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馃煣 FREE BITCOIN? What Can You Earn w/ a Lightning Network Node? - YouTube
Channel: Jonathan Levi - Bitcoin for the Masses
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These days more and more people are
running their very own Bitcoin lightning
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network routing node from Jack Dorsey
to politicians in developing countries.
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And even everyday people like you
and me, but let's just address the
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elephant in the room for one second.
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Can you actually earn any money running
a Bitcoin lightning node or like so
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many things in the Bitcoin ecosystem...
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Are these people just
doing it for pure altruism?
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Well, stick around because in this video,
I'm going to give you a behind the scenes.
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Look at exactly how much you can
or can't earn running a successful
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Bitcoin lightning network routing node.
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Greetings, honey badgers, and welcome
back to Bitcoin for the masses where
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it's my job to orange pill, as many new
cyber Hornets and plebs as possible.
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Damn, that was a lot of Bitcoin inside
jokes and jargon in one sentence.
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Anyways, in this video, I want to
answer the question that seems to
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be on everybody's mind these days.
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Can you actually earn anything?
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Running a Bitcoin
lightning network routing?
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Now before we dive in, I just want to make
sure we're on the same page in this video,
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I'm going to be talking about running a
Bitcoin lightning network routing node.
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If you don't know what that is, or you're
not sure how that's different from Bitcoin
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mining, then please take a moment to
check out my other video on running a
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Bitcoin full node, where I explain the
difference in easy to understand terms
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I'll even link you directly to the part
where I explain it in the description.
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Right?
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For the rest of this video, I'm going
to assume that you understand that we
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are not talking about Bitcoin mining.
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So, uh, wait, if we're not talking
about mining, then how exactly can
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you earn Bitcoin with a routing node?
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Well, in order to understand that
we need to really quickly explain
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how exactly Lightning network
works in just a few sentences.
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If.
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If you already get all this,
you can feel free to skip ahead.
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I'll put the section timestamps with
the links in the description below, as
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you probably already know, Lightning
network is basically a network of
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payment channels between parties.
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You can think of them as bar tabs that
you keep with different businesses
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that you want to be able to pay.
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Paying someone you have
a channel with is free.
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You basically just update the state
of the channel to say that more of
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the funds are on their side than were
previously before the transaction.
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But what if you want to pay
someone you don't have a channel
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with for that Lightning network
has a functionality called rowdy.
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Basically, let's assume that Alice wants
to pay Charlie 10,000 Satoshis or SATs as
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we call them in the Lightning world, but
she doesn't have a payment channel to him.
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She does, however, have a payment
channel to Bob who has a payment channel.
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By the way, one Satoshi is equal to
one, 100000000th of a Bitcoin or 0.0 0
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0 0 0 0 0 1 Bitcoin because lightning
network lets us send any payment of any
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size for very, very small, if not zero
fees, it's just easier for us to speak
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in terms of SATs, rather than always
saying things like 0.00001 Bitcoin.
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That's.
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Okay.
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Back to our scenario.
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Alice wants to pay Charlie, but
she doesn't have a channel to him.
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So Alice agrees to send Bob 10,001 sats.
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If Bob can prove that he delivers
no less than 10,000 sats to Charlie.
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Now, Bob accepts this offer receives
10,001 sats in his channel with
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Alice increasing his local balance
by 10,001 sats, and then sends
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10,000 sats in his channel with.
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So this is a routing transaction.
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It's a little bit confusing, but in
this scenario, Bob has earned one
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Satoshi or a rate of a hundred parts
per million for sending 10,000 sats.
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Now, one Satoshi may not seem like
much, and it's actually 0 cents.
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At the time of this recording.
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But imagine that the transaction
is a hundred times the size, the
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fee is two or three times as high.
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And that there are millions of
transactions sent like this every day,
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bouncing, not through one hop or middle
route, but actually through four or five
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hops before reaching their destination.
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See pretty quickly you can see
that someone out there is making
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money off of the Lightning.
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Now.
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So that's how routing works
and how Lightning network
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node operators make money.
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But now the real question, how much can
you actually make at these incredibly low?
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I mean after all, isn't the point of
Lightning network to be unfairly cheap.
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And by the way, before we go any
deeper on this, I just want to make
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a quick disclaimer here and say
that the information I'm sharing
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here is neither investment advice,
nor a statement of my earnings.
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All information shared has been collected
from anonymous sources and does not
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reflect how much you could make or
how much I may or may not be making
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running a lightning network routing.
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Okay.
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With all that out of the way, let's
take a moment to evaluate the rates
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of Lightning network channels.
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Now, from my experience over the last
half a year or so I, typical routing
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fee rate is going to range anywhere from
zero PPM, all the way up to say 5,000
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PPM, meaning that a 1 million Satoshi
transaction could be free or it could
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cost 5,000 Satoshis at the highest.
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Of course, these are extremes.
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And generally speaking, the transactions
I see or make to pay others are routing
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at between 102 hundred and 50 PPM.
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Let's imagine then that you have
a 5 million Satoshi channel, which
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at the time of this recording,
it means that you've tied up
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approximately $3,000 in the channel.
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If you price that channel at around 200
PPM, you will make a total of 1000 sats
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for sending all of the funds in that.
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That is at the time of this
recording around 61 cents.
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Not bad.
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Now, keep in mind that as people send back
through that channel and use it to route
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to other channels, you won't actually
earn on this channel itself, but you will
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earn on the channels that you send out to.
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In other words, you never get paid to
receive funds only to send them out again.
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So while that doesn't technically
mean that you are earning on
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this channel, when you receive.
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It does mean that every set you send out
from this channel gives you more inbound
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capacity to earn on another channel.
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Now imagine that this channel is
particularly active, at least from
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my experience, let's say the funds
go back and forth, back and forth.
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And after a few months have gone
by you've routed an impressive 50
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million SATs or one half of an entire.
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Now that's a pretty wild scenario
because that's a lot to move.
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But in that scenario, just from this
one channel alone, assuming a medium
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to high rate of 200 PPM you'll have
earned an impressive 10,000 SATs or
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over $6 at today's Bitcoin prices.
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That's not much, but it is enough to cover
your electricity for the entire year.
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If you're running your
node on a basic raspberry.
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Alright.
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Cool.
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So now we understand the scale of earnings
on Lightning network right now enough with
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the hypothetical's Jonathan, show me the.
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Well recently I ran an anonymous poll
in a small group that I run on telegram,
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which is comprised of only relatively
large and experienced node runners.
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And here was the answer, as you can
see, even among the more serious node
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runners, the majority of us are making
less than 10,000 SATs per month.
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And it's not clear whether those answers
are before or after rebalancing fees.
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After rebalancing, we
could actually be losing.
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In USD terms that amounts to
only zero to $6 per month.
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And of course that number is
for the larger, more experienced
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node runners before rebalancing.
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So again, we may be losing money
or making a very small amount, a
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few dollars a month here or there.
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Now, when I ran the same poll in the
broader pleb net group with 5,500 node
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runners, the results were surprisingly
pretty much the same, pretty grim.
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Clearly the long tail of node runners
is very long and the majority of people
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are earning less than $10 a month.
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And that doesn't consider if
they're doing any paid rebalancing.
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Now that doesn't seem like a lot of
money and quite frankly, it's not sure
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Bitcoin may go to $10 million one day.
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And I certainly believe it will.
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And those hundred Satoshi payments
could be worth a lot more than.
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But for right now, it's not a huge amount.
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In fact, if you're already going
to pull some of your Bitcoin out of
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cold storage, where it should be,
hopefully if you've been watching this.
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You could earn a lot more, putting
it into something like Celsius or
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block fi, but that's not the point.
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See, for many node operators running a
lightning node is all about supporting
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the network by supporting the network.
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They help Bitcoin grow and reach
mass adoption, which will increase
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the value of their Bitcoin holdings.
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Much more than earning
a hundred Satoshis here.
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Plus by being early adopters today's
node runners often feel like they
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are staking their claim today.
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Establishing successful routing nodes
while the barriers to entry are still
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high for others and gaining an early mover
advantage that could pay off for years.
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What I'm trying to say is I definitely
believe that anyone who is the slightest
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bit interested in Bitcoin should be
running a lightning network routing
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node, but profit is just one small
reason for doing so, at least for now.
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Okay, fine.
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But what about the whales?
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I mean, surely someone is making
money off of all these millions
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of lightning network transactions.
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Well, yes.
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On the other end of the spectrum, you have
some of the big wigs of Lightning network
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earning considerable amounts of money.
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Unfortunately, the biggest players like
async wallet of Satoshi and Bitfinex
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don't publish their routing profits, but
one Lightning heavyweight Alex Bosworth
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recently did in this tweet, he shared
that he had earned over $30,000 in routing
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fees from January 1st to July 30th, 2020.
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But of course, when he sent that
tweet, Bitcoin was currently
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trading at around $40,000.
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So using that number, we can
calculate that Alex is year to date
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earnings were approximately 0.7,
five Bitcoin or 75 million sats.
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Since he sent the tweet out.
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At the end of July, we can divide
that number by seven to figure out
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that Alex is, or at least was earning
roughly 10.7 million sats per month.
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At today's prices, that's
close to $7,000 a month.
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That's huge.
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But of course, Alex
Bosworth is an outlier.
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He runs multiple highly successful nodes.
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He prices his routing extremely high
at 2,500 to 5,000 PPM because he can,
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and he probably is tied up dozens of
Bitcoin on his nodes an amount that
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most of us can only ever dream of.
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Speaking of amounts of Bitcoin.
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Most of us can only ever dream of owning.
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Let's take a look at LN big, the mega
whale with dozens of nodes and over
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700 Bitcoin tied up in his channels.
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How much is he making?
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Well, according to a recent tweet, he's
earning roughly 170,000 SATs per day, or
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about a hundred dollars a day at today's
prices on his investment of over 700.
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So clearly even he, isn't getting
rich, running a Lightning routing
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node, the a hundred dollars
a day, certainly isn't bad.
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But in fact, he's making significantly
less than Alex Bosworth, at least from
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routing, despite having significantly
more Bitcoin tied up in channels.
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See, this is because LN big is also
selling channels as I've talked about
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in previous videos, meaning that most
of his capital is probably tied up
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in crappy channels that never route.
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Compare this to an anonymous friend
of mine on telegram who runs one
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of the more popular and well-known
nodes, but not in the top 10.
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And once reported earning 9.5
million SATs in a single week
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or $5,700 in today's prices.
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That's incredible.
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And while it was obviously just one
really atypical successful week, it
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certainly beats a hundred dollars.
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Now, this type of extreme comparison
between my friend and Alex who
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invested time and energy in their
node versus someone like LN big should
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show you the importance of properly
managing your node, channels and fees.
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If you want to actually earn on.
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By the way, if you do want to learn how
to optimize your node for earning routing
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fees, now's a good time to make sure that
you are subscribed to my channel, where
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I have an entire playlist of tutorials
on how to rebalance, profitably, how to
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choose which channels are best and even
how to automate the fee policies of your
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node, and much, much more on the way.
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Okay.
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So that was a lot of information
to take in all at once.
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Let's take a step back
and consider everything.
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First we learned how lightning
node operators make money
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and how routing works.
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Then we discovered that the vast
majority of node runners are earning
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less than $10 a month at today's prices.
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And that's probably before
considering rebalancing.
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Finally, we saw that some extreme
examples of very well managed nodes
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can earn thousands of dollars a
month, even with less Bitcoin.
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From that we can draw the conclusion
that by properly managing your node,
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you can generate a modest profit,
even if you're not a whale, what
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do I mean by properly managing your
node and what factors set apart?
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The highly profitable routing
nodes from the rest of the pack?
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Well, that's a big question and it's
way too much to cover in just one.
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Fortunately, I've already created
videos on the majority of these topics,
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including channel pricing strategies,
profitable rebalancing, choosing the right
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channels and capacities and analyzing
your routing data to make educated
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decisions right here on this channel.
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Plus, I have many, many
more videos like this.
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If you're not already subscribed,
please take a moment to do so and
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hit the bell icon while you're at it.
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So you don't miss out on any of my
free educational videos designed
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to help you become an expert
lightning network node runner.
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By the way, I'd love to know in
the comments below, do you run a
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lightning network routing node?
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And if so, why is it for
the profit for the network?
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A little bit of both.
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Cause it's fun because you're learning.
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I'd love to know.
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That's all for now.
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Thanks for watching and happy HODLing..
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