How much Bitcoin will migrate to Lightning?
247 sats \ 15 comments \ @kr 10 Jul 2022 bitcoin
When Bitcoin/Lightning tech is both mature and globally adopted (perhaps 10+ years from now), how much BTC will be on the Lightning Network?
In my mind this depends on a few things…
  • How efficient can routers be in re-balancing channels on Lightning?
  • How much payment activity does Lightning eat from the traditional payment system?
  • How much payment activity is created on Lightning that never existed before?
  • How much does Lightning security/reliability improve?
  • What is the mix of public vs. private capacity?
  • What is the price of Bitcoin?
Curious to know your guesses for the total capacity on Lightning in a mature state, and any other important factors that should be considered before making a guess.
I’ll guess that in a decade, there will be 100k BTC on Lightning, half in public capacity and half in private capacity.
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86 sats \ 2 replies \ @chinwenwencha 11 Jul 2022 freebie
IMHO, when/if Bitcoin gets mass adopted we'll see most of it being transacted on layers 2 and the first layer will be used by computers, companies or apps rather than individuals. First we need the experience to be user-friendly, cheap, fast and reliable. All of this can be achieved with more centralized systems that rely on the decentralized blockchain. And even decentralized ones, of course. I can easily see LN and maybe other, new, successful networks using BTC in its core but interceding between the blockchain and the average joe. So, yes, my answer is more than 50% of it.
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0 sats \ 0 replies \ @kilianbuhn 11 Jul 2022
This
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0 sats \ 0 replies \ @kr OP 11 Jul 2022
I guess one other consideration I should have thought about is the fees for confirming a BTC transaction in a decade.
My guess could be way too low if fees get extremely high on the Bitcoin blockchain.
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79 sats \ 7 replies \ @k00b 11 Jul 2022
30x seems pretty reasonable, but kind of conservative, almost a lower bound.
I do expect other layer 2's, like fedimint, to grow a lot too and wouldn't be surprised if all layer 2's combined account for 100-1000x, or 1M+ bitcoin in 10 years as an upper bound.
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110 sats \ 6 replies \ @kr OP 11 Jul 2022
Good points.
My assumption here is that people will still strongly prefer to keep BTC in cold storage vs. on a Lightning node in a decade, and payment routing will become far more efficient, increasing the velocity of payments on Lightning.
Combine higher velocity w/ a higher BTC price, and those effects could counteract the need for more BTC on Lightning.
I need to read up on FediMint.
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69 sats \ 5 replies \ @k00b 11 Jul 2022
Velocity as a counterweight to liquidity demand is interesting. I'm not sure that's a stronger force than base layer fees getting really high but possibly.
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100 sats \ 4 replies \ @kr OP 11 Jul 2022
Yeah I didn’t really think about how high fees could get.
If BTC transaction fees go exponential in a decade, my guess is probably way too low.
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69 sats \ 3 replies \ @k00b 11 Jul 2022
Most people seem to assume either one (low fees <> less lightning) or the other will happen (high fees <> more lightning).
I think if Lightning continues to improve and the use cases flourish, low fees won't be the main thing people switch to lightning for.
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200 sats \ 1 reply \ @kr OP 11 Jul 2022
True, high fees could incentivize some Bitcoiners to pay on Lightning, but Lightning use cases will go far beyond making less expensive payments.
This year was arguably one of the most successful for Lightning adoption, and blockchain fees have been minimal for many months.
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69 sats \ 0 replies \ @k00b 11 Jul 2022
Nice ... backtest.
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100 sats \ 0 replies \ @chinwenwencha 11 Jul 2022
Exactly. I think people will use lightning because it's user friendliness. Imagine a future where a big percentage of the world gets paid in BTC for their work. I can see two examples:
  1. Freelancers getting paid via LN and using it for day to day payments. Then at the end of the month they could send a portion of it to a cold storage as savings.
  2. 8/5 employees receiving their monthly salary on chain and then sending part of it to LN for day to day expenses.
And on top, of course, you have to add all those new ways we are exploring right now with value4value apps and stuff.
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69 sats \ 2 replies \ @hector 11 Jul 2022
IMO there's not much demand for btc payments YET. Most people bitcoin holders right now on want to do just that, hold.
If you look at other blockchains most of the traffic is for smart contacts/defi stuff, not really payments.
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110 sats \ 1 reply \ @kr OP 11 Jul 2022
True, but if you look at the fiat financial system, trillions of dollars of payments are sent and received from all around the world every day.
Bitcoin is money, and money is for storing wealth and making payments. The other tokens that are not vying to become money have other use cases.
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0 sats \ 0 replies \ @chinwenwencha 11 Jul 2022
Yep. I can see other blockchains interacting a lot with DeFi and stuff but Bitcoin settling just in what it's good for: payments.
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0 sats \ 0 replies \ @iguano 11 Jul 2022
I think we are going to have more than 100x comercial activity happening in lightning.
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