50 sats \ 3 replies \ @kuroba OP 14 Aug 2022 \ parent \ on: Will the Lightning Network reduce Bitcoin's security budget (transaction fees)? bitcoin
I can't put a number on it, as it's always changing, but I believe a sufficient security budget would be the amount that incentivizes enough miners to secure the network to make it unfeasible to compromise, roll back, double-spend, etc.
In May 2021 the bitcoin hashrate was 180 EH/s. Less than two months later it was under 90 EH/s (a >50% drop). Was security still sufficient at that time?
I believe so.
What I am getting at is the amount of hashrate we have is (mostly) because of the price, and not because that much hashrate is required for the bitcion network to be secure. As the price rises, the hashrate rises. Does that increase in hashrate make bitcoin more secure? Not really. Does a bunch of hashrate going away make bitcoin less secure? Well, it depends on how much is taken away, and who is exiting, and what happens to the hardware, etc., etc., etc. But essentially, just because bitcoin miners receive tens of billions of dollars worth of revenue each year currently doesn't mean bitcoin needs to pay tens of billions of dollars to remain secure. It was once secure when miner's revenue was just a billion dollars a year.
Plus, don't forget channel open and close transactions, and certain rebalancing methods. Those all go onchain. As LN gains, and people custody their own funds, LN will eventually increase the volume of onchain transactions.
And then you have things like this: RoboSats now has a way to receive onchain using a reverse-submarine swap. And Paxful, which has a 0.0005 withdraw fee for onchain transactions is suggesting to use LN withdrawals and then do a reverse-submarine swap. What users were doing was converting to USDT (Tether) and withdrawing that. So this lets you remain in bitcoin.
1/It’s usually costly to send #bitcoin to an external wallet if you use a wallet from an exchange.A 🧵
And then there's the time component. Over time bitcoin has seen much greater adoption,and with that greater demand for the limited block space. There is like a decade or so to come before the subsidy gets to be relatively tiny, in bitcoin terms. Greater demand bumps the price up as well. Both greater adoption and/or a rising price brings added revenue to miners.
And finally, if the worst case scenario (miners leaving in droves) occurs and there needs to be some change made ... a soft fork that reduces the block size limit (and thus presumably results in higher fees paid) is always an option.
reply
enough miners to secure the network to make it unfeasible to compromise, roll back, double-spend, etc.
Also, look at chains that have had problems in that area. Did they disappear? No. The exchanges increased the number of confirmations required before crediting the account for the deposit. They increased their transaction monitoring and imposed withdrawal halts when they see a rise in the risk of a 51% double spend attack.
The saving grace is that a successful 51% attack doesn't give the attacker the ability to do anything other than double spend their own previous transactions. They can't take your coins. In other words, the reward is not that great, and the cost to attempt the attack are high and the risk of loss of funds in flight (due to an exchange halting withdrawals) is also high.
I'm not insinuating that a 51% attack is nothing to worry about, but it certainly would not be fatal to bitcoin. The exchange rate would definitely be impacted but no doubt the brilliant minds in bitcoin would find a way. For example, there is already a fork of the bitcoin core client that changes the mining algo. For emergency recovery if there was, suppose, a state actor that had built a collection of mining farms that controlled 101% of the existing hashrate. Change the algo and reorg from the last block before the attack that state actor at that point has 101% of nothing and no further power to do anything.
reply
Thanks for this thorough response; from this and other comments I see that I wasn't factoring in all the ways in which LN necessitates on-chain transactions. As you point out, the security budget has so far been more than sufficient; I'm just trying to game out if a major government decided the Bitcoin network was an existential threat, but it's hard to predict developments on the scale of decades. The replies here have at least convinced me that LN adoption isn't an obvious future vulnerability at present (which I figured but wanted to be able to explain why), and that there are options should it trend toward being one.
reply