There is no such thing as fee-free money

Someone told me that Bitcoin will never be adopted because of the fees. They said that using cash has no fees and that inflation doesn’t count (very debatable, but that’s for another post).

I told them, paper bills cost money to print, and they wear out. That cost either paid for by inflation or taxes or both. There is a cost.

And it’s actually way higher than I expected! https://www.federalreserve.gov/faqs/currency_12771.htm

It costs 11.2 cents to produce a $20 bill.

https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm

And it circulates for approximately 7.8 years?

I found an estimate of how many times a 20£ note (I know, not the same, but close enough for my thought experiment) changes hands in its lifetime: https://www.theguardian.com/news/datablog/2015/sep/04/how-often-uk-banknotes-change-hands

So if we take $0.112 (cost of producing a $20 bill) and divide by 2,328 (estimated number of times a 20£ pound bill change hands in its life) we get $0.000048 per time the bull changes hands.

So, a paper bill costs $0.000048 per transaction.

As of this writing, 1 Satoshi is worth $0.000667

So, a 1 Satoshi transaction on Lightning is the same transaction cost as handing over ~14 bank notes.

So if you move $280 of Bitcoin on the Lightning network, or 14 $20 bills, it costs about the same.

Pretty wild.

(Before you say it, I know this doesn’t factor in the cost of channel openings or running the node, and I know most transactions on LN are more than 1 sat, but as a thought experiment I think it works.)

Edit: Corrected some numbers