For crypto, it's all about the money!

For crypto, it's all about the money!

By beachbummer | CryptoBeach | 2 Sep 2019


Altruism and idealism can only get you so far. In the end, there are still bills to pay and lives to live. This is the harsh reality of life that some cryptocurrency projects are facing, one of them being the high profile BTC Lightning Network (LN).

It was reported previously that the BTC Lightning Network participation has dropped significantly and there are concerns about whether this is a precursor to concentration of LN nodes in the hands of a few operators.

One practical reason that has been mooted for the drop in the number of nodes is the lack of profitability. It costs money to run and maintain the nodes, but the rewards from LN are scant. One of the node operators in the article mentioned in the earlier paragraph only managed to earn 0.00003535 BTC within a 24 hour period! The electricity and manpower costs definitely outweight this small amount of revenue.

Other than that, I reckon that the recent volatility of BTC has also led to LN node operators to shut down their nodes in order to utilise the BTC that had to be locked up. 

It seems like the transaction fees for BTC will need to go up in order for both the mainnet and LN to remain healthy. The reason why I mentioned the mainnet is that miners will be entirely reliant on transaction costs once mining rewards are gone. If transaction costs do not go up in the face of reducing rewards, the network size will rapidly decrease if miners and node operators were rational.

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beachbummer
beachbummer

Professional in Financial Services


CryptoBeach
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