Subject: Re: [bitcoin-dev] Off-chain transactions and miner fees

From: "[email-masked]" <[email-masked]>
Date: Mon, 10 Aug 2015 17:35:55 +0200

> Nodes in the Lightning network earn fees that wouldn't be there if it
weren't for the Lightning network. The base Bitcoin layer can't handle
the transaction throughout that Lightning can, so the Lightning fees
were never available to Bitcoin miners in the first place.

This is questionable to some degree:

While it's given that limited space inherently limits the number of
on-chain transactions, one could argue that the limited space could
result in significantly higher fees due to the competition.

Likewise, if we assume there were a higher/no limit, then it would also,
or especially, be favorable to pay miners, instead of
off-chain-serivce-provider X.

In both scenarios, with, or without capacity limit, it doesn't seem
favorable to move transactions off-chain.

-------- Original Message  --------
Subject: Re: [bitcoin-dev] Off-chain transactions and miner fees
From: Rune K. Svendsen <[email-masked]>
To: [email-masked] <[email-masked]>
Cc: "[email-masked]"
<[email-masked]>
Date: Mon, 10 Aug 2015 07:57:30 +0200

> Nodes in the Lightning network earn fees that wouldn't be there if it weren't for the Lightning network. The base Bitcoin layer can't handle the transaction throughout that Lightning can, so the Lightning fees were never available to Bitcoin miners in the first place.
> 
> What Lightning does is raise the value of a transaction on the block chain. Imagine you're a Lightning node, and in order to collect your fees, that you've earned over the past month, you have to settle on the blockchain. If you've earned, say, 0.5 BTC in fees, you can attach a huge 0.005 BTC fee to the Bitcoin settlement transaction. The miners earn a larger fee, and you make sure your transaction gets into the blockchain quickly, and you can afford to pay this fee because you've made much more on the Lightning transactions you've routed.
> 
> /Rune
> 
> 
> 
>> Den 10/08/2015 kl. 00.20 skrev info--- via bitcoin-dev <[email-masked]>:
>>
>> Hello all,
>>
>> one argument I often read on this mailing list is that it's essential to
>> reward miners with transaction fees at some point to secure the network.
>>
>> 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 have not yet seen this conflict addressed in the recent discussions.
>>
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