Lightning Network apps in 2020 – a small review

“Cash in hand… but no sale… “

I’ve been in the bitcoin space for a while now. But not too active. Too much other stuff to do. I’m more on the side of Tone Vays and Saifadein Amous, but I also have tremendous respect for the Bitcoin Uncensored guys, who teached us all so much.

To return the favor to the community, I test stuff from time to time, the feedback is rarely appreciated,… but that’s ok.

LN

So I’ve been testing the Lightning Network from an end user perspective every few months, just to look at the progress being made. (My background is in IP, encryption, application testing and routing).

About 2 years ago, there was a series of online services you could try, like the blockstream online sticker store (here) and a few fake-coffee bars to make test payments on. That was fun, but also a rather disappointing experience.

All these experiments showed the “upper” layer of the LN (Lightning Network) itself and its features to the more advanced users. The more in-depth theories and inner-workings are hardly interesting to me.

I admit, to slowly lose interest on how such a channel is opened, how a node exactly is set up and so on. It’s been a few years since I read all these explanations and I have the basic knowledge that’s necessary to test it. I don’t want to set this up myself at all (no time, no interest).
I do hope the developers know what they’re doing, just like I really hope my email provider protonmail is secure, and yes I know they encrypt it with AES encryption … that’s enough for me as a user.

LN2020

We’re not in 2016 anymore, and things have taken off to a new level in LN. A growing network of nodes, more interest. ( https://lightning.network/)
This interest, and an increasing amount of “locked” funds, is however a bit strange, and in my opinion has nothing to do with new users being onboarded. It’s the same people putting more money in, or rediscovering the Lightning Network payment system.
Let me start with my conclusions, and then allow me to explain how I got there.

In August 2020, the Lightning Network and the apps supporting it, are no where near a deliverable product of any kind for even average or beginning users. And that being said, even more technical users will struggle with the basic usage, let alone “Joe Sixpack”. The main reason is the inner-workings still being too exposed to the user. (Not everyone needs to know the in and outs of a Tesla autopilot in order to drive the car). In LN, you need to know some things about the inner workings before being able to use it, BUT even then, you’ll get close to nowhere.
That’s my conclusion.

The underlying systems only showed a bit of promising progress on the Lightning Labs app, and especially the Phoenix app (https://phoenix.acinq.co/ ) … it’s still there, but in the case of Phoenix app, you could say it’s getting there. At least these people got the bright idea to give the user a pop-up, when a bigger incoming transaction was pending, and you needed to open a channel with a small fee in order to accept it. The user could accept or decline it, without knowing the ins and outs of opening channels. That feature is great!
It showed some inkling of thinking about the end user (which is very, very rare withing the lightning community apparently).

I’m not hiding my sarcasm here,… after 5 years of progress (the LN whitepaper was released in 2015), the end result is downright disappointing in my opinion.

I want to say that I wish is would be better, I don’t hate LN at all, I think it’s a good idea, and it’s bitcoin’s ‘application layer’ to refer to the OSI model in networking. The debate about whether it will solve the scalability problems is an entirety different subject, which I’m not going to talk about here.

I wish would be usable in real life.

I can’t however, look past the totally destructive behavior of some parts of this LN community as well. A small minority of people who don’t realize they should be in technology to make things better, not to have a sort of status and be smug about it while calling the users names for asking questions.
(I’ll get into that later, I was called “dumb” for even asking about closing a channel).

Four main reasons for my conclusions in August 2020 about the Lightning Network:

  1. Treating new users like dirt
  2. Having no ‘normal’ way to cash out
  3. LN is a mere placeholder for bitcoin, while making it less valuable
  4. Focusing on scanning a QR code and seeing the prepaid amount go through is just a cheap trick to hid the on and off ramp issues you have.

Here goes

1) Treating new users like dirt and spitting in the face of new users

Interacting with the Lightning Network community was never easy. It’s like being a total noob in a shooter game, and asking some questions about the game. Only in LN, there’s not a 12 year old from France calling you names, but 30 something (usually dudes) who think they’re the big chief for writing a tool with a QR code scanner and an input/output amount.

Somehow, most of these exist somewhere in an obscure section of the internet, developing something that’s really cool, but not usable yet, but feel like they’re OGs.

When I asked simple questions like: “When can I use it in a real store?” or “How can I cash out the tips I got in my Lightning Network wallet?” … I got strange replies.

One user on twitter, even went so far as to call me a dumbass for “wanting to cash out”. (the vision behind calling me dumb, was the rather shortsighted statement that you only use LN for very small tx, and you don’t want to settle these on chain, which was besides the question I’ve asked, but of course fitted my question inside their rather binary narrative, instead of answering about how to cash out… ).

This sort of user is a very good example of people who are probably thinking about themselves as very smart for writing some lines of code, but never realized that at some point: all these small transactions can come together in a wallet, and at that point, a user wants to cash out. … my statement was that I’ve looked at LN-BTC as a separate sort of coin, or placeholder). This thought was infuriating the user, as they can’t think about real-life, or real life examples apparently. Calling users “dumb” is of course a very easy way to avoid having to improve your product. Hence you stay in the same circle of people “on the inside” … ppl who set up nodes in their attic and yell at me on twitter.
Bless their hearts.

The encounter started to infuriate me.
As this is exactly the kind of question you WILL get from average users; and you’re not able to answer them because your vision of LN is one where it’s used as a barter system within a series of inter-linked channels where they use some digits. At some point you’ll have to admit that bitcoin stops being bitcoin if it’s inside a LN channel, and starts being BTC again when it’s out.

Service or not?

When a new service launches, it’s normal for users to experiment with it, try it out, and point out some issues. (It’s called usability tests, you should try it, dear LN-fans).

When e-mail was first being used, people started to wonder why a mail didn’t go through, as they accidentally put their incoming mail server address as their outgoing or something…
It’s important to have some information ready for answering the REAL questions people have.

The FAQs and other websites I see for Lightning Network are all from 2 perspectives: they either tell tech-users how to set up a node and channel or they either show you how you can scan a QR code and pay for things (hype and very on the surfece).

These two perspectives might be useful to some, but a third important aspect is systematically overlooked:
– the actual real casual user who want to pay for services with lighting
– the basics on how it works (pay bitcoin, get LT-btc locked up, and no way to get it out)
– pay friends and cash out (if possible).

Which brings me to the next point:

2: Having no way to cash out

There’s a good reason for this part being overlooked, and I believe on purpose. They aren’t ready for it. The apps and services can’t or won’t let you on-ramp, use and off-ramp again. 
If you find such a guide or explanation, it’s usually deep inside some obscure forum where no normal user will ever find it, or it’s outdated.

Very simple things like:
What node URI do I use?
How to cash out?
Why is payment channel not being set up?
Why is there a limit that I can’t check anywhere?
Are never answered.

Some wallets, like Blue Wallet solve this by directing the user to a dodgy exchange, where they either don’t allow the transaction, or get a 3% fee on top. Which also strengthens my case for this thing not being bitcoin at all, but once your bitcoin is sent to LN, you’re stuck in their little world, their sub-culture, where you have to pray you can ever get your money out, by following their rules and permissions.
I hate to say it, but Lightning Network looks like a very scammy altcoin at the state it is in.

Hence, your service will be a little gimmick with a QR reader and some nice digits being transferred from A to B. But people will not use it this way in real life, unless you’ll explain things INSIDE your App.
And yes, I know there are a lot of people actually making Lightning Payments….

This all is related to point nr 3:

“Treating LN as a token, or placeholder for bitcoin, while making it less valuable”

This is a rather bold statement, I know. But hear me out.
When Alice has 50$ worth of bitcoin, it’s only “bitcoin” when she can transfer it to Bob’s bitcoin address right?

When she has her keys, and can confirm a transfer of bitcoin to Bob, then we can truly say there is bitcoin going from A to B.
When Alice has put this 50$ worth of bitcoin on to her LN wallet balance (let’s say Blue Wallet, but they’re all equally flawed). Then it stops being real bitcoin to her, as she now has this 50$ in a status that isn’t totally permissionless (the channel and node need to allow her to send things, and she has spending limits and so on. In my own tests, I’ve seen 150.000 sats not being able to send to another Lightning Network wallet balance at once. I had to chop it up in 8(!) Different payments in order to get them through… there was no indication as to why this was, the spending limits were fluctuating and as a user it was a complete pain in the ass to work with (imagine buying a food item in a store for 150000 satoshi… and having 8 payments on lightning , every time the seller had to adjust the satoshi ‘invoice’ and generate a new QR code. It’s a complete usability nightmare.

In any case, even without the user-friendliness down the drain, the LN-Bitcoins (on a Lightning Network wallet) are worth less than actual bitcoin, in theory they are indeed the same if you follow the narrative of LN, but in reality it’s not the same.

What do you want most?
500$ in bitcoin in your bitcoin wallet?
Or
500$ in “bitcoin” on a lighting wallet?
Yes, the first one please. (they are not the same at all, one I can use, the other I can’t cash out).

I see Lightning Network bitcoins as an altcoin, … one that’s pegged to the price of bitcoin very closely, but is nonetheless existing off chain, and only gives you a placeholder (token) for your bitcoin. It’s nothing more than a promise to get you real bitcoins on-chain somewhere in the future.

The lightning on you LN wallet is also ‘stuck’ …

And about being “stuck”.

Eclair, not for me

That popular “Éclair wallet” is really something else when it comes to bad user-experience:
– you start it up and you sync (takes a long time)
– then you want to pay someone with lightning, but you have no funds (normal)
– then you try to funds your wallet, with lightning (from another lightning wallet for example) but you can’t… since you need to “activate” this feature. Yo go to settings in the app and activate it. It states “you now can receive with lightning”
– You go to “receive” and click “lightning” but there it says: please open up a channel. (so I can’t fund my wallet yet through lightning!:)
– You go to channel, and want to enable that part.
– You have NO idea where to get a node to open a channel with (I solved that myself, but an average or new user is just left out to dry). So I scan the URI code for opening a channel …
– then I get “channel capacity is invalid” – … which is logic since there are NO funds in it.
The answer is: you need an open channel with a node in order to receive funds, but you can only receive funds when you’re having a channel open,… eh… who designs this thing anyway?
The only way to get through to it is to send real bitcoin to the wallet’s address and then putting that real bitcoin in a channel and transforming it this way in what I call “LN-BTC”.
– When I transferred some real BTC to the wallet, and after it confirmed, I tried to open a channel again. This failed again because there needs to be 100000 sats inside. I’ve tried this with 101000 and 135000 , but nothing worked. Apparently the error said that 135,000 sats is less than 100,000 sats.

The opening of a channel failed in a few more ways, I’m not going to go into them all here, one of them was from chosing ‘a random node’ connection that failed because ther wasn’t any DNS feature implemented yet.
In other words: my bitcoins were now rather worthless inside this lighting wallet, lucky for me, opening a channel inside Éclair failed.

There are countless other bugs, like not being able to input the sat amounts, the lightning labs tool crashes often, during ‘synchronization’ so you have to re-start it, where it gets stuck on the loading screen and you’ll need to manually stop the app and restart.

There are too many smaller annoyances, and that’s not that bad, it’s beta anyway. That’s the excuse for over 3 years now; and during all this time, new users who try the thing have a miserable user experience, making the pool of people you’ll be able to start from smaller week by week.

If you tried lightning and it fails, you’ll maybe try it again once more, even twice (or 10 like me). But in the end, you eventually give up and move on. A new protocol, and certainly one that SO IMPORTANT for bitcoin, should have more brainpower put behind it, ppl who know something about UX and user friendliness, but also have a mentality that goes beyond calling users “dumb” for trying to cash out their bitcoin from a lightning channel. If you have that miserable kind of view on your end-users, then you’re ending up with a garbage product anyway.
It’s a missed chance to on board people, and I dare to say that the so-called high number of users, could be 10x bigger if you at least get the basics right.

The practical side is horrible actually; new users , please try it: get the éclair wallet and try to tip me ANY amount … just try it, you’ll be amazed how crappy it is.  https://tippin.me/@kim0raku

This brings me to point nr 4

It seem the whole focus is still on the “wooow, look, we can scan a QR code… look how fast it goes” effect.

That’s a cheap trick, nothing more. IF you have a working channel (good luck getting there) and IF you find something to use your lightning bitcoins on, then you can indeed scan a QR code, and have your payment appear done in a few milliseconds. Not that impressive, if you pre pay something in a shop, you can wave your orde number at the cash register and take the product with you as well.
It’s pre-paid, so yes… it’s fast. That’s cool and all… but the actual steps to get there are too difficult to use, and above all: just don’t work. And if by any chance it works, then you can’t cash out. Something some lightning people really dislike, … their view is mostly to ‘spent it on small stuff and never cash out your LN-BTC’. They don’t even realize that their protocol allows people to accumulate tips in a tipjar… if that tipjar is having 50$ or more in it, some people would like to get the actual bitcoin out…

But that’s “too far fetched” for a part of the LN people apparently. Yes, I’m not happy for being called “dumb” for wanting to cash out.
That’s just what’s wrong with the whole space from the beginning: user friendliness is downt he drain.

Don’t even get me started on the complete garbage the Bitcoin Core v20 wallet is… after >10 years, we still can’t have a command that really can be used as stated in their OWN help file inside of the console help function… for anyone willing to try, it try getting your private keys from a 2014 wallet.dat file in 2020… good luck asking help in their forums, where you’ll be branded a hacker, scammer, nitwit or “dumb” when even asking. I guess the same people are building the Lightning Network apps now, with the regards for real users that’s prevalent in the whole bitcoin space.

I hope things improve, I’ll check back next year in August.


kim0raku

That being said: here’s my LN tippin jar. As this is the only valuable service I could find in LN right now. I’ll try to find a way to cash this out sometime in 2025 when they’re maybe out of beta 😊
https://tippin.me/@kim0raku