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Comment by kevinak | Hacker News Reader

The parent here is exaggerating. It's not free, just very very very cheap. Nodes with channels can set fees and get paid when they a transaction is routed through them.

There is work being done on non-custodial escrow services for LN. Here's one: https://lightningescrow.io

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What prevents a node connecting many consumer wallets from raising rates for "out-of-network" wallets, especially smaller ones, or independent nodes?

Think of any network: Economic forces usually drive it towards centralization if not outright monopolization, especially if interfacing with end users (e.g. banks, electricity providers, ISPs, messengers...) unless there are (effective) laws in place prohibiting it.

> There is work being done on non-custodial escrow services for LN.

I'm very curious about efforts like that. Dispute resolution is extremely difficult to do in a way that is cost-effective, yet fair enough to not drive away either buyers or sellers.

Not sure what you mean by your question. Payers choose the channel they want to send the payment over. If somebody sets a large fee, the payers will simply choose a different channel.

By that logic, if customers would see how large interchange fees can be, they would choose different payment methods than the most expensive credit cards.

The opposite is the case: Merchants almost always prefer not losing the purchase over a few bips saved on interchange and cardholders continue using their high-fee cards because issuers pay them kickbacks from that interchange in the form of rewards.

The exact same thing could happen with a dominant Lightning wallet provider (supporting channels only to their own nodes in exchange for a better user experience, incentives etc.) and merchants accepting Lightning.

Monopolization almost seems impossible to prevent at a technical level in networks due to the network effect (quadratic utility) and customers being relatively slow to change providers and easy to sway with one-time incentives. Credit cards have just had a few decades of a headstart over Lightning in that regard.

The difference between Lightning channels and credit cards, is it's much harder to create a competing credit card company than it is to spin up a new Lightning channel. And it's also more difficult for customers to get new credit cards vs switch payment channels. So, if a bank or credit card company wanted to extort certain merchants, eg saying "pay me a big fee or I will reject all payments to you", they can do so, since they know many customers are tied to their card and the merchant risks losing those customers. On the other hand if some lightning channel tried to extort merchants, both the merchant and the customer can easily switch channels to dodge fees.

This is one of the main goals of crypto. By drastically lowering the barrier to entry, competition is higher and fees are lower. This is what filecoin is doing to AWS [1], what NFT tickets are doing to Ticketmaster [2], and what Lightning is doing to credit card companies.

[1]: https://file.app/

[2]: https://variety.com/2022/digital/news/web3-touring-ticketing...

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