In a previous article I debunked the claim that Bitcoin is suitable for sending small amounts of money cross-border. At this rate, I'm going to get a reputation as a "bitcoin basher". But here is the thing: when people argue that Bitcoin is far from perfect as "medium of exchange", Bitcoiners counter with "perhaps, but ... Lightning!"
The Lightning Network, a 2nd layer on Bitcoin, was a long time coming. When it arrived it was plagued by excessive complexity. Lately, it appeared as ready for the prime time, almost ... So I naturally wanted to give it a try!
As a product whose aim was to democratize the use of Bitcoin in everyday transactions, I assumed it would not require particular skill nor technical knowledge. You can't expect an innovation to be adopted if the knowledge barrier is significant. So I've read a little bit and went for Phoenix, apparently "the best" Lightning wallet, without investigating in detail.
I cannot recommend this product, so I won't add a link but if you really want, you can find it by yourself
I wanted to load it with some sats, and was somewhat baffled. Phoenix has a feature to set a "max fee": it won't do the LN transaction if the fee incurred are above that setting. I set that max to 5000 sats. With Bitcoin at 60k, that's a hefty $3. So I would accept a transaction if the fees are $3 or less. Which is already very high, if you ask me. Clearly, if the fees are so high, you won't like paying for your cofee with the Lightning network...
So I've sent 60 000 sats and ... I had to wait several days and do several retries because ... the fees were constantly above 5000 sats!
Finally back in September I managed to charge about 58Ksats with slightly above 5000 sats in fees! What a bargain ...
... but wait, 4000 sats were "for the miners to treat the transaction on chain", right? So you can excuse them, perhaps.
Anyway, fast forward to 18 of April (two days before the halving and the explosion in on-chain tx fees), I had to receive about 60€ from a friend. That was about 101Ksats. So I said, "Let's do a Lightning transaction!"
To all LN fans who want to prove me wrong, I say: knock yourself off! Here is my LN address, send me whatever you think will prove that I am wrong and that "the LN will redeem Bitcoin's mediocre ability to serve as medium of exchange"
He has "Wallet of Satoshi". He scanned my Phoenix address and off you go ! ...
Or rather NOT! His wallet indicated that there had been an error. We tried several times, to no avail. After a while not understanding what went wrong (error messages were no indication, which is another "no, no" if you want to conquer the mass market with a new product), I checked MY Phoenix wallet ....
And there it stood, in all its beauty
My wallet had refused the payment because for this "pure Lightning transaction" the fees were ... almost 19Ksats !!! Almost 20% of the sum to be sent, in the same league with Western Union!
This is basically the end of the claims that LN is a product that will ever help with Bitcoin adoption as medium of exchange. After something like this, nobody should be expected to give LN a second chance.
But because I am genuinely interested to understand, I said, "Ok, is this perhaps related to the Phoenix wallet?"
And I recalled that I had also @brianoflondon 's V4V.app in my Hive Keychain browser (shoutout to @stoodkev for an excellent product, @keychain).
So I said, let's try that! I've asked my friend to send me 60€ as HBD using the Lightning Network (and Hive, of course). I entered the sum in V4V.app and it generated a LN invoice
My friend used hiw Wallet of Satoshi to read it and the payment went through like a charm!
The swap from sats to HBD had a fee of 1700 sats, which is acceptable for a swap but not insignificant.
Is it Phoenix then?
So is Phoenix the scam,rather than the Lightning network? Well, you see, this is a more complex question than one might think at first.
Lightning is supposed to be the product that democratizes Bitcoin for payments. And whoever says "democratize" should imagine people with little to no technical knowledge that come to try it. People who cannot be expected to "do their own research" and spend a lot of time investigating different wallets. Phoenix looks well and, if you ignore the outrageous fees, works ... almost. But not well enough. Most people who will come to Lightning via Phoenix will tend to conflate the two. If Phoenix doesn't work well enough, it will be, for them, that the Lightning network doesn't work. And who can really blame them?
I downloaded Wallet of Satoshi (WoS) myself and decided to move my sats from Phoenix to WoS. I can tell you it wasn't easy, I had to try several times and in the end I paid 232 sats for this move and left more than 500 sats on Phoenix because there was no way to know the transfer fee in advance
Is it me, perhaps?
In the following days, I wanderd on X and found out my experience was far from being unique. Here is a screenshot from a Bitcoin "influencer".
Conclusion
At this point, I can draw the following conclusions:
Bitcoin has failed as a means of payment / medium of exchange (MoE). It is important to note though that it remains a unique store of value and it is also the intellectual father and protector of the cryptoverse (including Hive)
LN will not redeem Bitcoin as MoE. It is a futile attempt at solving, at great cost, a problem which has already been solved. You want to pay for coffee with crypto? Even a fee of 1 sat (the WoS fee) will be too much when Bitcoin will be worth $1,000,000. You should rather pay with HBD, whose fees will always be precisely 0 (zero), by design. To all the LN advocates, I dare you: you want to demonstrate that LN works well? See my LN address above, send me whatever sum you think will prove me wrong.
As Valenzuela says in the tweet below, "Lightning is not a scam. But it's definitely been used to scam you."
My answer: something that works for payments exists. It's called Hive, the HBD, Hive keychain, V4V.app
I attribute my good experience of lightning on Muun to dumb luck. If you doing when there is a lull in the bitcoin core transaction amounts, then the transaction fees may be low and reasonable.
As activists wanting people to have some alternative money systems so that we will have options in the future to trade without a great social credit score. For this reason we choose Bitcoin core as it has the highest marketcap and thus the best chance of getting even more adoption assuming that its offering is better than fiat.
As consumers, we want to use something that costs less than fiat. With credit card payments the merchant pays 3%. 5000 sats on 10,000 stas is 50%. Then that 5000 sat digital-coin needs bytes for another transaction to mint it into a larger coin, but that may be more than the value of the digital-coin itself. So, it ends up being 100%. Six dollars is dust on the Bitcoin core chain. Bitcoin fees need to be 1.5% or less than what is being spent. If the fee is 5000 sats, then it is only good for things that cost at least 0.003 3 BTC ($200 USD). We are talking about car rentals or house rentals depending in what country you live in.
Being how the BTC's popularity has made it useless, as consumers we should consider something that has high acceptance but lower fees. This varies depending on where you shop which is the best for this. Sometimes it is Hive or HBD.
Did you take a look at this article about BTC and no-coiners? https://www.proofofbrain.blog/btc/@leprechaun/perhaps-it-is-time-to . Basically I argue as advocates for cryptocurrency we should probably get people to avoid Bitcoin Core (BTC) and Ethereum assets but instead go with a balance of a chain with popularity with low fees.
I agree with you - the most difficult will probably be to convince the Bitcoiner-maxis that the other chains are not ennemies but friends and allies of Bitcoin, that complement and help spread adoption
What I meant by what I wrote earlier, is the lionshare of people don't really know what cryptocurrencies are, and why they are not a get rich scheme for buying with fiat and then selling for fiat, but something that can actually be a medium of exchange. In some situations, it is better than credit cards.
True, but we have a lot of work before we can open people's eyes to seeing beyond fiat money
Bitcoin maxis are a drop in the bucket. The people who only think of Bitcoin as some kind of magical metal coin that keeps going up make up most of the water in the lake.
Not sure. They are few, but with an outsized influence.
That's some good information for anyone thinking to get into lightning payments, I have no interest in it, but I can see that if we do get a massive run on bitcoin that there will be a lot of retail customers jumping on board. hey I was wondering if you can send me a witness vote, if you have a spare one. Thanks for the informative post.
I reviewed my witness votes and there were a few spare ones. I gave you a vote, use it wisely 😄
Thanks a lot, I value each and every vote.
Can’t we gain access to lightning without making use of Phoenix?
Wallet of Satoshi if you want to stay in sats. Or V4V.app if you want to cross over to HIVE / HBD.
But my experience with Lightning is limited
I think the lightening network always to a great job when it comes to transfer. Though I don't know how the gas fee compares
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