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RE: What is the Lightning Network
It does take two transactions to set up and teardown a payment channel. However, payment channels themselves have expiration dates, and once the channel times out your funds will be released to you. While a payment channel is active your funds are secure, but you cannot spend the amount you've staked to open the payment channel until you close it.
Now, say I move 0.1 BTC into the lightning network and I do lots and lots of microtransactions there. When the channel times out, the transaction cost for closing the channel is like 0.2 BTC. What will happen?
(this is an honest question - I haven't read the white paper, I don't know the answer to this).
Hey, they say there might be negative fees for some transactions https://bitcoin.stackexchange.com/questions/42639/what-are-the-trade-offs-between-transacting-on-lightning-network-and-bitcoin-mai/42653#42653
I think people will keep using bitcoin as they already do. But businesses will probably be paying large lightning node operators for an always open lightning channel to receive payments without commission. And services like Stripe and Paypal will develop in crypto world. This will lead to a more widespread adoption of bitcoin and litecoin, which will lead to price increase. Just don't forget to cash out before it bursts if you think that centralized regulated payment providers for cryptocurrencies will be the end of it.
Negative fees for moving lightning funds from too-well-funded lightning hubs to the not-so-well-funded lightning hubs, yes, but to close the channel it's needed to pay the fee for the on-chain transaction, and that fee will never be negative. What happens if the channel cannot be closed due to lack of blockchain capacity?
Opening a payment channel requires two parties, but a payment channel can be unilaterally closed by either one. So in this case, the economic incentive to close the payment channel is on the person who has received more funds through the channel rather than on the one who has spent money. Basically, as long as one account has enough money to pay for the payment channel to close, everything should be alright.
The interesting edge case is when neither party has enough funds to close the payment channel. In this case, if I understood correctly, the payment channel will simply time out, and all the funds will be returned to the original state, as they were before the channel was open. Minus, of course, the payment channel opening fee that one of the participants has paid.