The authors of the Lightning paper were well aware of the cost of Bitcoin mining to the environment. We (the authors and myself) speculated at the time that energy usage of Bitcoin mining could one day exceed the current output in the energy markets. I was the one that made the joke about forcing us to wrap the sun in a Dyson sphere one day to satisfy the need for power. It concerned us and they (Joseph and Tadge) ended up doing something about it, while I just sat back and watched.
Lightning isn't limited to Bitcoin, either. As long as the cryptographic algos are compatible, cross-chain swaps can be a thing on the network. That said, Lighting was initially architected to take advantage of Bitcoin's scripting and post-dated payment abilities (which are done using full nodes, not miners). That means anything using Lightning doesn't necessarily contribute to excessive power usage by the Bitcoin network. This is why I called out the attack on Lightning by association to Bitcoin. Would it, if used widely, contribute to Bitcoin's power usage problem? No, it wouldn't. Bitcoin's power usage problem is unique to the mining strategy for the chain, not the use of the transactions it enables, off chain.
Does Lightning still require on-chain transactions? Yes, but they can be done within the current capacity of the network AND even then that doesn't contribute much to the power usage given the full nodes process these payments, not the miners.
If mining came to a near halt, Lightning would still be functional. This means blaming it for anything related to Bitcoin is not a valid argument, which is why I said what I said. It's not that you are wrong about mining costs to the environment or energy markets, but more that the thing you are blaming has little to do with those issues.
Besides which, Bitcoin isn't the primary enemy here, it's the idea of PoW put into production plus human behavior to attempt to acquire wealth with it that is the real boogeyman. Ethereum is making a big bet on PoS, but some remain skeptical this can give way to a fair market. We'll see, I guess. Those folks appear to be way smarter than I am, even on a good day. In the meantime, Ethereum is still stupid slow and still uses PoW to do what it does.
> This is why I called out the attack on Lightning by association to Bitcoin. Would it, if used widely, contribute to Bitcoin's power usage problem? No, it wouldn't. Bitcoin's power usage problem is unique to the mining strategy for the chain, not the use of the transactions it enables, off chain.
The contribution to Bitcoin's power usage is a bit more indirect. The power usage of Bitcoin mining is capped by how much electric power miners can buy with the block rewards and fees (otherwise, the miners would lose money). The block rewards and fees are measured in Bitcoins, while the cost of electric power is measured in dollars (or whatever is the currency where the miner is located). To convert from Bitcoins to dollars, you multiply by the price of a Bitcoin. Therefore, whenever the Bitcoin price increases, the cap on how much power Bitcoin mining can use also increases.
By making Bitcoin more useful, Lightning Network can increase the demand for Bitcoins. As we all know, increasing demand while keeping the supply the same (and Bitcoin's supply is fixed by its algorithm, it doesn't change to track the demand) tends to increase the price. And that means miners have more money they can use to buy more power to mine Bitcoin.
Very good points and nicely written. Are you involved in these techs?
I should make it more clear I'm far from a no-coiner and in fact I'm deeply familiar with the tech and ecosystem - e.g. i've written my own Ethereum ZK Rollup, written smart contracts, traded, made on-chain NFTs... I've been toying with blockchain technologies for a couple of years now, and transacting with cryptocurrencies for considerably longer across many L1s and L2s.
I mention that because whilst I find these technologies fascinating, as I say I think it's crucial to recognize the following:
- Bitcoin has failed to achieve its objective of being a new form of cash
- Bitcoin has failed its objective as a fair alternative financial system; in fact people are far more exploited
- Bitcoin has failed its objective to be truly decentralized
- Bitcoin is astonishingly bad for the environment
- Bitcoin advocates are incredibly toxic
- Bitcoin has facilitated illegal acts like no other technology
- Bitcoin has failed to prove it has any intrinsic value as proven by its 0.95 correlation with risk assets like tech stocks; people speculate with it and that's its only "use".
The only thing it's good for is taking money from people who want to escape their financial oppressors and putting it into the pockets of the rich. It's a negative sum game and on the whole it's the poor and disillusioned who lose.
Are those true of other cryptocurrencies too? More or less, I'd say. Can cryptocurrencies ever fix all their problems? Personally I doubt it but in theory it's doable. Do we even need these technologies? Most of the time not... but I recognize a need in some niche areas. Are these technologies even simply superior to the ones they replace? Largely that seems like not to be the case. Are there some good use cases? I personally think so, but they certainly don't justify the market caps and are the subject of another debate.
Lightning isn't limited to Bitcoin, either. As long as the cryptographic algos are compatible, cross-chain swaps can be a thing on the network. That said, Lighting was initially architected to take advantage of Bitcoin's scripting and post-dated payment abilities (which are done using full nodes, not miners). That means anything using Lightning doesn't necessarily contribute to excessive power usage by the Bitcoin network. This is why I called out the attack on Lightning by association to Bitcoin. Would it, if used widely, contribute to Bitcoin's power usage problem? No, it wouldn't. Bitcoin's power usage problem is unique to the mining strategy for the chain, not the use of the transactions it enables, off chain.
Does Lightning still require on-chain transactions? Yes, but they can be done within the current capacity of the network AND even then that doesn't contribute much to the power usage given the full nodes process these payments, not the miners.
If mining came to a near halt, Lightning would still be functional. This means blaming it for anything related to Bitcoin is not a valid argument, which is why I said what I said. It's not that you are wrong about mining costs to the environment or energy markets, but more that the thing you are blaming has little to do with those issues.
Besides which, Bitcoin isn't the primary enemy here, it's the idea of PoW put into production plus human behavior to attempt to acquire wealth with it that is the real boogeyman. Ethereum is making a big bet on PoS, but some remain skeptical this can give way to a fair market. We'll see, I guess. Those folks appear to be way smarter than I am, even on a good day. In the meantime, Ethereum is still stupid slow and still uses PoW to do what it does.