True. I shouldn’t have said duration mismatch is the *only* way because Nik is right, collecting Sats fees for lightning liquidity is a yield and operates within the system without violating 21M.

Saylor’s discussing it from a capital perspective though. Borrowing money for a car or a house.

So say Bitcoin hits $13M per Saylor’s projection and a teenager wants to borrow $100k for a used car (inflation is a bitch) - that’s 769,231 Sats for a car.

In this world tx fees are going to be WAY higher. Realistically we’re heading to 500-1000 Sats per vbyte - that’s another 6.5%-13% cost on capital in tx fees.

People aren’t going to pay that kind of fee + interest to do this on the base layer to buy a used car..

Lightning or future L2s are the only feasible way to transact $100k at $13M Bitcoin. We could tack on additional lightning fees to represent the yield but then its not contained within Bitcoin any more, the car and the loan are outside of Bitcoin’s property rights enforcement which is not a knock on Nik’s idea, merely pointing out this doesn’t solve the yield either.

So if we can’t get around the 21M - where does the yield come from?.. 

WHERE DOES THE YIELD COME FROM IN A FIXED SUPPLY ASSET THAT IS CONSTANTLY APPRECIATING IN VALUE MICHAEL! 

 LN (routing) fees aren’t yield, they’re payment for a service. 

 It’s a yield, because I decided to move some of my UTXOs from cold storage to a hot wallet because it can provide a yield (earnings generated from someone willing to pay for the service it enables). 

 Then we have different definitions for yield. I see yield as return for lending. Self custodial LN routing channels generate fees or revenue. 

 Those fees are generated because you’ve locked up your liquidity in a lightning channel for a time and taken on some risk and cost to do so - thats the typical Austrian justification for interest too.

So it depends on how pedantic with semantics you want to be. You’re probably technically correct, but in practice it amounts to the same thing. 

 To be more clear, yield comes from counterparty risk. If it’s just *risk*, then everything has risk. Generating and storing private keys to UTXOs in cold storage has risk (and liquidity and other costs), but we wouldn’t say Bitcoin’s appreciation in cold storage is yield.

Yes, we could then debate the semantics of counterparty risk with the other side of your channel, but if the technical risk of mismanaging your channel and losing funds to a force close counts as risk to justify the classification of any return as yield, then the technical risk of managing cold storage private keys or even setting up your own self custodial time lock contract could also be seen as risk that offers yield. 

 Yield doesn’t exclusively come from the fact there is counterparty risk though. There is cost to deferring consumption, and providing the security and matchmaking so whilst banks needed vaults and guards for security (you could do this yourself - private credit has always been a thing), Bitcoin relies on channels which also need security and the matchmaking is routing. That’s why the Austrian definition is broader than purely having counterparty risk and considers duration and other costs for why interest is not inherently bad.

Price appreciation isn’t yield because 1 BTC = 1 BTC, but 1 BTC in a Lightning channel should over time = >1 BTC with a risk that it = <1 BTC. I agree it’s fees in the purest sense rather than “yield” but I feel like this is semantics and not really productive. 

Bitcoin doesn’t map one-to-one with legacy concepts so when we apply them they don’t always fit neatly and that’s a big part of where people go wrong. It’s why Saylor is getting it wrong. We have to work within the rules of Bitcoin, imposing outside ideas on it only helps us in the abstract but if our ideas don’t exist within those rules then they’re rough proxies at best and this is an example of that.