Yours CEO and co-founder Ryan X. Charles has said that Bitcoin payment channels will only be competitive with a block size increase of “ideally 1000x.”
In a post on the Yours site on Tuesday, Charles further calculated the value of a payment channel would likely need to be $150 “in order to be competitive with Stripe and PayPal.”
“We demonstrate that payment channels on bitcoin funded with $44 or less are not economically viable if they are used predominantly for payments in one direction,” he wrote.
“In order to be competitive with Stripe and PayPal, channels on bitcoin need to be funded with more than $150.”
Been wanting to get this out of my system for a while now: The Economics of Payment Channels https://t.co/cVTLCdMwDo
— Ryan X. Charles (@ryanxcharles) June 19, 2017
Charles’ calculations refer specifically to Yours’ in-house payment channels. However, during the research, it became apparent that the figures would likely apply to Lightning Network channels as well, these potentially becoming a future feature of the Bitcoin network.
“[…T]he differences are subtle and do not significantly alter the on-chain transaction fees, so the conclusions apply to both networks,” he continued.
Costs associated with micropayments and lower-level payments have becoming a bone of contention for some Bitcoin users as transaction costs have continued to spiral.
Merchant service BitPay even raised its minimum invoice amount from 4 cents to $1 several months ago as a direct result of the costs incurred sending Bitcoins through the network.
Yours concluded that a vast block size increase would be the only solution “if the bitcoin community wishes to be competitive on a transaction fee basis with […] traditional payment processors and altcoins.”
“[…T]he maximum block size should be increased at least 100-fold, and ideally 1000-fold,” Charles said.