Re: [bitcoin-dev] What Lightning Is

[Patrick Strateman <patrick.strateman@gmail.com>]

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The costs of operating a hub are as follows:

Time value of the funds the Hub has locked up in payment channels.
Enhanced risk of loss of control of private keys (the keys necessarily
need to be on an internet connected system).
Operating costs (I expect this will be minimal).

The hub can charge a fee for it's services to recoup these costs.

On 08/09/2015 02:45 PM, Hector Chu via bitcoin-dev wrote:
> Tom, my understanding is that the money that is debited from a payment
> hub is simultaneously credited from either another payment hub or the
> person making the payment, so that the net funds flow at a payment hub
> always sums to zero. So no, there is no credit advanced by the payment
> hub to anyone.
>
> Given Mark's previous answer of using CPFP and other tricks to pay for
> the Bitcoin transaction fees, we can assume that Bitcoin fees do not
> play a part in the payment channel balances.
>
> So, the interesting question is what are the costs of running a
> payment hub? The tx fees that a payment hub would have to pay to
> settle its Bitcoin transactions would be passed on as a cost to the
> clients of the payment hub. Also there is a cost to locking up funds
> in a payment channel (time value of money). The lost interest or
> opportunity cost on those funds would need to be paid for by its
> clients as well. And don't forget normal running costs such as
> networking and electricity.
>
> On 9 August 2015 at 22:27, Tom Harding via bitcoin-dev
> <bitcoin-dev@lists.linuxfoundation.org
> <mailto:bitcoin-dev@lists.linuxfoundation.org>> wrote:
>
>     On Aug 9, 2015 11:54 AM, "Mark Friedenbach" <mark@friedenbach.org
>     <mailto:mark@friedenbach.org>> wrote:
>
>     > On the contrary the funds were advanced by the hub on the creation of the channel. There is no credit
>     involved.
>
>     That's a chuckle. 
>
>     As I said, nothing requires the hub to advance anything, and if it
>     does, Bob can expect to pay for it.
>
>     We'll see whether hubs assess a fee for depositing funds, whether
>     the fee depends on the amount deposited, and whether it depends on
>     the amount of time it stays there.
>
>     I predict "all of the above." There is a name for these kinds of
>     fees.  Can you guess it?
>
>
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