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Lightning Network Users and Use Cases

Lightning Network User Use Cases

The Lightning Network is a layer 2 payment network built on top of Bitcoin (and other cryptocurrencies).

It is denominated in the currency of the blockhain upon which it sits (first and primarily Bitcoin), and disputes are settled entirely by the base blockchain (Bitcoin).

Like Bitcoin, it is decentralized. Ultimately, the utility, speed and cost of the network will be defined by the sum of how all of the participants behave. In this post, I will explore at least 6 different user types I predict will exist on the Lightning Network and my expectation of how they will behave.

Users on the Lightning network can be roughly categorized by: The size, number, distribution and placement of their channels, whether they route payments and whether or not they are online as close to 24/7 as possible.

DISCLAIMER: These are unsourced, unfounded ramblings to be released to the community to be debated and discussed. There are likely to be novel scenarios and complicating factors that could render some or all of this inaccurate. This is a sort of crystal ball reading of what the Lightning Network could look like with a given population having above double digit Lightning Network usage among its citizens.

Table of Contents

  1. The Consumer
  2. The Merchant
  3. The Exchange
  4. The Employer
  5. The Watchtower
  6. The Enthusiast
  7. Final Thoughts

The Consumer

Example individual: Average Joe, who buys coffee from Starblocks.
Expected average channel size: small (<$100)
Expected relative channel number: small (1-4)
Expected relative channel distribution: Mostly local, or 50/50 if onboarded via an Exchange.
Channel connection points: to an Exchange, Merchant, Enthusiast, Employer, or Watchtower.
Online 24/7: no
Payment routing: no
Multiple nodes: no

The first, and simplest user of the Lightning Network will likely be the most prolific: the Consumer. This user is most similar to a user making normal Bitcoin purchases. The Consumer might be onboarded by any other user who routes payments, who can onboard themselves to the network by opening a channel to any node on the network.

Thus, the Consumer is given access to the entire network via an Exchange or Merchant, who can charge routing fees for subsequent transactions. The Consumer might also be onboarded by an Enthusiast friend, or an Employer who can pay the Consumer hourly, thus settling payroll by the day rather than 2 weeks or a month at a time. The Consumer has no incentive to be make many separate channels, so long as their existing channels are usable for their payments.

The Consumer will likely not hold much funds in channels, as they cannot be online 24/7 to police them and punish individuals that try to cheat them. However the Consumer can work with a Watchtower who is online 24/7 to punish cheaters. In addition, most of a Consumer's channels will be private, as a Consumer will want to retain privacy and won't be online often enough to route payments.

The Consumer's optimal channel connection strategy is to have a channel funded mostly on their end to a well-connected node, such as an Exchange, or a Merchant. The Consumer will then make micropayments out of this channel until it is depleted, or the other side wishes to settle their counterparty risk.

Consumers will likely have most of the funds in their channels on their side, with payments deducting small amounts until they or their channel partner closes the channel due to counterparty risk. The exception is channels with Exchanges, which will be covered below.

It will probably not be common for Consumers to open channels between one another, except for cases of multiple, continuous payments in one direction (example: A Consumer opens a channel to another Consumer with the amount equaling 12 consecutive grass cuttings, which the Consumer then doles out over a year. If a Consumer has many of these situations, they should not be considered a Consumer, but rather an Enthusiast or a Merchant.)

The Merchant

Example individual: Overstock, or Fred who offers computer repair services in his spare time.
Expected average channel size: medium (<$10,000)
Expected relative channel number: medium (hundreds, perhaps more or less)
Expected relative channel distribution: Mostly local balances with important nodes, mostly remote balances with Consumers.
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, and Consumers
Online 24/7: probably
Payment routing: maybe
Multiple nodes: no

The next use case is the Merchant. This is a business that accepts Lightning-enabled payments, such as a coffee shop or internet cafe. Merchants will likely make up the largest raw percentage of online nodes, as the barrier to entry is very low. Merchant is also a misnomer, because Consumers and Enthusiasts can elevate themselves to being a Merchant simply by running their node 24/7 and selling goods or services, such as a lemonade stand, or a one person lawn care service.

The principal difference between a Merchant and an Enthusiast is whether or not the Merchant wishes to dedicate time to managing their node. Most Merchants will wish for their node to run automatically, opening and closing channels according to settings they want such as total amount of funds to be locked up in channels, and total acceptable counterparty risk.

Merchants have little incentive to minimize fees as their overall rate of transactions will be relatively low, and will prioritize usability above all else. Thus, they will likely have a couple to a few large channels with the most well-connected nodes, Exchanges, larger Merchants and Enthusiasts, and their smaller channels will largely be repeat Consumers. Merchants will want their channel distributions to be mostly on the remote end with both well-connected nodes (Enthusiasts, Exchanges and other well-connected or better-connected Merchants), and with Consumers, until the Consumers have exhausted the funds in their channel.

Merchants, like Consumers, can work with a Watchtower to secure their funds and punish cheaters. Smaller Merchants, perhaps Consumers too well-connected to be considered a Consumer, will want to be online as often as possible ("synchronizing" once a day or every couple of days, depending on channel lock time, could be more than sufficient.) This means many Merchants could accept payments via their smartphone, provided they require channel timelocks to be sufficiently long.

Some Merchants will take initiative to route payments, but most will accept default settings for fee rates, which will likely respond to market forces automatically, and perhaps not in the most efficient way. As a result, they could make money routing payments, but not enough to be worth mentioning.

The Exchange

Example individual: Gemini, Bitstamp, a power LocalBitcoins user
Expected average channel size: large to very large (>$10,000 or >$1,000,000)
Expected relative channel number: large to very large (multiple hundreds to thousands)
Expected relative channel distribution: 50/50 to all participants
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, and Consumers
Online 24/7: yes
Payment routing: yes
Multiple nodes: yes

The Exchange is the next user in the Lightning Network ecosystem. The Exchanges will have the highest liquidity on the Network, and will be central hubs for only the very largest transactions. The definition of a large transaction is also nebulous, since at some point, the benefits of micropayments on LN outweigh the risk of counterparties locking up your funds.

Exchanges will have a person or persons actively managing their nodes on the Network. They will also be the first example of a user with more than one node on the Network. They are also the first example of a user who has a financial incentive to have efficient channels. These users will monitor channel distributions, likely using specialized software to reduce risk, find optimal channels, offload funds from "hot" nodes to cold wallets, and very closely manage transaction fees. Exchanges will likely make the most from transaction fees, as they can front the most liquidity and monitor the Network to find optimal channels.

Exchanges will open direct channels between each other with high amounts of liquidity to enable high-frequency trading between exchanges. Since most on-chain transactions are from one exchange to another (or so I've read), this will singlehandedly push on-chain transaction fees down immensely, though the total effect remains to be seen.

Exchanges will have backup nodes, disaster recovery plans and so forth. They are likely to be the most reliable nodes on the network, and as a result, they will be common channel onboarding points for every other user to the Network. This further increases the Exchange's take-home from operating a routing node.

Exchanges may also offer services no other node can offer, mostly around translating legacy fiat into Bitcoin onto the Lightning Network since they already have infrastructure in place to comply with KMC/AML. One example of such a service is using LN to back and trade stocks on a stock market, or a Merchant or Employer paying an exchange in fiat or Bitcoin to allow paying their customers on Lightning without requiring the Merchant or Employer to actually write or use software that does this.

  • A point to note: No user on LN has to comply with KYC/AML since at no point is a node, routing or otherwise, a custodian of someone else's funds. Exchanges could offer services where they willingly act as custodians of funds, though, which triggers KYC/AML. I am not a lawyer, and most governments are still struggling to wrap their heads around Bitcoin, so it is a large unknown that only Exchanges may feel comfortable finding novel Lightning-enabled services.

The Employer

Example individual: ACME, Inc., Walter's Widget Co.
Expected average channel size: medium to large to very large (<$10,000, >$10,000 or >$1,000,000)
Expected relative channel number: large (multiple hundreds to thousands)
Expected relative channel distribution: Mostly local balances
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers and Watchtowers
Online 24/7: yes
Payment routing: maybe
Multiple nodes: maybe

The Employer is the next user type. Employers typically make large outgoing payments (through direct channels or via an Exchange) such as for rent, utilities, supplies (perhaps to a Merchant) and paying employees (Consumers and Enthusiasts).

The Employer is very similar to the Merchant and the Exchange, except the Employer will make large purchases on the Network, either streamed in small amounts over time or in large chunks. This means Employers (if they themselves do not accept Lightning payments for their goods/services) will likely have a net outflow of funds. If they do accept Lightning payments, they will operate in a very similar manner to Exchanges, only with the addition of making regular payments through their channels.

Employers can work with Watchtowers to bridge the gap between how much time they intend to dedicate to managing their Lightning services and how much liquidity they are comfortable locking up on the Network. Some may not need their services and will be self-managed, and others may not want the headache of managing their software even though they have the resources to.

Employers may route payments, depending again on their level of interest in managing their node.

The next two users, Watchtowers and Enthusiasts are not well demarcated. Consider them as sort of an optional flag to be enabled, or a different flavor of an already existing user type.

The Watchtower

Example individual: Lightning Security Services, Inc., Anti-fraud Dept at Gemini
Expected average channel size: medium ($100-$10,000)
Expected relative channel number: small (dozens to hundreds)
Expected relative channel distribution: Mostly remote balances
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers and Watchtowers
Online 24/7: yes
Payment routing: maybe
Multiple nodes: yes, probably multiple Internet connections

The Watchtower is probably the most interesting Lightning Network user. This is a user who watches the Lightning Network for fraud, and scoops up the funds of fraudsters, while also providing services to any other user type to recover their funds in case of fraud. The Watchtower has a financial incentive to be well-connected (network-wise), highly available, highly technically capable and specialized. Watchtowers share common ground with Enthusiasts (below) and Merchants in that they can route payments and accept payments of their own, but a Watchtower can monitor the network with 0 channels, if they wish, though they will likely have open channels to take advantage of Lightning's low transaction fees anyway.

The Watchtower will actively interrogate the Network, connecting to every node possible and ensuring they are the best informed user as to the state of the Network. They may publish data on the Network as a public service, or provide it for a fee.

Any user can negotiate with a Watchtower to watch their funds, either outside of the Network or in a decentralized manner in a configuration as yet to be determined, and provide the Watchtower with the most up-to-date state of their transactions. Then, if the Watchtower sees a node broadcast a previous state (and thus attempt to steal funds) to the base blockchain, they can sweep the funds themselves and return them to their owner, if they can sweep them in time.

The main difference between Watchtowers and enthusiasts will likely be resources available at their disposal, and goals for their usage of the network. A Watchtower will primarily be looking to "snipe" funds, and may route them as a side-benefit.

The Enthusiast

Example individual: Satoshi, Blockstream
Expected average channel size: medium ($100-$10,000)
Expected relative channel number: medium to large (hundreds to thousands)
Expected relative channel distribution: Either mostly local or mostly remote, with not a whole lot of 50/50
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers
Online 24/7: yes
Payment routing: yes
Multiple nodes: maybe

Enthusiasts are the last user type. As I write this, there are 450 Lightning nodes on the main Bitcoin network, and these are virtually entirely Enthusiast nodes. Like I explained above, like a Watchtower an Enthusiast can also be any other type of user, however the primary difference between Enthusiasts and other user types is their motivation.

Enthusiasts may have any number of reasons for running a Lightning node. Primary among them is likely to have a very small (very, very small) stream of additional income by locking up liquidity in channels on their node. Enthusiasts may lock up a few hundred dollars or potentially tens of thousands of dollars in their channels, especially if they were an early adopter of Bitcoin. Enthusiasts are largely programmers, "true believers" and ideologists who understand that by participating, they make the network more valuable.

Enthusiasts may, like Watchtowers who choose to route payments, look for inefficiencies in the network and open channels to exploit them, using community tools or tools they develop themselves. Enthusiasts will directly counter the centralization of Exchanges. Should an Exchange start abusing their position, an Enthusiast with sufficient liquidity will gladly offer it up and bypass the Exchange's dominance in exchange for the fees one could collect on such a large channel, below whatever the Exchange was charging.

Enthusiasts will also be unique in that any enthusiastic enough node can implement and manage atomic swaps between different blockchains, such as between Bitcoin and Litecoin. Consumers, Merchants and Exchanges are likely to have at least some users who enable this functionality. What the space will look like after atomic swaps being commonplace is hard to predict. Many altcoins' value proposition is simply "Bitcoin, but with lower fees", which the Lightning Network directly undermines with it's incredibly low fees.

I predict cryptocurrencies that may survive the Lightning Network will be novel cryptocurrencies, such as Litecoin, Ethereum, Monero, Peercoin, Namecoin and maybe Ripple while the rest fall away into obscurity. Each one listed offers something unique enough not to be "Bitcoin but with low fees", such as different proof of work (or Proof of Stake), different privacy structures, secondary benefits of the network, or a sanitized, clean CorpCoin that you can pretend is crypto ;)

Note: I am not well versed in the altcoin space (Bitcoin or bust!), so evaluate those predictions with that in mind, and do know that I mean no offense to your super-cool "gonna change the world"-coin. :)

They might also keep the network honest by performing Watchtower-like services, but what they do with the funds will likely be altruistic, such as returning them for free (with proof of ownership and mediation) or by donating funds they snag to Bitcoin-related causes, further disincentivizing cheating.

Enthusiasts may also onboard their friends, family, employers who are not Lightning-aware and give them exposure or offer their services in a direct and ad-hoc manner to "bridge the gap" between fiat or normal Bitcoin transactions and the Lightning Network. Developers of Lightning Network implementations and secondary software enriching the primary implementations are also Enthusiasts. Some Enthusiasts may not even run a Mainnet node, and instead operate solely on Testnet troubleshooting, developing and teaching others.

Enthusiasts will also stress-test the network in every way possible. White-hat and Black-hat hackers in the space will both be considered Enthusiasts, and possibly Watchtowers, though Watchtowers will need to maintain a reputation as trustworthy, or a unknown-to-me arrangement must exist to allow watchtowers to punish cheaters but also be unable to keep funds must exist.

Final thoughts

In summary, each of these users will have different yet distinct use cases and objectives in the Lightning Network, and it remains to be seen if my predictions of dominance hold true especially over a longer time frame. I expect the network won't look like what I'm describing for at least a year or two from now, and only once all three current implementations, (Eclair, LND and c-lightning) are seasoned on Mainnet

I wanted to go into more detail regarding strategies each user will take, such as automatic management vs manual, and how groups of users will coordinate but unfortunately this ended up way longer than I planned for.

Also, I've created a sort of pseudo-map of how I expect the network to look. Not possible to depict is the sheer number of channels between any willing participants, and the sheer number of participants, particularly of the Merchant and Enthusiast type. In this graphic, the HODLR is an enthusiast who is an active LocalBitcoins user.

I appreciate any and all feedback and input.

Lightning Network Channel Strategies

This document details specifically what channel strategy a given user type might be expected to take. Because of the low barrier to entry to creating a channel, the differences between types of users will undoubtedly be blurry and not well-defined.

This document assumes you've read the previous one, Users and Use Cases

Table of Contents

  1. The Consumer Channel Strategies
  2. The Merchant Channel Strategies
  3. The Exchange Channel Strategies
  4. The Employer Channel Strategies
  5. The Watchtower Channel Strategies
  6. The Enthusiast Channel Strategies
  7. Final Thoughts Channel Strategies

The Consumer Channel Strategies

Example individual: Average Joe, who buys coffee from Starblocks.
Expected average channel size: small (<$100)
Expected relative channel number: small (1-4)
Expected relative channel distribution: Mostly local, or 50/50 if onboarded via an Exchange.
Channel connection points: to an Exchange, Merchant, Enthusiast, Employer, or Watchtower.
Online 24/7: no
Payment routing: no
Multiple nodes: no

As mentioned in the document above, the Consumer will likely have a handful or less of LN channels. It might be useful to imagine the Consumer sees Lightning as a sort of decentralized "Gift Card" that they can top up every once in a while. The consumer will find a trusted node with good uptime, such as an Exchange, or perhaps their Employer or a Merchant they shop at often through which they'll make purchases. They will largely not pay attention to Lightning, and will only care if it doesn't work.

Consumers will rely heavily on user-friendly, intelligent software to manage their channels. Consumer channels should probably have long timelocks to facilitate the unpredictable nature of how often they are online. Exchanges or Watchtowers may offer Watchtower services to consumers to help mitigate the risk of not being able to watch the network, though that's counterbalanced by the fact they will likely primarily have channels open to Exchanges, who have a social incentive not to ruin their own reputation by cheating.

The Merchant Channel Strategies

Example individual: Overstock, or Fred who offers computer repair services in his spare time.
Expected average channel size: medium (<$10,000)
Expected relative channel number: medium (hundreds, perhaps more or less)
Expected relative channel distribution: Mostly local balances with important nodes, mostly remote balances with Consumers.
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, and Consumers
Online 24/7: probably
Payment routing: maybe
Multiple nodes: no

Merchants will be similar to Consumers, except by being slightly more hands-on. Like I stated in the other document, Merchant is a misnomer, as the barrier to entry is extremely low to run your own node. Likewise, Merchants will have the highest numbers of Enthusiasts among them out of the 4 core user types.

Merchants will either take a Consumer-like approach, and try to be largely hands-off, or they will take an Enthusiast approach and try to assist the network while collecting a very small fee. If the Merchant routes payments (Enthusiast territory), their channels will likely persist for a long time so they can, over time, recoup transaction fees while selling goods and services.

Merchants channel sizes will also aid the network tremendously. Enthusiast Merchants will be crucial in keeping Exchanges in check, and they may handle thousands of micropayments an hour one day as a result of their available liquidity and their channel-making decisions.

On that node, hands-off merchants will use whatever automatic settings are provided to them, which will open and close channels in an automated and likely naiive fashion.

Enthusiast Merchants will be able to identify routing inefficiencies and exploit them, while also keeping their fees low for payments they anticipate they will make. Enthusiast Merchants could be where the majority of transactions per second happen, since LN is ideal for micropayments, and Merchants will take in small amounts of available liquidity to open channels to facilitate micropayments.

I expect, if transaction fees were the only thing holding people back from using Bitcoin day-to-day, the number of Merchants to number in the hundreds of thousands within a handful of years.

The Exchange Channel Strategies

Example individual: Gemini, Bitstamp, a power LocalBitcoins user
Expected average channel size: large to very large (>$10,000 or >$1,000,000)
Expected relative channel number: large to very large (multiple hundreds to thousands)
Expected relative channel distribution: 50/50 to all participants
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, and Consumers
Online 24/7: yes
Payment routing: yes
Multiple nodes: yes

Exchanges will have the some of the most complex and biggest channels in the Network. They will likely need to write in-house tools to manage their channels in an intelligent way, and may perhaps give away or sell these tools to Enthusiasts of all types for their own channel management. Exchanges will be where the most money transverses, since they will be nexuses of channels, but since they can charge premium fees for their privileged position, their channels will likely not be the fastest-moving.

Exchanges will probably directly negotiate between themselves to open non-routing channels with the lowest possible fees to facilitate cross-exchange trading and fund transfer.

Since exchanges, collectively, will sort of be the center fuzz of the Network, they will likely not explore the outskirts of the network, as they're not looking to lock up any more liquidity than they need to even if it means missing out on transaction fees between two areas of the Network not directly connected to them.

I expect there to be a few dozen, at most, users that qualify as an Exchange. Some of them may be a new type of exchange, enabled by the Lightning Network, which deal specifically in atomic swaps between multiple chains. Existing actual exchanges, such as Gemini, Bitstamp, and Kraken, could supplement their normal exchange functionality with Lightning-enabled atomic swaps, for example between the Bitcoin and the Litecoin networks.

Exchanges will have dozens of very large liquidity channels among themselves and Power Traders, and tens of thousands of channels with Consumers. Some exchanges may support opening channels via Bitcoin purchases, and will fund some percentage of value of the purchase on their side to allow the Consumer to use their channel to route payments, and to route payments to and from Consumers who connect to Enthusiasts that purchase Bitcoin from them.

The Employer Channel Strategies

Example individual: ACME, Inc., Walter's Widget Co.
Expected average channel size: medium to large to very large (<$10,000, >$10,000 or >$1,000,000)
Expected relative channel number: large (multiple hundreds to thousands)
Expected relative channel distribution: Mostly local balances
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers and Watchtowers
Online 24/7: yes
Payment routing: maybe
Multiple nodes: maybe

Since Employers may outsource their Lightning usage to Exchanges, they may be sort of Power Consumers, Power Merchants, or Minor Exchanges depending on the amount of time they wish to invest in managing their node. Most real-world Employers don't want to think about payroll, but they love to think about income streams, so it's difficult to predict how an Employer's channel structure and operation may look like.

I think it might be useful to imagine a Lightning-enabled Netflix: This user would likely have multiple channels open to exchanges to facilitate converting Bitcoin into USD, since they've not publicly expressed an interest in Bitcoin (that I know of). They would also probably have a drop-in solution provided by an Enthusiast vendor, or an Exchange, that enables Lightning payments for their service, where a Consumer can open a channel to them (or the Exchange can cut in here) and enable streaming micropayments to Netflix on a per minute or per hour basis of watching content. Consumers are happy, since their bills go down if they don't use much, and they pay for exactly what they use, which is fair. Netflix is happy, since power users use more and by implementing LN, they can spread further and farther to users with less and less liquidity, such as remote users with only a cellphone and Bitcoin in less-developed nations. And the Exchange/Enthusiast is happy to manage Netflix's Lightning node (if they allow them to), and collect very small transaction fees that multiplied by millions of people compensates them for time and effort.

If Netflix self-hosts, their channel structures will be a small handful of large liquidity channels they open, fill up and then close when the Exchange converts it to cash, and a large number of smaller channels Consumers open with them that they slowly stream out from them to Netflix.

The Watchtower Channel Strategies

Example individual: Lightning Security Services, Inc., Anti-fraud Dept at Gemini
Expected average channel size: medium ($100-$10,000)
Expected relative channel number: small (dozens to hundreds)
Expected relative channel distribution: Mostly remote balances
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers and Watchtowers
Online 24/7: yes
Payment routing: maybe
Multiple nodes: yes, probably multiple Internet connections

Watchtowers will likely look exactly like any other node, except Watchtowers could operate on the network without any, or with few channels. In this instance, a Watchtower provides its services for itself, scooping up the funds of cheaters.

A Watchtower that allows users to "stash" honest transactions with them might have incoming channels opened with them that Consumers, Merchants, and Employers fund and then stream out to them in exchange for their services.

The Enthusiast Channel Strategies

Example individual: Satoshi, Blockstream
Expected average channel size: medium ($100-$10,000)
Expected relative channel number: medium to large (hundreds to thousands)
Expected relative channel distribution: Either mostly local or mostly remote, with not a whole lot of 50/50
Channel connection points: to Exchanges, Merchants, Enthusiasts, Employers, Consumers
Online 24/7: yes
Payment routing: yes
Multiple nodes: maybe

Enthusiasts will have the widest varieties of channel sizes, directions, fees, destinations and capabilities. New features added to the network will happen on Enthusiast nodes first, so users of all types may flock to them from time to time as there comes a new "must-have" feature on the Network. Enthusiasts will likely pay close attention to their channels, and write code to manage, view, exploit and optimize the network as a whole that allows them to collect fees.

I'd say there will be two primary camps of Enthusiasts: High Liquidity Enthusiasts and Low Liquidity Enthusiasts. High Liquidity Enthusiasts will be technically savvy Exchanges, Merchants and Watchtowers who have the funding to intercept high value, high fee transactions by constructing the optimal channels. Low Liquidity Enthusiasts will likely be smaller Merchants, Watchtowers and Lightning-enabled app developers who sell goods and services in a decentralized manner but without high volume.

Enthusiasts will also be among the first and primary users who offer atomic swap functionality, perhaps even going so far as to create their own cryptocurrencies such as WalMartCoin that is atomically swappable for and from Bitcoin but can be used in WalMart stores only, with properties and exchange rates that WalMart can set.

Final thoughts on Channel Strategies

Hopefully, I've painted a picture of the goals and incentives each user in the network will likely have, which may help guide future users into making the economic decisions that make sense for their situation.

I appreciate any and all feedback and input.

@sangaman
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sangaman commented Feb 5, 2018

One quick thought is that I'd expect a lot of consumers will want channels bigger than $100, especially as lightning/bitcoin becomes more popular. Also, they will not need watchtower services for spend-only channels (all previous states of the channel will be better for them than the current state), which I expect will be common for pure consumers.

@tyzbit
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tyzbit commented Mar 19, 2018

@sangaman it depends on their level of acceptable risk. They could only keep a day's worth of possible expenses (perhaps $20-50) and top up as necessary to keep the lowest level of risk sort of like a hot wallet. If fees were a huge problem then as you said, they could keep more in channels.

Your point about watchtowers being unnecessary for spend-only/consumer channels/users is prescient though.

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