Bitcoin Core’s (BTC) Lightning Network (LN) continues to limp along. A fan recently asked ecosystem luminary Andreas Antonopoulos how to donate using LN. Suggestions on how to accomplish that simple, very kind gesture are very telling about the usability of LN, and could help explain why merchant adoption has been far less than expected.
Bitcoin’s Lightning and Donating to Andreas
In a recently published Reddit post, a user expressed the desire of asking Mr. Andreas Antonopoulos, a famous cryptocurrency advocate, about the possibility of his accepting donations in Lightning Network payments, a thing that he does not normally do.
On his donation page, there is a cryptocurrency address for donating to a normal BTC on-chain address and a link to support him via Patreon through conventional legacy/fiat banking platforms. What began as a nice gesture turned into an exposé of LN for being decidedly less than user friendly.
The fan’s intention appeared to be two fold, help out Andreas with his work while supporting more LN adoption. /u/YeOldDoc summarizes the three possible ways in which he thinks this could be done, with warnings. See image below. The only real practical solution would be the second, but the effort of running a Lightning Network node and funding it, with the associated work and maintenance that comes with this seem impractical.
A comment from kvothe1956 explained to use Lightning Network he would have to pre-fund its own node channel, spend that money on anything, and then receive the money. The problem is the liquidity of the channel because he would not want to spend his already earned money. See image below.Redditor /u/don-wonton makes an interesting point: payments in Lightning Network are made through invoices, and without knowing the actual amount of the donation it would be impossible. The most practical solution would be to set up individual tiers for donations.
/u/Hiddentrader summarizes the whole thing in just one quick post, comparing the complexity of using Lightning Network to make a donation with just using Bitcoin on-chain or even another fiat based service. See image below.
The objective of bringing Lightning Network to the payment realm was to achieve scaling off-chain, while having the same ease of use, maintaining low fees for everyday payments and expenses. The reality? LN is nowhere near that objective, and small donations help illustrate why.
In fact, LN devs have promised a smooth, off-chain payment solution for quite some time. The running joke for three or years is that “it’s just 18 months away”. The often promised “second layer” solution to boost adoption just hasn’t materialized to anyone’s satisfaction. A consistent, baked-in low fee payment protocol is key in any mass adoption scheme.
In theory, LN on paper would be a nice way to spend BTC in places such as Venezuela, where high transaction fees would literally cripple an already shaky economy. Combine that with anecdotes about payments not processing, lost funds, and it’s no wonder hardly anyone uses LN.
By the Numbers
Statistics recently revealed by 1ML, a Lightning Network search and analysis engine are starting to make a lot of sense. Active nodes are the lifeblood of LN, as they hold the money to open channels and transact. For the entire world, LN nodes number less than 4,000.
Another way to interpret that number is less than 4,000 institutions or merchants have actually put their trust in LN to have their own node and start accepting payments. This number is really low considering the number of payment transactions that are made on-chain every day and the number of wallets that exist.
The capacity of the network for making transactions is also hampered by the lack of funds stored by nodes. The maximum transaction amount appears to be around $717,000, a surprisingly low amount if we compare with the monstrous number transactions made on chain daily. In fairness, however, LN has been sold as a micro-payment platform.
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