It makes economic sense to include a transaction on the Lightning Network, iff the the fee to include the transaction on the blockchain is more than than the Time Value of Money of the encumbered funds on the Lightening Nodes amortized across the number of users pushing funds through a LN node.
Large-value transactions are going to hit the blockchain while smaller, predictable, closer-to-median transaction-rates transactions will go into the Lightning Network
Blockchain: Car Purchase, House Purchase, Unexpected Medical Expense
Lightning Network: Utility Bill, Groceries, Rent, Mortgage.
> If transactions happen in a big percent offchain, and they are only
> broadcasted on the mainchain where funds are moved in or out of the
> lightning network, this means there will be less transactions on the
> mainchain
This is optimal because the network has minimized the set of costs/externalities to the minimum necessary to conduct a series of transactions
> -> less fees collected by the miners.
“It's tough to make predictions, especially about the future.”
The effect on fees is going to be hard to predict.
1.) One part depends on user behavior around the dynamics of bid-side demand of fees. I.e. If there is a health ratio of
-users who want 1-block- times but are unwilling/unable to bid up the fee of their transactions to push out other 1-block-confirmation transactions (AKA how firm is that fee support presently and under dynamic conditions)
to
-users who take their transactions off the blockchain to LN
2.) New classes of transactions will be possible that aren't possible today.
3.) What market effect will the financial/technical potential of 'instant' transaction (after a network-joining-intro period) have on Bitcoin's utility/price/adoption?
It would be elucidating if any blockchain data scientists could study the effect of the fee market when high-volume exchanges unexpectedly halted trading.
> What will happen when the block reward will go away?
I believe a more specific question to ask is: What will happen when there isn't a convincing economic reason for a large majority of hashing power to be bolstering PoW defense on the main blockchain? Right now we have a pretty good handle on the amount of hashing power that's pointed at extending/defending the 'main' chain but don't have as good intel on how much idle hashing power there is. Idle hashing power becomes more of a threat in market scenarios where chain-extending PoW is scarce (late-game Bitcoin).
My humble prediction is that the necessary number of block confirmation will go up and there were be non negligible mining power idle ready to defend actors' preferred chain. If this is the scenario that plays out, I don't think it'll be very concerning; large-value transaction that will be on the blockchain have more flexible time-settlement tolerance (no one needs their home-buying escrow to settle in <= 1 day) and lower-value transaction that users want/need to be confirmed quickly will be confirmed 'instantly' over Lightning Network or another Bitcoin-anchored protocol.