LN is most useful for lager entities which hold users bitcoins, and move them on there behalf.
bitpay, bitfinex, changetip, etc..
will all be connected together via LN and allow users to move funds among these large site, in a cheap / instant / trustless manner.
I'm not sure I follow. If I want to pay Bob for a hamburger with BitPay, how would LN play into this? I have an open, pre-funded channel with BitPay, and BitPay has open, pre-funded channels with everyone I want to do business with? That's a *huge* sum of BTC to tie up.
If not clear, before using BitPay, I'd have to open a payment channel with BitPay, and fund it with as much BTC as I'm likely to spend with BitPay in, let's say, a month. That's a big chunk of change, but that's not all. BitPay has to keep a huge number of open channels with all of its users, and those channels all have to be funded. That's a huge chunk of change squared.
imagine you want to move bitcoins from your TheRockTradingExhange account to your bitfinex account.
right now you only have the option of transferring the funds using the bitcoin network.
Correct. One macro-transaction.
but with LN...
TheRockTradingExhange will send LN bitcoin to bitfinex, bitfinex doesn't need to trust TheRockTradingExhange and they can swap bitcoin back and forth all day long at no cost.
So TheRock has an open channel with BFX, prefunded with a humongous sum of BTC, as much as the two exchanges are likely to swap, in, say, a month? How many million BTC is that?
users dont open channels, they log into a website and request to send some bitcoin to some other website, instead of a BTC address you specify a site/account to send BTC to.
As long as TheRock has a channel with Hamburger Bob, open and funded, sounds like a plan. How much money did TheRock start out with, I mean before it funded all these channels? Are there enough bitcoins in the world for that?
TheRockTradingExhange and bitfinex open 1 channel which they use to move ALL user funds back and forth.
Or they can do it without involving Bitcoin at all, and just send numbers to each other, settle shit with macro-transactions on the first of the month, like every business in the world does.
TheRock and BFX can choose to settle the channel every time the debit/credit balance is X number of BTC
if users tend to send BTC to and from TheRock and BFX such that the amount coming in / going out of BFX is always balances out then they can keep the channel open with like 50BTC indefinitely.