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Comment by foepys | Hacker News Reader

To open a LN channel you need an on-chain transaction. Same for closing a channel. Currently a Bitcoin transaction is around 7 USD. So you need 14 USD to participate, assuming the transaction cost does not change. 14 USD is more than a daily income for the average citizen, most will be below 10 USD.

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The thing is, Strike doesn't open LN channels for people. In fact, they only use LN to move money between custodial accounts they themselves are beneficial owners of. I can't for the life of me figure out why they'd use LN - or crypto at all - for this and not just an entry in the centralized database they already have tracking balances. Avoid regulation, maybe? But like why?

I've listened to an hour long Maller podcast and I simply don't get it.

Why are remittances so expensive if this is so simple? Maybe you are missing something here?

The function of lightning and the Bitcoin base layer is settlement and clearing, those 2 things are non-trivial.

Then there is also the legal aspect, which cannot be detached from those.

Generally the answer is regulation. So I suspect that is quite likely the answer here. Although since they are an MSB in at least the US they answer could just as easily be crypto fever.

For a centralized entity settlement and clearing aren’t hard. You have a money pile and a debt facility in both countries, then you wire money to net settle once in a while.

Channel factories will be able to open and close many channels at once, so if you open 100 channels in a single transaction, well then you can divide the onchain cost by 100.

Channel factories only work as long as all participants of the factory want their Bitcoin inside the LN. As soon as any party wants their Bitcoin in their Bitcoin wallet, the factory needs to close all channels. This makes is unusable in the real world as people can and will not commit their whole networth into static channels that need settlement of 100 or so unknown parties until they can send it anywhere else.

All of this also completely ignores the LN routing problem which is conveniently left out of the LN whitepaper as it is actually unsolvable at large scale unless you have very few supernodes coordinating everything. In the real world those are commonly known as "banks".

You can splice out bitcoin from a channel without closing the channel. The channel balance can go almost all outwards (some is kept to be able to pay transaction fees). In the channel factory scenario, one participant can receive bitcoin on chain without closing the whole factory. However, they will have to pay the transaction fee which could be prohibitively expensive.

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