Is the Lightning network ... a scam?

In a previous article I debunked the claim that Bitcoin is suitable for sending small amounts of money cross-border. At this rate, I'm going to get a reputation as a "bitcoin basher". But here is the thing: when people argue that Bitcoin is far from perfect as "medium of exchange", Bitcoiners counter with "perhaps, but ... Lightning!"

The Lightning Network, a 2nd layer on Bitcoin, was a long time coming. When it arrived it was plagued by excessive complexity. Lately, it appeared as ready for the prime time, almost ... So I naturally wanted to give it a try!

As a product whose aim was to democratize the use of Bitcoin in everyday transactions, I assumed it would not require particular skill nor technical knowledge. You can't expect an innovation to be adopted if the knowledge barrier is significant. So I've read a little bit and went for Phoenix, apparently "the best" Lightning wallet, without investigating in detail.

^{I cannot recommend this product, so I won't add a link but if you really want, you can find it by yourself}

I wanted to load it with some sats, and was somewhat baffled. Phoenix has a feature to set a "max fee": it won't do the LN transaction if the fee incurred are above that setting. I set that max to 5000 sats. With Bitcoin at 60k, that's a hefty $3. So I would accept a transaction if the fees are $3 or less. Which is already very high, if you ask me. Clearly, if the fees are so high, you won't like paying for your cofee with the Lightning network...

So I've sent 60 000 sats and ... I had to wait several days and do several retries because ... the fees were constantly above 5000 sats!

Finally back in September I managed to charge about 58Ksats with slightly above 5000 sats in fees! What a bargain ...

... but wait, 4000 sats were "for the miners to treat the transaction on chain", right? So you can excuse them, perhaps.

Anyway, fast forward to 18 of April (two days before the halving and the explosion in on-chain tx fees), I had to receive about 60€ from a friend. That was about 101Ksats. So I said, "Let's do a Lightning transaction!"

^{To all LN fans who want to prove me wrong, I say: knock yourself off! Here is my LN address, send me whatever you think will prove that I am wrong and that "the LN will redeem Bitcoin's mediocre ability to serve as medium of exchange"}

He has "Wallet of Satoshi". He scanned my Phoenix address and off you go ! ...
Or rather NOT! His wallet indicated that there had been an error. We tried several times, to no avail. After a while not understanding what went wrong (error messages were no indication, which is another "no, no" if you want to conquer the mass market with a new product), I checked MY Phoenix wallet ....

And there it stood, in all its beauty

My wallet had refused the payment because for this "pure Lightning transaction" the fees were ... almost 19Ksats !!! Almost 20% of the sum to be sent, in the same league with Western Union!

This is basically the end of the claims that LN is a product that will ever help with Bitcoin adoption as medium of exchange. After something like this, nobody should be expected to give LN a second chance.

But because I am genuinely interested to understand, I said, "Ok, is this perhaps related to the Phoenix wallet?"

And I recalled that I had also @brianoflondon 's V4V.app in my Hive Keychain browser (shoutout to @stoodkev for an excellent product, @keychain).

So I said, let's try that! I've asked my friend to send me 60€ as HBD using the Lightning Network (and Hive, of course). I entered the sum in V4V.app and it generated a LN invoice

My friend used hiw Wallet of Satoshi to read it and the payment went through like a charm!

The swap from sats to HBD had a fee of 1700 sats, which is acceptable for a swap but not insignificant.

Is it Phoenix then?

So is Phoenix the scam,rather than the Lightning network? Well, you see, this is a more complex question than one might think at first.

Lightning is supposed to be the product that democratizes Bitcoin for payments. And whoever says "democratize" should imagine people with little to no technical knowledge that come to try it. People who cannot be expected to "do their own research" and spend a lot of time investigating different wallets. Phoenix looks well and, if you ignore the outrageous fees, works ... almost. But not well enough. Most people who will come to Lightning via Phoenix will tend to conflate the two. If Phoenix doesn't work well enough, it will be, for them, that the Lightning network doesn't work. And who can really blame them?

I downloaded Wallet of Satoshi (WoS) myself and decided to move my sats from Phoenix to WoS. I can tell you it wasn't easy, I had to try several times and in the end I paid 232 sats for this move and left more than 500 sats on Phoenix because there was no way to know the transfer fee in advance

Is it me, perhaps?

In the following days, I wanderd on X and found out my experience was far from being unique. Here is a screenshot from a Bitcoin "influencer".

Conclusion

At this point, I can draw the following conclusions:

1. Bitcoin has failed as a means of payment / medium of exchange (MoE). It is important to note though that it remains a unique store of value and it is also the intellectual father and protector of the cryptoverse (including Hive)

2. LN will not redeem Bitcoin as MoE. It is a futile attempt at solving, at great cost, a problem which has already been solved. You want to pay for coffee with crypto? Even a fee of 1 sat (the WoS fee) will be too much when Bitcoin will be worth $1,000,000. You should rather pay with HBD, whose fees will always be precisely 0 (zero), by design. To all the LN advocates, I dare you: you want to demonstrate that LN works well? See my LN address above, send me whatever sum you think will prove me wrong.

3. As Valenzuela says in the tweet below, "Lightning is not a scam. But it's definitely been used to scam you."

^{My answer: something that works for payments exists. It's called Hive, the HBD, Hive keychain, V4V.app}