Author: GC 2015-08-10 09:01:40
Published on: 2015-08-10T09:01:40+00:00
The Bitcoin network and other payment networks will compete for fees based on the duration and cost to process transactions. If Bitcoin's fees remain low and zero-conf txns are possible, rival payment networks will require unique features to survive and make money for their investors. Nodes in the Lightning network can earn fees that would not exist without it. The base Bitcoin layer cannot handle the transaction throughput of the Lightning network, so the Lightning fees were never available to Bitcoin miners. Lightning raises the value of a transaction on the blockchain. Suppose you're a Lightning node that has earned 0.5 BTC in fees over the last month. In that case, you can attach a large 0.005 BTC fee to the Bitcoin settlement transaction to collect your earnings by settling on the blockchain. You can afford to pay this fee because you've made more on the Lightning transactions you've routed. Off-chain transactions, such as Lightning, potentially extract fees that would otherwise be paid to miners if the transactions were on-chain. Therefore, some argue that encouraging off-chain transactions could harm Bitcoin's security.
Updated on: 2023-06-10T19:08:49.771921+00:00