TL;DR: LN is doing great, FUD only, sell your ALTs!Recently various alt-coiners started pointing to LN public channel capacity decrease as a “proof that LN is failing”. This is pure FUD and something that has ZERO impact on the network - explanation below.What is LN capacity:LN is made up of public and private nodes.Public nodes are typically on-line 24/7 and participate in routing of payments via public channels. You can see details of those nodes and channels capacity on websites like http://bit.ly/2MDn7Ag as this info is broadcasted publicly via LN gossip protocol.Private nodes are run by for example mobile LN wallets like eclair or BLW. Channels of private nodes are also private (not advertised via gossip protocol), so we don’t know how many there are and how much BTC is in those - but there are A LOT of them, as many as mobile wallets! To re-iterate: If you go to http://bit.ly/2MDn7Ag - you see only PUBLIC nodes/channels/capacity. This does NOT include any private channels (mobile apps). Capacity provided by PUBLIC channels is useful to route payments trough network, so some capacity is needed, but how much?It’s difficult question to answer, but frankly LN does not need a lot of capacity in public channels, just ENOUGH for you to find a path and make a payment. The more nodes there are and more capacity is available - the more possible routes/paths you can use for you payments which is good for privacy, fees, etc. But even if network capacity would drop by 90% today - it’s quite likely no-one would notice as payments would "just work".So why recent capacity drop?Let’s start why there was a surge in capacity starting from November 2018.Large part of capacity increase was due to @lnbig_com as this entity for couple of months was pouring hundreds of BTC opening channels to EVERY public node on the LN network.This in short order took total PUBLIC capacity to over 1000 BTC. Actions of @lnbig_com undoubtedly helped with confidence that software is ready to handle real funds, routing bigger payments, overall network topology, finding bugs and performance issues related to running of large nodes, etc. I don’t have an exact numbers but I suspect at least 300BTC in LN is owned by LnBig today, maybe more.I mentioned that @lnbig_com opened a channel to EVERY node on the network. But a lot of those nodes were not kept alive, disappeared completely or were unused (not routing any payments). So recently @lnbig_com started closing those inactive public channels - and this is the sole reason why public capacity is going down. See this as an example: https://twitter.com/lnbig_com/status/1156574772324646915?s=20So what is @lnbig_com doing with BTC that was freed? He/she decided to allocate those coins as incoming channels for both public and PRIVATE channels. It works as follow:anyone can go to http://bit.ly/2KcNmMm there you can open an free, incoming channel from @lnbig_com to your public node or PRIVATE mobile wallet like Eclair or BLWthis is awesome as it allows to receive LN payments without having to spend from the wallet firstNOTE however: @lnbig_com is closing unused PUBLIC channels and re-allocating funds to PRIVATE (mobile) channels. This will lead to 1ml.com and other LN explorers to report in drop of liquidity.So drop in capacity does not mean drop in TX count or LN adoption?LN by it's design keeps transactions private, so no-one knows what is the real growth or otherwise of transactions on the network. There is however no direct relation between public capacity and number of transactions handled in LN.The best we can do is to look at observations of LN takeup like this recent tweet: https://twitter.com/BtcpayServer/status/1156084772369776642?s=20To summarise:LN network arguably has today much more public capacity than needed for me and you to make everyday payments.Real LN capacity is much higher than what 1ml.com reports due to private channels - and recently capacity has been migrating to private channels.There is really nothing to see here, use LN and enjoy the only true P2P, instant and private payments in the crypto space.http://bit.ly/2MDn87i via /r/Bitcoin http://bit.ly/2KfPdjN
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