5 Conclusions
We show that usage of the Lightning Network is associated with reduced mempool congestion in Bitcoin and with lower fees. Our findings suggest that the off-chain netting benefits of the Lightning Network can help Bitcoin to scale and function better as a means of payment. Centralization of the Lightning Network does not appear to make it much more efficient, though it may increase the proportion of low fee transactions.
Data are not available on how Bitcoin is used, so we cannot say for sure whether Bitcoin is being increasingly used as a means of payment. Makarov and Schoar (2021) study blockchain data and conclude that the majority of usage is for trading and speculative purposes, but their analysis does not extend to transactions that take place on the Lightning Network. We can only say that the Lightning Network loosens a key technological constraint by allowing payments to be settled more quickly
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the federal reserve is very aware of bitcoin and also so is the defense department. Everyone is watching us closely and although the pundits don't get it, the smart administrators and generals understand the technology
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Our analysis covers the period January 1, 2017, to September 5, 2019.
Doesn't even include the explosive growth we've seen starting in 2020.
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Yeah, I wonder given the date of publishing why they'd ignore that data. Blockchain data is obviously accessible but perhaps they had trouble getting lightning network data from that period.
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Apparently they were dependent on a site called hashXP that stopped monitoring the Lightning Network in 2019.
We cannot extend our data set any later because, beyond these dates, hashXP was no longer actively monitoring the Lightning Network and providing accurate data. As a result, we are unable to study any more recent developments in the LN.
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If they'd been paying attention over the last 12 years, they'd realize not only is Bitcoin better than money, but ⚡️ makes it doubly better than money! :)
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One of the more interesting things the paper tried to tease out is whether centralization of Lightning nodes reduced demand for blockchain space. They suspected that a more decentralized LN would require more channels to be opened/closed as nodes attempt to connect to others and make payments, but their results didn't seem to indicate that. It might be some kind of methodological or data deficiency, but nonetheless it's an interesting finding.
On my reading, I found it strange that they didn't realize they could recognize and quantify channel opens/closes on the timechain, because channel opens/closes are pretty easy to detect for the time being.
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Bitcoin is already money, always has been but it's also a protocol. LN enables faster transfers on top of bitcoin
The FED, or at least some of the wagie in there are aware and afraid of bitcoin
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