The reason it doesn’t work as a currency is that the transaction costs are way way to high for that. A single transaction it is literally the price of 1-2 million visa transactions. This is by design, bitcoin will never be a competitive system for payment processing, without adding centralized “2nd layer” systems, and at that point why not just use a centralized system to begin with. It makes sense, a distributed system that does the same work millions of times cannot compete with a centralized system that does it once.
You use outdated information. Modern Lightning, a layer 2 solution based on Bitcoin, does Bitcoin transactions in less than a second for less than any Visa fee. More to it, you can send transfers of less than 10satoshis (less than a cent) for fees in the millisatoshi range on an economical scale. Visa/Mastercard won't ever offer transfer fees of less than fixed 10cent per transaction, making micropayments impossible, and 1$ payments super expensive (more like 20cent fees on the dollar). That is one of the reasons why W3C web payments API was cancelled.
As i understand it, all the lightning transactions happen off chain and the results are then published afterwards. So you are back to trusting a payment processor to avoid double spend. And, if you can do that, you don’t need BTC to begin with. Its just integrating bitcoin with another system that is actually able to do transactions. BTC alone remains horrible at that.
No, your understanding is incorrect - please do your homework and learn about lightning - you will be amazed. Lightning is zero-trust just as bitcoin is, there is no central instance. There is no "publishing" either. You can chose to not run your own lightning node (custodial vs. self-custodial wallets), then this becomes true. But that is the same as not running your own bitcoin wallet but using Exchanges, Banks etc. to hold your Bitcoin for you.
Lightning uses so called hashed time locked contract (HTLC) between nodes backed by bitcoin 2-of-2 wallets, with punishment options baked into the transaction script if people try to unilateraly reallocate funds from the channel. The channels between nodes form a payment network, where each node forwards funds (in return for a small fee).
To use a metaphor: bitcoin is the gold, lightning are green dollar notes with a guarantee to exchange those notes for gold anytime - just as our monetary system was before 1971 when Nixon broke that promise. Lightning is built in a way that it is decentralized and that promise can never be broken. And you can send those notes via the internet in sub-seconds.
Thanks, I accept that it requires less trust than using a central ledger, still it cannot provide the level of trustlessness bitcon can, if it could why use btc? I totally agree with your analogy, but in my view that just underlines that BTC is not useable as a currency, just as gold is not.
You still don't grasp lightning fully, and I totally understand because it a complex concept. It is not its own crypto, it is not a token, and lightning does not even use a blockchain. It is a layer 2 network, meaning it builds upon BTC and requires BTC node to run (to monitor the new blocks and publish transactions). So lightning cannot replace bitcoin, it augments it.
Thank you. It's a good point, but what I am trying to say is that lightning cannot provide the level of security BTC does, hence the need to constantly return to the safety of the block-chain. There is no free lunch: Security in the lightning network must break down/i.e. require more trust as the number of node-jumps in a transaction increases, and perhaps as the number of transactions in the channel increases as well. If not, then lightning solves the distributed double spend problem in its own (efficient) way, that we should just use instead of BTC.
Would you agree with me that lightning 'stretches' each BTC transaction by using clever tricks ala. aggregation, checksums, hashing, etc.? I buy that this scales the number of transactions dramatically, especially between a limited number of parties. It might be that this is stretches far enough be make BTC useful as a currency, but I remain very doubtful of that. If that is indeed the case, it seems that BTC has managed to fail as a currency for other reasons.
You obviously haven't looked into the tranasaction economics of the Lightning Network. And things will only be mentally priced in USD until we switch to something else - quite possibly Bitcoin.
I have, and as I have said to others the lightning network is not some magic that makes distributed PoW efficient, it just lets you conduct a bunch if transactions off chain and then record the end result. You could do that with fiat currency as well. BTC does one thing: lets users transact without possibility of double spending, without trusting any other users. Lightning network removes that last part, so you are just back to VISA/PayPal/Banks etc etc.
