. Of course, they can also run their own Bitcoin network (and ditch the internet completely) but it wouldn't have any real value because it wouldn't be a global consensus money.

42 sats \ 1 reply \ @DarthCoin 28 Aug 2023

Why do you run a public node if you cannot handle it properly to be a LN bank? For a regular user I will never recommend to run a public node.

Run private nodes!

0 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

Thanks @DarthCoin. Will read your guides.

10 sats \ 1 reply \ @Reachableceo 28 Aug 2023

https://c-otto.de/

Some interesting rules/logic/policies on LN ops.

0 sats \ 0 replies \ @Storyteller OP 29 Aug 2023

I loved these rules!! You can see that you know what you are doing!

10 sats \ 2 replies \ @Reachableceo 28 Aug 2023

I am interested in this as well.

In 2008 I came up with Economy 3.0 and I introduced Ripple (on sourceforge) to Bitcon. I have long been interested in a fully vertically integrated, self service/sovereign stack (that is also compliant with the law) (I realize this may run counter to many folks beliefs/feelings here).

I've been experimenting with Umbrel and running a bank/treasury desk etc off it.

charles @turnsys.com or we can chat public here. I would like to run the same experiments , and build out my business with this. Including tying it into my accounting/tax/ERP etc and using Cash App/BTCRefill etc and even compensating contractors etc all "off the fiat chain" (just because it can be coded as an API easily and no god awful fees from Stripe or whatever) (I tried to deal with authorize.net as a a 501c3 and they "couldn't classify me") sigh.

I have several LLC and corporations , so my accounting needs are moderately complex but not uncommon. My overall goal is building a self sovereign internet system (physical layer 1 using balloons) . The more we can vertically integrate, the better.

10 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

Where can we read about Economy 3.0. ?

Thanks for your thoughts. Tell us more about the experiments you want to conduct and what you want to find out.

How do you want to add it to your accountimg system? Do you want the transactions to be reported? There is a website that helps people with accounting. I will look it up and let you know.

How would you like to build out your business with it?

In Economics there us an equation

MV = P Y

That M is the money supply. Lets say 100 million sats. The V is the velocity of money. How many transactions in a year. How many times the sats change hands. Say 20 times a year.

The P is the price of the goods. Say 250.000 sats.

The Y is the production. How big is the economy.

So in tge case above witha 100 million sats liquidity in sll the nodes your economy eould be 2 billion sats.

If the velocity goes up to 200 times the economy is 20 billion sats big.

And if you divide that by the average price of 250.000 you get the value addef that can be channeled through that economy.

Once you have the value added you know that that is the total sum of the wages, the profits, the rents in that economy. So the payments for the different production factors of that economy.

I know that currently especially small island businesses, organizations and employees are limited to their own islands.

They cannot participate in the global economy or they can but at a high fee.

Basically the fiat banks and payment providers extract a big chunk of the M, the monetary base in the form of transaction costs.

If lightning can solve this at a lower cost it would help. People would create value and serve the lives of others.

I would love to see how this would work.

But not only for islands. For people everywhere.

I see a world where the M is 21 million bitcoin times 100 million sats.

That is the global M.

Probably that M will not completely have high velocity. But even if 5 million btc is in the lightning ecosystem than that would be the M.

How much btc is currently hold on in the lightning ecosystem?

This M we should be able to calculate how the velocity is. I can dive into that.

And then we know the left side of the equation.

If we know what the average prices are we know the Y.

It would be the Bitcoin Gross Domestic Product!!!

Others can experiment with this.

What do you think?

0 sats \ 0 replies \ @Reachableceo 2 Sep 2023

Wow the reply button / text is VERY small. Took me almost 60 seconds to locate it. :)

Also I didn't get any notification of your reply via e-mail, I just happened to see my bell icon had an indicator.

Anyway... the short answer (you sent a very long reply and I appreciate it, I'm only replying to a small part of it)

I would like to be able to treat BTC/SATS the same as fiat. Handled for accounting/finance reporting/general reporting/taxes etc. Compliance. Treasury desk operations. All using self hosted/self sovereign software/systems (dolibar/erpnext/firefly).

10 sats \ 1 reply \ @cstack 28 Aug 2023

I'm afraid I have to disagree with using testnet for this particular situation. The money needs to be small but real.

0 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

hahahah yeah. That is a good one @cstack. Lol. Yeah we don't want to teach kids to use "fake money" like fiat money that can just be created.

They have to feel that is real hard money. Digital liquid gold they are playing with.

Otherwise it makes no sense. So it has to be real on main net. Hmmm. Then the only thing I can think about is it should be a private node. Private nodes sending sats to each other.

And hopefully once those kids learn to send sats in their private world I created, they can use those sats to go public. And ask mom and dad: Hey mom and dad, here is how to create a wallet and I will send you some sats I earned today....

It has to be real hard money.

10 sats \ 1 reply \ @1sats 28 Aug 2023

Thank you for speaking up. Others have already discussed the cost of opening channels and the cost of liquidity, so I won't go into that here.

The problem is that after 15 years of cheap money, people aren't accustomed to paying to maintain their checking accounts anymore. Can you believe, 15 years ago, we had to pay $10 a month to keep a checking account open in the US?

Since Bitcoin is all about being your own bank, you have to bear the costs to maintain and operate it. With Lightning, you have to pay over 1000 sats for the account opening fee and lock in 1M sats in the channel. Or you will have to pay a hefty fee to the LSP so that they can offset the opening costs.

For educational purposes, you should use the testnet. Kids can play with toy money on the testnet without worrying about losing anything.

0 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

There are some islands in the Caribbean where you still pay 5 dollars a month to have an account and about 0.5 $ for every transaction you make through your bank!!!

Imagine paying your salary and 5 premiums and taxes per month as a business. You end up with 5 dollars a month fee and all these costs.

Imagine growing to a team of 5 employees or 10 employees. Your transaction costs increase like crazy.

And when you want to send some funds to Europe or US you get the 15 dollars transaction costs of international fees again.

I once caclulated that if you would send 100 dollars over and over again to some businesses after just 200 times your whole 100 dollars would end up in the pockets of the banks. Isn't that incredible? With a transaction fee of 0.5 dollars per time in just 200 times transacting 100 dollars all the dollars end up in the pockets of fiat banks.

Being your own bank, means somebody has to pay for the roads. You can have your bank but if there is no road to another country or island, there is no bank actually. We have to watch this. There needs to be competition and the fees have to remain reasonable.

We cannot go to the Fiat Banking system where you pay too.

The only great thing is that with Fiat banks you money loses value on top of it. Because it is being printed like crazy. Luckily in Bitcoin we do not have that.

10 sats \ 1 reply \ @kepford 28 Aug 2023

I realize lightning is complex and confusing but you could totally do what you are talking about with kids.

Each one could have a node. They could all open channels with each other. Set their fees to whatever. Open private channels with each other. It would work. It would be a good learning experience. This is how I learned. I had two Pis laying around and set up two nodes. I opened channels and set stats back and forth. If you narrow the focus to learning, this works perfectly well.

I would not expect routing nodes to allow me to open a small channel with me. Just like I would not expect my class project to be a part of Amazon Web Services. The big boys are running businesses, not hobby projects. Additionally, if bitcoin and lightning were based on ideology alone it would be doomed. Bitcoin will succeed based on incentives, not good will or helping a brother out.

10 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

Thanks. I think I need to run private nodes with the kids. Not public ones. Thanks for showing me how it would work. I want to share my knowledge with schools and those kids. So I'm glad that can be done with private nodes.

And I see that those "big" guys are running businesses. So it is unfair to expect them to provide free capital to starters.

10 sats \ 1 reply \ @cstack 28 Aug 2023

My suggestions (I run the Sideways node: 5 BTC, 40 channels, 5m minimum, but I started with Umbrel).

You should organize Lightning and Nostr communities on Umbrel and open smaller channels to each other. Only do on-chain transactions on weekend nights. Try setting 6 sats as your fee (watch mempool).

If you start this project I will open an inbound channel to you for free with zero fees.

0 sats \ 0 replies \ @Storyteller OP 28 Aug 2023

@cstack thank you!!! I will organize the Lightning and Nostr communities on Umbrel to so this. And once we are connected I will come back to this post and ask for opening a channel. Thanks. Thanks for all your suggestions. That is what I needed!!

I will dive into mempool and study it and do on-chain transactions in the weekend nights.

Thanks!!!

10 sats \ 4 replies \ @C_Otto 28 Aug 2023

I run c-otto.de, a rather large routing node. My funds are limited, which is why I have to carefully select peers, close channels, and make sure that the channels are actually used for routing. In most cases, this means having larger channels with larger nodes. Personally, I rarely open channels sized 20,000,000 sats (20 million) or less. It's not worth it, especially considering the open&close transaction costs.

However, I believe that there's a role for smaller nodes and other "mindsets". Maybe some smaller nodes (each connecting separate parts of the lightning network) collaborate and create a larger channel to a larger node (like mine)? In that case, a lot of smaller nodes can be reached with this well-connected larger node, which could be beneficial for all parties involved. I believe that, currently, there's not enough demand. The top nodes I see in my statistics are the usual larger ones: LOOP, bfx-lnd0/1, Kraken, WoS, ...

PS: As said in another comment, I can highly recommend using testnet to test and make first experiences. The mainnet approach is risky and expensive, especially if you also take into account software bugs, hardware issues, and - last but not least - your own mistakes.

1 sat \ 3 replies \ @Storyteller OP 28 Aug 2023

@C_Otto I understand you. Wow 20 million SATS or above. That means you are in serious business!!! That is a lot of precious capital that you got deployed in lightning. I applaud you for contributing capital to bitcoin.

There is a lot more involved than I first thought. More risks involved than I thought. It is more a business than I thought.!!

Your idea is great of some smaller nodes cooperating and then linking to one larger node.

I mentioned above that I want to experiment myself and then teach others how to use lightning. I think people (some businesses and organizations) should understand the technology. They should know how it works.

My focus now is understanding how it is done, deep diving into it and teaching others eventually.

One of my main goals is to have small islands (there are 58 official small islands) connected. Connected with each other and being able to trade with each other. So I would love to see at least 1 node on each island connected with sufficient liquidity so that people on those islands can trade with each other.

On most small islands there are 9-10 banks and they dominate the financial rails. It would be better to have more nodes than just 9-10 nodes on each island.

This is just an experiment to understand how it works, and to see how this vision will play out.

Thanks for your advice to use testnet. I will also go that route.

10 sats \ 2 replies \ @C_Otto 28 Aug 2023

I don't see the advantage of having many nodes. Why don't you create a single node that can be used from all islands? The internet doesn't really care about your physical location, and with international payments (or, at least, routes through international nodes) it doesn't really make a difference to have the first/last hop close to your physical location.

0 sats \ 1 reply \ @Storyteller OP 28 Aug 2023

Ok. I understand. You don’t need 58 nodes you say? Only 1 node and all the wallets on the islands connect to that node?

So you don’t need a node on an island to connect that island?

Aren’t the islands then vulnerable that they can be disconnected?

Can all the people on all these islands just use the existing nodes?

10 sats \ 0 replies \ @C_Otto 28 Aug 2023

As I said, there's no need to take your physical location into account. In theory everyone on those islands could just create a channel to ACINQ (or any other node) and things should be fine.