Credit cards can’t support small payments.
Blockchains can’t support small payments.
Lightning can.
202 sats \ 3 replies \ @sb 23 Jul 2022
This is a great visual! Do you happen to know where I can see the source data for the lines? I would love to use this for the book I'm writing.
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114 sats \ 2 replies \ @kr OP 23 Jul 2022
thanks!
the credit card line is based off the standard 2.9% + $0.30 fee most major processors charge.
the bitcoin line is based on current mempool rates. the horizontal position of the bitcoin line will change as mempool fees go up or down, but the curve of the line will likely remain the same over time.
the vertical position of the lightning line will also change over time, but the line should remain flat, always enabling opportunities for making small value payments.
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199 sats \ 1 reply \ @sb 23 Jul 2022
Thanks for the detailed response! I get why the Bitcoin line will change horizontally.
I'm a little confused as to why the lighting line will shift vertically. Why do you say that?
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111 sats \ 0 replies \ @kr OP 23 Jul 2022
the lightning fee market is still evolving, and imo it hasn’t fully played out yet.
folks like @zerofeerouting could push other nodes to lower their routing fees to compete for a more central location on the network graph, while it’s also possible that fee rates rise over time to compensate node operators more for their liquidity.
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199 sats \ 2 replies \ @tomlaies 23 Jul 2022
Yeah, but how many payments really are <1$ ?
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220 sats \ 0 replies \ @nullcount 23 Jul 2022
Yeah, but how many people are going to log on to their dial-up modem to surf for just 1-minute.
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107 sats \ 0 replies \ @kr OP 23 Jul 2022
basically none, because existing financial rails don’t support small payments.
imo the more interesting question is how many payments will be under $1 on lightning? what new use cases can we unlock that were never before possible?
look at how many new use cases the internet has unlocked when the transaction costs for moving information dropped to zero.
all the tiny transactions we make every single day (posting on twitter, instagram, googling things, reading blogs, etc…) were simply never feasible prior to the internet. but of course, these tiny transactions have spawned the biggest companies in the world.
on the payments side, we’ve got lots of emerging examples already (stacker news, fountain, mash, etc…) and there are lots more on the way. how many of the tips sent on v4v apps are under $1? probably most of them.
and when users can pay directly with their nodes or wallets, seamlessly moving sats anywhere on the internet, i suspect we’ll see a ton of new use cases that were always useful but simply never possible before.
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199 sats \ 1 reply \ @0341d74877 27 Jul 2022 freebie
another interesting aspect in this is that LN may not only capture small payments but also payments by small shops, niche industries (like adult entertainment) and all kinds of cross-boarder payments. That's because all these businesses are often excluded from tradfi payment rails because nobody wants to be an acquirer for them because they are too risky or too small. Even if LN had fees that are not too far away from Visa & Co., it still has the advantage of being entirely debit based, so no need to check any credit-worthiness or bank account, so the cost of processing payments of "riskier" industries is not higher than usual in LN
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0 sats \ 0 replies \ @kr OP 27 Jul 2022
good point
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3 sats \ 3 replies \ @SimpleStacker 23 Jul 2022 freebie
I'm guessing these calculations don't factor in the cost of settling funds on chain though?
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0 sats \ 2 replies \ @kr OP 23 Jul 2022
correct, this is just the cost of using different payment systems
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99 sats \ 1 reply \ @SimpleStacker 23 Jul 2022 freebie
I'm guessing even if you factored it in, it wouldn't change the story too much, since on chain fees are pretty low, and you're unlikely to need to open or close channels too often
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7 sats \ 0 replies \ @kr OP 24 Jul 2022
true, i suspect a lot of new bitcoiners in the coming years will have their very first interactions with bitcoin via lightning too… the concept of a base blockchain might not even matter to them
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0 sats \ 0 replies \ @02b4cb35bd 23 Jul 2022 freebie
Yes, really true.. I used them to transfer small amount of btc with way less fees. But it really works for small amount of btc with binance chain.