Author: David A. Harding 2023-05-27 20:36:47
Published on: 2023-05-27T20:36:47+00:00
Dave, in an email conversation with Burak, discusses the capital requirements and costs associated with using Bitcoin as a base layer for internal transfers. Dave suggests that Alice, who has one million customers, would need to keep several billion dollars worth of BTC in a hot wallet to serve all her customers as commitment outputs can't be spent by Alice for four weeks. He asserts that Alice needs to have enough capital on hand to pay out all amounts involved in mixing coins, paying lightning invoices, and making internal transfers. At a hypothetical risk-free interest rate of 1.5% annual, the per-user cost in fees and capital service would be around $1,000 per year. If we assume on-chain transaction costs are about $100, that would be equal to ten channels that could be opened or closed by each user for the same amount. Dave also reviews some technical aspects related to the timelock fidelity bond and its possible applications and limitations.
Updated on: 2023-06-16T18:33:55.216151+00:00