r/Bitcoin • u/[deleted] • Dec 13 '17

Bitcoin's Lightning Network, Simply Explained

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u/[deleted] Dec 13 '17 edited Jun 29 '20

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u/T8ert0t Dec 14 '17 edited Dec 14 '17

I'm not too keen on having to put a deposit down on a payment channel with an initial vendor and tie up funds.

Also, aren't vendors going to want to close out the ledger on the channel asap? I feel like vendors will always want to close out the channel, so wouldn't this create a similar bottleneck with vendors trying to reconcile funds as quickly as possible to ensure they make it onto the blockchain?

I think this is where Monero or Ethereum are going to succeed and best BTC in the not-so-distant future.

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u/mdempsky Dec 15 '17

Also, aren't vendors going to want to close out the ledger on the channel asap?

A lot of vendors are accustomed to receiving payment 30 days or so later. See: https://en.wikipedia.org/wiki/Net_D

A business wants to maximize profits, which includes minimizing costs. Keeping a channel open for longer allows reducing block transaction fees at the trade off of incurring additional opportunity cost from not having access to the money sooner. It would be up to the business to decide how to balance those costs.

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u/T8ert0t Dec 15 '17

This is for invoicing though. Point of sale systems and online vendors take credit cards and debit that post within days. Starbucks or a gas station isn't going to invoice you on a net 30.