Oddbean

It’s amusing that whenever on-chain fees have even a modest spike, people immediately freak out about the design state of BTC/LN. It’s like, we go through one period of “fees are too low, bitcoin will become insecure, these are rookie numbers, we need to pump those numbers up with altcoins on Bitcoin” and then we skip any sense of middle ground, and go right to “omg with even several dollar equivalents of fees the LN is terrible and we should do this soft fork”. In the future, assuming overall network adoption continues to grow, I expect fees to be higher on a more sustained basis, and so people will be less caught off guard in terms of how they are using the protocol. It’s that rapid transition from low fees to high fees that seems to catch so many people off guard.

Agreed. And maybe, as the network grows and the user base becomes more diverse, there will likely be a natural segmentation of users. Some will prefer the security of on-chain transactions at a higher cost, while others will leverage Layer 2 solutions for their efficiency and lower fees. This segmentation will help in balancing the load on the network and maintaining a dynamic yet stable fee market.

IMHO they should not stop freaking out when the fees temporarily go down. LN is a hack that I can only see in a multi-custodian bitcoin future. Too many reasons for on-chain transactions in the background for ten billion concurrent people and turnover.

OG's have been accustomed to paying low fees. I'm personally prepared for the next 6 months or so with lightning & some liquid to refill lightning channels. But Im probably not prepared for a 2 year raging bull run & the traffic it will bring. Sometimes you just have to pay more.

It’s like we are talking about apple today in 1995. We are way early on lightning and Bitcoin is a rowdy teenager. A trip to El Salvador is enough to show, We have a long way to go. The best immediate use for bitcoin is to capture purchasing power in developed economies. Otherwise it is still too early to see on the ground secondary and third wave effects.

This period of ridiculously high on-chain fees is what prompted me to spend last week learning about LN, installing my own LND node, and opening channels. It’s a simple economic reality that will drive Lightning adoption. My not-so-complex decision tree was: Am I willing to pay $8 in fees on-chain to buy a $100 Cheesecake Factory gift card from BitRefill? No, that would be insane. But am I willing to spend $8 to fund a $1,000 Lightning channel that I can use with a variety of vendors in an instantaneous and private manner? Yes, absolutely! You discussed this layered approach in your book, but it didn’t really become a salient point for me personally until the fee situation became a stumbling block in my day-to-day operations.

I think as Bitcoin goes through its next hyperbolic price increase we will see a temporary reduction in Tx fees (in sat terms). I don't think ordinanals would exist if Bitcoin was much closer to it's real value. Txs will then be more predominantly used for financial settlement rather than "tinkering". You'll then see a slow grind up of Tx fees rather than these crazy spikes. I don't think we'll see an end to the freak outs about fees being unsustainable in either direction for a good while. The fee market & miner incentives are hard to wrap your head around. I like to take a deep belly breath & whisper "this is also good for Bitcoin".