Litecoin becomes a useful, cheap mechanism for loading Lightning Network channels on top of Bitcoin

What About the Costs of Opening Lightning Channels? One caveat to the benefits of Bitcoin’s Lightning Network is that it still requires a user to open at least one channel to get started. After all, a user cannot send a Lightning Network payment without having a payment channel open with someone else who is on the Lightning Network. This requires an on-chain transaction. An on-chain transaction is also required to close a channel in case there is a dispute or add more funds to a channel via an address that is not connected to their Lightning node. The good news is that Bitcoin users can open a Lightning channel with another party while making an on-chain payment. This means that one way users can onboard themselves to the network is to send a Bitcoin transaction they would have sent anyway with the added benefit of a channel now being opened between the two parties. The payment is sent as normal, but now future payments can be sent at effectively no cost via the Lightning Network. Another possibility is that bitcoin wallet providers may cover the fees for their users. It’s likely that the wallet providers would have to collect some identifying information from their users in this case in an effort to prevent the same individual or entity opening many different channels on the wallet provider’s dime. Those who wish to remain anonymous will need to pay their own way. Users are usually also able to pay a lower on-chain transaction fee if they're willing to wait a longer period of time for that transaction to be included in a block. Those who are willing to wait can open a Lightning channel at a lower cost. Another possibility is that Litecoin becomes a useful, cheap mechanism for loading Lightning Network channels on top of Bitcoin. An often overlooked aspect of the Lightning Network is that it can be used to implement a sort of decentralized exchange among users who are running Lightning nodes on multiple blockchains. If a Lightning user already has a channel open on Bitcoin, they can fund that channel via Litecoin by way of an intermediary who is running nodes on top of both blockchains. Further down the line, it’s also possible that a sidechain may eventually become a useful method of loading bitcoin onto the Lightning Network at a lower cost. This would work in a manner similar to the Litecoin option described above, with the added benefit that the sidechain is also denominated in bitcoin. There are also further improvements for the Lightning Network in the works, which could potentially lead to even less frequent interactions with the base Bitcoin blockchain by users of the second-layer protocol. One final point worth making here is that the Lightning Network itself should be effective in lowering on-chain transaction fees as some types of payments can now be moved off of the Bitcoin blockchain — decreasing demand for block space.