pull down to refresh
My joke comment has gotten so many thoughtful replies.
Do we have evidence to support this for lightning? It's a thing that can happen with goods, but there's no requirement. Sometimes you just consume a little more and use most of the savings on other stuff.
We can see what the use cases for lightning are, and how none of them cannibalize uses the chain was ever used for materially.
No one zapped social posts, unlocked paywalls, paid for APIs, or vending machines with the chain. The chain isn't that granular.
Lightnings value isn't it's cost savings vs the chain, as it generally costs more on a percentage basis actually to route over LN... It's in its speed and granularity.
LN is also a hot wallet, so is not cannibalizing to/from cold storage to/from exchanges, nor institutional settlement as channel liquidity is a bigger friction than the lack of granularity.
Maybe cannibalizes a percentage of gift card buys? Or is it more people are buying GCs at all because they can fund a lightning hot wallet for that + the other stuff which makes the GCs more cost effective. I never bought a GC on chain.
It doesn't cannibalize using it to trade vs shitcoins with fake chain swaps...
There's simply no usage that ever existed lightning displaces, yet it generates a lot of channel/swap events.
Jevons doesn't apply to things with inelastic utility, but gas and electricity have infinite uses. In the context of money being akin to energy, Bitcoin has infinite uses.
Bitcoin blockspace is the good/service, and Lightning is a massive consumer of that good.
Good points.
There have only been a few lightning transactions that I’ve made that would have otherwise been on chain, and I’ve opened more channels than that.
This is the Jevon's effect, and why Lightning increases block demand rather than reduces it.
When the cost of gas goes down, people drive more, therefore spending as much or more on gas. Same for electricity, etc.
Lightning creates channel events far in excess of what its users would make in chain payments in its absence.
Bitcoin is institutional grade settlement, akin to ACH/SWIFT/Wires... not for coffees. So the question isn't why aren't people using it for coffees, why aren't more institutions settling in it.
Replacing ACH and Wires alone would be more transactions per day than Bitcoin can handle.
Each Lightning node however is an emergent institution, one that settles in on-chain Bitcoin. Thank god we have those, as each LN institution increases demand for settlement and the network effect is increasing.