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Comment by ddtaylor | Hacker News Reader

LN doesn't reduce on-chain Bitcoin transaction fees, but instead attempts to move most of the transactions off-chain. With LN you would open a channel using an on-chain transaction, conduct any number of off-chain transactions in that channel, then "settle" the channel by closing with another on-chain transaction.

There basically are two different views currently on the future scalability and funding model of the network.

The LN/small block view is to keep that layer limited and small and build on top of it and the idea is that with such limited transaction volume these "settlement" transactions will eventually cost a lot. I don't really see this working since to compete with block subsidy rewards you would need very costly transactions.

The big block or "Bitcoin Cash" view is to scale the block size up and eventually you will have very high volume of on-chain transactions.

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> I don't really see this working since to compete with block subsidy rewards you would need very costly transactions.

This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered.

There's no required amount of energy used for mining and miners are offered 0 guarantee of reward. Mining difficulty automatically increases and decreases depending on how profitably miners can operate. If the reward drops to the point that a miner using expensive coal can't compete with a miner using cheap solar, then they simply go out of business and hope they can sell their equipment to someone who can still turn a profit.

> This seems to suggest that miners dictate the reward they get, rather than miners are forced to adapt to the reward they are offered.

Miners don't dictate the reward they get. The subsidy is the "block reward" that started at 50 BTC and halves every 4 years, which is currently at 6.25 BTC - it will be halved again in a few years to 3.125, etc. Blocks are as full as they can be right now and rarely get to the 1.0 BTC mark, so basically if you want the transaction fee market to pay for blocks without increasing the size you'll need to pay close to 6X to 10X higher fees than the current price.

> There's no required amount of energy used for mining

This is true and actually the difficulty can decrease, but none of that changes how many transactions can actually fit into a block.

> Mining difficulty automatically increases and decreases depending on how profitably miners can operate.

Mostly accurate. Mining difficulty decreases if a block took too long to mine. There are lots of scenarios where mining difficulty could get easier - most of which don't seem plausible right now though.

Why do you need to compete with block subsidy rewards? Block subsidies are in addition to transaction fees

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