<p>'Under the hood' of a lightning network channel open/close, a user will be sending a bitcoin transaction. In order to send a bitcoin transaction, a fee is paid to miners. </p>

<p>One advantage of having a lightning channel is that you can amortize the cost of the miners fee across a potentially enormous number of payments. All else equal, having the ability to transact on the lightning network thus lowers a users expected fees/payment, small blocks or not. </p>

<p><a href="https://bitcoin.stackexchange.com/questions/67158/what-are-channel-factories-and-how-do-they-work">Channel factories</a> are a technology that could allow for immense cost saving for lightning users. So this is potentially a 'solution', in the context of your question. </p>

<blockquote>
  <p>Paying several hundred dollars to open and close a lightning channel seems uneconomical. This is a common argument against lightning by big blockers</p>
</blockquote>

<p><em>'Uneconimcal'</em> doesn't seem like the right word to use here. If in the future a bitcoin transaction costs hundreds of dollars in fees, that would mean that the ability to send a bitcoin transaction is in high demand. By many measures, being in high demand is a mark of success, though 'big-blockers' will argue that by increasing the block size the network can increase the 'supply', thus lowering transaction fees. </p>

<p>To illustrate this point, <strong>consider the absurdity of this sentence</strong>:</p>

<p><em>"That restaurant has become very popular! Nobody goes there anymore"</em></p>

<p>So you may ask <em>"Why don't we just increase the size of the restaurant then?"</em></p>

<p>Well, the issue is that by increasing the size of the restaurant, the restaurant will lose the properties that made it popular in the first place!</p>

<p>So lets return to Bitcoin, to explain why increasing the block size ('making the restaurant larger') is a naïve solution that damages the network's desirable properties, while only providing a rather meagre linear scaling relief:</p>

<p>Implementing larger blocks means that running a full node on the network will be more resource intensive (bandwidth, computational cycles, storage, etc), and so naturally we should expect less nodes will exist due to the increased costs. This is damaging to the core properties of bitcoin (eg censorship resistance), which can only exist when the network is sufficiently decentralized. 'How decentralized is good enough?' is a question that is difficult (if not impossible) to answer, but this much is certain: increasing costs is a centralizing force, and the most conservative approach is to be 'better safe than sorry'. A blockchain network is a very expensive and inefficient way to implement a database, but the core properties mentioned above make these expenses 'worth it', at least according to the market. </p>

<hr>

<p>In any case, there has never been a time where the average Bitcoin transaction fee is 'hundreds of dollars'... in fact transaction fees have been quite low for the majority of the history of the network. This isn't to say that fees can't or won't increase in the future, but making changes that sacrifice the most important properties of Bitcoin seems like an extremely misguided approach to scaling the network. </p>

CC BY-SA 4.0
2019-05-20T00:45:51.000Z
Chanel factories and eltoo where my first thought as well. What do you think about side chains? For example lightning could be build on top of Liquid and the cross chain Atomic swap should not be a problem. In particular the American call option Problem should not exist as the underlying asset is the same by the end of the day. In that sense we would have a fragmented base layer in which tx costs should not rise to heavily.
Rene Pickhardt
CC BY-SA 4.0
2019-05-20T01:15:24.237Z
@RenePickhardt hmm interesting! I hadn't considered the possibility of sidechain/mainchain LN interoperability as a means of lowering fees. While the trust model of holding liquid coins is different, I think it could quite reasonably be argued that the potential cost savings would be worth the tradeoff for some users. I think you could post that idea as an answer as well, it seems reasonable to me!
chytrik
CC BY-SA 4.0
2019-05-20T06:47:34.507Z
@RenePickhardt I think using federated coins like L-BTC, in order to enable faster payments would kinda inhibit the decentralized scalability that we can achieve with LN. Even in LN, you do not need to trust anybody, and if anything bad happens, you can just close the channel getting your assets back.
Ugam Kamat
CC BY-SA 4.0
2019-05-20T11:52:08.653Z
There are other potential sidechain solutions like Paul Sztorc's Drivechains. There are some security tradeoffs versus main chain security, but they are still decentralized and permissionless, and can be implemented on Bitcoin with a soft fork.
Mark H
CC BY-SA 4.0
2019-05-20T00:22:10.707Z
2019-05-20T00:22:10.707Z
chytrik
<p>Paying several hundred dollars to open and close a lightning channel seems uneconomical. This is a common argument against lightning by big blockers, I’m yet to read a valid argument against this.  </p>

CC BY-SA 4.0
2019-05-20T23:13:44.293Z
Uneconomical was probably the wrong word yes, but if the fees get higher (which they will once the block subsidy is practically gone) the use of LN will decrease because no one can afford to open a channel. The main chain will be okay due to like you said, high fees = high demand. I’ll have a look into channel factories and get back to this thread.
Electric_Sheep01
CC BY-SA 4.0
2019-05-20T23:52:21.103Z
re: *"the use of LN will decrease because no one can afford to open a channel"* - This is absolutely not true; on-chain fees will only increase under increased usage. If fees were too high for *everyone*, then usage would slow/stop, and thus fees would be lowered. In fact, if fees are high, we should expect users to be incentivized to use their transactions to open LN channels, because this will allow them to pay **lower fees per payment sent**. It is simply not logical to purpose that *"high fees will mean no LN channel opening/closing, but regular transactions will still be economical"*.
chytrik
CC BY-SA 4.0
2019-05-20T23:52:58.867Z
Understand that no matter the fee level, **some number of users/use-cases will be priced out**. They key point is to find ways to allow more users to engage with the network, **without** sacrificing the network properties that make Bitcoin interesting in the first place.
chytrik
CC BY-SA 4.0
2019-05-23T02:08:17.020Z
@chytrik I never said regular transactions will not economical, I see L1 primarily being used as the SoV layer of which high fees isn’t an issue. But if I’m interacting with say a small business and want to open a LN channel with them I’m not going to pay 10’s of dollars to open a channel.
Electric_Sheep01
CC BY-SA 4.0
2019-05-23T02:19:03.893Z
That line of reasoning makes more sense to me, though I think it is worth noting that a lot of people and businesses *do* spend $10's of dollars monthly in order to have a bank account that allows them access to easily transact in the wider economy.
chytrik
<transaction-fees><lightning-network><blockspace-market>
Is there a solution to paying high fees when opening and closing lightning channels once we hit a fee only market?
Electric_Sheep01
# Is there a solution to paying high fees when opening and closing lightning channels once we hit a fee only market?

(Asked by: username_0 on 2019-05-19)

Paying several hundred dollars to open and close a lightning channel seems uneconomical. This is a common argument against lightning by big blockers, I’m yet to read a valid argument against this.

**Tags:** transaction-fees, lightning-network, blockspace-market

> **Comments:**
> **username_0**: Uneconomical was probably the wrong word yes, but if the fees get higher (which they will once the block subsidy is practically gone) the use of LN will decrease because no one can afford to open a channel. The main chain will be okay due to like you said, high fees = high demand. I’ll have a look into channel factories and get back to this thread.  
> **username_1**: re: *"the use of LN will decrease because no one can afford to open a channel"* - This is absolutely not true; on-chain fees will only increase under increased usage. If fees were too high for *everyone*, then usage would slow/stop, and thus fees would be lowered. In fact, if fees are high, we should expect users to be incentivized to use their transactions to open LN channels, because this will allow them to pay **lower fees per payment sent**. It is simply not logical to purpose that *"high fees will mean no LN channel opening/closing, but regular transactions will still be economical"*.  
> **username_1**: Understand that no matter the fee level, **some number of users/use-cases will be priced out**. They key point is to find ways to allow more users to engage with the network, **without** sacrificing the network properties that make Bitcoin interesting in the first place.  
> **username_0**: @username_1 I never said regular transactions will not economical, I see L1 primarily being used as the SoV layer of which high fees isn’t an issue. But if I’m interacting with say a small business and want to open a LN channel with them I’m not going to pay 10’s of dollars to open a channel.  
> **username_1**: That line of reasoning makes more sense to me, though I think it is worth noting that a lot of people and businesses *do* spend $10's of dollars monthly in order to have a bank account that allows them access to easily transact in the wider economy.  

---

## 1 answers

### Answer by username_1 on 2019-05-20. Score: 4 | Accepted answer

'Under the hood' of a lightning network channel open/close, a user will be sending a bitcoin transaction. In order to send a bitcoin transaction, a fee is paid to miners.

One advantage of having a lightning channel is that you can amortize the cost of the miners fee across a potentially enormous number of payments. All else equal, having the ability to transact on the lightning network thus lowers a users expected fees/payment, small blocks or not.

[Channel factories](https://bitcoin.stackexchange.com/questions/67158/what-are-channel-factories-and-how-do-they-work) are a technology that could allow for immense cost saving for lightning users. So this is potentially a 'solution', in the context of your question.

> Paying several hundred dollars to open and close a lightning channel seems uneconomical. This is a common argument against lightning by big blockers

*'Uneconimcal'* doesn't seem like the right word to use here. If in the future a bitcoin transaction costs hundreds of dollars in fees, that would mean that the ability to send a bitcoin transaction is in high demand. By many measures, being in high demand is a mark of success, though 'big-blockers' will argue that by increasing the block size the network can increase the 'supply', thus lowering transaction fees.

To illustrate this point, **consider the absurdity of this sentence**:

*"That restaurant has become very popular! Nobody goes there anymore"*

So you may ask *"Why don't we just increase the size of the restaurant then?"*

Well, the issue is that by increasing the size of the restaurant, the restaurant will lose the properties that made it popular in the first place!

So lets return to Bitcoin, to explain why increasing the block size ('making the restaurant larger') is a naïve solution that damages the network's desirable properties, while only providing a rather meagre linear scaling relief:

Implementing larger blocks means that running a full node on the network will be more resource intensive (bandwidth, computational cycles, storage, etc), and so naturally we should expect less nodes will exist due to the increased costs. This is damaging to the core properties of bitcoin (eg censorship resistance), which can only exist when the network is sufficiently decentralized. 'How decentralized is good enough?' is a question that is difficult (if not impossible) to answer, but this much is certain: increasing costs is a centralizing force, and the most conservative approach is to be 'better safe than sorry'. A blockchain network is a very expensive and inefficient way to implement a database, but the core properties mentioned above make these expenses 'worth it', at least according to the market.

---

In any case, there has never been a time where the average Bitcoin transaction fee is 'hundreds of dollars'... in fact transaction fees have been quite low for the majority of the history of the network. This isn't to say that fees can't or won't increase in the future, but making changes that sacrifice the most important properties of Bitcoin seems like an extremely misguided approach to scaling the network.

> **Comments:**
> **username_2**: Chanel factories and eltoo where my first thought as well. What do you think about side chains? For example lightning could be build on top of Liquid and the cross chain Atomic swap should not be a problem. In particular the American call option Problem should not exist as the underlying asset is the same by the end of the day. In that sense we would have a fragmented base layer in which tx costs should not rise to heavily.  
> **username_1**: @username_2 hmm interesting! I hadn't considered the possibility of sidechain/mainchain LN interoperability as a means of lowering fees. While the trust model of holding liquid coins is different, I think it could quite reasonably be argued that the potential cost savings would be worth the tradeoff for some users. I think you could post that idea as an answer as well, it seems reasonable to me!  
> **username_3**: @username_2 I think using federated coins like L-BTC, in order to enable faster payments would kinda inhibit the decentralized scalability that we can achieve with LN. Even in LN, you do not need to trust anybody, and if anything bad happens, you can just close the channel getting your assets back.  
> **username_4**: There are other potential sidechain solutions like Paul Sztorc's Drivechains. There are some security tradeoffs versus main chain security, but they are still decentralized and permissionless, and can be implemented on Bitcoin with a soft fork.  

---

