Author: Patrick Strateman 2015-08-09 22:36:28
Published on: 2015-08-09T22:36:28+00:00
The cost of operating a hub includes the time value of funds locked up in payment channels, enhanced risk of loss of control of private keys, and operating costs. However, even with a small volume of transactions, the costs are relatively low. The true cost of operating a hub lies in the enhanced risk of loss, which can be moderated by market forces. Hubs that are better at securing their systems will reduce their risk of loss and obtain a competitive advantage. It's important to note that the risk of loss is the same whether the hub is doing 1 transaction/second or 1 million transactions/second. At 1 transaction/second, the cost (but not necessarily the fees) is going to be quite high, whereas at 1 million transactions/second, the cost is going to be very low.When considering the growth complexity of the total cost of the network in terms of the number of connections each hub has to other hubs, it's important to note that the end-to-end users would have to swallow all the costs of the hubs in the channel. The hub can charge a fee for its services to recoup these costs. The tx fees that a payment hub would have to pay to settle its Bitcoin transactions would be passed on as a cost to the clients of the payment hub.Networking and electricity are normal running costs associated with running a payment hub. Funds are debited from a payment hub and simultaneously credited from either another payment hub or the person making the payment, so that the net funds flow at a payment hub always sums to zero. The lost interest or opportunity cost on funds locked up in a payment channel would need to be paid for by its clients. Hubs can assess a fee for depositing funds, depending on the amount deposited and the amount of time it stays there. All of these costs can be recouped through fees charged by the hub.
Updated on: 2023-06-10T19:05:14.907648+00:00