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The FED Released A Study Of The Lightning Network. These Are Their Conclusions | Bitcoinist.com

bitcoin is the fed’s new pet topic. fresco from the federal reserve bank of st. louis measures inflation in btc terms, the federal reserve bank of cleveland arrives with a study titled “the lightning network: turning bitcoin into money.” An exhaustive investigation that unfortunately only “covers the period from January 1, 2017 to September 5, 2019”, its conclusions are far from surprising.

“We found a significant association between ln adoption and blockchain congestion reduction, suggesting that ln has helped improve the efficiency of bitcoin as a means of payment. this improvement cannot be explained by other factors, such as changes in demand or the adoption of segwit.”

Reading: Releases bitcoin lightning network crypto to

The surprising thing here, however, is that the federal government is investigating the bitcoin lightning network. and has positive things to say about it. What’s going on here? Let’s check what they found to see if it gives us any clues.

BTCUSD price chart for 07/14/2022 - TradingView

the most interesting observations of the feds

  • “we found that the adoption of the lightning network has led to a reduction in bitcoin block chain congestion and lower mining fees.”

well fed, that’s exactly the goal. could “lower mining fees” affect the project in the long run as altcoin fans love to say? maybe in 50 to 100 years. for now, miner rewards are guaranteed.

  • “we found limited evidence that greater network centralization is associated with lower fees.”

good to know, fed!

  • “Recent episodes of high congestion, especially in early 2021, suggest that the LN is not a panacea.”

in this study, every little sentence has its source… except this one. why is that, fed?

  • “less blockchain congestion can mean lower arbitrage barriers on cryptocurrency exchanges, thus improving market liquidity.”

See also: 5 Best ASIC Miners For Bitcoin Mining in 2018

note the “may” there, this is not guaranteed. and it’s the least interesting thing about the lightning network.

  • “bertucci studies a strategic model of network formation and shows that competition between nodes prevents the network from becoming highly centralized.”

Take that, altcoiners! even the fed knows how terrible the “lightning network is centralized” argument is. however…

  • “when the network is more centralized, each channel and each bitcoin locked in the protocol is likely to support a higher volume of payments”

good to know, fed. however, no one wants or needs centralization.

remarks on the bitcoin network as a whole

  • “total fees attached to waiting payments in the mempool have decreased since 2017, suggesting either lower demand or higher supply of settlement capacity.”
  • “overall , fees have decreased in nominal bitcoin terms.”

There are no more comments on these.

questionable observations in the fed study

  • “By lowering fees, the ln reduces the incentive for bitcoin miners to use large amounts of computing power, which means less energy use and positive consequences for the environment.”

The lightning network implies a much much much lower energy consumption because it does not require mining. however, the bitcoin network and pow mining are the best friends of the environment, as this other study clearly shows.

  • “While this document focuses on bitcoin, the same technology can enable other cryptocurrencies to be widely used, secure and decentralized.”

stop, fed. the bitcoin network is the only decentralized one. altcoins can be many things, but decentralized is not one of them.

the surprising results of the study

  • “Our results suggest that the lightning network can help bitcoin achieve greater scalability, allowing it to better operate as a payment system.”

once again, that’s exactly the goal. however, it’s nice that even the federal government admits that it works as intended.

  • “an increase in the number of ln channels reduces the number of mempool”.

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It’s good to remember that both channels and network capacity are at their highest.

  • “network centralization has no clear effect on network efficiency.”

fine, but no one wants centralization anyway.

  • “if, during 2017, the ln had existed and had been the size it was at the end of our sample, how much would bitcoin congestion have been reduced? our results suggest that the mempool count would have been 93% lower, the mempool fees 96% lower, and the proportion of transactions with low fees 197% higher.”

Those are promising numbers, to say the least.

  • “Our findings suggest that the benefits of off-chain lightning can help bitcoin scale and perform better as a means of payment.”

Even the federal government knows it.

  • “no data is available on how bitcoin is used, so we cannot say with certainty whether bitcoin is increasingly used as a means of payment.”

however, it is. and the party is just beginning.

  • “The lightning network loosens a key technological constraint by allowing payments to be cleared faster.”

yes, that’s exactly the goal.

and that’s it. it’s crazy how this fueled study and the blog post discussed above came to such different conclusions. Are we dealing with a good cop/bad cop situation here?

FED, dollar bills

See also: How to Buy Bitcoin Cash (BCH) with Credit & Debit Card Instantly – CEX.IO

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