Lightning and Gaming: Building off-chain micro economies
It was back in 2014 when I first released my popular bitcoin tipping game “SaruTobi”, hopefully some bitcoin veterans reading this will remember it and how it used to spam the blockchain with thousands of 1 cent transactions.
The premise of the game was simple, you swung a monkey to see how far it would fly, after a while the game would throw some bitcoin tips into your wallet. These tips came from donations and later from ad revenue. As the bitcoin fee increased sending bitcoin tips on-chain became infeasible so it switched to a monthly payout (rather then random instant tips) and where possible utilised coinbase’s api to send tips for free off chain.
Since I heard about the lightning network it sounded like a perfect match for SaruTobi and would allow the sending of instant bitcoin micro transactions once again, without having to go through a centralised 3rd party.
I know that some readers will be thinking “why not use litecoin? or bitcoin cash?”, personally I think regardless of the chain in order for a blockchain to scale securely as a multipurpose utility it ultimately needs to utilize layer 2/3 solutions. Furthermore the lightning network is not just specific to bitcoin and there is no reason why it could not be used on other chains as well.
Problems with the Lightning Network
At first the lightning network did seem a bit clunky, I felt the whole area around charging, recharging, opening, closing channels etc would effect the usability enough that the lightning network may not catch on past your average linux nerd or bitcoin maximalist, scaling aside why would users buy bitcoin and then open a channel to start purchasing when they could just buy litecoin or bitcoin cash? I couldn’t imagine users paying an on chain fee to open a channel to my game in order to get a few cents/dollars in tips.
However as I pondered on how I could use the lightning network in SaruTobi I started to see it in a different way, rather then thinking about it in regards to a single game it starts to make sense when thought about in the context of a network of games and apps.
To put it a better way a common misconception regarding lightning is as follows. Alice wants to buy coffee with bitcoin, she first has to buy bitcoin, once she has her bitcoin she then has to open a channel to the lightning network. Once a channel is opened and assuming her bitcoin has not already been consumed by on chain fees she can then buy her coffee.
Though about that way it does sound silly i.e. having to open a channel just to buy coffee. However I do believe this is the wrong way to think about it, a better way is as follows.
Alice has bitcoin and wants to join the network of innovative applications on the lightning network. She opens a channel with the lightning network and now that she is “plugged in” has instant and cheap bitcoin transactions with a plethora of games/apps/services/stores and coffee shops.
Recharging channels through gaming
There is still an issue around what Alice does once her channel is empty as it takes an on chain transaction to recharge her channel. I mentioned before that SaruTobi sent the player bitcoin tips and expanding this concept further lets imagine that Alice has run out of coffee money in her channel, now rather than recharging the channel with an expensive on chain transaction she could instead earn some more bitcoin playing SaruTobi. I’m not suggesting that a single game will help recharge a user’s channel however combined with other such games and services it may be possible that Alice rarely has to recharge her channel and can earn a small income to keep her channel “topped up”.
This ecosystem may be hard to imagine at the moment but with the Lightning network and the realisation of micro payments it starts to make sense.
Alice may play several bitcoin earning games, she may also write articles on yalls.org, perhaps she’s a youtube blogger who receives tips from her viewers, or trades RAREPEPEs for profit. As we move in to a cryptocurrency based economy the apps and services made possible by lightning I believe could result in a micro economy which in turn will help keep the lightning network liquid and channels funded.
The opening and recharging of channels in lightning seems to be a particular hurdle. I understand there are proposed technical approaches such as “channel factories” by Decker, et al, however via gaming and other such bitcoin transactional applications there is also an economic approach to help keep channels liquid.